Lesson 1

Introduction to
The World
Medical of
Terminology:
Health
Word Care
Parts

 Step 1 Learning Objectives for Lesson 1

‰‰ When you have completed the instruction in this lesson, you will be trained to do
the following:
³³ Describe medical personnel and their role in quality health care.

³³ Describe an average day of a medical coding and billing specialist.

³³ Discuss the responsibilities of the medical coding and billing specialist.

³³ Describe the job opportunities available in your new career.

³³ Describe the personal qualities of this healthcare position.

³³ Describe the desirable character traits of a medical coding and billing specialist.

Step 2 Lesson Preview

‰‰ Medical coding and billing is an exciting and expanding medical
profession. You will work with people who save lives! Currently,
employment opportunities in the medical coding and billing field
are increasing throughout the country. This course will give you
the knowledge you need to find the job you want. At U.S. Career
Institute, we will continue to help you after you graduate. We
offer graduate assistance to every student who completes our
courses. We will counsel you on marketing yourself, as well as
preparing yourself for your new career.

We know you are ready to learn, and be assured that we are

ready to teach you. From the very first page until you have
completed the course and are working in the field, U.S. Career
Institute is dedicated to your success. Your course is divided
into lessons. Each lesson contains skills that you will master on We know you are ready
your way to graduation. The lessons are easy-to-follow and offer to learn, and we are
step‑by-step instruction to make learning simple—even fun! ready to teach you.

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Medical Coding and Billing Specialist

You will always begin with Learning Objectives and a Lesson Preview. From there,
you will read new material and then take a Practice Exercise, which is a self-graded
review with answers at the back of each course. This combination of new material
followed by a review may repeat two or more times per lesson. This format helps you
apply what you learn and retain the information.

Finally, you will take a graded Quiz once you complete a lesson. This Quiz highlights
what’s important in the course. You will know many of the items on the Quiz without
looking back at the lesson. However, if you don’t remember or aren’t sure of an answer,
you can find the information in your lesson. All of your Quizzes are open book! We want
you to learn how to find the right answer rather than memorize the material.

If you have questions about any part of the course, feel free to call an instructor. The
instructional faculty is available to make your trip through this material enjoyable
and rewarding.

In this first lesson, you’ll study the key players in the healthcare field. You’ll look
at a typical day in the life of a coding and billing specialist, and will learn the
responsibilities of this position. Then, you’ll explore the types of job opportunities in
your new career. Finally, you will look at the personal qualities and character traits
of a successful coding and billing specialist.

Step 3 Teamwork in the Healthcare Profession

‰‰ Let’s identify some of the key players in the healthcare profession and elaborate on what
they do. In most professions, success comes from a team of people working together to
accomplish goals. In medicine, physicians certainly cannot perform their jobs alone.
Many people work hard, some behind the scenes, others more visibly, to ensure that our
healthcare system works properly. When you go to see the doctor, you don’t just see the
doctor. You might see a number of people, including a receptionist or an office manager.
Throughout a visit, a doctor may talk to several staff people, including the medical coding
and billing specialist. All of these people are essential members of the medical care team.

Success comes from a team of people working together to accomplish goals.

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Physicians
Physicians or doctors are the most prominent members of the medical care team.
They perform life-saving procedures. They cure the sick and help heal wounds.
Becoming a doctor of medicine is one of the most challenging career paths a person
can choose. Not only do physicians earn four-year college degrees, but they also must
complete medical school and one or more residency assignments. During residency,
85- to 100-hour work weeks are common. Because of this huge commitment, doctors
deservedly receive much of the attention in the medical field.

Let’s look at a medical service from the physician’s point of view.

Dr. Green is a physician that works at Weston Medical Clinic. He sees his first
patient, Hannah, at 8:00 a.m. He examines Hannah, a woman in her mid-30s,
complaining of pain to her right arm. A concise statement that describes why a
patient is seeking treatment is called the chief complaint. Dr. Green documents the
patient’s description of the development of the condition. Then, Dr. Green asks a series
of questions to identify signs and symptoms that Hannah may be experiencing.

Next, Dr. Green does an examination and documents the

objective findings. After the exam, Dr. Green recommends
that x-rays be taken. The x-rays indicate a fracture. The
physician’s opinion about what is wrong with the patient or
what is causing the patient’s complaint is the diagnosis.

Finally, Dr. Green puts her arm in a cast, which is a

procedure. A procedure is anything the physician does
to determine a diagnosis and help the patient heal.

This sequence began with a complaint—“my arm hurts”—

and was followed by a history and exam to determine
the diagnosis aided by tests—a broken arm as seen on
the x-ray. The sequence is completed with a service or
procedure—the fracture care. Doctors perform one or more of
these steps with every patient they see. And every time a doctor
The physician’s opinion about or nurse performs these duties, the steps must be recorded into
what is wrong with the patient the patient’s medical record. The diagnosis and procedure, along
or what is causing the patient’s with any tests done, eventually are coded and billed by you, the
complaint is the diagnosis. medical coding and billing specialist! You will learn all about
coding and billing the diagnoses, procedures and services as you
move through this course. For now, you just need to understand
where you will gather that information.

After Dr. Green dismisses the patient, he records some notes about the encounter.
The office’s medical transcriptionist will use this dictation to transcribe the
encounter into a formatted medical report. Dr. Green also makes some notes on the
patient’s history or chart. Now he is ready to see his second patient.

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In summary, physicians diagnose illnesses and injuries. They prescribe drugs to

alleviate symptoms, treat conditions and ease pain. They rely on their training
to make quality, accurate decisions. However, as good as physicians are, their
staff ultimately supports them as they provide quality treatment. Nurses are one
essential part of the medical staff.

Nurses
As professionals who perform a variety of tasks in the medical
world, nurses often must follow through with treatments
physicians prescribe. Nurses can give injections and check a
patient’s vital signs, as well as assist in surgery. It’s also true
that nurses must often do the thankless jobs—cleaning up exam
rooms and organizing supplies.

Without nurses, the number of patients a doctor sees in a day

would drop dramatically. Nurses allow doctors see more patients
and are able to focus on those patients who require the most care. Nurses can
give injections.
Nurse’s and Physician Assistants
Two other categories of personnel in the medical field are nurse’s and physician
assistants. Nurse’s assistants, or nursing aides, help nurses with daily duties, such
as paperwork, general organization, and taking a patient’s temperature, weight and
blood pressure. Some nurse’s assistants also talk to patients and make sure they’re
comfortable.

Physician assistants or PAs are normally under the supervision of a doctor

and can perform some of the same functions as a doctor. PA duties might include
stitching up a cut, taking a patient history and even performing lab work.

Emergency Personnel
Emergency personnel are a group of
professionals with the sole responsibility of
providing immediate medical assistance and
transporting the patient to the hospital for
treatment. When someone is hurt and needs an
ambulance, these people respond. Police officers,
firefighters and other rescue professionals all
have some level of medical training.

When someone is hurt and

needs an ambulance, emergency
personnel will respond.

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You have probably heard of emergency medical technicians (EMTs) and paramedics.
EMTs take classes that enable them to stabilize patients who have a wide variety
of emergency medical conditions. They are often members of ambulance crews
and volunteer fire-fighting organizations. Paramedics have more training than
EMTs. Paramedics are not only able to stabilize patients, but they can also begin
treatments to cure patients, such as administering medication.

Support Staff
Physicians and nurses rely heavily on support staff to keep a medical office or clinic
running smoothly. As you might guess, each of these positions plays an important
role in the medical world.

Office Professionals
Office professionals include office managers and receptionists. Without this staff,
many medical offices would grind to a halt! These people organize schedules,
record appointments and answer patient questions. Office staff members have
terrific communication and organization skills. They also must make a good first
impression. The office manager may be the first person a patient sees upon entering
a medical office, and the manager’s attitude can mean the difference between a
pleasant visit and a nightmare for the patient.

Medical Transcriptionists
Do you remember when the doctor in our previous example
recorded some notes about a patient encounter? Well, that
dictation went to a medical transcriptionist who listened
to the doctor’s dictation and typed what she heard. This
then was added to the patient’s medical record. By using
transcriptionists, doctors save time by speaking their notes.

While you don’t need to know every aspect of medical

transcription, you should be aware as to what transcribed
reports look like. You often will work from these transcribed
reports to determine the accurate code for a service. Two
examples of transcribed reports follow: one for Laura Brown
and one for Johnny Cruz. Study these reports so that you
have a better understanding of a transcriptionist’s role in the
medical records process.
A medical transcriptionist
listens to the doctor’s dictation
and types what she hears.

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Transcribed Report Example One

Name: Laura Brown
#030311

PROBLEM
Upset stomach with vomiting and fever.

SUBJECTIVE
The patient is a 22-year-old female. She went to breakfast with her friends earlier this morning.
She ordered a cream-filled pastry with her coffee. She stated that no one else had a pastry.
About 4 hours later, she started having an abrupt onset of nausea, vomiting, abdominal cramps,
diarrhea, headache and a slightly elevated fever. Since she had the symptoms for over 3 hours,
she called her family physician and was able to see him this afternoon.

OBJECTIVE
Physical examination reveals a well-developed, well-nourished female in acute distress.
Blood pressure: 125/85. Temperature: 99.6 ºF. Pulse: 88. Respirations: 24. Chest is clear.
Cardiovascular examination: Regular rate and rhythm. Abdomen: Positive bowel sounds.
Diffuse tenderness with slight pain. Laboratory results indicated a slightly elevated white blood
cell count. Abdominal x-ray: Normal.

ASSESSMENT
Staphylococcus toxin gastroenteritis.

PLAN
The patient was sent home and told to get plenty of bed rest and begin clear fluids when nausea
and vomiting cease. If the symptoms continue for more than 3 more hours, she should contact
the office.

____________________________________
Robert Snow, MD

D: 02-08-20XX
T: 02-08-20XX
RS:CJL

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Transcribed Report Example Two

Name: Johnny Cruz
#249315

PROBLEM
Sore throat with fever.

SUBJECTIVE
Johnny, a 5 year old, presents to his pediatrician with a sore throat, fever, loss of appetite and a
headache. His mother said that he has been on the couch all morning and refuses to eat or play.

OBJECTIVE
After examining the patient, the doctor reports enlargement of the lymphatic glands and a
temperature of 103 ºF. The oral exam reveals a swollen, bright-red throat. A throat culture is
positive for strep throat.

ASSESSMENT
Acute follicular pharyngitis (streptococcal sore throat).

PLAN
Take erythromycin as directed. Temperature to be taken frequently. Children’s Tylenol every
4-6 hours as needed for fever. Encourage bed rest, modify activities, and increase fluid intake.
All citrus juices should be avoided until symptoms subside. Call office if symptoms persist.

____________________________________
Marikit Makabuhay, MD

D: 09-15-20XX
T: 09-15-20XX
MM:BDD

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Medical Coding and Billing Specialists

Medical coding is the “translation” of narrative descriptions of diseases, injuries,
procedures and services into numeric and/or alphanumeric terms. Codes are
determined by the information obtained from a patient’s visit to a medical facility. The
medical record is reviewed for the diagnosis and treatment, and then coded. To code,
you will look up the information in a reference book and find the right set of numeric
and alphanumeric codes that describes exactly what happened. Once the accurate
codes have been determined, the codes are transferred to forms that are submitted to
insurance companies for reimbursement to the provider for his services. The doctor
doesn’t get paid unless the form is completed and filed correctly. Medical billing
involves working with medical bills to help doctors and other healthcare providers get
paid for their services. If the patient’s insurance forms aren’t completed correctly, then
the healthcare providers cannot collect payments from insurance companies.

Now that you know the job duties of many of those in the healthcare world, let’s talk
about the role that you, the medical coding and billing specialist, will play in the
healthcare profession.

Step 4 Daily Routine

‰‰ Joann is the coding and billing specialist for Weston Medical
Clinic. She usually starts the day by going through the claims
that are still outstanding, which are bills that haven’t been
paid yet. For this clinic, most of these outstanding claims
are still waiting for insurance payments. The others are
due either from patients who don’t have insurance or from
patients who need to pay the remaining portions of the bills
that their insurance policies did not cover.

A few of the insurance claims are late in being paid, so

Joann starts calling the individual insurance companies,
trying to track down each claim. It takes two hours for her
to work through 10 claims. This type of follow-up is very
important for the clinic. It prevents any claim from “slipping
Joann starts her day
through the cracks” of the insurance world. After getting
with the claims that need
a better idea of when to expect payment for the 10 claims,
insurance payments.
Joann works on the individual claims or those that have a
balance due from the patient.

Joann checks the individual claims for the time of notification to determine how long
it has been since each person received the bill. She marks those that are 60 or more
days past due. These people will soon receive another reminder requesting payment.

Finally, Joann is ready to work on coding the services received during yesterday’s
clinic activity. At Weston Medical, the coding and billing specialist is one day behind
the reception area. For instance, the medical coding and billing specialist works on
Tuesday’s bills on Wednesday, Wednesday’s bills on Thursday and so on.

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Joann spends most of the remainder of the day reading the dictation to assign the
correct diagnoses and treatments. You will learn how to determine the correct
diagnosis and procedure codes later in this course.

Joann also checks the patient information to make sure that the patient included
all necessary information, including the name, address, insurance company and
policy number. After making sure all the information is correct, she transfers the
information to an insurance claim form, most commonly a CMS-1500. You will learn
how to fill out this form later in the course.

By 4:30 p.m., Joann has organized, processed and packaged the claims she has gone
through today. They go out to their respective insurance companies, and the clinic
waits for payment.

You have an idea of what a medical coding and billing specialist does every day. Now
let’s review some general responsibilities.

Step 5 Responsibilities
‰‰ As a medical coding and billing specialist, you have four basic responsibilities:

1. Gather Information.
As a medical coding and billing specialist, you will gather all pertinent
information. Usually, this means reading the dictation to determine the
diagnoses and procedures. Then, you’ll use reference manuals to translate this
information into codes.
2. Complete and Submit the Insurance Claim Form.
Using the codes obtained from the manual, as well as patient and physician
information, you will complete and submit the appropriate insurance claim form.
3. Follow Up With Insurance Companies and Patients.
After you submit the insurance form, you might need to contact the company
regarding the claim. You might also have to follow up with patients to
secure payments.
4. Secondary Insurance Claims and Patient Billing.
After the primary carrier has paid its share of the bill, if the patient has
secondary insurance, you need to bill that secondary carrier. If the patient does
not have secondary insurance, then the patient may be responsible for paying
whatever remains after the primary carrier has paid.

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Medical Coding and Billing Specialist

Codes Completes and

Dictation Submits Insurance
Claim Forms

MEDICAL CODING
AND BILLING
SPECIALIST

Follows up on Bills Secondary

Claims and Carriers and
Bills Patients

Let’s pause and complete a quick Practice Exercise.

 Step 6 Practice Exercise 1-1

‰‰ Select the best answer from the choices provided.

1. The _____ is usually the first person in the doctor’s office to see a patient.
a. office manager
b. doctor
c. EMT
d. coding and billing specialist

2. When the patient tells the doctor what’s wrong, the information is
called the _____.
a. diagnosis
b. problem
c. chief complaint
d. procedure

3. An outstanding claim is one that _____.

a. the insurance company has paid
b. has multiple charges
c. is filled out correctly
d. hasn’t been paid yet

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Answer the following question.

4. Describe the four basic responsibilities of a medical coding and

billing specialist.
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________

³³Step 7 Review Practice Exercise 1-1

‰‰ Check your answers with the Answer Key at the back of this book. Correct any
mistakes you may have made.

Step 8 Medical Coding and Billing Career

‰‰ You chose a great profession for your career. The healthcare industry is booming,
and it needs eager, qualified professionals. This is especially true for medical coding
and billing specialists.

Employment in health care is growing rapidly for two reasons. First, the number of
people in older age groups will grow faster than the total population. This increase is
due to rising life expectancies and continual advances in medical technology. Second,
healthcare costs continue to climb, which means more physicians want to get paid.
As a result, you have more job opportunities—medical coding and billing specialists
are in demand! You can see this by looking at the number of patients doctors see
every day. Every appointment needs a code attached and a claim submitted!

In your new career, you may work at home, in a doctor’s office or outpatient facility,
and some doctors even use independent coding and billing specialists. In fact, there
are companies that hire coding and billing specialists across the country. These
remote professionals work online in distant locations, and the company finds work
for them to code and bill. So much depends on where and when you want to work.
What’s exciting is that you’re in control—just as you are in this course, working
toward your new career!

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Where to Work
Someone with the knowledge you’re gaining in this course will not be limited to simply
filling out forms. No, the world of medical coding and billing is very diverse. As you
already know, it offers full- or part-time job opportunities, at home or in offices.

Mercy Medical Center is looking for a part-time Medical

Coding and Billing Specialist to accurately assign codes
to records and assist in the claims process. One year of
coding and billing experience is preferred, but those
who can show they have real-world training in medical
coding and billing also will be considered. Mercy
Medical Center is an equal opportunity employer.

Please send cover letter, resume and references to:

Mercy Medical Center
111 Main Street Suite 1
Avery, Ohio 44444

Hart Family Practice is looking for a full-time medical

coder/biller to code medical records, as well as submit
claims to insurance for payment. Applicant must
have knowledge of medical terminology, anatomy,
medical coding and medical billing. The position offers
a generous benefit package, and salary is based upon
experience. EOE

If interested in applying, please send a cover letter

and resume to:
Hart Family Practice
222 Skinner Road
Pittman, Louisiana 23232

Medical coding and billing specialists no longer are restricted to the doctor’s
office but now work in hospitals, pharmacies, nursing homes, mental healthcare
facilities, rehabilitation centers, insurance companies, consulting firms, health data
organizations and their homes. And remember, if you decide you want to work at
home, you set your own work schedule and save on items such as child daycare and
transportation. How is it possible for one career to offer so many choices? Let’s take
a closer look at two different jobs available to you in this career.

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Verify or Assign Codes

In some cases, the physician assigns the code, and you will simply
verify that these codes are consistent with what the physician
has documented. In other cases, the doctor does not assign codes.
Instead, you’ll translate the doctor’s written diagnosis and treatment
into codes. Once the codes are determined, you’ll complete the claim
form and send it to the insurance company for reimbursement.

For example, you might work for a radiologist that provided

services to a patient for a broken finger. You review the dictation
documenting how the x-ray was performed and the radiologist’s
reading of the x-ray. You would apply the correct codes for the
diagnosis and the procedure, and create the claim to send these You’ll review the dictation
codes to the insurance company. documenting how the
x-ray was performed.
Coding and Billing Service
A medical coding and billing service is the most common at-home employment
opportunity for this profession. Typically, the self-employed medical coding and billing
specialist charges by the medical record and has more than one provider as a client.

The work of an independent medical coder and biller doesn’t vary much from that
of those who work in offices and hospitals. The biggest difference involves how the
work gets to and leaves the medical coding and billing specialist. If the service does
work for local providers, the work could be picked up and dropped off every 24 to
48 hours. The medical coding and billing specialist simply takes the information
home, codes it, completes and submits claims and then returns it to the physician’s
office. If the physician is having his transcription done online, he is set up for
online communication of all work. The coding and billing work can be exchanged
online. The great thing about this route is the medical coding and billing specialist
isn’t limited to clients in his town or even state! Let’s talk a bit about the personal
qualities that medical coding and billing specialists should possess.

Step 9 Personal Qualities

‰‰ If you think about it, there are a large number of potential clients available in most
towns. Even small towns usually have one or two practices and a hospital. Many times
qualified help is hard to find, and because you have a skill that is in great demand,
you have the opportunity to make good money. Though salaries vary depending on
experience, the number of hours worked and location, we think you’ll be pleased to
discover the amount of money you can earn as a medical coding and billing specialist.
And remember that as your experience builds, you can add to your earnings while
being a vital part of a medical team and doing work that helps people.

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Medical coders and billers do much of their work alone; however, they are still a
vital part of the healthcare team. The main thing to remember when you approach
a potential client or employer is that you are the best medical coding and billing
specialist for the job. Your competence means money to your employers! You should
remember and practice three qualities: professionalism, presentation and adaptability.

Professionalism
Professionalism is the conduct, aim or qualities that characterize
a profession or professional person. As with any business, the image
you project is important. You must be professional. Professionalism
includes how you dress, talk and interact with your clients. When
you have an initial meeting with potential clients, your level of
professionalism will affect their impression of you.

When you select what to wear, be conservative but not bland. Your
attire should be clean, wrinkle-free and professional. Try to choose
something you feel comfortable wearing. If you are comfortable, you
will be able to concentrate on other important things, such as your
presentation and answering any questions your potential client
may have. An uncomfortable outfit, whether in style, color or both,
will distract you.
The image you project
Let’s look at the following example to see how professionalism
is important.
affects our choices.

Jane entered the Haber Dash Men’s Store to exchange a tie for her husband. As she
approached the counter, she saw that two clerks were at either end. She noticed that
one clerk wore a t-shirt and torn jeans and had a few visible piercings. The other
clerk was dressed conservatively in black pants, a starched white shirt and a snazzy
bow tie. In a split second, she decided who looked the most helpful. She thought the
conservatively dressed clerk would be more sympathetic to her tie dilemma, so she
approached him for assistance.

Has this ever happened to you? Perhaps if Jane wanted advice on which CD to buy
for her son, the other clerk would have appeared more competent. Either way, Jane
made a judgment based on how each employee looked. Of course, no two people look
alike, but there are certain factors of appearance that are important in the work
setting. This is especially true for a professional healthcare worker.

Another facet of professionalism is delivering what you promise. You’ve probably

heard the saying, “Five minutes early is 10 minutes late.” Basically, this means if
you have a meeting at 10 a.m., be 15 minutes early. Never be late, especially for a
first‑time interview. Such promptness shows you are responsible and considerate.

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If your client is a little late, be understanding. Just make sure you aren’t the tardy
one. When you are asked for work samples, be prepared. Explain what you know
and how you gained your knowledge. If you ever are asked to complete a test task,
do so promptly.

Presentation
Presentation is the act of bringing or introducing something into the
presence of someone else. Often your initial presentation will decide
whether you gain a client or employer. In addition to being on time
and dressed properly for the meeting, your presentation can go a long
way in influencing your client-to-be—both positively and negatively.

Be sure to present a confident image. Your attitude should say, “I

know what I’m doing” without being arrogant or condescending.
Remember, this is the client’s money you’re talking about.
Confidence is a must!

Adaptability
Adaptability is the ability to be modified or changed. To be
successful, you must be able to adapt for each client. Some people
want tasks done a certain way. Others may have exactly the opposite
requirements. Codes are updated annually. Insurance regulations
change. Forms are altered. If you get too set in your ways, you might Be sure to present a
lose clients who require slightly different approaches. confident image.

Step 10 Character Traits

‰‰ What makes a top-notch medical coding and billing specialist? Let’s examine some of
the most important character traits of a successful coder and biller. You’ll be able to
boast about these traits by the end of your course!

Curiosity and Drive

A medical coding and billing specialist needs to have a true interest in the healthcare
field. You demonstrated an interest by enrolling in this course! This includes the
constant desire to follow the ever-changing face of medicine. As you progress in your
field, be willing to open your mind to new information to learn new skills and change
your life.

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Warmth and Confidence

A medical coding and billing specialist appreciates the satisfaction of caring
for others. You may interact with other people, such as coworkers, doctors and
patients, and you can do so in a courteous, pleasant manner. Showing warmth and
compassion will put patients at ease. You may be the one assigned to explain the
coding and billing process, as well as insurance denials. As you begin your career, be
confident in your abilities and understanding of the information you’re explaining.

You can put a patient at ease by

showing warmth and compassion.

Organizational and Professional Skills

A successful medical coder and biller is a multi-tasker because you’ll handle several
responsibilities at once. You can make lists of things to do so you don’t forget any of
your tasks for the day. As you start working, you’ll learn to keep charts and other
paperwork organized so that you can find what you need at a moment’s notice. You’ll
also realize that it’s important to keep your work area clean and tidy so there’s
room to work and you don’t lose things. It’s also important to be able to prioritize, or
decide which duties are more important. “Should I code Mrs. Smith’s record first, or
should I follow up on insurance payments?”

As you progress through this course, you’ll learn the skills it takes to keep organized
and to prioritize. Let’s keep moving!

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 Step 11 Practice Exercise 1-2

‰‰ Select the best answer from the choices provided.

1. Some medical coders and billers work _____ in distant locations.

a. with medical transcriptionists
b. online
c. long hours
d. by phone

2. The most common at-home employment opportunity for the medical

coding and billing specialist is the _____.
a. medical coding and billing service
b. coding processor
c. medical coding and billing software system
d. insurance adjuster

3. When a physician assigns the code, the coding and billing specialist
simply _____.
a. ignores the codes and reassigns new ones
b. verifies that these codes are consistent with what the physician has
documented
c. disputes whatever the doctor did
d. calls the patient and asks what happened during the appointment

4. An independent medical coding and billing specialist typically works _____.

a. in a doctor’s office
b. in a hospital
c. in an insurance company office
d. at home

Answer the following question as directed.

5. Explain the most important character traits of a successful

healthcare professional.
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________

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³³Step 12 Review Practice Exercise 1-2

‰‰ Check your answers with the Answer Key at the back of this book. Correct any
mistakes you may have made.

Step 13 Lesson Summary

‰‰ Medical coding and billing specialists are an important part of any medical setting.
This lesson gave you a firm understanding as to what each member of the healthcare
team does. You’ll work with physicians, nurses, office managers and others to
contribute to the best possible patient care. You learned that this care occurs in a
three-part sequence: complaint, diagnosis and treatment. The diagnosis and treatment
eventually are coded and billed by you, the medical coding and billing specialist!

We also discussed a few important points

for you to remember as you move toward
your new career. You explored possible
employment opportunities and settings. You
also learned the importance of professionalism,
presentation and adaptability in your new
career. Lastly, this lesson discussed the
character traits of a successful medical coding
and billing specialist.

As you continue with this course, you’ll see

in greater detail just how important medical
coding and billing specialists are to those
who work in and rely on medical facilities. The medical coding and billing specialist is
This career is in demand! By choosing this important in the healthcare field.
program, you have started on an exciting path
toward success.

You are now ready to complete your first Mail-in Quiz!

1-18 0205502LB01A-01-13
 The World of Health Care

* Step 14 Mail-in Quiz 1

‰‰ Follow the steps to complete the Quiz.

a. Be sure you’ve mastered the instruction and the Practice Exercises that this
Quiz covers.
b. Mark your answers on your Quiz. Remember to check your answers with the
lesson content.
c. When you’ve finished, transfer your answers to the Scanner Answer Sheet
included. Use only blue or black ink on your Scanner Answer Sheet.
d. Important! Please fill in all information requested on your Scanner Answer
Sheet or when submitting your Quiz online.
e. Submit your answers to the school via mail, e-mail, fax or, to receive your grade
­immediately, submit your answers online at www.uscareerinstitute.edu.

Mail-in Quiz 1
Choose the best answer from the choices provided. Each question is worth 5 points.

1. During residency, physicians might be asked to work _____ hours per week.
a. 200-250
b. 100-150
c. 85-100
d. 1000

2. The _____ assists the doctor by carrying out instructions under the
doctor’s supervision.
a. nurse’s assistant
b. EMT
c. paramedic
d. physician assistant

3. _____ code and complete insurance forms to ensure proper

reimbursement for patient encounters.
a. Accounts receivable specialists
b. Medical coding and billing specialists
c. Radiologic technologists
d. Medical record technologists

0205502LB01A-01-13 1-19
Medical Coding and Billing Specialist

4. Which of these lists correctly illustrates the order of training, from

lowest to highest, of medical personnel? _____
a. EMT, paramedic, physician
b. Paramedic, EMT, physician
c. Physician, EMT, paramedic
d. EMT, physician, paramedic

5. EMT personnel _____ patients, while paramedics might begin to cure them.
a. perform surgery on
b. treat
c. stabilize
d. none of the above

6. The _____ organizes schedules and keeps appointments straight.

a. office manager
b. laboratory technician
c. physician
d. nurse

7. To give yourself the best chance of gaining a new client, you must
remember and practice professionalism, adaptability and _____.
a. preoccupation
b. insurance billing
c. presentation
d. altruism

8. Medical coding is the process of _____.

a. identifying patient complaints
b. translating narrative into numeric and/or alphanumeric codes
c. identifying types of specialists
d. e-mailing messages to insurance companies

9. PA stands for _____.

a. protein allergy
b. podiatrist’s assistant
c. payment allowed
d. physician assistant

1-20 0205502LB01A-01-13
 The World of Health Care

10. Chief complaint means _____.

a. what is wrong
b. the complaint with the most letters in it
c. how long the patient waited to be seen
d. what the nurse thinks is the worst symptom

11. A medical coding and billing specialist’s work attire should be _____.
a. coveralls
b. lab coat
c. clean, wrinkle-free, proper size, professional
d. whatever style you like best

12. As a medical coding and billing specialist, it is your responsibility to _____.

a. schedule appointments
b. examine patients
c. code and submit insurance claims
d. take patient vitals

13. Employment in health care is growing rapidly due to _____.

a. rising life expectancies
b. government mandates
c. early retirement of physicians
d. decline in technology

14. Two essential characteristics of a successful medical coding and billing

specialist are _____.
a. tenacity and toughness
b. warmth and confidence
c. curiosity and free-spiritedness
d. being argumentative and organizational

15. A medical bill might be outstanding because the _____.

a. clinic isn’t waiting for the insurance payment
b. patient paid the balance because he does not have insurance
c. insurance company has paid
d. insurance company has paid, but there is still a balance due for the
patient to pay

0205502LB01A-01-13 1-21
Medical Coding and Billing Specialist

16. The medical coding and billing specialist uses _____ to gather
patient information.
a. an informal survey
b. an insurance salesperson
c. the dictation
d. the doctor

17. Making lists to not forget tasks for the day is an example of _____.
a. organization
b. warmth
c. drive
d. confidence

18. Professionalism includes how you _____.

a. talk
b. dress
c. interact
d. all of the above

19. Which is not a responsibility of the medical coding and billing

specialist? _____
a. Follow up with insurance companies
b. Complete and submit insurance claim forms
c. Schedule appointments
d. Patient billing

20. Which is not a responsibility of a nurse or nurse’s assistant? _____

a. Cleaning up exam rooms
b. Stitching up a cut
c. Taking a patient’s temperature
d. Talking to patients to ensure they are comfortable

1-22 0205502LB01A-01-13
 The World of Health Care

Congratulations!
You have completed Lesson 1.

Nice!
Triumph

Determ
ination
!
P r o g r e s s

Winning

Do not wait to receive the results of your Quiz

before you move on.

0205502LB01A-01-13 1-23
Medical Coding and Billing Specialist

1-24 0205502LB01A-01-13
 Lesson 2

Introduction to
Medical
Medical Terminology:
Insurance 101
Word Parts

 Step 1 Learning Objectives for Lesson 2

‰‰ When you have completed the instruction in this lesson, you will be trained to do
the following:
³³ Define medical billing terms common to the healthcare profession.

³³ Discuss the importance of preauthorization.

³³ Describe the resources used by a medical coding and billing specialist.

³³ Explain what a medical bill is and how it is used for reimbursement.

³³ Discuss the importance of being accurate and thorough.

Step 2 Lesson Preview

‰‰ Liz is a receptionist for Dr. Grant. She is great at making appointments
and keeping track of patients. Yesterday, Dr. Grant’s coding and
billing specialist was out sick, and the doctor asked Liz to check on
some information for him. He asked her to verify the diagnosis and
procedure codes in a patient’s medical record. Then he asked if any of
the patients had paid their copayments and if their deductibles had
been met yet.

While the doctor was speaking English, this all sounded like another
language. Liz didn’t have a clue about any of the items Dr. Grant
had asked about. Finally, she gave up and asked Dr. Grant to wait
until the next day when the coding and billing specialist returned.
Medical coding and
In this lesson, we’ll study the language of the insurance world. You
billing specialists may
will find out about the reimbursement process and different types of
verify codes from a
reimbursement methods. Then we’ll briefly discuss preauthorization.
patient’s medical record.
Next, we’ll examine some of the resources used by the medical coding
and billing specialist. After explaining the basics of diagnostic and
procedural coding, we’ll discuss the life cycle of a medical bill and the
importance of accuracy. So let’s get started!

0205502LB01A-02-13
Medical Coding and Billing Specialist

Step 3 Insurance Terminology

‰‰ Insurance refers to a contract between an
insurance company, also called the carrier or
insurer, and an individual or group, which is
also call the insured. Medical insurance,
also called health insurance or health
coverage, is a contract between an insurance
company or carrier and the insured for medical
benefits. This contract, or policy, states that
in the case of certain injuries or illnesses, the
insurance carrier will pay some or all of the
medical bills of the insured. In exchange for
this coverage, the insurance carrier collects Insurance is a contract between an
payments from the insured. These payments insurance company and the insured.
are called premiums. Premiums are paid in
advance, either monthly, quarterly, semi-annually or annually, depending on the
contract between the carrier and the insured. When an insurance carrier pays for
medical treatment based on a policy, it is paying benefits.

The insurance carrier collects premiums from many people and only has to pay
benefits to relatively few. That is how insurance companies make money and are
able to provide services. Every insurance company requires an itemized list of
diagnoses, procedures, pharmaceuticals and other materials before it pays benefits.
Every procedure has its own code, and insurance companies use these codes to
help determine benefits. Different insurance companies and plans all have their
own forms and specific requirements. This is where you, as a medical coding and
billing specialist, enter the picture. When you’ve completed this course, you can code
and prepare claims for providers in the form necessary to meet the standards of
insurance companies and government agencies.

Medical providers offer their services in return for payment. Reimbursement

is a healthcare term that refers to the compensation or repayment for healthcare
services. Reimbursement is the process of paying a provider back for services he
already performed or provided. In health care, patients may walk out of a clinic
without paying a large portion of the medical bill. Providers must seek to be paid
back for the services that they have already provided,
which is the reimbursement process. There is a
hierarchy to this process.

The first-party payer is the patient, or the person

responsible for the person’s health bill. In some cases,
this may be a guarantor. A guarantor is someone
who is responsible for an account because the patient
is, for example, a minor. The guarantor is liable for
any amounts that have not been paid to the provider, A guarantor is responsible
whether the insurance company makes partial payment for the account because the
or declines to pay. patient is a minor.

2-2 0205502LB01A-02-13
 Medical Insurance 101

The second-party payer is the physician, clinic or hospital. This group is often known
as the providers because they provide the health care. An organization other than
the patient (first-party) or healthcare provider (second-party) involved in the financing
of personal health services is known as the third-party payer. Therefore, when you
submit a claim to an insurance company for payment on a service, you are billing a
third-party payer.

Before moving on, let’s review some common, related terms used in medical insurance.

Claim Form
The claim form is the document that is completed and submitted to an insurance
carrier to request reimbursement for services rendered. The most common insurance
forms are the CMS-1500 and the UB-04. We’ll look at the history and format of these
forms later in this lesson.

Allowable Charge
The allowable charge is the maximum amount an insurance carrier will pay for a
specific service.

Deductible
The amount of money an individual must pay before insurance benefits begin is
called the deductible. Usually a policy will not pay the first $250, $500 or $1,000
of medical charges and then will pay a percentage of everything above that amount
every year.

Any amount that is “applied to deductible” is an allowable charge that is subtracted

from the total deductible amount. The insurance carrier does not pay any money on
“applied to deductible” charges.

For example, imagine that Toby has a medical policy that has a $250 deductible and,
after the deductible is paid, 80 percent coverage. So far this year, Toby has spent
$200 of his own money on medical care, and that medical care has been defined
as covered under his insurance policy. For the insurance company to begin to pay
80 percent of Toby’s covered medical care costs, he must still pay out $50 more for
covered charges. After he has met the $250 deductible, Toby’s medical insurance
benefits will begin, and the carrier will pay 80 percent of each claim submitted for
covered charges for the rest of the year.

0205502LB01A-02-13 2-3
Medical Coding and Billing Specialist

Copayment
A copayment is a flat amount of money paid by the patient. Many policies have
a copayment for prescription drugs or office visits to a doctor. That means every
time a person has a prescription filled or visits the doctor, it costs her no more
than her copayment; however, she must pay that copayment every time she has a
prescription filled or goes to the doctor. Some policies require copayments even after
the deductible has been met. Other policies have no deductible, but a copayment is
required every time any type of medical care is received. Copayments are usually
paid immediately at the time of service.

Now that you have a better understanding of these insurance terms, let’s turn our
attention to preauthorization.

Explanation of Benefits
After you have submitted a claim to an insurance carrier and it is processed, the
physician will receive an explanation of benefits (EOB). The EOB may include
payment for one patient or several patients. Always check each patient’s name,
dates of service, procedures billed for and the amounts billed, the amount allowed,
deductibles, copayment amounts and the amount paid on each individual claim.

The physician bills the patient for amounts applied to the patient’s deductible, any
copayment amounts and noncovered procedures, depending on the contract. Often,
a service benefit contract stipulates a maximum charge per service. The insurance
company will disallow the difference if a doctor submits a claim for an amount that
exceeds that maximum charge.

2-4 0205502LB01A-02-13
 Medical Insurance 101

EXPLANATION OF BENEFITS

THIS IS NOT A BILL

BLUE CROSS OF COLORADO

Date: 04/10/XX If you have any questions regarding this

notice, please write or call our Customer
Service Department at:
Policy: STEEL RECYCLING
MEMBER SERVICE
P.O. BOX 1234
ANYTOWN, CO 80000
(612) 936-1234 OR 1-800-936-1234
TDD (612) 936-1234 OR 1-800-936-1234

STEVE MAC
1823 KERRY COURT
YOURTOWN, CO 80000

Patient: FRAN MAC

Number: 605000508

Explanation of Payments:
Total
Provider/Type of Date of Service Billed Disallowed Copay/ Reimbursement
Claim Number Service From – Through Charges Amount Deductible CoIns Amount
Douglas Smart MD* *
66355912 99212 0317XX-0317XX 50.00 6.48 9 20.00 23.52
66355912 84550 0317XX-0317XX 33.00 9.00 9 24.00
Totals 83.00 15.48 20.00 47.52

Payment has been made to: Amount Deductible and out of pocket expenses for
03/17/XX-03/17/XX
Copayment $20.00
Non-covered amount $15.48

Front Range Family Care 47.52 Total Patient Responsibility $20.00

* Message 9: This amount is above the maximum allowable reimbursement for this procedure.

Sample EOB for Fran Mac. Notice that the insurance company disallowed $15.48.

0205502LB01A-02-13 2-5
Medical Coding and Billing Specialist

Step 4 Preauthorization
‰‰ John has to go into the hospital. He knows it. His doctor knows it. According to his
insurance policy, John must make sure his insurance company knows it as well. If he
doesn’t notify his insurance company before he enters the hospital, the company will
reduce or deny his benefits. In addition to hospitalization, many insurance companies
require notification before surgery or certain tests are performed. This process of
notifying an insurance company before hospitalization, surgery or tests is called
preauthorization. The insured must call the insurance company (or the company’s
designated agent, which is sometimes a third-party oversight company) and explain
what is planned and why. A third-party oversight company might be contracted with
the insurance company to review all hospitalizations and surgeries and certain other
tests and procedures to make sure these procedures are medically necessary.

The preauthorization requirement helps reduce

fraud by enabling the insurance company to review
a patient’s case history before major costs occur.
Usually the insurance company approves the
procedures, but the company might call the doctor
handling the case to discuss the procedures.

The insurance company might extend or reduce

the proposed hospital stay. For example, if
John’s doctor wanted him to stay in the hospital
for four days after knee surgery, the insurance
company might only authorize three days. This
authorization is based on an average stay for that The preauthorization allows the insurance
particular procedure. If no complications from company to review a patient’s case history
the surgery arise and John stays four days, the before major costs occur.
insurance company would pay for only three days.
John becomes responsible for the fourth.

In many cases, preauthorization is required even in the event of an emergency.

When a patient is admitted to a hospital because of an accident or other emergency,
the insurance company requires someone to notify the insurance company within 24
hours of hospitalization. Although the insurance company may deny a claim because
preauthorization was not received, usually the company simply reduces the amount
it will pay for that claim.

Visitation Limits
In this case, visitation limits doesn’t refer to how many visitors a patient can have.
It refers to the visits to a specialist. Visitation limits set the number of visits to
specialists that a patient may make, or the number of special treatments a patient may
have, such as five physical therapy sessions. Insurance companies set visitation limits.

Now that you’re aware of the lingo of the medical coding and billing field, let’s apply
what you’ve learned in the following Practice Exercise.

2-6 0205502LB01A-02-13
 Medical Insurance 101

 Step 5 Practice Exercise 2-1

‰‰ Select the best answer from the choices provided.

1. _____ is a contract between an individual or group and an insurance company.

a. Insurance
b. Coverage
c. Deductible
d. A premium

2. The payments from the insured person or group that are collected by
the carrier are known as _____.
a. deductibles
b. schedules of benefits
c. premiums
d. benefits

3. The second-party payer is the _____.

a. patient
b. guarantor
c. physician
d. insurance

4. The amount of money an individual must pay before insurance benefits

begin is called the _____.
a. deductible
b. copayment
c. premium
d. benefits

5. The process of notifying an insurance company before hospitalization,

surgery or tests is called ______.
a. preadmission screening
b. preauthorization
c. postoperative notification
d. preoperative testing notice

0205502LB01A-02-13 2-7
Medical Coding and Billing Specialist

³³Step 6 Review Practice Exercise 2-1

‰‰ Check your answers with the Answer Key at the back of this book. Correct any
mistakes you may have made.

Step 7 Tools of the Trade

‰‰ There are many resources available to help you succeed as a medical coding and
billing specialist. Now, discuss the forms you’ll use in billing and the manuals you’ll
use to obtain the accurate codes.

2-8 0205502LB01A-02-13
 Medical Insurance 101

CMS-1500
The CMS-1500 is the standard claim form used to request payment for services
rendered by the healthcare provider, usually used by physician offices and
government programs. The National Uniform Claim Committee (NUCC) is
responsible for the design and maintenance of the CMS-1500 form.
CMS 1500 BLANK FORM

1500
HEALTH INSURANCE CLAIM FORM
APPROVED BY NATIONAL UNIFORM CLAIM COMMITTEE 08/05
PICA PICA
1. MEDICARE MEDICAID TRICARE CHAMPVA GROUP FECA OTHER 1a. INSURED’S I.D. NUMBER (For Program in Item 1)
CHAMPUS HEALTH PLAN BLK LUNG
(Medicare #) (Medicaid#) (Sponsor’s SSN) (Member ID #) (SSN or ID) (SSN) (ID)

2. PATIENT’S NAME (Last Name, First Name, Middle Initial) 3. PATIENT’S BIRTH DATE SEX 4. INSURED’S NAME (Last Name, First Name, Middle Initial)
M F
5. PATIENT’S ADDRESS (No., Street) 6. PATIENT RELATIONSHIP TO INSURED 7. INSURED’S ADDRESS (No., Street)
Self Spouse Child Other

CITY STATE 8. PATIENT STATUS CITY STATE

Single Married Other

ZIP CODE TELEPHONE (Include Area Code) ZIP CODE TELEPHONE (Include Area Code)
Full-Time Part-Time
Employed
Student Student
9. OTHER INSURED’S NAME (Last Name, First Name, Middle Initial) 10. IS PATIENT’S CONDITION RELATED TO: 11. INSURED’S POLICY GROUP OR FECA NUMBER

a. OTHER INSURED’S POLICY OR GROUP NUMBER a. EMPLOYMENT? (Current or Previous) a. INSURED’S DATE OF BIRTH SEX
MM DD YY

YES NO M F
b. OTHER INSURED’S DATE OF BIRTH SEX b. AUTO ACCIDENT? Place (State)
b. EMPLOYER’S NAME OR SCHOOL NAME
MM DD YY
M F YES NO
c. EMPLOYER’S NAME OR SCHOOL NAME c. OTHER ACCIDENT? c. INSURANCE PLAN NAME OR PROGRAM NAME
YES NO
d. INSURANCE PLAN NAME OR PROGRAM NAME 10d. RESERVED FOR LOCAL USE d. IS THERE ANOTHER HEALTH BENEFIT PLAN?
YES NO If yes, return to and complete item 9 a-d.

READ BACK OF FORM BEFORE COMPLETING & SIGNING THIS FORM. 13. INSURED’S OR AUTHORIZED PERSON’S SIGNATURE
12. PATIENT’S OR AUTHORIZED PERSON’S SIGNATURE. I authorize the release of any medical or other information necessary I authorize payment of medical benefits to the undersigned physician or
to process this claim. I also request payment of government benefits either to myself or to the party who accepts assignment below. supplier for services described below.

SIGNED DATE SIGNED

14. DATE OF CURRENT 15. IF PATIENT HAS HAD SAME OR SIMILAR ILLNESS, 16. DATES PATIENT UNABLE TO WORK IN CURRENT OCCUPATION
MM DD ILLNESS (First symptom) OR
YY GIVE FIRST DATE MM DD YY MM DD YY MM DD YY
INJURY (Accident) OR
PREGNANCY (LMP) FROM TO
17. NAME OF REFERRING PROVIDER OR OTHER SOURCE 18. HOSPITALIZATION DATES RELATED TO CURRENT SERVICES
17a.
MM DD YY MM DD YY
17b. NPI FROM TO
19. RESERVED FOR LOCAL USE 20. OUTSIDE LAB? $ CHARGES
YES NO
21. DIAGNOSIS OR NATURE OF ILLNESS OR INJURY (Relate Items 1, 2, 3, or 4 to Item 24E by Line.) 22. MEDICAID RESUBMISSION

1. . 3. . CODE ORIGINAL REF. NO.

23. PRIOR AUTHORIZATION NUMBER

2. . 4. .
24. A. DATE(S) OF SERVICE B. C. D. PROCEDURES, SERVICES, OR SUPPLIES E. F. G. H. I. J.
From To PLACE OF (Explain Unusual Circumstances) DIAGNOSIS DAYS OR EPSDT ID. RENDERING
MM DD YY MM DD YY SERVICE EMG CPT/HCPCS MODIFIER POINTER $ CHARGES UNITS FAMILY QUAL. PROVIDER ID. #
1.

NPI
2.

NPI
3.

NPI
4.

NPI
5.

NPI
6.

NPI
25. FEDERAL TAX I.D. NUMBER SSN EIN 26. PATIENT’S ACCOUNT NO. 27. ACCEPT ASSIGNMENT? 28. TOTAL CHARGE 29. AMOUNT PAID 30. BALANCE DUE
YES NO $ $ $
31. SIGNATURE OF PHYSICIAN OR SUPPLIER 32. SERVICE FACILITY LOCATION INFORMATION 33. BILLING PROVIDER INFO & PH #
INCLUDING DEGREES OR CREDENTIALS
(I certify that the statements on the reverse
apply to this bill and are made a part thereof.

a. b. a. b.
SIGNED DATE

0205502LB01A-02-13 2-9
Medical Coding and Billing Specialist

UB-04
The UB-04, also known as the CMS-1450, is the uniform claim form used in
hospitals and other inpatient settings. The National Uniform Billing Committee
(NUBC) is responsible for the design and printing of the UB-04 form.

1 2 3a PAT. 4 TYPE
CNTL # OF BILL
b. MED.
REC. #
6 STATEMENT COVERS PERIOD 7
5 FED. TAX NO.
FROM THROUGH

8 PATIENT NAME a 9 PATIENT ADDRESS a

b b c d e

10 BIRTHDATE 11 SEX ADMISSION CONDITION CODES 29 ACDT 30

12 DATE 13 HR 14 TYPE 15 SRC 16 DHR 17 STAT 18 19 20 21 22 23 24 25 26 27 28 STATE

31 OCCURRENCE 32 OCCURRENCE 33 OCCURRENCE 34 OCCURRENCE 35 OCCURRENCE SPAN 36 OCCURRENCE SPAN 37

CODE DATE CODE DATE CODE DATE CODE DATE CODE FROM THROUGH CODE FROM THROUGH
a a

b b

38 39 VALUE CODES 40 VALUE CODES 41 VALUE CODES

CODE AMOUNT CODE AMOUNT CODE AMOUNT
a
b
c
d
42 REV. CD. 43 DESCRIPTION 44 HCPCS / RATE / HIPPS CODE 45 SERV. DATE 46 SERV. UNITS 47 TOTAL CHARGES 48 NON-COVERED CHARGES 49

1 1

2 2

3 3

4 4

5 5

6 6

7 7

8 8

9 9

10 10

11 11

12 12

13 13

14 14

15 15

16 16

17 17

18 18

19 19

20 20

21 21

22 22

23
PAGE OF CREATION DATE TOTALS 23

52 REL. 53 ASG.
50 PAYER NAME 51 HEALTH PLAN ID 54 PRIOR PAYMENTS 55 EST. AMOUNT DUE 56 NPI
INFO BEN.

A 57 A

B OTHER B

C PRV ID C

58 INSURED’S NAME 59 P. REL 60 INSURED’S UNIQUE ID 61 GROUP NAME 62 INSURANCE GROUP NO.

A A

B B

C C

63 TREATMENT AUTHORIZATION CODES 64 DOCUMENT CONTROL NUMBER 65 EMPLOYER NAME

A A

B B

C C

66
DX 67 A B C D E F G H 68

I J K L M N O P Q
69 ADMIT

74
DX
70 PATIENT
REASON DX
PRINCIPAL PROCEDURE a.
a
OTHER PROCEDURE
b b.
c 71 PPS
CODE
OTHER PROCEDURE 75
72
ECI a b c 73

76 ATTENDING NPI QUAL

CODE DATE CODE DATE CODE DATE
LAST FIRST
c. OTHER PROCEDURE d. OTHER PROCEDURE e. OTHER PROCEDURE QUAL
CODE DATE CODE DATE CODE DATE 77 OPERATING NPI

LAST FIRST
81CC
80 REMARKS 78 OTHER NPI QUAL
a
b LAST FIRST

c 79 OTHER NPI QUAL

d LAST FIRST
UB-04 CMS-1450 APPROVED OMB NO. 0938-0997 THE CERTIFICATIONS ON THE REVERSE APPLY TO THIS BILL AND ARE MADE A PART HEREOF.
NUBC
™ National Uniform
Billing Committee

2-10 0205502LB01A-02-13
 FORM 80

1500
Medical Insurance 101
CIGNA
PO BOX 3490
HEALTH INSURANCE CLAIM FORM
CHICAGO IL 60671
APPROVED BY NATIONAL UNIFORM CLAIM COMMITTEE 08/05

PICA

As a medical coding and billing specialist,

1. MEDICARE
you’llCHAMPUS
MEDICAID
completeCHAMPVA
TRICARE
CMS-1500
GROUP
and FECA
HEALTH PLAN UB-04
BLK LUNG
OTHER 1a. INSURED’S I.D. NUMBER

forms and submit them to insurance companies for payment.3.You’ll

(Medicare #)

2. PATIENT’S NAME (Last Name, First Name, Middle Initial)

(Medicaid#)
learn more about
PATIENT’S BIRTH DATE
(Sponsor’s SSN)

SEX
(Member ID #) (SSN or ID) (SSN) (ID)

4. INSURED’S NAME (Last Name, First

these forms soon. M F

5. PATIENT’S ADDRESS (No., Street) 6. PATIENT RELATIONSHIP TO INSURED 7. INSURED’S ADDRESS (No., Street)
Self Spouse Child Other

CITY STATE 8.PATIENT STATUS CITY

Diagnostic Codes ZIP CODE TELEPHONE (Include Area Code)

Single Married

Full-Time
Other

Part-Time
ZIP CODE TELE
Employed
Student Student

Now that you were introduced to the different types of claim 10.
9. OTHER INSURED’S NAME (Last Name, First Name, Middle Initial)
forms, let’s take a
IS PATIENT’S CONDITION RELATED TO: 11. INSURED’S POLICY GROUP OR FE

moment to discuss medical codes and how they apply to insurance. After a patient’s
a. OTHER INSURED’S POLICY OR GROUP NUMBER a. EMPLOYMENT? (Current or Previous) a. INSURED’S DATE OF BIRTH

office visit, tests and other procedures, a OF

claim formSEXis completed. These forms Place (State)
YES NO
b. OTHER INSURED’S DATE BIRTH b. AUTO ACCIDENT? b. EMPLOYER’S NAME OR SCHOOL N

require special codes—diagnostic codes and procedure

c. EMPLOYER’S NAME OR SCHOOL NAME
M F
codes. c.When you
YES
OTHER ACCIDENT?
writeNOa code c. INSURANCE PLAN NAME OR PROG
on an insurance form, a bill or a patient’s chart, you are “coding thatYESentry.” NO
d. INSURANCE PLAN NAME OR PROGRAM NAME 10d. RESERVED FOR LOCAL USE d. IS THERE ANOTHER HEALTH BENE

When you look at the CMS-1500, you canREAD see that there are many fields
THIS FORM.to be filled.
YES NO If y

BACK OF FORM BEFORE COMPLETING & SIGNING 13. INSURED’S OR AUTHORIZED PER

One of the most important fields is Field 21 Diagnosis or Nature of Illness or Injury.
12. PATIENT’S OR AUTHORIZED PERSON’S SIGNATURE. I authorize the release of any medical or other information necessary I authorize payment of medical bene
to process this claim. I also request payment of government benefits either to myself or to the party who accepts assignment below. supplier for services described below

In this field, you must enterSIGNED

some crucial information—the diagnosticDATE code. SIGNED

14. DATE OF CURRENT ILLNESS (First symptom) OR 15. IF PATIENT HAS HAD SAME OR SIMILAR ILLNESS, 16. DATES PATIENT UNABLE TO WORK I
INJURY (Accident) OR GIVE FIRST DATE

Field 21 is filled in with PREGNANCY (LMP)

17. NAME OF REFERRING PROVIDER OR OTHER SOURCE
17a.
FROM TO
18. HOSPITALIZATION DATES RELATED

crucial information— 17b. NPI FROM TO

the doctor’s diagnosis. 19. RESERVED FOR LOCAL USE 20. OUTSIDE LAB?
YES NO
$

Here, the code listed 21. DIAGNOSIS OR NATURE OF ILLNESS OR INJURY (Relate Items 1, 2, 3, or 4 to Item 24E by Line.) 22. MEDICAID RESUBMISSION

represents the diagnosis of 1. 428 . 0 3. . CODE O

23. PRIOR AUTHORIZATION NUMBER

2. . 4. .
congestive heart failure. 24. A. DATE(S) OF SERVICE B. C. D. PROCEDURES, SERVICES, OR SUPPLIES E. F. G. H.
DIAGNOSI
FROM TO PLACE OF (Explain Unusual Circumstances) S DAYS EPSDT

MM DD YY MM DD YY EMG CPT/HCPCS MODIFIER POINTER $CHARGES UNITS FAMILY

Diagnostic codes are numbers that identify the physician’s opinion about what is
SERVICE

1.

wrong with the patient. This2.is the physician’s diagnosis. These codes are not random
numbers; they are based on a system called the International Classification of Diseases
or ICD. These diagnostic codes
3. are listed in the ICD-9-CM manual. It is your accurate
and complete coding that ensures maximum reimbursement to the provider and
provides meaningful statistics to assist our nation with its health needs.
4.

5.

The codes and patient data then are transferred from the patient’s chart to a claim
form and sent to the insurance6.
carrier for reimbursement to the provider based
on the diagnoses and procedures involved. The types,
25. FEDERAL TAX I.D. NUMBER SSN
frequency
EIN
of treatments
26. PATIENT’S ACCOUNT NO.
and
27. ACCEPT ASSIGNMENT? 28. TOTAL CHARGE 29. AMOUN

diagnoses gathered from the patient information provide the statistics necessary to NO YES $ $

depict health care in this country. The government andon insurance companies use
31. SIGNATURE OF PHYSICIAN OR SUPPLIER INCLUDING 33. BILLING PROVIDER INFO & PH #
DEGREES OR CREDENTIALS (I certify that the statements the 32. SERVICE FACILITY LOCATION INFORMATION
reverse apply to this bill and are made a part thereof.)

these statistics to establish guidelines to develop the rates of reimbursement paid to

medical practices in the future.
SIGNED DATE a. b. a. b.

As you can see, it’s the analysis of diagnostic codes that determines whether
insurance carriers will provide coverage for a particular procedure or service. Now
you have a bit of an idea as to how your new role affects insurance reimbursement.
Without your coding skills, providers would not get reimbursed for their services.
This is one reason why the medical coding and billing specialist’s role is important!
We will cover diagnostic coding concepts later in the course. Now, let’s look at
procedure coding.

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Medical Coding and Billing Specialist

Procedure Codes
Like diagnoses, procedures have a numerical language as well. The language of
procedure codes is found in either the Current Procedural Terminology (CPT) or the
Healthcare Common Procedure Coding System (HCPCS)—pronounced “Hick-Picks.”
If you look at the portion of the CMS-1500 that follows, you will see Field 24D
Procedures, Services or Supplies. You will record CPT and/or HCPCS codes, along
with appropriate modifiers in this field.

Procedures and modifiers are listed in Field 24D. The procedure codes given here indicate that
an established patient made an office visit and was given an influenza immunization.
FORM 3

24. A. DATE(S) OF SERVICE B. C. D. PROCEDURES, SERVICES, OR SUPPLIES E. F. G. H. I. J.

FROM TO PLACE OF (Explain Unusual Circumstances) DIAGNOSIS DAYS EPSDT ID. RENDERING
MM DD YY MM DD YY SERVICE EMG CPT/HCPCS MODIFIER POINTER $CHARGES UNITS FAMILY QUAL. PROVIDER ID. #
1.

99212 NPI
2.

90658 NPI
3.

90460 NPI
4.

NPI
5.

NPI
6.

NPI

You might be called upon to double check records as they come through your coding
service. Usually double checking means checking to be sure the diagnosis matches
the procedures. Insurance companies check the procedures to make sure they are
consistent with the diagnosis. If they aren’t consistent, reimbursement from the
insurance company may be delayed, denied or reduced.

Most procedures the doctor performs will have a code. You will enter the correct code in
the correct column of the CMS-1500. We’ll show you exactly how to find this code later.
For now, all you need to know are the fields that codes go in on the CMS-1500 form.

Now, let’s look at how you’ll use these tools to create a medical bill.

Step 8 Life Cycle of a Medical Bill

‰‰ Imagine you are a patient at a doctor’s office. This is the first time you’ve been to
this particular doctor. When you check in with the front desk, the office manager
hands you a questionnaire to complete. This form asks for your name, address,
telephone number, medical history and insurance information. After you complete
the form, you give it back to the receptionist. With this process, you’ve just started
the medical bill’s life cycle.

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 Medical Insurance 101

When your examination is complete, the doctor may use an encounter form to
document your visit. An encounter form, also known as a superbill, is a template
of commonly used codes in the specific practice that serves as a communication
device between the physician and the coding and billing specialist. In addition, the
physician dictates the details of each visit to substantiate the charges. A medical bill
gets created once the diagnosis and procedure codes have been applied to the service.
Let’s look at the details involved in the billing process.

Processing the Bill

Once the medical bill exists, it goes through several steps on its way to being paid. A
patient and provider handle bills for medical care in one of three common ways:

1. The insurance company might require the patient to pay the entire bill at the
time of service, before the patient leaves the provider’s facility. Then the patient
submits a claim to the insurance company for reimbursement.
OR
2. The patient might pay a copayment before leaving. Then the provider submits a
claim to the patient’s insurance company for the remainder of the bill.
OR
3. The patient might pay nothing at the time of the visit to the provider. Following
the patient’s visit, the provider submits a claim to the patient’s insurance
company for the bill. The provider is reimbursed by the insurance company for
the charges the patient’s insurance policy covers. The doctor’s office then sends a
bill to the patient for the remaining costs that the insurance doesn’t cover.
Processing the bill is slightly different depending on the manner in which the
patient pays—either before or after the insurance company pays.

If, as the patient, you have to pay the entire bill on

the day of your treatment, then, generally, it is up
to you to send the bill to your insurance company.
The provider is not obligated to submit claims to
an insurance company unless it has a contract with
that company or the federal government requires
it. However, the provider often submits claims as a
courtesy to the patient. The insurance company then
reimburses you, the patient, for any covered charges.
For example, if your bill is $100 and the insurance
pays 80 percent, you receive an $80 reimbursement. You’ll process bills differently depending
The difference between paying at the time of service on how the patient pays.
and the provider billing your insurance company
is that when you pay at the time of service, the
insurance company pays you directly.

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Medical Coding and Billing Specialist

If the provider bills your insurance company first, then usually you leave the
office without paying any of the bill or only a copayment. The insurance company
receives the doctor’s request for payment and pays the covered amount, which varies
according to your policy. Then, after the provider receives the insurance payment,
her office bills you, the patient, for any balance due. For example, if your bill was
$100 and your insurance policy covered 80 percent of the bill, the provider would
receive $80 from the insurance company and bill you the remaining $20.

Medical Bill Owed: $100

Patient pays entire bill at Patient pays flat-rate Doctor’s office

time of service copayment bills insurance

Patient sends bill to Doctor’s office bills Insurance pays doctor for
insurance company insurance company for covered charges
remaining amount

Insurance company Doctor’s office bills patient

Insurance company
reimburses patient for for remaining charges
reimburses doctor for
covered charges
covered charges

A big part of the medical coding and billing specialist’s role is to submit insurance
claims—the bills to insurance companies that request payment in accordance with the
appropriate insurance policies. This course will give you the knowledge to be accurate
and thorough—two essential qualities of a good medical coding and billing specialist.

Step 9 Accurate and Thorough

‰‰ When the correct codes are applied and the claims are accurately completed,
payments come quickly, and the providers are happy.

As a medical coding and billing specialist, you might double-check bills as they
come through your office or service. Usually, this means checking to be sure that
the diagnosis matches the procedure and that all the patient’s information (such
as name, address and identification number) is correct. When you check this
information, you help to ensure timely payments and, most importantly, appropriate
payment amounts. Medical coding and billing specialists can increase doctors’
collections by as much as 10 to 15 percent! That’s why medical coding and billing
specialists play such an important role in the healthcare industry.

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 Medical Insurance 101

When bills include mistakes, they may delay payments a month or more, delay
processing and cost the provider in denied claims, resubmission costs and reduced
payments. Providers need accurate medical coding and billing specialists—like
you—which is one of the great aspects of this career. Medical coding and billing
specialists enjoy job security because people will always need doctors, and doctors
will always need to code and file claims for their services. The demand for healthcare
services is greater every year, and the ever-increasing number of patients, insurance
claims and hospital admissions means more work for you!

 Step 10 Practice Exercise 2-2

‰‰ Select the best answer from the choices provided.

1. When an insurance company pays for medical services, it _____ either

the insured or the provider.
a. gerrymanders
b. processes
c. collects from
d. reimburses

2. The medical coding and billing specialist is responsible for _____.

a. transcribing the doctor’s notes
b. coding and submitting insurance claim forms
c. examining patients
d. scheduling patients

3. A form used by some doctors that contains the most common

procedures performed by that doctor is called a(n) _____.
a. account-easing document
b. easy-accounting bill
c. encounter form
d. claim form

4. A patient may simply make a copayment for a visit and then the _____.
a. provider bills the insurance company for the remainder of the bill
b. provider considers the remainder of the bill uncollectible
c. patient sends a bill to the insurance company
d. provider sends out a full bill to the patient in 10 days’ time

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Medical Coding and Billing Specialist

5. An error on the claim form may _____ reimbursement.

a. delay
b. not impact
c. speed up
d. improve

6. When you write a code on an insurance form, you are ______ that entry.
a. deleting
b. coding
c. highlighting
d. eliminating

7. Diagnosis codes are contained in the ______ manual.

a. CPT
b. Diagnostic Code Listing (DCL)
c. ICD-9-CM
d. HCPCS

³³Step 11 Review Practice Exercise 2-2

‰‰ Check your answers with the Answer Key at the back of this book. Correct any
mistakes you may have made.

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 Medical Insurance 101

Step 12 Lesson Summary

‰‰ You now have a foundation to stand on in the world of insurance and coding.
Insurance is very important in the medical field. Insurance companies have many
regulations, including preauthorization requirements. It’s essential that you keep
up to date with these procedures and requirements. Lesson 2 introduced you to some
insurance terminology, such as copayment and deductibles. You also got an overview
of the billing process, and caught a glimpse of two common claim forms, the CMS-1500
and UB-04. You also learned about diagnostic and procedure codes, which learn about
further in later lessons. Keep in mind that this lesson was a brief overview of how
insurance and the coding and billing process work. As we move through this course,
you will see the important role you’ll play as the medical coding and billing specialist.

In the next lesson, you’ll get a taste of private and group healthcare programs. But
first, complete the following Quiz.

* Step 13 Mail-in Quiz 2

‰‰ Follow the steps to complete the Quiz.

a. Be sure you’ve mastered the instruction and the Practice Exercises that this
Quiz covers.
b. Mark your answers on your Quiz. Remember to check your answers with the
lesson content.
c. When you’ve finished, transfer your answers to the Scanner Answer Sheet
included. Use only blue or black ink on your Scanner Answer Sheet.
d. Important! Please fill in all information requested on your Scanner Answer
Sheet or when submitting your Quiz online.
e. Submit your answers to the school via mail, e-mail, fax or, to receive your grade
­immediately, submit your answers online at www.uscareerinstitute.edu.

0205502LB01A-02-13 2-17
Medical Coding and Billing Specialist

Mail-in Quiz 2
Each item is worth 5 points.
Match the term with its definition.

1. _____ Provider a. An amount of money an individual must pay before

insurance benefits kick in
2. _____ Deductible b. The compensation or repayment for healthcare services
c. A flat amount of money paid by the patient every time a
3. _____ Copayment medical service is performed
d. A person or organization that provides medical services
4. _____ Reimbursement

Select the best answer from the choices provided.

5. When an insurance carrier pays for medical treatment based on a

policy, it is paying _____.
a. premiums
b. a copayment
c. benefits
d. deductibles

6. Typically, the explanation of benefits contains _____.

a. nothing of interest to a coding and billing specialist
b. the doctor’s contact numbers
c. payment for one or more patients
d. a privacy policy

7. Some providers use a(n) _____, which is a form that contains the most
common procedures performed by that provider.
a. account-easing document
b. easy-accounting bill
c. encounter form
d. claim form

8. When an insurance company pays for medical services, it _____ the

appropriate party (either the insured or the provider).
a. gerrymanders
b. processes
c. collects from
d. reimburses

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 Medical Insurance 101

9. If an insurance company pays 80 percent of a claim of $100, the patient

is responsible for _____ percent of the bill.
a. 20
b. 10
c. 80
d. 100

10. The most commonly used insurance form is called the _____.
a. CMS-1500
b. CMS-1000
c. Common Carrier Insurance Form (CCIF)
d. Primary Carrier Claim Form (PCCF)

11. Paying someone for services already performed is _____.

a. claims processing
b. completing an encounter
c. reimbursement
d. always an insurance company’s responsibility

12. If preauthorization is required, but the insurance company is not

notified, the insurance company ________.
a. bills the doctor for the cost of the extra paperwork involved
b. might reduce reimbursement
c. pays more
d. any of the above

13. If an insurance company authorizes a hospital stay of five days and the
patient stays seven days (not due to any medical necessity), then the _______.
a. patient must pay for the extra two days
b. hospital allows the patient to stay for free for the extra two days
c. insurance carrier pays for the extra two days
d. insurance agent must pay a penalty

14. ______ are numbers based on the diagnoses made and procedures performed.
a. Codes
b. Checks
c. HMOs
d. Terms

0205502LB01A-02-13 2-19
Medical Coding and Billing Specialist

15. The diagnosis code is entered in field _________ of the CMS-1500.

a. 24D
b. 1
c. 21
d. It is not entered on the CMS form.

16. Codes that identify the physician’s opinion about what’s wrong with a
patient are called ______ codes.
a. procedure
b. diagnosis
c. HCPCS
d. Medicare

17. The procedure code is entered in field _________ of the CMS-1500.

a. 24D
b. 1
c. 21
d. It is not entered on the CMS form.

18. ICD stands for _________.

a. International Coding Decimals
b. International Coding Disorders
c. International Classification of Diseases
d. Internal Classification of Disorders

19. HCPCS stands for ________.

a. Honorary Coding Procedures Common System
b. Healthcare Common Procedure Coding System
c. Health Care Primary Coding System
d. Hired Care Primary Coding System

20. CPT stands for ________.

a. Colorado Procedure Tests
b. Corporate Procedure Terminology
c. Current Primary Tests
d. Current Procedural Terminology

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 Medical Insurance 101

Congratulations!
You have completed Lesson 2.

Nice!
Progress
Winning
Triumph

Determ
ination
!

Do not wait to receive the results of your Quiz

before you move on.

0205502LB01A-02-13 2-21