Coding, Billing, and Collections Practices in Medical Offices

Nurse reviewing medical record in clinic filing cabinet

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Everyone would agree that the primary function of a medical office is the care of its patients, however, in order to stay in practice and flourish, the office has to collect payment for services rendered. Coding, billing, and collections are a vital part of the medical office staff’s duties and proper training and guidelines are vital to the successful completion of these duties.

The billing department works very closely with coding personnel in a physician’s office. In some cases, the same person carries out the coding, billing and collection duties but these are three distinct positions. While some of the aspects of each job intersect with the others, they also have very specific responsibilities as well.


Coding actually facilitates the billing process by bringing uniformity to the procedures through recognizable codes. Using standard diagnosis codes and procedure codes that are recognized by insurance companies, all medical practices, and relevant care related agencies, the medical coder will ensure that the insurance companies or “commercial payer” or the Centers for Medicare and Medicaid (CMS) will recognize the billed item and how the diagnosis warrants that procedure, test, or treatment.


The billing process begins at patient intake. It is important to obtain all insurance information before the patient is seen if possible so that all parties will understand what each visit and procedure will cost the patient out of pocket. The fewer surprises your patients have regarding payment for services rendered, the happier everyone will be. When the patient arrives and presents the insurance information it is vital that the information given is verified with the insurance company as active, the benefits allowed, and that the provider is currently contracted with that specific payer. Websites have misinformation, contracts lapse and benefits change so verifying the data is very important.


To save time, revenue, and aggravation, each procedure that is out of the normal scope of an office visit should be preauthorized well in advance, or within the time limits of the specific insurance plan. Any payments that are due from the patient should be discussed and collected prior to the procedure, test, therapy, or treatment. Copays should always be paid before a patient is seen by the physician as well, in order to avoid any problems later.

Collections of past due amounts are the least effective way of reimbursement. The longer a bill is past due, the less likely it is to be collected and the more money it costs the office in time and payroll hours. This is the best reason of all to have effective coding and billing staff in your medical office.

A denied claim by a commercial payer is a likely reason for a bill not being paid on time. When both the patient and the staff have done their due diligence beforehand, this is less likely, but it does happen. An appeal by the staff with any clarifications or explanations may be necessary. An appeal by the patient is another possible solution, but the patient must be made aware of the possibility that they will be responsible for any outstanding balances. While a payer agreement is often one of the first orders of business when filling out patient intake paperwork, the likelihood is that the patient did not read the document carefully. Sometimes the patient was not feeling well at the time and did not pay attention to the document, or they simply expect most or all of their bills to be paid by the insurance companies. Discussing the financial responsibility before there is a problem is the most effective course of action in order to avoid any uncomfortable and possibly emotional encounters.

A Word From Verywell

Coding, billing, and collections are important to a thriving medical facility no matter the size or specialty. Proper training, continuing education, and instruction of current changes in laws, codes, or insurance practices are imperative. Up to date reference materials and equipment allow these staff members to make a positive impact on both the patients and the medical office.

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