National Medical Billing Authority - Medical Billing & Coding Authority Reference

Medical billing and coding form the financial and administrative backbone of the United States healthcare system, translating clinical encounters into standardized codes that determine reimbursement from Medicare, Medicaid, and private payers. This page defines the scope of medical billing and coding authority, explains how the process functions within federal regulatory frameworks, identifies common scenarios where coding decisions carry compliance risk, and maps the decision boundaries that distinguish correct from incorrect claim submissions. The reference network described here — anchored at the National Health Authority hub — covers 24 member sites spanning the full continuum of health services.

Definition and scope

Medical billing and coding is the process of converting documented clinical services into alphanumeric codes drawn from standardized classification systems, then submitting those codes to payers as claims for reimbursement. The two dominant coding systems in the United States are the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) for diagnosis codes — maintained jointly by the Centers for Disease Control and Prevention (CDC) and the Centers for Medicare & Medicaid Services (CMS) — and the Current Procedural Terminology (CPT) code set, maintained by the American Medical Association (AMA). A third system, the Healthcare Common Procedure Coding System (HCPCS), extends CPT to cover supplies, equipment, and non-physician services under CMS rules.

Scope encompasses outpatient claims, inpatient facility billing under the Uniform Bill (UB-04), professional fee billing under the CMS-1500 form, and specialty-specific coding for ancillary services. The Health Insurance Portability and Accountability Act (HIPAA), specifically 45 CFR Part 162, mandates the use of standardized transaction code sets for all electronic claims submitted by covered entities, establishing the legal floor for coding compliance across the industry.

The full medical and health services terminology and definitions resource provides baseline glossary coverage for terms used across billing, coding, and reimbursement contexts.

How it works

Medical billing and coding follows a discrete sequence of steps that convert a clinical encounter into a paid claim:

1. Patient registration and insurance verification — Demographic and payer information is collected and eligibility confirmed against plan records before the encounter.
2. Clinical documentation — The treating provider documents the encounter in a health record, specifying diagnoses, procedures, and medical necessity rationale.
3. Code assignment — A certified coder assigns ICD-10-CM diagnosis codes, CPT or HCPCS procedure codes, and — for facility claims — revenue codes and Diagnosis-Related Group (DRG) classifications.
4. Charge capture and claim construction — Codes are entered into a practice management or hospital information system; modifiers are appended where procedures require clarification (e.g., CPT modifier -25 for a significant, separately identifiable evaluation and management service).
5. Claim scrubbing — Automated edits check for National Correct Coding Initiative (NCCI) bundling conflicts, payer-specific requirements, and missing required fields before submission.
6. Payer adjudication — CMS or the private payer processes the claim, applies fee schedule rates, and either pays, denies, or requests additional information.
7. Denial management and appeals — Denied claims are reviewed against Remittance Advice Remark Codes (RARCs) and Claim Adjustment Reason Codes (CARCs), then corrected or appealed.
8. Payment posting and reconciliation — Received payments are posted against expected reimbursement; balances are billed to secondary payers or patients.

The conceptual overview of how medical and health services works situates billing within the broader delivery system, illustrating how administrative processes interact with clinical care pathways.

For Medicare, fee-for-service rates are governed by the Medicare Physician Fee Schedule (MPFS), updated annually by CMS. The 2024 conversion factor under the MPFS was set at $32.74 per relative value unit (CMS MPFS Final Rule, CY 2024).

The National Medical Billing Authority provides structured reference content on coding standards, claim submission rules, and payer-specific billing requirements across Medicare, Medicaid, and commercial insurance lines.

Common scenarios

Evaluation and Management (E/M) coding represents the highest-volume claim category in outpatient settings. CMS overhauled E/M documentation guidelines effective January 1, 2021, replacing time-and-medical-decision-making complexity rules that had governed coding since 1995 and 1997.

Inpatient facility billing uses DRG assignment under the Medicare Severity-Diagnosis Related Group (MS-DRG) system. The principal diagnosis — the condition established after study to be chiefly responsible for admission — drives DRG assignment and thus the base payment rate for the stay.

Specialty-specific billing introduces scenario complexity across chiropractic, mental health, home care, telehealth, and long-term care settings:

• Chiropractic Authority covers CPT coding for spinal manipulation services (98940–98943), Medicare's active treatment limitation, and subluxation documentation requirements that determine claim validity.
• National Telehealth Authority addresses the expanded originating site rules, place-of-service codes (02 and 10), and audio-only billing allowances that emerged under CMS waivers and were partially codified in subsequent rulemaking.
• National Home Care Authority details Home Health Resource Group (HHRG) coding under the Patient-Driven Groupings Model (PDGM), which CMS implemented in 2020 and which reorganizes home health payments around 432 payment groups.
• Assisted Living Authority addresses the billing distinction between assisted living facility services — which are rarely covered by Medicare — and skilled nursing facility claims, which are, clarifying a persistent source of coverage confusion.

Durable medical equipment (DME) billing under HCPCS Level II requires Certificate of Medical Necessity (CMN) documentation for covered items, with face-to-face encounter requirements established under the Medicare Improvements for Patients and Providers Act (MIPPA).

Mental health and substance use disorder billing follows parity rules under the Mental Health Parity and Addiction Equity Act (MHPAEA), enforced jointly by the Departments of Labor, Health and Human Services, and Treasury. The National Mental Health Authority provides reference coverage of behavioral health billing codes, parity compliance frameworks, and the intersection of CPT coding with the Diagnostic and Statistical Manual (DSM-5-TR) criteria used to substantiate diagnoses.

Substance use disorder treatment facilities face additional coding requirements. National Drug Rehab Authority maps the HCPCS and CPT codes applicable to residential and outpatient treatment, including the Revenue Code 900 series used on UB-04 claims for substance use services.

For patients navigating coverage disputes, National Patient Advocacy Authority documents the appeal rights and external review processes available under the Affordable Care Act (ACA) and state insurance regulations — mechanisms that intersect directly with billing and coding accuracy.

Decision boundaries

Upcoding versus appropriate code selection — Upcoding is the assignment of a code that reflects a higher-complexity or higher-cost service than was actually documented and performed. It constitutes fraud under the False Claims Act (31 U.S.C. §§ 3729–3733), which carries civil penalties of $13,946 to $27,894 per false claim (adjusted annually; Department of Justice Civil Penalties Inflation Adjustments).

Bundling and unbundling — NCCI edits, published by CMS, define which procedure code pairs are bundled (Column 1/Column 2 edits) and which may be reported separately when a valid modifier applies. Unbundling — separating component procedures that CMS policy requires to be billed as a single combined code — is a compliance violation.

Medical necessity — CMS defines medical necessity through Local Coverage Determinations (LCDs) and National Coverage Determinations (NCDs). A procedure coded correctly can still be denied if the accompanying ICD-10-CM diagnosis code does not appear on the covered diagnosis list for that service. LCDs are searchable in the Medicare Coverage Database.

Incident-to billing — Services provided by non-physician practitioners (NPPs) in a physician's office may be billed under the supervising physician's National Provider Identifier (NPI) under Medicare's "incident-to" rules, but only when specific direct supervision and initial-visit conditions are met. Billing incident-to without meeting those conditions constitutes misrepresentation.

Place of service codes distinguish where a service was rendered and directly affect payment rates. A service billed with Place of Service 11 (office) receives a higher facility rate than the same CPT code billed with Place of Service 22 (outpatient hospital), where the facility absorbs overhead costs. Mismatch between POS code and actual site of care is an auditable error flagged by CMS Recovery Audit Contractors (RACs).

The regulatory context for medical and health services page expands on the federal compliance architecture — including OIG Work Plans, RA