What Is Medical Billing and Coding?

So what is medical billing and coding? It's the process that turns a patient's doctor visit into a paid insurance claim. Every time you see a healthcare provider, someone has to document what happened, assign the right codes to each diagnosis and procedure, and then send a claim to your insurance company for payment. That's medical billing and coding in a sentence.

The field splits into two connected but distinct functions. Medical coding is the translation work: reading clinical documentation and converting it into standardized codes. Medical billing is the financial work: assembling those codes into claims, submitting them, and following the money until the provider gets paid. Some professionals do both. Others specialize in one or the other.

The BLS groups both roles under "Medical Records Specialists" (SOC 29-2072). As of May 2024, there are 194,800 jobs in the U.S., the median salary is $50,250/yr, and employment is projected to grow 7% through 2034, with about 14,200 openings per year (BLS Occupational Outlook Handbook).

Medical coding is the process of reviewing clinical documentation and translating each diagnosis, procedure, and piece of medical equipment into a standardized code. These codes form the backbone of healthcare data. They tell insurers what happened during a patient visit, feed public health databases, and help hospitals track outcomes.

Coders work with three primary code sets. ICD-10-CM covers diagnoses (roughly 72,000 codes). CPT describes medical services and procedures (about 10,000 codes). HCPCS Level II adds codes for items like durable medical equipment, prosthetics, and ambulance services that CPT doesn't cover. We'll break down each system in detail below.

Accuracy is everything. An incorrect code can trigger a claim denial, delay payment by weeks, or raise compliance red flags. Coders follow the rule of "coding to the highest degree of specificity," meaning they capture the most precise diagnosis and procedure information the documentation supports. No more, no less.

Medical billing picks up where coding leaves off. Once the codes are assigned, a biller assembles the insurance claim. This is a structured electronic document (typically an 837P for professional services or 837I for institutional claims) that tells the payer what services were rendered, why they were medically necessary, and how much the provider expects to be reimbursed.

The billing cycle has several stages. Before a visit, billers verify insurance eligibility and obtain prior authorizations. After the visit, they review coded charges for accuracy, submit claims through a clearinghouse, and monitor each claim's status. When a payer denies a claim or requests more information, the biller investigates, corrects errors, and resubmits. They also generate patient statements for any remaining balance and set up payment plans.

Revenue cycle management (RCM) is the industry term for this end-to-end process. A skilled biller keeps the cycle moving, reducing "days in accounts receivable," one of the key financial metrics healthcare organizations track.

The table above captures the core differences, but here's the practical version. Coders spend their day reading clinical documentation and choosing codes. Their mistakes trigger denials and compliance problems. Billers spend their day managing money: submitting claims, chasing payments, and resolving denials. Their mistakes mean the provider doesn't get paid.

In small practices, one person does both. In hospitals and large health systems, they're separate departments with specialized teams for inpatient coding, outpatient coding, charge capture, claims follow-up, and payment posting. If you're deciding between the two, coders tend to prefer detail-oriented analytical work, while billers tend to prefer financial problem-solving and communication. For a deeper breakdown, see our billing vs. coding comparison.

ICD-10-CM / ICD-10-PCS. ICD-10-CM handles diagnosis coding across all healthcare settings. ICD-10-PCS handles inpatient procedure coding exclusively. Together, they contain over 72,000 diagnosis codes and roughly 78,000 procedure codes. The World Health Organization maintains the underlying ICD framework. The U.S. version is adapted by CMS and the National Center for Health Statistics (NCHS).

CPT (Current Procedural Terminology). Published annually by the American Medical Association, CPT codes describe medical, surgical, and diagnostic services. Category I covers standard procedures (the codes billers and coders use most). Category II covers supplemental tracking codes for performance measurement. Category III covers emerging technology and temporary codes.

HCPCS Level II. Maintained by CMS, these alphanumeric codes (a letter followed by four digits) capture supplies, equipment, and non-physician services that CPT doesn't cover. Think wheelchair accessories, orthotic devices, and certain drugs administered in a physician's office.

A typical day for a medical coder starts with a queue of patient encounters waiting for codes. You open each electronic health record, read the provider's documentation, identify all reportable diagnoses and procedures, and assign the right ICD-10, CPT, and HCPCS codes. When documentation is unclear, you submit a query to the provider asking for clarification. That step protects both accuracy and compliance.

Medical billers, meanwhile, manage the claims pipeline. Mornings might involve reviewing the previous day's coded encounters, batching claims for submission, and checking clearinghouse reports for rejected transmissions. Afternoons often focus on denial management: reading Explanation of Benefits (EOB) documents, identifying denial patterns, and preparing appeals. Patient-facing tasks (answering billing questions, explaining coverage, arranging payment plans) fill the gaps.

In a small practice, you'll handle all of it. In a hospital, you'll specialize. Either way, the work is detail-heavy, screen-based, and deadline-driven.

The BLS reports that the largest employers of medical records specialists are hospitals (28% of jobs), physician offices (22%), and administrative/support services (11%). Other common settings include outpatient care centers, nursing facilities, and insurance carriers.

Remote work has reshaped the field. AAPC's 2025 salary survey reports that 64.8% of coders work remotely full time, a number that jumped during the pandemic and hasn't come back down. This makes medical coding one of the most remote-friendly careers in healthcare. Most remote positions require at least 1-2 years of on-site experience first, though some employers now hire entry-level remote coders.

Third-party billing companies and revenue cycle management (RCM) firms employ large numbers of billers and coders, handling claims for multiple providers under one roof. Government agencies, including the VA, DoD, and state Medicaid offices, are another significant employer and tend to offer higher-than-average pay.