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Everything You Need to Know About Dermatology Medical Billing 

Dermatology medical billing is the process of submitting claims and receiving payment for medical services provided by dermatologists, who specialize in the diagnosis and treatment of skin disorders. It is an essential part of a dermatology practice’s revenue cycle, as successful billing plays a huge role in a business’s financial health. 

In this blog, we will give an overview of dermatology medical billing as well as explain workflow steps and challenges for dermatology billing. We’ll also offer tips for billing dermatology-related services to help providers streamline the process and optimize revenue. 

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Dermatology Medical Billing Guidelines 

Dermatology billers and coders need to familiarize themselves with the fundamentals of skin-related diagnoses, such as the differences between benign and malignant masses. They also need to know the difference between simple, intermediate, and complex as well as sizing terms such as length, depth, width, and circumference. 

Specific to the dermatology subspecialty, medical coders and billers must know the difference between cosmetic and medical dermatology. Medical dermatology services are medically necessary to treat a specific condition or disease. In contrast, cosmetic dermatology services improve the appearance of the skin but are not considered a medical necessity.  

Medically necessary dermatology services are typically covered by insurance, whereas cosmetic dermatology services are billed directly to the patient. Some services, such as mole removal, may fall under both categories.  

In these cases, medical coders need to first determine if the dermatology procedure was medically necessary. Then, the billers and coders need to translate each procedure or service into industry-recognized alphanumeric codes.  

So, what is medical coding? The two main code sets used by medical providers are the Current Procedural Terminology (CPT) and the International Classification of Diseases, Tenth Revision (ICD-10). The CPT system also includes Evaluation and Management (E/M) codes, which denote the extent of the examination and medical decision-making involved in a patient encounter. 

Common Dermatology-Related Medical Codes 

To understand the complexity of billing dermatology services, let’s take a look at the ICD-10 diagnosis codes for urticaria. Also known as hives, this common skin condition is characterized by raised, itchy, and red- or skin-colored welts or bumps. The ICD-10 code for urticaria is L50, but multiple diagnosis codes fall under this classification. 

  • L50.0 Allergic urticaria 
  • L50.1 Idiopathic urticaria 
  • L50.2 Urticaria due to cold and heat 
  • L50.3 Dermatographic urticaria 
  • L50.4 Vibratory urticaria 
  • L50.5 Cholinergic urticaria 
  • L50.6 Contact urticaria 
  • L50.8 Other urticaria 
  • L50.9 Urticaria, unspecified 

Some ICD-10 codes seem related to urticaria but are actually different diagnoses. Below are a few examples. 

  • T78.3 Giant urticaria 
  • T80.6 Serum urticaria 
  • L56.3 Solar urticaria 
  • P83.8 Urticaria neonatorum 
  • L28.2 Urticaria papulosa 
  • D47.01 Urticaria pigmentosa 

It’s also helpful for dermatology medical billers to know the ICD-10 codes for acne. 

  • L70.0 Acne vulgaris 
  • L70.1 Acne conglobata 
  • L70.2 Acne varioliformis 
  • L70.3 Acne tropica 
  • L70.4 Infantile acne 
  • L70.5 Acne excoriée 
  • L70.8 Other acne 
  • L70.9 Acne, unspecified 
  • L73.0 Acne keloid 
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Revenue Cycle Management Steps 

Step 1: Pre-Authorization and Insurance Eligibility Verification 

Prior to providing any services, dermatology billing staff need pre-authorization from the patient’s insurance provider. Insurance coverage for dermatology procedures depends on the medical necessity of the services rendered and the terms of the patient’s insurance plan.  

It is important to verify eligibility beforehand so patients can plan for any out-of-pocket expenses. Accurate verification also minimizes the risk of denied claims and helps ensure timely reimbursement from insurance payers. 

Step 2: Rendering Services and Capturing Charges 

Once pre-authorization is obtained and insurance eligibility is verified, the dermatologist sees the patient. Providers must keep detailed records during the appointment to itemize these services in claims for reimbursement later.  

Capturing charges can be especially complicated for dermatology billers since providers often perform the same procedure on different anatomic locations in a single visit. Skin on different areas of the body may be related to different organ systems and sub-specialties, which changes billing and coding requirements. 

Step 3: Claims Submission 

After a medical appointment, a dermatology medical coder translates the patient’s documentation into industry-recognized CPT and ICD-10 codes, usually by a dermatology medical coder. Medical billers then submit these codes in a payment claim to the patient’s insurance provider. 

Some insurance companies have filing deadlines that, when missed, nullify coverage. Submitting claims in a timely manner can help dermatologists prevent unnecessary revenue loss. 

Step 4: Payment 

After claims have been submitted, the insurance company will review and process the claims. Payment will be issued for approved claims, and any denied claims will need to be appealed or resubmitted.  

Dermatology billing may require more payment collection from patients than other medical specialties, because of the cosmetic nature of many services. In the case of late or unfulfilled payments, medical billers are responsible for reaching out to patients and explaining charges for timely repayment. 

Step 5: Data Reporting 

The dermatology billing data reporting workflow involves tracking and reporting data on the services provided, payments received, and any outstanding claims or denials. Accurate data reporting is essential for monitoring the financial performance of the practice and identifying areas for improvement. 

Challenges of Dermatology Medical Billing 

Misunderstanding Codes 

Dermatology medical billing is susceptible to upcoding, or billing for a higher level of service.  

An example of upcoding would be billing for a comprehensive exam when only a problem-focused exam was performed. 

Another common source of upcoding error is confusing excisions and biopsies. An excision is a surgical procedure that removes an entire lesion or growth, including surrounding healthy tissue. On the other hand, a biopsy removes a small sample of tissue from the lesion or growth for diagnostic purposes.  

At the same time, dermatology billers need to avoid undercoding to get paid appropriately for the services they provide. Undercoding in dermatology billing can occur when a dermatologist performs a more extensive procedure than what was billed for. 

The two most common methods for destroying malignant growths in dermatology are cryotherapy and electrosurgery. If a dermatologist uses cryotherapy to destroy a malignant growth but bills for a less complicated procedure, such as a simple excision, it is considered undercoding. Similarly, providers may use electrosurgery to destroy a growth but bill for a less complicated procedure like electrodesiccation. 

Undercoding also occurs when a dermatologist treats multiple malignant growths but bills for only one. In this case, each growth should be billed separately, as each requires a distinct procedure. It’s critical to be exact in your coding. Undercoding can result in significant financial loss for the practice, as the reimbursement will not reflect the true value of the service provided. 

Adding Time-Consuming Tasks to Processes 

Medical billers process hundreds of claims a day, with staff spending hours on manual data entry and following up with payment collection from patients. This can result in revenue creep and increased costs for the practice due to human error. Completing a large volume of paperwork by hand leads to erroneous code assignments, which subsequently lead to claims denials. 

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Tips for Streamlining Dermatology Medical Billing 

Understand the Coding System 

Dermatology medical billing requires a thorough understanding of the appropriate CPT and ICD-10 codes. Maximum reimbursement depends on accurate medical coding, because insurance payers check that all procedures are medically necessary and not cosmetic dermatology. 

Verify Coverage 

Before providing any services, dermatologists should verify the patient’s insurance coverage and eligibility. This way, providers know in advance whether patients will have out-of-pocket expenses, and both parties can be prepared for the billing process later. 

Keep Accurate Documentation 

Before submitting payment claims, billing personnel should ensure all records related to the patient’s medical treatment are complete. Accurate documentation provides evidence of the medical necessity of the procedures being billed to insurance payers; it also helps patients understand their cosmetic dermatology charges. These details ensure that providers are reimbursed appropriately. Having a detailed system for organizing documentation helps not only with reimbursement by insurance companies but also for compliance audits by regulatory agencies. 

Submit Claims on Time 

Insurance companies typically have filing deadlines for claims that must be met to ensure coverage. Dermatology billers need to stay on top of these deadlines and submit claims promptly to avoid missing out on reimbursement for services rendered. With the volume of cases and varying deadlines from different insurance companies, it can be easy for payments to fall through the cracks.  

Stay Up-to-Date with Regulations 

Staying current with the ever-changing medical billing landscape is crucial for a dermatology practice’s financial health. New regulations and policies, such as updates to ICD-10 and CPT codes as well as changes to federal and state regulations, can have a significant impact on medical billing practices. It is essential for providers to stay informed about these changes and maintain compliance to avoid delays in payment and potential financial penalties. 

Use Technology 

There are many technology tools available to help streamline the medical billing process, from electronic health record (EHR) systems to medical billing software. Dermatologists can also consider integrated digital charge capture solutions, which assign codes to help eliminate lost or missed charges. This can save time and improve the accuracy of the billing process. 

Hire Professional Dermatology Billing Services 

For professionals struggling to manage dermatology medical billing in-house, outsourcing to a professional medical billing company may be a viable solution. Due to the complexity of medical coding in this sub-specialty, it can be challenging for providers to keep up with billing regulations and ensure accurate reimbursement. By partnering with a specialized billing company, dermatologists can streamline their billing processes, free up internal resources, and receive comprehensive billing services to maximize revenue. 

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Medical Billing Software for Dermatology 

Too many dermatology practices still file and track payment claims manually, which often results in human error. The best medical billing software solutions streamline workflows and minimize errors with features like automated medical coding, electronic claims submission, automatic patient eligibility verification, and integration with EHR and electronic medical record (EMR) systems.  

CollaborateMD is a flexible, scalable solution that streamlines the dermatology medical billing process to optimize revenue, while giving staff time back for better patient care. Learn more about how CollaborateMD improves efficiency and accuracy in the dermatology billing process. See what makes our medical billing software the choice of thousands of practices in our more than 20 years of business and schedule your demo today! 

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