Understanding the Basics Before Outsourcing Dermatology Medical Billing

Dermatology practices can face financial or legal issues through erroneous billing and coding. Whether the payment comes from a government program or a private insurance carrier, a dermatology clinic should strictly comply with industry and government rules for billing processes.
Dermatology Procedure Codes - Featured Image - Online Electronic Invoice And Finance Audit. Medical Bill and coding

Written by Rene Mallari


Dermatology practices can face financial or legal issues through erroneous billing and coding. Like other businesses, a healthcare practice’s concern is collecting reimbursements after rendering patient service.

Whether the payment comes from a government program or a private insurance carrier, a dermatology clinic should strictly comply with industry and government rules for billing processes.

Basic billing or coding errors can lead to fines or penalties. Worst of all, intentional or accidental mistakes can result in search warrants, criminal investigations, lawsuits, arrests, and business closures.

What Are Dermatology Medical Billing and Coding? 

Electronic Medical Accounts And Codes. Bill Audit In Office

Dermatology medical billing and coding are the processes of identifying diagnoses, medical tests, treatments, and procedures affecting hair, nails, and skin. Coders turn patient information from medical notes, transcriptions, and lab results into dermatology procedure codes. 

Billers create claims to submit to the government and commercial payers based on these standardized codes. U.S. government payers are the Civilian Health and Medical Program of the Department of Veterans Affairs, Medicaid, TRICARE, and Medicare. Commercial payers are mainly insurance companies.

Due to ever-changing government regulations and insurance policies, dermatology billing is a complex process. It ensures that the descriptions of treatments and conditions of lesions, wounds, scars, and other skin-related conditions are accurate, understandable, and detailed. 

In addition, the medical billing process should also determine the numbers and sizes of skin wounds and their exact locations. It also requires extensive and clear documentation on biopsies, lesion removal or destruction, and excision.

You might be interested in reading about the best cloud-based business phone system for your dermatology clinic. 

Dermatology Medical Billing 

Outsourcing dermatology medical billing is a business strategy of employing a group or an entity to carry out billing and coding operations of a dermatology practice. 

Medical billing and coding are essential to a healthcare provider’s revenue cycle management (RCM), which involves reimbursement, claims processing, and revenue generation. RCM is a process that begins when a patient visits a dermatology clinic and ends when the clinic receives the settlement for the services rendered. 

Outsourcing billing and coding functions open the door to higher levels of productivity and efficiency, resulting in more significant revenue. Business process outsourcing (BPO) companies have proven ways to lower costs while improving revenue generation and collections of their clients, including healthcare providers. They have a qualified, trained, cost-effective workforce that can manage a dermatology practice’s RCM daily. 

By outsourcing non-core and administrative functions such as medical billing, a dermatology facility can focus its time, effort, and money on patient care. 

What is a Medical Biller or Coder? 

The individuals in charge of processing patient data, including treatment and insurance information, are dermatology medical billers and coders. They specialize in dermatology coding and billing, assigning standard codes with a classification system, and filing claims with insurance providers. These specialists undergo training to interpret diagnoses and procedures for billpayers. 

Dermatology practices have various medical billing and coding requirements different from other medical procedures. Practitioners in this field perform medical and surgical duties. Thus, coding specialists should be highly familiar with Current Procedural Terminology (CPT) codes and the proper use of modifiers. 

The financial health of a dermatology clinic rests on the performance and effectiveness of its coding and billing teams.

Pursuing a Medical Billing or Coding Career

An article on Find Medical Assistant Programs, a website on medical assisting, explains ways to become a medical biller or coder.

In the U.S., obtaining a high school diploma or equivalent is the first step toward eligibility. After finishing a degree in medical billing or coding, certification examinations such as Certified Professional Coder (CPC) and Certified Coding Specialist (CCS) help boost one’s chance of landing the job. 

Many colleges across the country offer medical billing and coding training courses. These degrees are classified as certificates, diplomas, and associate programs. In addition to the theoretical studies and applied laboratory exercises, some programs also train students for certification exams.

In less than 12 months, candidates can finish the certificate programs with up to 40 credits. By contrast, those pursuing associate degrees must complete 60 credits in 24 months. They can also take online courses requiring six months to take. 

The article points out that to pick the right medical billing or coding program, the candidate should first determine their eligibility by checking the requirements of the prospective schools. Selecting the right degree is critical because this can determine the direction of one’s future career. 

Before enrolling in a program, find the actual cost of schooling. An aspirant can also apply for financial grants, loans, or aid to help pay tuition and other fees. 

What Are Billing Guidelines? Wooden block form the word HIPAA - The Health Insurance Portability and Accountability Act of 1996. Medical concept.

Medical billing guidelines are sets of policies or instructions that help practitioners and patients decide about the proper healthcare for particular clinical situations.

Billers should follow the guidelines laid out by the Health Insurance Portability and Accountability Act (HIPAA). They should follow CPT and the Healthcare Common Procedure Coding System (HCPCS) instructions. 


According to the Centers for Disease Control and Prevention (CDC), HIPAA is a guideline that the federal government developed in 1996 to protect patients’ critical health information from being revealed without their consent or knowledge. The federal law includes electronic medical records and the International Classification of Diseases (ICD).

ICD is a system of diagnostic codes that the World Health Organization (WHO) issued and maintained to classify diseases. The latest version is ICD-11 which took effect in January 2022. 

CDC adds that the U.S. Department of Health and Human Services issued the HIPAA Privacy Rule to execute HIPAA requirements. 

The Privacy Rule includes standards for the patient’s rights to know and controls how their health information is used. One of its goals is to ensure that a person’s health information is adequately protected.  

While being shielded, the flow of health information needed to deliver high-quality healthcare for the public’s health and well-being should be allowed. Simply put, the Privacy Rule offers a balance between permitting the use of vital information for the benefit of society and protecting patients’ privacy. 

Since HIPAA’s implementation, all health providers have had to send claims electronically. But the guideline does not mandate physicians to make all transactions digitally.


The CPT coding system, maintained by the American Medical Association (AMA), describes the services given to a patient during an encounter and is used for private payers. AMA issues CPT coding guidelines annually to help medical coders code specific services and procedures.

CPT codes contain modifiers detailing the services rendered. Specifically, CPT modifiers show the number of procedures physicians have conducted and the purpose of delivering patient service. Healthcare providers will more likely receive maximum reimbursements if coders use modifiers accurately. 

Similarly, the Healthcare Common Procedure Coding System (HCPCS) is a group of codes that explains services, supplies, products, and procedures that Medicare beneficiaries and people registered with private health insurance programs can receive.

Learn: Best Practices for Dermatology Medical Billing Outsourcing

Why Is Billing Compliance Important? 

Healthcare Compliance and dermatology procedure codes. Medicine observation service concept. Doctor offers icon compliance gear on virtual screen. Medical governance modernization healthy strategy technology

Medical billing and coding are challenging, especially given the dynamic laws, codes, policies, and regulations of the healthcare industry. These constant developments make it tough to stay updated and be compliant no matter how experienced the practitioners are. 

Not being able to maintain compliant medical billing and coding can adversely affect a healthcare practice. Struggling to meet compliance requirements can affect the bottom line and the practice’s relationship with patients and regulatory authorities. 

The Benefits of Billing Compliance 

Accurate billing is beneficial to a healthcare practice complying with rules imposed by each payer and the federal and state governments. Correct billing methods and details allow the healthcare provider to make realistic financial forecasts that most organizations need to ensure long-term planning. 

Financial forecasting allows the practice to predict or estimate its performance in the next few months or years. Based on accurate billing, the practice can review data on revenue, costs, other incomes, and expenses. These reviews can help with the decision-making concerning the company’s future direction.

Another reason billing compliance is vital is that it protects patients. Recording diagnoses, treatments, and procedures are accurate when the healthcare provider observes strict compliance. 

Initial records or documents can serve as bases or references for patients’ future visits. Inaccurate information on X-rays, medical prescriptions, laboratory results, and physical examinations can have a detrimental impact on patient care.

Improved revenue collection is another advantage of billing compliance. If medical billers file error-free claims with payers, the healthcare practice will have greater chances of receiving optimal reimbursements.

Finally, billing compliance prevents a dermatology business from potential lawsuits due to errors and inaccuracies. Patients who think they have been overcharged and whose issues have not been taken care of appropriately can take legal action against the healthcare practice. 

Is Medical Billing Outsourcing a Good Idea? 

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BPO companies provide medical administrative services that can reduce, if not eliminate, a healthcare provider’s burdens of dealing with its billing processes. 

Having an in-house billing team has its advantages. But the increasing acceptance by many healthcare providers of outsourcing as a strategy indicates that this business practice is effective and offers various benefits.  

Why It’s a Good Idea

The first benefit is that physicians can pay more attention to patient care. Core activities are disrupted or slowed down when the healthcare practice often gives time and effort to handle the billing processes. BPO companies can carry out these tedious tasks to help improve patient services. 

Better patient care translates to higher patient satisfaction. Those who experience first-rate service personally endorse a dermatologist to others, return to avail themselves of the service again, or give the practice favorable feedback online. 

The second benefit is that medical billing outsourcing boosts a healthcare provider’s collection. External service providers and medical billing companies are experts in different fields, such as claims submission processing. They have experienced workers who ensure the practice receives payment for services delivered. More collection means better cash flow. 

Furthermore, a practice can reduce its operating expenses because it no longer needs to purchase additional office equipment, hardware, software, and other relevant tools for its internal billing team. It does not have to recruit extra employees and pay for them regularly to run and maintain the billing operations.

The third benefit of farming out medical billing to BPO companies is operation streamlining. These external companies have extensive experience and can simplify the processes, from the start of a patient encounter to the final payment the healthcare provider receives.

Read more: The Advantages and Disadvantages of Dermatology Medical Billing Outsourcing. 

The Bottom Line 

What makes dermatology different from other medical practices is that it includes not only cosmetic approaches but also surgical procedures. After all, the skin is the body’s biggest organ, susceptible to various diseases. 

In this regard, dermatology clinics require numerous medical codes and complicated modifiers to identify and describe skin conditions, treatment, and surgery. This makes dermatology billing a complex task for dermatologists. They need an external service provider to carry it out for billing compliance and optimal reimbursements. 

Dermatology clinics must follow billing guidelines and rules imposed by the government and insurance carriers. This way, they can minimize or avoid financial and legal risks. Outsourcing billing to an expert in the field saves time and money and can help your dermatology practice grow.

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