Dermatology Billing: How to Avoid Revenue Loss and Stay Audit-Ready

Dermatologists enjoy lucrative compensation, diverse caseloads, and a better work-life balance than many other medical professionals. What’s more, they often see immediate improvements from their care, which can be incredibly gratifying.

With these unique advantages come distinct challenges, particularly in the billing department. Dermatology medical billing requires a thorough understanding of cosmetic vs. medical procedures, complex modifiers, and payer pre-authorization requirements. If your in-house billing team makes mistakes, it can drain revenue from your practice, introduce compliance issues, and reduce patient satisfaction.

In this article, we’ll outline some of the most common dermatology billing pitfalls and how to avoid them. We’ll also provide strategic tips and tactical advice to ensure your dermatology practice’s billing success.

What Makes Dermatology Billing Uniquely Challenging🔗

So, what makes dermatology billing so difficult compared to other specialties? Here are four notable factors:

• Split nature of services – Dermatologists perform a wide variety of procedures, including elective and medically necessary interventions. Classifying these services accurately is critical. If you accidentally mark a medically necessary procedure as cosmetic, you can miss out on reimbursements. Meanwhile, billing a cosmetic service as a medical one can lead to claim denials and payer audits.
• High volumes of small ticket services – Dermatologists often see dozens of patients per day, performing quick procedures for lower reimbursement rates. These high volumes introduce the potential for more frequent billing errors and inefficiencies.
• Heavy use of modifiers – Dermatology billers rely heavily on modifiers, which are two-digit codes (e.g. 25, 59, 51) that append a procedure code to add extra detail about the service. Using the wrong modifier or failing to include one at all can trigger claim denials and payment delays.
• Frequent bundling and NCCI edit issues – Payers use National Correct Coding Initiative (NCCI) edits to determine which procedures can be billed together and which ones must be bundled into a single payment. Since dermatology procedures often overlap, they’re prone to bundling errors.

5 Dermatology Billing Pitfalls That Drain Practice Revenue🔗

Without the right support, dermatology practices of all sizes can face billing issues. Here are five of the most common dermatology billing pitfalls and how to avoid them:

Misclassifying Cosmetic vs. Medical Services🔗

As mentioned earlier, one of the biggest traps in dermatology billing is failing to classify services correctly. For example, treating seborrheic keratoses may sound medically necessary at first, but payers may consider it cosmetic if there are no additional symptoms, like bleeding or irritation.To prevent claim denials, you should include supporting diagnosis codes and clear chart notes that explain your rationale for each treatment. You can also add photos, lesion counts, and patient symptoms to support your case.

Undercoding and Upcoding Risks🔗

Coding errors are another common source of lost revenue and compliance issues for dermatology practices. These mistakes often fall into two categories: upcoding and undercoding.

• Upcoding takes place when you bill for a higher level of service than provided. For example, you may bill for an excision in place of a biopsy. Both are surgical procedures, but the former removes an entire lesion or growth and its surrounding tissue, while the latter only extracts a small sample for diagnostic purposes. Upcoding can increase your risk of payer audits, penalties, and compliance issues.
• Undercoding occurs when you perform a more extensive procedure than you bill for. For instance, maybe you destroy a malignant growth using cryotherapy but bill for a less complex procedure, such as a simple excision. Or maybe you treat multiple malignant growths and only bill for one. These minor coding mistakes can shortchange your practice of its rightful revenue.

To prevent these mistakes, you need support from billing specialists with a strong understanding of Current Procedural Terminology (CPT) codes and International Classification of Diseases, Tenth Revision (ICD-10) codes.Read More: 6 Common Billing & Coding Errors and How You Can Avoid Them

Underuse or Misuse of Modifiers🔗

Modifiers relay critical information about procedures and services that standard billing codes can’t convey on their own. However, using modifiers incorrectly, whether through omission or improper application, can lead to claim denials, reduced reimbursements, and compliance problems.

Here are some commonly misapplied modifiers in dermatology billing:

• Modifier 25, which clarifies that a patient had a medical exam or evaluation on the same day as a procedure and notifies the payer that they should be billed separately.
• Modifier 59, which relays that two or more procedures are distinct and performed in different sites, sessions, or for different purposes.
• Modifier 51, which indicates that multiple procedures were performed during a single session.

Stacking modifiers without clear justification can confuse payers, delay reimbursements, and potentially trigger audit alerts, which is why it’s essential to have experienced billers handling your claims.Learn More: How to Use Modifier 25 Correctly: 7 Tips to Promote Revenue Integrity

Poor Pre-Authorization Workflows🔗

Some dermatologic procedures require pre-authorization from payers, such as laser treatments, biologics, and excisions. Failing to secure a patient’s pre-authorization upfront can introduce claim denials and reimbursement delays. By setting up a dedicated system to verify patients’ insurance coverage and initiate authorizations in advance, you can avoid these issues and streamline your administrative burdens.

Not Keeping Up With NCCI Edits🔗

Bundling errors occur when multiple procedures performed on the same day, such as a biopsy and lesion destruction, are billed as a single service. These mistakes can cause claim denials or reduced reimbursements. Luckily, you can avoid these issues by staying up to date on NCCI edits and guidelines. You can also leverage claim scrubber software to identify bundling conflicts before submission.

Inconsistent Documentation for Procedures🔗

Failing to provide complete, consistent documentation is another prevalent dermatology billing pitfall. To ensure smooth claims submissions, you should always document the number, size, and location of lesions that you treat. This allows your billing team to assign the correct diagnosis and procedure codes.

Read More: Understanding Medical RCM

High-Impact Dermatology Procedures and How to Bill Them Correctly🔗

To give your billing team a helpful head start, here’s a quick overview of some of the most common dermatology procedures and their corresponding CPT codes.

• Biopsies vs. excisions – Biopsies use CPT codes 11102–11107, while excisions are designated by CPT codes 11400–11646. Specific codes depend on lesion size, type, and location.
• Destruction of benign vs. premalignant lesions – Benign destruction (CPT 17110–17111) and premalignant destruction (CPT 17000–17004) are coded based on the lesion amount and clinical classification.
• Mohs surgery – Mohs surgery (CPT 17311–17315) requires specific pathology and surgical documentation, so you should always record the number of stages performed and provide tissue maps.
• Phototherapy, cryotherapy, and laser treatments – The CPT codes for phototherapy and cryotherapy are CPT 96910 and CPT 17000-17004, respectively. Laser treatment CPT codes can vary by payer and clinical intent.
• Cosmetic injectables – Since they’re cosmetic, injectables typically can’t be billed to insurance. You should collect payment from patients and have them sign cosmetic procedure waivers before rendering service.

Learn More: CPT® Code Changes for 2025: Medical Coding Updates

Workflow & Revenue Optimization Strategies for Dermatology Billing🔗

Refining your dermatology medical billing workflows can provide an impressive return on investment. Along with reducing claim delays, it can also strengthen your compliance and cash flow. Here are some tools and tactics for improving your billing process:

• Front-desk protocols – Train your staff to verify patients’ insurance eligibility during scheduling and ask them to sign financial waivers for cosmetic services upfront.
• Staff cheat sheets – Create easy-to-follow guides about common modifiers, documentation do’s and don’ts, and frequently billed CPT codes.
• Claim scrubber tools – Leverage claim scrubber software to pinpoint bundling errors and missing data before claims submissions.
• Key performance indicators (KPIs) – Monitor your claim rejection rate, first-pass resolution rate, time-to-payment, and other key metrics to identify bottlenecks in your billing process.

Should You Outsource Dermatology Billing?🔗

While you can take steps to optimize your billing process, outsourcing is often an easier solution. After all, dermatology billing’s complexity can quickly overwhelm in-house teams.

By partnering with a medical billing solutions provider who understands dermatology, you can streamline your claims, reduce denials, accelerate reimbursements, and free up your staff to focus on patient care. If you’re open to outsourcing, Medusind can provide personalized support and proven results.

Using advanced technology and dermatology billing expertise, we specialize in helping practices like yours enhance their billing procedures and maximize their revenue. Discover how Medusind can support your dermatology practice today!