Medical coding professionals help ensure the codes are applied correctly during the medical billing process, which includes abstracting the information from documentation, assigning the appropriate codes, and creating a claim to be paid by insurance carriers.
Medical coding happens every time you see a healthcare provider. The healthcare provider reviews your complaint and medical history, makes an expert assessment of what’s wrong and how to treat you, and documents your visit. That documentation is not only the patient’s ongoing record, it’s how the healthcare provider gets paid.
Medical codes translate that documentation into standardized codes that tell payers the following:
Patient's diagnosis
Medical necessity for treatments, services, or supplies the patient received
Treatments, services, and supplies provided to the patient
Any unusual circumstances or medical condition that affected those treatments and services
Like a musician who interprets the written music and uses their instrument to produce what's intended, Medical Coding requires the ability to understand anatomy, physiology, and details of the services, and the rules and regulations of the payers to succeed.
The main task of a Medical Coder is to review clinical statements and assign standard codes using CPT®, ICD-10-CM, and HCPCS Level II classification systems. Medical billers, on the other hand, process and follow up on claims sent to health insurance companies for reimbursement of services rendered by a healthcare provider. The Medical Coder and medical biller may be the same person or may work with each other to ensure invoices are paid properly. To help promote a smooth coding and billing process, the coder checks the patient’s medical record (i.e., the transcription of the doctor’s notes, ordered laboratory tests, requested imaging studies, and other sources) to verify the work that was done. Both work together to avoid insurance payment denials.
Why is Medical Coding Needed?
The healthcare revenue stream is based on the documentation of what was learned, decided, and performed.
A patient's diagnosis, test results, and treatment must be documented, not only for reimbursement but to guarantee high quality care in future visits. A patient's personal health information follows them through subsequent complaints and treatments, and they must be easily understood. This is especially important considering the hundreds of millions of visits, procedures, and hospitalizations annually in the United States.
The challenge, however, is that there are thousands of conditions, diseases, injuries, and causes of death. There are also thousands of services performed by providers and an equal number of injectable drugs and supplies to be tracked. Medical coding classifies these for easier reporting and tracking. And in healthcare, there are multiple descriptions, acronyms, names, and eponyms for each disease, procedure, and tool. Medical coding standardizes the language and presentation of all these elements so they can be more easily understood, tracked, and modified.
This common language, mandated by the Health Information Portability and Accountability Act (HIPAA), allows hospitals, providers, and payers to communicate easily and consistently. Nearly all private health information is kept digitally and rests on the codes being assigned.
Types of Codes Used
Medical coding is performed all over the world, with most countries using the International Classification of Diseases (ICD). ICD is maintained by the World Health Organization and modified by each member country to serve its needs. In the United States, there are six official HIPAA-mandated code sets serving different needs.
ICD-10-CM (International Classification of Diseases, 10th Edition, Clinically Modified)
ICD-10-CM includes codes for anything that can make you sick, hurt you, or kill you. The 69,000-code set is made up of codes for conditions and disease, poisons, neoplasms, injuries, causes of injuries, and activities being performed when the injuries were incurred. Codes are “smart codes” of up to seven alphanumeric characters that specifically describe the patient’s complaint.
ICD-10-CM is used to establish medical necessity for services and for tracking. It also makes up the foundation of the MS-DRG system below.
CPT® (Current Procedure Terminology)
This code set, owned and maintained by the American Medical Association, includes more than 8,000 five-character alphanumeric codes describing services provided to patients by physicians, paraprofessionals, therapists, and others. Most outpatient services are reported using the CPT® system. Physicians also use it to report services they perform in inpatient facilities. Here's a little behind the scene on the making of CPT® codes.
ICD-10-PCS (International Classification of Diseases, 10th Edition, Procedural Coding System)
ICD-10-PCS is a 130,000 alphanumeric code set used by hospitals to describe surgical procedures performed in operating, emergency department, and other settings. Don’t let the procedural coding intimidate you by taking the right approach to ICD-10-PCS coding.
HCPCS Level II (Health Care Procedural Coding System, Level II)
Developed originally for use by Medicare, Medicaid, Blue Cross/Blue Shield, and other providers to report procedures and bill for supplies, HCPCS Level II’s 7,000-plus alphanumeric codes are used for many more purposes, such as quality measure tracking, outpatient surgery billing, and academic studies.
CDT® (Code on Dental Procedures and Nomenclature)
CDT® codes are owned and maintained by the American Dental Association (ADA). The five-character codes start with the letter D and used to be the dental section of HCPCS Level II. Most dental and oral procedures are billed using CDT® codes.
NDC (National Drug Codes)
The Federal Drug Administration's (FDA) code set is used to track and report all packages of drugs. The 10-13 alphanumeric character smart codes allow providers, suppliers, and federal agencies to identify drugs prescribed, sold, and used.
Modifiers
CPT® and HCPCS Level II codes use hundreds of alphanumeric two-character modifier codes to add clarity. They may indicate the status of the patient, the part of the body on which a service is being performed, a payment instruction, an occurrence that changed the service the code describes, or a quality element.
MS-DRG and APC
Two federal code sets used to facilitate payment deriving from those above systems are MS-DRG and APCs. They rely on existing codes sets but indicate the resources consumed by the facility to perform the service.
MS-DRG (Medical Severity Diagnosis Related Groups)
MS-DRGs are reported by a hospital to be reimbursed for a patient’s stay. The MS-DRG is based on the ICD-10-CM and ICD-10-PCS codes reported. They are defined by a particular set of patient attributes which include principal diagnosis, specific secondary diagnoses, procedures, sex, and discharge status. The Centers for Medicare & Medicaid Services (CMS) work with 3M HIS to maintain this data set.
APC (Ambulatory Payment Categories)
APCs are maintained by the Centers for Medicare & Medicaid Services (CMS) to support the Hospital Outpatient Prospective Payment System (OPPS). Some outpatient services in a hospital, such as minor surgery and other treatments, are reimbursed through this system.
