The Fundamentals of Medical Coding in Health

Medical coding is an integral part of medical billing and communications between healthcare providers and insurers. Learn the basics of what these codes mean and how to use them.

What is medical coding?

Medical coding is a system of labels of numbers and letters that are unique to each diagnosis, set of symptoms, and cause of death in humans. Additionally, the codes are used for standard communication of supplies and procedures used in treating human conditions. Accurate medical coding is important for billing and tracking medical treatment and illness statistics.

Medical coding is an important factor in obtaining insurance reimbursement, as well as maintaining patient records. Coding claims allow the insurance payer to know the patient’s illness or injury and the method of treatment.

Medical coding can include one or more of the following types of codes: ICD codes, CPT codes, HCPCS codes, DRG codes, and modifiers. All of these coding sets are important for communication and billing purposes. Coding is not only important in medical practice, but it is also imperative because commercial payers such as insurance companies, Medicare, and Medicaid will not pay a claim if it is not properly filed with acceptable codes.

ICD codes

The International Statistical Classification of Diseases or ICD codes is a system of codes. These are specific to the classifications of diagnoses, symptoms, and causes of death in humans. These classifications are created, copyrighted, and monitored by the World Health Organization, which are standard and therefore recognizable by all medical and professional facilities around the world. In the United States, the National Center for Health Statistics, part of the Centers for Medicare and Medicaid Services, administers amendments to the ICD codes in conjunction with the WHO.

HCPCS codes

HCPCS (Healthcare Common Procedures Coding System) Levels I and II represent another coding system. Level I is comprised of CPT codes and Level II includes alphanumeric codes that are used to identify products, supplies, and services that are not included in CPT codes when used outside of a physician’s office.

HCPCS codes are defined at three levels:

  • CPT Level I (Current Procedural Terminology) codes are made up of 5-digit numbers and are administered by the American Medical Association (AMA). CPT codes are used to identify medical services and procedures requested by physicians or other licensed professionals.
  • HCPCS Level II are alphanumeric codes consisting of an alphabetic letter followed by four numbers and are administered by the Centers for Medicare & Medicaid Services (CMS). These codes identify non-medical services, such as ambulance services, durable medical equipment, and pharmacies.
  • Level III codes are W, X, Y, or Z alphanumeric codes followed by a four-digit numeric code. Also known as local codes, these codes are used as a miscellaneous code when there is no level I or level II code to identify it.

Modifiers: Some HCPCS codes required the use of modifiers. They consist of a two-digit number, two letters, or alphanumeric characters. The HCPCS code modifiers provide additional information about the service or procedure performed. Modifiers are used to identify the area of ​​the body where a procedure was performed, multiple procedures in the same session, or indicate that a procedure was started but suspended.

CPT codes

CPT codes are common procedure codes and were developed and registered by the American Medical Association in 1966. These are a system of five-character alphanumeric codes that describe medical, surgical, and diagnostic services in a standardized method.

DRG codes

DRG codes, codes of the diagnosis-related group, are used to encode only inpatient claims. Many insurers pay according to the DRG, therefore the accuracy of all components is essential for proper claim reimbursement.

How to use medical coding

These coding sets are important for communication and billing purposes. Not only is coding important in medical practice, but it is also financially critical for providers offering medical coding services because commercial payers such as insurance companies, Medicare, and Medicaid will not pay a claim if it is not properly filed with acceptable codes.

In addition, diagnostic codes are used to analyze disease patterns in societies and for national and regional health and death statistics. Member countries of the World Health Organization can benefit from the resources they need to combat widespread health problems, educate the population on prevention and treatment, and ensure the future health and well-being of their citizens.

Education in Medical Coding

Many colleges and schools offer classes, certifications, even Associate of Applied Science degrees in medical billing and coding. These are in-depth courses or curricula that educate students on medical terminology, proper billing and coding techniques, proper office procedures, and a host of related courses. Some of these are accredited and some are not, so every potential student should do their homework before choosing an apprenticeship program.

The importance of initial education and continuing education in a clinic or doctor’s office cannot be overstated. Staying abreast of changes in billing and coding practices, as well as current regulations, is essential in this fast-paced digital system in which we all work and live.

Coding and Billing

Coding and billing are often mentioned together because these are two facets of the medical office that are closely related to each other. Staff members completing your medical billing and coding must work together to ensure accurate and prompt payment of all correct and complete medical claims and medical records.

Resources, such as up-to-date codebooks listing the various codes or current software for coding or billing, are imperative for billing and coding staff to ensure accurate submission to insurance companies or Medicare and Medicaid, and the prompt payment of these entities. In addition to the initial submission of patient claims, the coder and / or biller may be responsible for following up on rejected claims by auditing the patient’s history, resubmitting the claim, appealing the claim, or taking other action to ensure the accuracy of the claim.

Since medical and billing staff are responsible for the accuracy of medical records in accordance with state and federal regulations, the importance of competent billers and coders cannot be overstated. A successful medical facility must have well-trained, organized, and competent medical billers and coders.

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