What is Medical Coding?

Chapter 1

Medical coders are essential in the health information industry. In fact, without them, the industry would be at a virtual standstill. Without medical coders - who assign specific codes to medical procedures and services - doctors, hospitals and other healthcare providers would not get paid.

Medical coders use codes to identify specific outpatient and inpatient procedures and services for billing private and public insurance companies.

Medical coders read medical documentation (i.e. patient charts) then assign the proper code, using their coding knowledge in addition to checking classification manuals, to the completed service or procedure.

Once they've determined the proper coding, medical coders key the code into the proper form on their computer system.

In addition to identifying the procedure or service performed, the assigned codes also help determine how much the healthcare provider will be reimbursed by Medicare, Medicaid and private and public insurance companies. It's critical that the proper codes are used as mistakes can delay payment. Furthermore, the codes must adhere to insurance requirements and federal regulations.

Medical coders work with one or all of the major healthcare coding systems:

CPT (Current Procedure Terminology) procedure codes. The CPT codes were established and are sustained by the American Medical Association. Medical coders use CPT to code outpatient procedures and procedures done in physicians' offices. CPT codes are numeric. Changes and additions to the CPT are generally made, at most, four times a year.

Here are just a few examples of CPT codes:

  • 90805 = outpatient psychotherapy
  • 38221 = bone marrow biopsy, trocar or needle
  • 38211 = tumor cell depletion
  • 99261 - 99263 = follow-up inpatient consultation
  • 99054 = services requested on holidays or Sundays

HCPCS (Healthcare Common Procedure Coding System). Medical coders who work with Medicare or Medicaid must become proficient in HCPCS. Maintained by the American Medical Association, the HCPCS has two levels. CPT procedure codes are level one, and HCPCS are level two. HCPCS codes are all alphanumeric and include services, products and supplies - such as prosthetics and ambulance services - not covered in the CPT.

Here are several examples of HCPCS codes:

  • J8700 = Temozolmide, oral, 5 mg.
  • A0030 = Ambulance service, conventional air service, transport, one way
  • JO530 = Injection of penicillin
  • J3490 = Unclassified drugs
  • P9010 = Blood (whole) for transfusion

To meet the standards set by HIPAA (Health Information Portability and Accounting Act), the Final Rule was instituted in 2000. It stated that the CPT and HCPCS codes are defined as procedure codes for "physician services, physical and occupational therapy services, radiological procedures, clinical laboratory tests, other medical diagnostic procedures, hearing and vision services and transportation services including ambulance." (Source:American Medical Association)

You can learn more about CPT and HCPCS - including how codes are determined and new changes are made - at the American Medical Association's website by clicking here.

ICD-9. According to the Final Rule, ICD-9 provides coding for diagnosis, procedures and inpatient hospital services. ICD codes are also used on death certificates. According to the World Health Organization, which has created and updated the ICD codes over the years, "The ICD has become the international standard diagnostic classification for all general epidemiological and many health management purposes. These include the analysis of the general health situation of population groups and monitoring of the incidence and prevalence of diseases and other health problems in relation to other variables such as the characteristics and circumstances of the individuals affected." (Source: The World Health Organization)

ICD-9 codes were implemented by the federal government and, according to The American Health Information Management Association, they are now obsolete. With the ICD-9 codes in use since 1979, the United States is one of the few countries that still use the ICD-9 codes. Most countries are using the updated ICD-10 codes.

The American Health Information Management Association points out that, despite yearly updates and changes, ICD-9 codes are no longer effective. In fact, their stance is, "Terminology and classification of numerous conditions and procedures are outdated and inconsistent with current medical knowledge and application. ICD-9-CM also cannot address the increasing pressure for more specific codes, especially codes that can keep up with new technology." (Source: American Health Information Management Association)

Currently, the American Health Information Management Association is advocating an industry-wide update to ICD-10 codes by October 2008.

Here are some samples of ICD-9 codes

  • 805.12 = Injury-cervical, open/second cervical vertebra
  • 296.0 = Manic disorder, first episode
  • 633.1 = Ectopic pregnancy, tubal, no IUP
  • 780.1 = Hallucinations
  • 333.1 = Alzheimer's

To learn more about the ICD-system, you can visit the World Health Organization or the American Health Information Management Association.

Stay abreast of the news, changes and advocacy within the medical coding industry, so you can do your job more effectively.