If you’re running a small medical practice, you’re likely already able to answer a question like “what are medical codes?” at least partially. At the very least, you’ll have in-house staff members who understand them more thoroughly, since they’re an imperative part of running a healthcare organization and you need them to be accurate if you want to be reimbursed properly and to avoid issues with insurers. 

Think of them as the shorthand labels your office attaches to each patient encounter. Doctors and medical coders pick codes for the following factors so insurers know exactly what happened:

– Diagnoses

– Treatments

– Supplies

– Equipment

So to put it simply, medical codes are used by healthcare providers like yourself so you’re able to track patient diagnosis and treatment. And you need them to bill insurance companies for medical services.

In other words, every medical service your practice could possibly provide has a code. The main point here is to ensure the whole healthcare system speaks the same language. 

Major Code Sets: CPT, ICD, and HCPCS

There are three main code sets that every certified medical coder needs to know about:

CPT (Current Procedural Terminology)

So these are our first codes, and they cover medical procedures and services. CPT provides what’s known as a ‘uniform nomenclature’ for billing doctors’ services, and it’s maintained by the American Medical Association (AMA..

In fact, the AMA says CPT codes describe “every type of medical service” a patient gets. These five-digit codes are what you submit to insurers or Medicare on a claim so you can get paid.

CPT codes also have sub-categories: for example, Category I codes are used for things like:

– Routine office visits

– Surgeries

– Lab tests

– Similar services

Category III codes, on the other hand, cover new or experimental procedures.

ICD (International Classification of Diseases)

Next, these codes are for classifying diagnoses. The ICD is the global standard for health conditions, and it’s published by the World Health Organization (WHO). It’s officially called the International Statistical Classification of Diseases and Related Health Problems. 

WHO describes the ICD as “the main basis for health recording and statistics.” Every diagnosis in your office (flu, diabetes, fracture, etc.) gets an ICD code. ICD has been the basis for comparable statistics on causes of illness and death for more than a century. 

HCPCS (Healthcare Common Procedure Coding System)

And lastly, HCPCS handles things that CPT doesn’t cover for whatever reason. Level I of HCPCS is actually just the CPT set. 

Level II of HCPCS is used for various equipment and certain non-physician services. For example, durable medical equipment – think wheelchairs, oxygen tanks or prosthetics – and ambulance services get HCPCS Level II codes. 

CMS notes HCPCS Level II is “used to identify products, supplies, and services not included in the CPT codes, such as ambulance services or durable medical equipment.”

How Codes Keep Billing Running

So once you put all this together and see the big picture you’ve got the basis of medical coding. When a patient visits, the doctor documents the encounter and the practice’s medical coder or biller translates that documentation into codes. 

The coder will apply an ICD code for the diagnosis, one or more CPT codes for each service performed, and any HCPCS codes for equipment or supplies used. That’s how each of the three code sets we just mentioned works together.

It’s actually the coder’s main job to review clinical statements and assign standard codes using CPT, ICD-10-CM, and HCPCS Level II classification systems. Put simply, medical coding happens almost every time you see a healthcare provider; it’s how the healthcare provider gets paid.

One of the main issues in this field, though, is accuracy – it’s absolutely critical that your practice gets these codes right. Each code must tell the whole story of the visit so the payer knows why you should be paid. 

If codes align with the treatment, claims go through nice and easy and you get paid quickly. If not, insurers deny or delay the claim and the practice has to fix and resubmit it.

And CPT, ICD, and HCPCS codes do more than just billing behind the scenes. The collected data feeds things like:

– Healthcare analytics

– Resource planning

– Quality metrics

It’s not exactly an overstatement to say these codes are the foundation of our healthcare system’s data and payment flow, as heavy as that sounds.

Who Updates the Codes?

The code sets are maintained by official bodies. The AMA oversees CPT, and an AMA panel meets each year to add or revise codes. The World Health Organization updates the ICD (new editions like ICD-11 come through WHO’s World Health Assembly). 

CMS (the federal Medicare agency) then ties these standards into the billing rules. So all in all, these organizations work together to keep the codes current with medical advances.

Outsourcing Medical Billing to PMN

Handling all the coding and claims paperwork can be a headache for any small practice, especially given that you don’t exactly have many staff members sitting around doing nothing.

So many clinics choose to outsource this work. PMN is a medical billing and coding firm with over 20 years of experience across all branches of medicine. That means when you partner with PMN, your coding and claims submission will be handled for you – quick submissions, massively reduced claim denials.

Want to learn more about what we do? Schedule an in-person chat at our office Laguna Hills, Orange County, California or get in touch over the phone for more information.

FAQs

Why Do We Use So Many Different Code Sets?

Each code set serves a purpose. ICD gives a universal way to code diagnoses worldwide. CPT (and HCPCS) cover the specific treatments and services provided. Using all these codes means any clinic or insurer will interpret the claim consistently. 

What Happens If Codes Are Entered Incorrectly?

A wrong code usually triggers a claim denial or rejection, which means you’ll have to fix and resubmit it. That delays payment and causes extra work. In contrast, properly coded claims tend to be paid quickly. In practice, coding right up front helps guarantee you’ll be paid quickly for the healthcare services you provide.