The Medical Coding Process

The Medical coding process is usage of standardized codes to diagnose the services rendered to a policyholder. Every possible injury and diagnosis is assigned a universal code that is readily understood by both healthcare providers and insurance companies so these parties are operating under the same umbrella of information. This process has become particularly useful, in terms of efficiency, ever since the claims process moved over to a largely digitized format.

Because clinical documentation practices vary, the process of abstracting code-able information about the patient involves some detective work. Coders must sift out the crucial information regarding diagnosis and treatment from the documentation. For example, a coder might receive a clinical file that looks like this:

Date of Procedure: 6/13/20xx
Patient Name: Jaswinder Patel
DOB: 11/28/19xx
HPI: Mr. Patel is a 27-year-old male who states he was doing light chores around the house when he fell off a ladder and felt sharp pain in his left hand. Upon receiving advice from his neighbor, he sought medical treatment.
Past Medical: History of sinusitis
Diagnosis: Multiple fractures of hand
Procedure: Splint

Workers on the administrative side of healthcare and insurance may be prone to misunderstanding the technical terms in this document. Therefore, after the diagnosis and procedures are complete, this medical statement is given to the medical coder, who looks at this report and sifts out the most crucial information that needs to be reported to the insurance company: the diagnosis and procedure, or treatment, prescribed by Mr. Patel’s physician. Coders convert the diagnosis and treatments into a code set, “translating” the physician’s jargon into the universal medical language understood by all healthcare professionals.

The medical coder then hands the converted data to the medical biller, who sends the claim to the policyholder’s insurance company. Often, the medical coder and the medical biller are the same person.

Coding Diseases: Navigating the ICD

The standard accepted code set for medical diagnosis is called the International Classification of Diseases, or ICD. The ICD was created by the World Health Organization (WHO). Since the medical field, particularly in the realm of diagnosis and treatment, is constantly changing when new treatments evolve, many updates of the ICD have been issued since its initial conception. Despite being more than 30 years old, the Ninth Revision of the International Classification of Diseases (ICD-9) is still the primary code set in use in the United States. However, ICD-10 is due to be implemented in the United States on October 1, 2014 and students interested in this field should be prepared for the change, which is discussed further in Course 10.

Since there are thousands of different diagnoses needing to be represented in code, down to extremely specific diagnoses, the coding system needs to be extensive, but easy to navigate. Medical coders navigate these codes using conventions, or guidelines for selecting and sequences ICD-9-CM codes. They are generally set up in a tabular list to make navigating easier.

Reading the ICD codes

An ICD-9-CM code is broken down into categories and subcategories, and can contain as many as five digits. To take Mr. Patel’s injury, for example, coders use the ICD-9-CM code for “multiple fractures of hand bones” is 817, or 817.0. The three digits before the decimal denote the category. It falls within categories 810-819, or “Fracture of the upper limb.” The categories 810-819 themselves fall within the larger categories 800-999, or “Injury and poisoning.”

The digit after the decimal is called the subcategory. In the case of this diagnosis, 817 (817.0) is the default, since it has no subcategory and represents “multiple closed fractures of the hand bones.” If the fractures were open, the ICD-9-CM code would be 817.1, or “multiple open fractures of the hand bone.” The digit “1” marks the subcategory of open fractures.

To review, if a medical coder received a statement listing “multiple open fractures of the hand bone,” or alternative language that describes the same diagnosis, the coder may navigate the ICD-9-CM codes through the following breakdown:

Injury and poisoning (800-999)
- Fractures (800-829)
  - Fractures of the upper limb (810-819)
    - Multiple fractures of the hand bones (817)
      - Multiple open fractures of the hand bones (817.1)

The categories and subcategories break down in a logical manner. The medical coder will always have a comprehensive reference guide to break down the ICD-9-CM using this tabular system.

Coding Treatments: Using the CPT or HPCPS

In addition to translating the diagnosis to the appropriate ICD code, medical coders convert the treatment to a CPT code or HCPCS code. The differences are explored below.

Exploring the CPT

Despite how extensive it is, the ICD is just one portion of medical coding, as it covers only diagnoses. There is an entirely separate code set for medical treatments. This code set is called Current Procedural Terminology (CPT), and is copyrighted and maintained by the American Medical Association’s CPT Editorial Panel.

CPT codes refer to the wide range of all medical procedures, including every task and service performed by a medical practitioner. These codes are broken down into three categories. The majority of CPT codes exist in Category I. Category II is reserved for optional performance measurement, and Category III denotes emerging technologies.

Like the ICD system, CPT codes are broken down into categories. Unlike ICD codes, the CPT codes do not exist in detailed tabular format, and are broader in their organization.

Category I is broken down into six main sections:

Codes for Evaluation and Management: 99201-99499
Codes for Anesthesia: 00100-01999; 99100-99150
Codes for Surgery: 10021-69990
Codes for Radiology: 70010-79999
Codes for Pathology & Laboratory: 80047-89398
Codes for Medicine: 90281-99199; 99500-99607

Individual sections are then broken down further. For example:

Codes for Evaluation and Management: 99201-99499
- Office/other outpatient services 99201-9215
- Hospital observation services 99217-99220
- Hospital inpatient services 99221-99239
  Consultations 99241-99255
- Emergency department services 99281-99288
- Critical care services 99291-99292

Because the CPT is copyrighted and run by the American Medical Association, a comprehensive list of codes is generally not made available to the public.

Using the HCPCS

Not all insurance providers accept the CPT. Medicare and Medicaid (both of which will be discussed below) use the Healthcare Common Procedure Coding System (HCPCS). This coding system is comprised of two levels.

Level one consists of the CPT codes and is identical in its implementation. Level two is a coding system that is used to identity medical products and services not included in CPT codes, such as ambulance services, prosthetics, and durable medical equipment. These products and services are usually used outside of the medical practitioner’s office, and Medicare/Medicaid often cover these services where other insurance providers may not.

The Medical Coding Process