What are the medical code sets that coders use? The links on this page will help you get to know the major code sets used in physician office coding and facility coding.
Although the medical code sets differ, each has a role to play in representing the specifics of healthcare encounters and services in the form of numeric and alphanumeric codes. Coders review the medical record to determine the appropriate codes for an individual case. When providers and facilities submit those codes for medical billing on insurance claims, insurers have essential information to determine coverage and payment. Healthcare organizations also may use these codes internally to track and analyze areas important to the business of medicine, such as services and supplies provided overall or coding patterns for each provider.
Once you grasp how these lists of medical codes affect payment and productivity decisions, you can see why medical coding involves more than just searching medical code lists. This area is subject to complicated guidelines, regular updates, and official audits that can result in serious financial and legal consequences. Individuals involved in medical coding must keep their knowledge of the code sets and rules sharp to ensure accurate reporting and compliance. The links below will help get you on your way to a better understanding of the individual code sets.
CPT® stands for Current Procedural Terminology, a code set that health care providers use to identify procedures provided to patients.
In broad terms, providers report CPT® codes to insurers, and insurers use the codes to determine appropriate payment for the provider. For instance, if a provider reports 71020 (Radiologic examination, chest, 2 views, frontal and lateral) to represent a chest X-ray service, then the patient's insurer will reimburse the provider a certain amount based on the code reported.
The AMA maintains and owns the copyright to the CPT® code set, which includes codes, descriptors, and guidelines. To access a list of CPT® codes and descriptions, you'll typically use either software with procedures code lookup or a CPT® coding manual.
The CPT® code set includes three main categories
To comprehend CPT® coding, you also need to be familiar with two-character CPT® modifiers. The modifier lets you indicate that a code is correct, but there was a specific circumstance that also needs to be acknowledged. For instance, appending modifier 22 (Increased procedural services) to a code shows the provider performed the service described by the code but the patient's individual circumstances required much more effort than a typical case. A common explanation for modifiers is that they help tell the story of the encounter.
The AMA provides CPT® coding guidelines to help explain how to use the codes and modifiers correctly. For instance, you may find there are rules listed with the code, the subsection the code is in, and the section, too, such as the Evaluation and Management (E/M) Services Guidelines. For a better understanding of the AMA's intent for the code, review the guidelines at each level, keeping in mind that individual payer guidelines may affect your use of the code, as well.
The Healthcare Common Procedure Coding System (HCPCS) has two main levels. Level I is the AMA’s CPT® codes. Level II is the code set that most people think of as simply the HCPCS code set. It includes codes for products, supplies, and services that CPT® does not include. This page talks about HCPCS level II codes, which we’ll refer to as HCPCS codes.
Examples of items represented by HCPCS medical codes include ambulance services; durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS); and even procedures and services that Medicare or another payer wants a specific code for.
HCPCS codes are five-character alphanumeric codes. The first character is a letter, and the remaining four characters are digits, such as V5261 (Hearing aid, digital, binaural, BTE). Various types of providers can submit HCPCS codes on claims for insurers to receive reimbursement. However, the existence of a HCPCS code does not guarantee coverage or payment.
There are a variety of types of HCPCS codes. Below are some examples (not a complete list of HCPCS code types):
There are also HCPCS modifiers that you may append to provide additional information about the circumstances surrounding the use of the code. While CPT® modifiers are typically two digits, HCPCS modifiers are either two letters or alphanumeric. Payers may accept HCPCS modifiers appended to both HCPCS and CPT® codes. Similarly, certain CPT® modifiers may be appropriate for use with HCPCS codes. An example of a HCPCS modifier is F1 (Left hand, second digit).
Each payer may have its own rules regarding application, coverage, and payment for HCPCS codes, so be sure to be aware of the individual payer’s policies so you know what to expect for a particular case.
International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) is based on the World Health Organization’s ICD-10 statistical classification of disease. The National Center for Health Statistics (NCHS) is responsible for use of ICD-10 in the U.S. ICD-10-CM replaced ICD-9-CM effective Oct. 1, 2015, for medical claim reporting purposes.
ICD-10-CM codes are also commonly called diagnosis codes. The codes represent conditions and symptoms as well as reasons for encounters, such as Z23 (Encounter for immunization). Don’t confuse ICD-10-CM codes with ICD-10-PCS codes. PCS codes are procedure codes used by inpatient hospitals.
ICD-10-CM codes are alphanumeric and range from three to seven characters. Multiple provider types use ICD-10-CM codes. For instance, physicians submit ICD-10-CM codes on claims to show medical necessity for a certain procedure or service, and inpatient facilities use ICD-10-CM codes when calculating DRGs.
All of the ICD-10-CM areas listed in the bullets below are important for helping you pinpoint the correct code. The ICD-10-CM Official Guidelines advise you to use both the Alphabetic Index and Tabular List before selecting a code:
The International Classification of Diseases, Tenth Revision, Procedure Coding System (ICD-10-PCS) is a code set adopted under the Health Insurance Portability and Accountability Act (HIPAA) for hospital inpatient healthcare settings. ICD-10-PCS replaced ICD-9-CM, vol. 3, effective Oct. 1, 2015, for medical claim reporting purposes.
ICD-10-PCS codes are procedure codes, not to be confused with ICD-10-CM diagnosis codes. The ICD-10-PCS codes have seven characters with each character representing specific information. This code set uses the numbers 0 to 9 and all letters of the alphabet except for the letters I and O, which can look too much like the numbers 1 and 0, causing confusion. An example of an ICD-10-PCS code is 07CF0ZZ. Below you can see an image from the code’s TCI SuperCoder details page that illustrates how each character has a separate meaning.
PCS Tables: The structure of the ICD-10-PCS code set lends itself to the use of tables to determine final codes. These PCS Tables are an essential part of correct reporting using ICD-10-PCS. Below is an image of the B32 table. Note the definitions for the first three characters (B32) at the top and the options for the final characters listed beneath that. As you work through the table, you must stay on the same row. For instance, the table below has two rows. Suppose Y is the correct fifth character. Y is available only on the top row, so you must continue selecting options from the top row to complete the code. You can’t have Y from the top row as the fifth character and then choose 2 from the bottom row for the sixth character.
In addition to PCS Tables, coders who use the ICD-10-PCS code set should be aware of these elements:
Ambulatory Payment Classifications (APCs) are the typical unit of payment for Medicare’s Outpatient Prospective Payment System (OPPS). CMS assigns items and services (or more specifically codes describing items and services) to APCs based on costs and characteristics. CMS assigns a payment rate to the APC, and that rate applies to each service in the APC.
There are also New Technology APCs that may represent items and services that don’t have their own CPT® or HCPCS codes. New Technology APCs are defined only by cost. The clinical characteristics are not part of the APC assignment. CMS pays the service under the New Tech APC until it collects enough data to assign the service to a clinical APC group, usually in two to three years, although it can be less or more.
Each APC has four digits, such as 1515 (New Technology - Level 15 ($1301 - $1400)) and 5312 (Level 2 Lower GI Procedures).
Some of the services that Medicare pays separately are below:
Some packaged items are listed here:
CMS creates comprehensive APCs packaging payment for all items and services for certain procedures. The policy packages payment for items and services both typically and not typically packaged under OPPS. But the payment doesn’t include services that can’t be paid under OPPS by stature, that must be paid separately by statute, or that can’t be covered outpatient department services.
CMS provides quarterly updates to the OPPS website with files that include HCPCS codes, status indicators, APC groups, and OPPS payment rates:
Diagnosis-related groups (DRGs) are a classification system for inpatient discharge billing. MS-DRGs are Medicare Severity DRGs, which were developed for classifying claims for Medicare patients.
Each DRG has three digits. Here are some MS-DRG examples:
As in the example DRGs above, you should check for references to CC, MCC, or both in DRG descriptors. CC stands for complication or comorbidity. MCC stands for major complication or comorbidity. The presence of complications and comorbidities may increase payment from Medicare to reflect the increase in hospital resource use, so it’s important to choose the correct DRG from the range. Medicare provides lists of ICD-10-CM codes that qualify as CCs and MCCs.
Procedures: Another factor in the creation of DRGs was whether the case requires an operating room procedure. If so, the type of surgery is important because of its relationship to resource use, such as major surgery, minor surgery, or surgery unrelated to the principal diagnosis. More details are available in Medicare’s MS-DRG Definitions Manual documents.
Medicare performs yearly reviews to determine changes to the MS-DRGs. The following information plays a role in classifying cases into MS-DRGs for payment under the inpatient prospective payment system (IPPS):
In some cases, the patient’s age, sex, and discharge status also may play a role in the final DRG classification.
Groupers: DRG groupers are tools that assist with calculating payments for inpatient hospital stays. Each case under Medicare’s IPPS gets categorized into a DRG, which a grouper program helps a coder determine to support proper reporting and payment.