Introduction to Medical Coding

Why We Use Medical Codes

There are two primary types of medical codes:

  1. Diagnosis Codes which describe the condition of the patient. There may be multiple diagnosis codes assigned on one visit with the physician.
  2. Treatment Codes which describe the treatment or services performed on the patient to treat the condition(s) described by the Diagnosis Code(s).

Coding is wide and deep. Most specialties use the same codes and modifiers over and over again.

Codes are a kind of short-hand method assigned to describe the conditions of a patient and the treatments applied.

Diagnosis Codes

ICD stands for International Classification for Diseases. ICD-10 codes are used for all diagnosis:

  • ICD-10-CM for Outpatient Services
  • ICD-10-PCS for Hospital Billing

ICD-9 was previous revision. You may still see ICD-9 codes on older claims.

ICD-10 codes are 7 characters.

CMS required all claim submission after October 15, 2015 to use ICD-10 diagnosis codes.

Medical Treatment Codes

Procedure codes are used to document services performed by a health care provider.

The federal government established the Healthcare Common Procedure Coding System (HCPCS) years ago for Medicare and it’s been adopted by the entire industry.

There are two categories of procedure codes defined by HCPCS

  • Level I
  • Level II

Level I are the Current Procedural Terminology (CPT-4) codes. These are 5 Digit codes.

These are the treatment or procedure codes medical billing is mostly concerned with on CMS-1500 claims for physician services.

CPT codes are maintained and copyrighted by the American Medical Association (AMA).

CPT-4 is the current edition used for physician or other healthcare provider services.

Level II codes are maintained by CMS (Centers for Medicare & Medicaid Services) for non-physician services and supplies that are not covered by CPT-4 Level 1 codes.

Level II codes are composed of a single letter in the range A to V, followed by 4 digits.

Treatment Code Modifiers

CPT codes may have a 2-digit alpha-numeric modifier added to the code. For example 99203 is for and initial office visit. 99203-57 is initial office visit with a decision for surgery.

Modifiers are used when a procedure is performed differently than described in the normal 5-digit code. Modifiers typically indicate:

  • Procedure performed by more than one physician
  • Has a Professional (PC) or Technical (TC) component
  • Procedure was provided more than once
  • Bilateral procedure was performed
  • Only part of procedure was performed
  • Procedure was increased or reduced

Where Codes are Used

In Practice Management Software


On Paper CMS-1500 Claim


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