The Relationship Between Medical Coding and HIPAA

The Health Care Insurance Portability and Accountability Act, or HIPAA, became law in 1996. Initially started to allow individuals to carry health insurance between employers, it later expanded to include issues like the privacy and security of patient health information, health care fraud and abuse and standard elements used when transmitting electronic patient health information, or e-PHI, for reimbursement. The e-PHI elements relate directly to medical coding.

About Medical Coding

• Medical coding assigns numerical and alphanumerical codes to patient diagnoses and procedures for reimbursement and reporting purposes. Medical codes provide a condensed way to report lengthy and detailed medical information. For example, 943.11 represents the code for a first-degree burn to the forearm. Converting medical diagnoses and treatments into numerical formats allows for the easy search, retrieval and submission of data.

Electronic Data Interchange

• Before HIPAA, health care organizations were behind other businesses and technology in processing information. As industries like banking moved to electronic formats for information, the health care industry still processed much of its information via paper. Paper-based information exchange is costly, and health care needed a way to save money and provide a more efficient way of doing business. Electronic data interchange, or the electronic format of "data elements that assist in identifying the contents of a transaction," provided a way to work more effectively. According to the Centers for Medicare and Medicaid Services, EDI covers "claims and encounter information, payment and remittance advice, claims status, eligibility, enrollment and disenrollment, referrals and authorizations, and premium payment" information, which correlates with the medical coding process.

Transaction and Code Set Rule

• As part of HIPAA's Administrative Simplification Title II, a "Transaction and Code Set Rule" exists. "Covered entities," or any health care organization falling under HIPAA law, are required to follow the standard set of coding. Under this portion, HIPAA also sets forth requirements for standard medical diagnosis and procedure codes.

HIPAA's Adoption of Coding Systems

• The medical coding and billing industry had established coding systems prior to HIPAA. Because of this, HIPAA law named the well-known coding systems as the standard for reporting diagnoses, procedures and drugs. For physician office procedures, the Current Procedural Terminology, or CPT-4, system is used. ICD-9, or International Classification of Diseases-Ninth Revision, codes identify hospital diagnoses and inpatient procedures. Current Dental Terminology, or CDT, and National Drug Codes, or NDC, are standards for the dental and drug industries. Under HIPAA, any covered entity reporting e-PHI reimbursement information must adhere to the standard coding systems listed here.

HIPAA and ICD-10

• In October 2013, the ICD-9 system updates to ICD-10. Foreseeing the change, HIPAA included terminology in the law to name the updated ICD-10 as one of the required standard code systems once implemented. The updated ICD-10 system provides better detail in codes for easier sharing and accessibility of patient health information.