Importance of Medical Coding

Medical coding is the process of assigning codes to a patient’s medical diagnosis and procedure descriptions. Collecting and reporting aggregate information through codes allows the medical community a simplified way to provide information quickly and easily.

Reimbursement

• Medical codes have associated reimbursement values, so they are submitted on a billing claim to the insurance company for reimbursement of services.

Data Gathering

• Medical codes allow for gathering of important data on a variety of topics. For example, a code for an infection due to a needle stick may be tracked over a period of time for risk and quality management purposes.

Research

• Medical codes are often tracked for research purposes. For example, cancer-related codes are reported regularly in order to determine the funding and resources needed for research.

Statistics

• Because each code relates to a diagnosis or procedure, it allows the medical community to provide statistical information on specific diseases and injuries. For example, statistics on children’s head injuries while riding bicycles without wearing helmets are provided through medical codes.

Resource Use

• Because medical codes have associated reimbursement, many hospital administrators and managers use coding reports to ensure that resources are being utilized properly and to make further decisions about the most cost-effective services to offer patients.