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Guidelines for Medical Coding & Billing Procedures

Medical coding and billing are two separate processes that work together to ensure that a health care provider is reimbursed for services provided to a patient. Medical coding is the process of assigning numerical and alphanumerical codes to diagnosis and procedure descriptions. Medical billing is the process of taking the assigned codes and billing them to the insurance provider for reimbursement.

  1. Understanding Inpatient Coding

    • Inpatient coding is done by coders for patients who are admitted to the hospital. Inpatient coding uses the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM, soon to be ICD-10) coding system to assign codes to diagnoses and procedures.

    Assigning ICD-9-CM Diagnosis Codes

    • ICD-9-CM diagnosis codes are assigned to current conditions and diseases affecting the patient’s health. A review of the patient’s health record is performed to record all of the current diagnoses. The diagnoses are then converted to the corresponding numerical code. Diagnosis codes are assigned via a software system or by looking them up in an ICD-9-CM coding book.

    Assigning ICD-9-CM Procedure Codes

    • ICD-9-CM procedure codes are assigned to the procedures and treatments performed on the patient during the hospital stay. If a procedure code is assigned, there must also be a corresponding diagnosis code assigned. Procedure codes are also assigned by using a coding book or software.

    Prioritizing Codes

    • Inpatient claims are reimbursed based on how the assigned diagnosis and procedure codes are prioritized. For example, if a patient is admitted to the hospital because of a hip fracture treated with surgery, the hip fracture code is listed first in the diagnosis section, with the code for the surgery listed first in the procedure section. Additional diagnoses and procedures are then listed as secondary.

    Understanding Outpatient Coding

    • Outpatient coding is done for patient procedures that do not require an overnight stay in the hospital. They can be in hospital outpatient centers, urgent care or physician’s offices.

    Assigning CPT Codes

    • Outpatient coding classification is done with Current Procedural Terminology (CPT) codes. CPT, copyrighted and maintained by the American Medical Association (AMA), is used mainly to report medical services by physicians to insurance carriers. CPT codes are assigned by looking up procedures and services in a CPT coding book or CPT software.

    Understanding HCPCS Codes

    • HCPCS codes are numerical and alphanumerical codes assigned to medical procedures, products, supplies and services that are not covered by ICD-9-CM and CPT codes. Hospitals, physicians and other health care providers use HCPCS to report services and procedures delivered. HCPCS codes are generally not assigned by coders. They are assigned by software systems that automatically generate charges for services and products like ambulance transportation or the cotton balls used by a patient.

    Billing

    • Health insurances and payers are billed from the health care provider (like the physician or hospital) for services provided to patients. Codes are grouped together by a biller to send to the payer. Based on factors like the location of the facility and service performed, the payer reimburses the provider based on the reimbursement assigned to ICD-9-CM and CPT codes.

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