Tuesday, April 2, 2024

What is Medical Coding? The Complete Explanation

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Medical coding converts diagnoses, treatments, services, and supplies used in medical care into standard medical alphanumeric codes. The diagnoses and procedure codes are derived from the documentation in the medical records, such as the transcription of the doctor’s notes and the laboratory results and radiologic tests. Professionals in medical coding ensure that the codes are correctly applied during the medical billing process, extracting the necessary information from the supporting documentation, assigning the proper codes, and generating a claim that insurance companies will reimburse.

What is Medical Coding?

Every time you visit a medical care professional, medical coding carries place. The healthcare professional looks over your complaint and medical background, determine what’s wrong and how to treat you, and records your appointment. Not only is that documentation the patient’s ongoing record, but it also serves as the basis for the healthcare provider’s payment.

These records are transformed into standardized codes by medical codes, which notify payers of the following:

  • Diagnosis of the patient
  • Medical essentials for the patient’s medicines, services, or supplies
  • The patient’s medicines, services, supplies, and any exceptional situations or medical conditions may have impacted those procedures.

Medical coding involves the capacity to comprehend the services’ anatomy, physiology, intricacies, and the payers’ laws and restrictions to succeed.

Medical coding was inspired by public death bills published in London in the 18th century. Doctors connected these to identify the cholera epidemic’s root cause. It is now much more critical because medical coding data is used to enhance healthcare. In addition to generating actuarial tables, the data derived from the codes are also used to determine utilization, manage risk, detect resource use, support public health initiatives, and more. The results are sent to payers for compensation.

A specific discipline is necessary for medical coding. Medical coders are regarded as healthcare team members and frequently collaborate closely with payers, managers, and clinicians. Medical Coders have specialized abilities as researchers, investigators, teachers, and problem solvers.

Every day, the medical coder and biller process various services and claims. Medical codes must accurately capture reimbursement for delivered services and detail the patient’s interaction with the doctor.

A medical coder’s primary responsibilities are reviewing clinical statements and assigning standard codes utilizing the CPT®, ICD-10-CM, and HCPCS Level II categorization systems. On the other hand, medical billers process and monitor claims made to health insurance companies for payment of services provided by a healthcare practitioner. To guarantee that invoices are paid correctly, the medical biller and coder may be the same individual, or they may collaborate.

The coder examines the patient’s medical record (i.e., the transcription of the doctor’s notes, required laboratory tests, requested imaging studies, and other sources) to confirm the work completed to support a smooth coding and billing process. Both collaborate to prevent insurance payment rejection.

Refer: Medical Coding Certification 2022 : A Complete Guide

Why is Medical Coding Needed?

The documentation of what was discovered, chosen, and carried out serves as the foundation for the healthcare revenue stream.

Documenting a patient’s diagnosis, test findings, and therapy is necessary to ensure future visits will be of the highest caliber and reimbursed. The patient’s health records must be simple to understand and follow throughout subsequent complaints and treatments. This is particularly significant given the hundreds of millions of visits, operations, and hospitalizations that occur each year in the United States.

The difficulty, though, is that countless ailments, illnesses, wounds, and fatalities exist. A comparable number of injectable medications and supplies, as well as the thousands of services that providers do, need to be monitored. These are categorized by medical coding for more superficial reporting and tracking. Each disease, process, and tool has different names, eponyms, acronyms, and descriptions in the healthcare industry. These components are presented and spoken thanks to medical coding uniformly, making it simpler to understand, monitor, and make changes.

Hospitals, providers, and payers may communicate quickly and consistently thanks to the Health Information Portability and Accountability Act (HIPAA), which mandates the use of standard language. Most private health information is stored digitally and based on the allocated codes.

Various Codes Worldwide, medical coding is practiced, and the International Classification of Diseases is used in most nations (ICD). The World Health Organization maintains the ICD, and each member nation modifies it to suit its needs. Six official HIPAA-mandated code sets in the US are used for various purposes.

1. ICD-10-CM (International Classification of Diseases, 10th Edition, Clinically Modified) 

ICD-10-CM contains codes for everything that can harm, ill, or kill you. The 69,000-code collection consists of codes for ailments, poisons, neoplasms, wounds, their causes, and what people did when the injuries were sustained. Codes are “smart codes” that contain up to seven alphanumeric characters and express the patient’s complaint in detail.

For recording and proving the medical necessity for services, ICD-10-CM is employed. It also serves as the framework for the MS-DRG system described below.

2. CPT (Current Procedure Terminology) 

More than 8,000 five-character alphanumeric codes that describe the services rendered to patients by doctors, other healthcare professionals, therapists, and others are included in this code set, which is owned and maintained by the American Medical Association. The CPT system is used to report the majority of outpatient services. Doctors also use it to document the services they provide to inpatients. Here is a look at the creation of CPT codes from behind the scenes.

3.ICD-10-PCS (International Classification of Diseases, 10th Edition, Procedural Coding System) 

Hospitals employ the 130,000-character ICD-10-PCS code set to define surgical procedures in operating rooms, emergency rooms, and other settings. By approaching ICD-10-PCS coding correctly, you can avoid being intimidated by procedural coding.

4. Level II HCPCS (Health Care Procedural Coding System, Level II)

HCPCS Level II’s more than 7,000 alphanumeric codes were initially created by Medicare, Medicaid, Blue Cross/Blue Shield, and other providers to report procedures and bill for supplies. Still, they are used for many purposes, including academic studies, quality measure tracking, and outpatient surgery billing.

5.CDT® (Code on Dental Procedures and Nomenclature) 

The American Dental Association owns and maintains CDT® codes (ADA). The HCPCS Level II dental section was previously represented by the five-character codes that begin with the letter D. Most dental and oral procedures use CDT® codes for billing.

6. NDC (National Drug Codes)

Every medication packet is tracked and reported using the Federal Drug Administration’s (FDA) code. Providers, suppliers, and federal agencies can identify pharmaceuticals prescribed, sold, and utilized thanks to the 10–13 alphanumeric intelligent codes.

7. Modifiers

Hundreds of alphanumeric two-character modifier codes are used in CPT® and HCPCS Level II codes to increase clarity. They may denote a patient’s status, the body portion on which a service is being rendered, a payment directive, an event that modified the assistance the code refers to, or a quality component.

8. AS-DRG and MS-DRG

MS-DRG and APCs are two federal code sets that are utilized to support payments derived from the systems mentioned above. They draw on already-existing code sets but also provide information on the resources needed by the facility to deliver the service.

9. MS-DRG (Medical Severity Diagnosis Related Groups) 

A hospital submits MS-DRGs to get paid for a patient’s stay. The ICD-10-CM and ICD-10-PCS reported codes to form the basis of the MS-DRG. Describe specific patient characteristics, such as the primary diagnosis, particular secondary diagnoses, procedures, sex, and discharge status. This data set is maintained by the Centers for Medicare & Medicaid Services (CMS) in collaboration with 3M HIS.

10. APC (Ambulatory Payment Categories) 

The Hospital Outpatient Prospective Payment System (HOPPS) is supported by the Centers for Medicare & Medicaid Services (CMS), which maintains APCs (OPPS). This system pays for some of the hospital’s outpatient services, including minor surgery and other treatments.

The Process of Medical Coding

The best medical coders are those who have received training and certification. An illustration of a regular day in the life of a medical coder is described below.

A Medical Coder often starts the workday by reviewing the collection of patient details from the previous day for evaluation and coding after settling into the office.

Depending on the therapeutic environment, the type of records and notes may necessitate a specific level of specialization. Medical care systems may have people who concentrate on medical specialties, while medical coders who work in less, or more general offices, may have a broad range of patients and medical necessities.

The coder starts by choosing the top patient note or billing sheet in the stack and begins reading the documentation to comprehend the diagnoses given to the patient and the operations carried out during their visit. The names of the doctors, the dates of the surgeries, and other important details are also abstracted by the coders from the documentation.

Coders start by converting the doctor’s notes into meaningful medical codes using the ICD-10 and CPT® code books. 

Coding is accessible in a lot of circumstances. Individual medical coders acquire in-depth knowledge of the practices and patterns used in their clinic or hospital. Coders can run upon challenging notes that require extensive research and extra time to code appropriately. There are large gray regions that coders might examine, even among the more frequently used codes. Coding standards can be challenging to understand in highly complex or uncommon circumstances.

Experienced coders will rely on their peers and industry experts to debate details in online forums, network with specialists they met at national conferences, or consult with coworkers to assist in comprehending the problem and choosing the appropriate codes. Continuous education and current coding-related publications, including Healthcare Business Monthly, offer significant chances to enhance knowledge and professionalism.

The coder finally finishes the chart and starts the subsequent patient record. The process of reading, taking notes, assigning codes, and entering data into a computer is repeated with every chart. Most of a coder’s day will be spent at a computer reading notes, entering data into a billing system, or looking up material to clarify the documentation in the notes.

Refer: 8 Key Steps of the Medical Billing and Coding Process

What Is the Training for Medical Coders?

Anatomy, physiology, medical practices, and payer laws and policies are all knowledge bases for successful medical coders. It would be best if you enrolled in a coding-specific training program or association to obtain training to become a medical coder. After that, having a professional credential like the AAPC’s makes finding work in the industry more accessible.

Depending on the revenue cycle sector that you choose to specialize in, various medical coding certificates are available. The Certified Professional Coder, which indicates a coder’s competence to work in outpatient settings, is the standard for the majority. For inpatient and outpatient coding for hospital patients receiving in-and-out care, facility coders should obtain the Certified Inpatient Coder and Certified Outpatient Coder certifications.

Both physical and online classes for medical coding training are offered under several different programs.

Currently, AAPC has over 200,000 medical professionals as members. By creating training, professional certification, opportunities for networking with other related medical professionals, and a variety of job-search and career-building possibilities, AAPC raises the bar for medical coding.

Professional programmers are typically self-employed. However, communication with the office’s medical billers, doctors, and support workers is crucial. Medical coders are frequently put on strict production schedules and must finish a predetermined number of notes each day or maintain a predetermined number of lag days.

Lag days are the days between the time the notes are made and the date the claims are submitted. The ideal date often ranges from two to five days.

Internal or external auditors frequently check the coding and documentation for accuracy and completeness, depending on the therapeutic environment. The compliance department or the department supervisor keeps track of the findings of these code audits, which are an essential component of job evaluations.

Medical Coding Training, Courses and Degrees

8 Best Free Medical Billing and Coding Courses In 2022

The annual salary of a medical coder is how much?

The average yearly pay for medical coders with AAPC certification is $60,917, or 29% more than that of uncertified health information technologists, who make about $47,200. 

Your compensation may vary depending on your place of residence, your position within the revenue cycle, and your level of education and qualifications. According to the AAPC’s 2022 Medical Coding Salary Survey, coders who pursue career advancement and earn their CPMA, CPPM, or CDEO credentials earn average yearly salaries of $71,646.

Creating your career path involves ingenuity, curiosity, and ongoing education. Getting the certificate marks the start of a lifetime of learning and new experiences.

Refer: Medical Billing And Medical Coding Salary

Resources & Tools for Medical Coding: 

  • E/M Utilization Tool

Use this tool to assess how effectively a doctor or a practice uses evaluation and management (E/M) CPT codes compared to other practitioners in the same field. Each E/M subcategory’s utilization by code distribution is compared to the national distribution of paid Medicare claims for doctors practicing the same specialty.

Keep in mind that the data is helpful with a few cautions. It is offered by specialty and demonstrates how doctors use E/M codes. Any E/M code range should be used according to a bell-shaped curve. There is a chance of an audit if your practice’s doctor(s) don’t use E/M codes as intended. If you discover that your data considerably differs from regional and local norms, a focused coding assessment might be the best course of action.

  • Calculator for Salary Surveys

The 2022 Medical Coding Salary Survey by the AAPC gathers wage information from business professionals in the healthcare sector. Through the Medical Coding Salary Calculator, employers and employees can access this information to determine fair compensation. Use the filters below to see peer-based incomes for your region, certification(s), experience, and other factors.

  • RVU Calculator (Relative Value Units) 

The CPT® and HCPCS Level II codes’ related work relative value units are quickly analyzed using the work RVU calculator. You may find out the actual work RVUs and the value of each work RVU for a given code by entering the proper code and the number of associated units. The Centers for Medicare & Medicaid Services (CMS) provided values for the national Medicare Physician Fee Schedule (MPFS) relative value file, which were used to calculate RVUs for 2022.

How Important RVUs Are

The Resource-Based Relative Value Scale’s component most frequently utilized is the Work RVU (RBRVS). Work RVUs, which are distinct from practice expense RVUs and malpractice RVUs and are based on wage data for numerous specialty occupation categories, indicate the amount of work a physician must do to perform a service or procedure coded with a CPT® or HCPCS Level II.

  • CPT Code Lookup

Current Procedural Terminology is a set of medical codes developed and maintained by the American Medical Association that hospitals, outpatient facilities, laboratories, hospitals, and allied health professionals use to represent their services and procedures. No outpatient care provider is paid without submitting the correct CPT® codes. You can choose the CPT® codes you need to keep your claims on track with the help of Codify by AAPC.

You can check common code pairings using the cross-reference tools provided by Codify by AAPC. Additionally, you get crosswalks for CPT to ICD-10-CM, CPT to HCPCS, and CPT to Modifier. You can avoid denials brought on by Medicare’s National Correct Coding Initiative modifications by using our NCCI Edit tool.

Since 2011, you’ve had access to quarterly versions, which will help you make more strong appeals.

  • Risk Assessment Lookup

Use the Risk Adjustment Search Tool to access a hierarchical condition category (HCC) assignment easily. For results in the CMS-HCC PACE/ESRD Category V21, the CMS-HCC Category V24, and the RxHCC Model V05, enter the ICD-10-CM code or the diagnosis.

  • Search Health Plan/Provider Policies

The AAPC has gathered information from more than 500 local and national health plans’ websites, as well as from physician credentialing and Medicare/Medicaid eligibility, provider manuals, and provider rules. This new search tool will be accessible to everyone; after that, it will only be for AAPC members.

  • Denial Calculator for Claims

Claim denials are expensive in terms of lost revenue and rework expenses. Fill in the blanks below with your numbers to calculate how reporting difficulties may affect your bottom line.

  • Score Calculator for MIPS

For MIPS, our MACRA calculator employs a “unified scoring system.” This tool awards half credit and points for success in each Performance Category. For instance, clinicians can be credited for submitting 3 of the six required quality measures.

  • Convert ICD-9 to ICD-10 Codes

This tool is not meant to be used as an ICD-10 conversion, ICD-10 mapping, or ICD-9 to ICD-10 crosswalk tool; instead, it is based on the General Equivalency Mapping (GEM) files published by CMS. 

Although many ICD-9-CM codes readily map to ICD-10-CM codes, keep in mind that in some circumstances, a clinical analysis may be necessary to identify which code or codes should be used for your mapping. Before using mapping results, always review them.

  • The ICD-10 Map

“ICD-10” is the tenth edition of the International Classification of Diseases. It is a system of medical coding developed primarily by the World Health Organization (WHO) to classify medical conditions by groups of related illnesses under which more specific illnesses are listed, tying slight diseases to more expansive discouragement.

ICD-10 is used in numerous nations, each of which has changed it to fit with its particular healthcare system.

ICD-10-CM and ICD-10-PCS are the two medical code sets that make up the US version of ICD-10, developed by the Centers for Medicare & Medicaid Services (CMS) and the National Center for Health Statistics (NCHS).

The International Classification of Diseases, Tenth Revision, Clinical Modification is known as ICD-10-CM. ICD-10-CM is a standardized classification system of diagnosis codes representing conditions and diseases, related health problems, abnormal findings, signs and symptoms, injuries, external causes of injuries and illnesses, and social circumstances. It is used for medical claim reporting in all healthcare settings.

ICD-10-CM codes must be reported to the payer for a medical provider to be paid for medical services. ICD-10-CM codes show the patient’s diagnosis, which supports the CPT® codes’ depiction of the patient’s services as being medically essential.

FAQ on Medical Coding

Are You a Good Fit for a Career in Medical Coding?

Your work dramatically influences your future, impacting your identity, family, finances, lifestyle, and personal contentment. It is understandable why choosing a career can seem impossible.

Many people have decided to become medical coders to improve these same aspects of their lives. Medical coding has many benefits as a job.

First, getting certified doesn’t require much effort or money. Second, there are many prospects for promotion, and it pays well. Third, it’s a job with an excellent reputation in the healthcare sector.

However, choosing a career is still tricky, so you want to do it well. These few frequently asked questions are meant to help you understand what a medical coder does and determine if it suits you.

Refer: Getting Your First Billing and Coding Job in 2022

What do medical coders do?

Medical coders are highly specialized workers who examine patient health data entered into the medical file. They then convert information such as signs, circumstances, wounds, illnesses, and medical interventions into alphanumeric codes. These medical codes act as a common language between payers and providers.

Coders must adhere to state and federal privacy standards since clinical documentation sometimes contains sensitive information.

Coders aid in addressing denials of claims when they happen. Additionally, coders engage with doctors to discuss ways to enhance their paperwork to enable compliant coding and payment.

Refer: Daily Activities of Medical Billers & Medical Coders

Does medical coding suitable for me?

Although medical coding is a terrific job, not everyone is suited for it. In every case, your code is essentially a problem to discover the precise codes to convey a complete picture of the patient’s condition. Thus you have to enjoy solving puzzles to be good at it genuinely. But there’s a lot to love about coding if you enjoy solving mysteries, are interested in medicine, and believe you’d enjoy communicating with medical professionals.

Refer: Medical Coder Job Description

Who are the ideal candidates to become medical coders?

Medical coders come from all different backgrounds. Some people shift from clinical employment in healthcare to start their coding professions. Others have just finished high school, and many are empty nesters. In our opinion, there isn’t a specific background or personality that makes a successful coder. However, several characteristics seem to fit the occupation.

1. Inquisitive – Do you enjoy learning new things? No matter how long you’ve been a programmer, you’ll constantly face new challenges.

2. Attention to detail – Do you have an eye for fine details? A clinician’s paperwork may have just one word that differentiates between the correct code and an almost-right code.

3. Organized – Are you prone to running behind schedule? Is the environment cluttered? To prevent mistakes and fulfill deadlines, coders need to be able to manage time and space.

4. Ethical – How do you handle keeping secrets? You must aggressively safeguard patient data and respect patient privacy.

5. Analytical – Are you good at making connections? It helps to have strong critical thinking abilities when examining rules and to select acceptable codes.

What goes on in a medical coder’s regular day?

Typically, medical coders operate in offices away from patient traffic. They spend most of their time reading medical charts, confirming regulations, issuing codes, and fixing mistakes. Working with coworkers to discuss provider notes and billing difficulties is a regular part of their day.

Refer: What is the Job Role of A Medical Billing and Coding Specialist?

Does becoming a coder require a college degree?

Although some institutions offer 2- or 4-year medical coding degrees, postsecondary education is not required. Only specific training and certification are necessary to become a qualified coder. The Certified Professional Coder (CPC®) certificate is a popular choice among employers, and most students can complete the CPC course in four to six months.

Refer: Medical Coding Certification: A Complete Guide 2022

What crucial medical coding abilities exist?

Medical coders need a working understanding of anatomy and medical language because their job entails extracting information from the medical record. They also need to know how to report codes effectively in a heavily regulated sector.

Industry-specific competencies:

  • the ICD-10 code
  • Code CPT®
  • coding for HCPCS
  • specialized language
  • Anatomy
  • Pathophysiology
  • regulations for healthcare

Professional qualifications

  • Communication
  • Thinking critically and solving problems
  • management of time
  • Detail-oriented Research Organization
  • knowledge about computers

Where are medical coders employed?

Physician offices, hospitals, urgent care facilities, ambulatory surgery centers, long-term care facilities, health plans, schools, and more are just a few places where medical coders work.


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I am a medical biller, a blogger and have 20 years of experience in medical billing, medical billing management, and medical assistant. My background includes positions as a clinical medical assistant, medical records technician, medical office manager, biller, and coder. I am certified by the American Academy of Professional Coders (AAPC) as a Certified Professional Coder (CPC) and by the Practice Management Institute (PMI) as a Certified Medical Office Manager (CMOM). As an office manager/biller/coder, I was a member of the Michigan Medical Group Managers, Michigan Medical Billers Association. I also served as a committee member of the Michigan Osteopathic Association of Practice Managers Education Committee.

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