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Ashworth College Surgical and Procedural Coding Discussion

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Course Name:Medical Coding 1
Lesson 5: ICD-10-PCS Coding
In this lesson you’ll learn how to code using the ICD-10-PCS system,
which codes for procedures performed in hospitals. You’ll learn about
chronic and infectious diseases. You’ll also learn the layout of ICD-10-PCS
and the steps for surgical and procedural coding in a hospital setting.
 Objective 1 Describe ICD-10 diagnosis and
 Objective 3 Describe the layout of ICD-10-PCS
procedure coding

 Objective 4 Explain the steps for accurate surgical
Objective 2 Identify top chronic and infectious
and procedural coding in a hospital setting using
Page:1 of 6
Course Name:Medical Coding 1
Text Readings
The ICD-10-PCS codes you’ll need for this course are provided for free
through the CMS website. Click
here ( to download the PDF containing these codes before you
continue on with your studies. Save the PDF in a safe location so that you can
use it in future courses.
Additional Readings
Required Readings
ICD-10-PCS (
Learning and Using ICD-10PCS (
Supplemental Videos
External Reference (
External Reference (
External Reference (
Lecture Notes
ICD-10-PCS stands for International Classification of Diseases, 10th
Revision, Procedure Coding System. It’s the coding classification system used
to track and report inpatient (hospital) medical procedures. This new system
was developed to replace International Classification of Diseases, Ninth
Revision, Clinical Modification (ICD-9-CM), Volume 3, Procedures, which had
been used for coding and reporting inpatient procedures since 1979.
Because medical terminology, diagnoses, and procedures change and
become more detailed and specific over time, there’s a need for a new
classification system. The ICD-9-CM classification system quickly became
obsolete and outdated, and it became more difficult to accurately reflect the
procedures performed. That’s why ICD-10-PCS was created.
ICD-10-PCS is a seven-digit alphanumeric code consisting of a combination of
the numerals 0 through 9 and the alphabetical letters of A–H, J–N, and P–Z.
(For example, for excision of the tonsils, open approach, the ICD-10-PCS
code is 0CTP0ZZ.) The letters O and I aren’t used in the system to avoid
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Course Name:Medical Coding 1
confusion with the numbers 0 and 1. The procedures are divided into sections
and categorized by the type of procedure performed. The first digit in the code
always reflects the category.
The ICD-10-PCS code sections are as follows:
0: Medical and Surgical
1: Obstetrics
2: Placement
3: Administration
4: Measurement and Monitoring
5: Extracorporeal Assistance and Performance
6: Extracorporeal Therapies
7: Osteopathic
8: Other Procedures
9: Chiropractic
B: Imaging
C: Nuclear Medicine
D: Radiation Oncology
F: Physical Rehabilitation and Diagnostic Audiology G: Mental Health
H: Substance Abuse Treatment
ICD-10-PCS consists of the following features:
Tables—contain rows that show the valid code combinations for each code
Index—a list of code descriptions listed alphabetically. Codes can be
looked up in the index based on common terms (tonsillectomy) or procedure
type (excision, tonsils). Once the desired procedure is located in the index,
you can then use it to find the appropriate table to determine the correct
List of Codes—valid codes shown for the table
ICD-10-PCS codes can be broken down in such a way that will enable you to
look at a code and automatically understand it. The position of each part of a
code has a meaning:
Position 1: Section
Position 2: Body system
Position 3: Root operation
Position 4: Body part
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Course Name:Medical Coding 1
Position 5: Approach
Position 6: Type of device
Position 7: Further qualifiers
Let’s take a look at our earlier example code for tonsillectomy—0CTP0ZZ.
This code tells us the following information:
0: The code is in a medical and surgical table.
C: The procedure is in the mouth and throat.
T: The root operation is resection.
P: The body part is the tonsils.
0: The approach is an open approach.
Z: There’s no device.
Z: There’s no further qualifier.
All of these alphanumeric characters are found by reviewing the appropriate
table in the coding book. At the beginning of each table is a list of
alphanumeric characters used with that table.
Now it’s time to practice finding the same code using your coding book. Follow
these steps:
1. In the Index of the coding book, locate the procedure tonsillectomy.
2. Follow: See Also, Resection Mouth Throat OCT.
3. In the Tables section of the coding book, locate the MOUTH AND THROAT
4. Then, follow the headers until you get to the OCT table.
5. Within each column, locate the appropriate information for the procedure:
Body part: Tonsils (P); Approach: Open (0); Device: No Device (Z);
Qualifier: No Qualifier (Z)
6. In the Index of the coding book, locate the procedure tonsillectomy.
7. Follow: See Also, Resection Mouth Throat OCT.
8. In the Tables section of the coding book, locate the MOUTH AND THROAT
9. Then, follow the headers until you get to the OCT table.
10. Within each column, locate the appropriate information for the procedure:
Body part: Tonsils (P) (Column 1); Approach: Open (0) (Column 2); Device:
No Device (Z) (Column 3); Qualifier: No Qualifier (Z) (Column 4).
Let’s look at another practice code. Suppose a patient has an excision of the
toenail, external approach, for diagnosis of a condition. Before going any
further, take a moment to see if you can locate the correct code in your coding
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Course Name:Medical Coding 1
To locate excision of toenail, external approach, diagnostic, follow these steps:
1. In the Index of the coding book, look up Excision.
2. Under Excision, locate toenail.
3. The code in the Index lists 0HBRXZX. Before using the code, be sure to
look the code up in the Table. (You should never code directly from the
Index.) Start by locating the 0HB table.
4. In the Body Part column, locate toenail (R).
5. In the Approach column, locate external (X). In the Device column, locate
No Device (Z).
6. In the Qualifier column, locate Diagnostic (X).
7. The final code for excision of the toe nail, external approach, for diagnosis
If you’re feeling overwhelmed at this point, that’s normal. It takes a little while
to become acclimated to the layout of the coding book, so don’t worry!
ICD-10-PCS versus ICD-9-CM
Great differences exist between the ICD-10-PCS system and the ICD-9-CM
procedure coding system. Upon initial review, the biggest difference is in the
code structure. ICD-9-CM consisted of three- or four-digit numeric codes,
including a decimal point. As discussed previously, the codes for ICD-10-PCS
are seven alphanumeric digits, with no decimal.
Let’s take a closer look at the example we’ve been using for tonsillectomy.
The code for tonsillectomy without adenoidectomy in the ICD-9-CM
classification system is 28.2. The code for tonsillectomy without
adenoidectomy in the ICD-10-PCS classification system is 0CTP0ZZ (open
approach) or 0CTPXZZ (external approach).
As you can see, the structure of the code in ICD-9-CM is very different from
that of ICD-10-PCS. There are almost 72,000 ICD-10 procedure codes sets,
compared to 4,000 in ICD-9-CM! ICD-10-PCS codes allow for a great amount
of detail, and the ICD-9-CM procedure codes didn’t. In fact, when using ICD-9CM procedure codes, it was common to assign the codes NOS (Not
Otherwise Specified) and NEC (Not Elsewhere Classified), because there
wasn’t enough detail in that coding classification system to accurately identify
the procedure.
The structure of ICD-10-PCS allows for growth and changes to accommodate
more codes. This issue was one of the biggest problems with ICD-9-CM
procedure codes. Since there was no allowance for growth, it created a huge
problem when new procedures were added to the medical field.
Procedural Coding within the Hospital Setting
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Course Name:Medical Coding 1
Although the coding book is a great way to assign codes, and although it’s
important to understand, learn, and practice how to code with the aid of the
coding book, it’s now possible to use software to code procedures. Today’s
healthcare facilities use computerized coding software systems to help assign
codes. These computerized systems make coding faster and more efficient;
however, they can’t replace the knowledge and skills required to code
manually. So, it’s still important to understand this process and how to obtain
codes using a coding book.
When ICD-10 was first implemented, there was a bit of an overlap between
using ICD-9 and ICD-10. When hospitals need to convert ICD-9-CM
procedure codes to ICD-10-PCS, they use a process called mapping within
the software. A mapping tool points the ICD-9-CM code to the appropriate
ICD-10-PCS code. To aid in mapping, the Centers for Medicare and Medicaid
Services (CMS), National Center for Health Statistics, American Health
Information Management Association, American Hospital Association, and 3M
have collectively developed the General Equivalency Mapping System
(GEMS). This system helps point ICD-9-CM codes to the new ICD-10 codes.
Visit and map the ICD-9CM code for laparoscopic appendectomy (47.01) to the new ICD-10-PCS
code. Type appendectomy into the search box and click on the magnifier icon
to search. Click on the ICD-9/10 Conversion link at the top. Select the
Convert ICD-10-PCS 0DTJ4ZZ to ICD-9-CM link, and you’ll see how the
ICD-10 code for appendectomy is mapped back to the ICD- 9 code. This is an
example of how mapping software works in coding and billing systems.
Think of mapping (also sometimes referred to as a crosswalk) as translating a
word or phrase from one language to another language. Hospitals and other
healthcare facilities load mapping files into their software systems to help
them convert old codes to the new classification system.
Mapping isn’t an exact science. Sometimes, one code isn’t matched closely
with an old code and a set of codes are presented, instead of just one code.
So, coders still need to be able to have a good understanding of the manual
coding process to determine which code is the most precise. As you know by
now, selecting incorrect codes can result in loss of reimbursement to the
healthcare facility or even complete denial of the claim.
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Course Name:Medical Coding 1
Lesson 6: CPT and Place-of-Service Coding; Coding
Procedures and Services
In this lesson, you’ll learn about coding procedures and services performed
by healthcare providers. The CPT codes were developed by the American
Medical Association (AMA) in 1966 for similar reasons as the ICD-9-CM
codes: to provide detailed terms that are consistent and to eliminate
confusion and misinterpretation in reporting services rendered to patients.
The CPT codes are five-digit numbers (with no decimal points). The CPT
manual is maintained and updated annually by the AMA, including
additions, deletions, or changes in existing numbers, just like the ICD
 Objective 1 Discuss the history of CPT.
 Objective 3 Explain and use modifiers.
 Objective 2 Identify E/M services and codes and
 Objective 4 Assign CPT codes correctly and use
review CPT categories and classes.
the CPT index.
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Course Name:Medical Coding 1
Text Readings
Comprehensive Health Insurance: Billing, Coding, and Reimbursement,
6 (
7 (
Additional Readings
Required Readings
Current Procedural Terminology (CPT)
Code (
Intro to CPT Coding (
Supplemental Readings
CPT (Current Procedural Terminology) (
Using CPT (
CPT Modifiers (
Try Medical Coding (
Supplemental Videos
External Reference (
External Reference (
Lecture Notes
When the doctor sees a patient in the office, he or she checks off all the
services and procedures performed during that visit, in addition to the
diagnoses for that visit. Sometimes the nurse or medical assistant will assist in
checking off the procedures.
CPT codes are usually marked on the encounter form or routing slip, but other
services might be handwritten. Codes are then added to the claim form, and
they must be consistent with the diagnosis from the patient visit. By the time
this encounter form gets to you, the patient will be long gone, and you’ll have
to decipher the checks and marks the physician made on this form. If you
aren’t receiving clear and complete information, you must communicate this
with the office manager or physician to remedy the situation. With the federal
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Course Name:Medical Coding 1
government increasingly rooting out fraud and abuse, proper CPT coding and
billing can decrease your chances for a Medicare audit and will help avoid the
recoding of your services by insurers.
The process of coding procedures is accomplished by finding the correct
description of the procedure in Level I of the HCPCS system. The Level II
codes are applied to the supplies, medications, therapeutic substances,
medical equipment, and certain specialized services needed by the patient.
We’ll be discussing more about HCPCS Level II codes in the next lesson. In
this lesson, we’re concentrating on the Level I CPT codes.
The CPT code book that includes the Level I codes is broken down into six
sections, each with a list of consecutive code numbers available to describe
the procedures found in that section. Your text explains each section and the
symbols and conventions that are used.
You’ll remember from studying the ICD-10 code books that all notes, symbols,
indents, and headings have meaning and must be utilized in arriving at the
correct code. Like the ICD volumes, the CPT manual has an index, which is
the first place you should look when trying to determine an appropriate code.
It’s important to remember to never to code solely from the index.
A two-digit modifier is added when further explanation is needed, or to give
some additional information. Some modifiers affect reimbursement, whereas
others are more informational in nature. Some modifiers are used for
evaluation and management services, whereas others are used for radiology
or surgical procedures. Failure to use modifiers can result in rejection of the
claim or reduced payment. There’s a complete listing of all CPT Level I
modifiers in Appendix A of your CPT manual. It’s very helpful to flag this
section for easy reference. Sometimes you may even have to submit more
than one modifier for a single code.
Coding procedures for surgery can be challenging. Surgery is normally coded
from postoperative notes and other documents provided by the surgeon. Your
text discusses the numerous guidelines for coding surgery cases. One of the
most important surgical coding guidelines is the concept of unbundling
procedures. According to the CPT system, procedure codes have either an
asterisk, indicating a minor surgical procedure, or no asterisk, indicating a
major surgical procedure. CPT rules about surgical coding are different from
the rules set by Medicare. Most insurance payers follow Medicare’s policies,
but it’s important for you to learn CPT rules to have a complete understanding
of the process.
There are numerous guidelines for the various types of procedure coding.
Laceration repair coding, for example, is one you likely will encounter and is
found in the beginning of the integumentary section. Lacerations are classified
into three types: simple, intermediate, and complex. The classification
depends on the extent of the laceration. You should become familiar with the
differences between the different levels of repair. Repairs of lacerations are
coded according to the sum of the length of the repairs measured in
centimeters (cm) for lacerations of similar classification. This means that if
there’s more than one laceration of a particular classification, you would add
the length of each laceration together and code the entire group with one
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Course Name:Medical Coding 1
CPT stands for Current Procedural Terminology. It’s part of the Healthcare
Common Procedure Coding System. The CPT codes are used for reporting
medical services and procedures. They provide a standard and a uniform way
for healthcare facilities to report services and procedures. There are several
different levels within the HCPCS classification system, with the most
commonly used level being the CPT level.
CPT codes are published and maintained by the AMA, which first developed
the codes in 1966. A second, expanded edition was published in 1970.
Throughout the 1970s, the codes were expanded and updated to meet the
needs of the ever-changing medical field. The codes were then adopted for
use by the CMS (then called HCFA) in 1983.
Visit the AMA webpage “How a Code Becomes a Code” at .
In August 2000, CPT codes were named as the national standard of codes
under HIPAA. According to the AMA, HIPAA officially names CPT (including
codes and modifiers) and HCPCS as the procedure code set for
Physician services
Physical and occupational therapy services
Radiological procedures
Clinical laboratory tests
Other medical diagnostic procedures
Hearing and vision services
Transportation services, including ambulance
CPT codes are five-digit numerical codes used to describe the procedures
and services from providers, especially those from physician offices. For
example, a physician may perform a physical checkup on a patient and report
the CPT code 99396, which translates to “Established Patient Preventive
Medicine Services.”
You may be wondering how ICD codes differ from CPT codes. ICD-10
includes both diagnoses and procedure codes, used mainly for inpatient
hospital settings and diagnosis reporting. CPT codes are procedure (or
service) codes used mainly in outpatient and physician settings for billing and
CPT is organized into three categories:
Category I: Widely performed procedures
Category II: Supplementary tracking codes
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Course Name:Medical Coding 1
Category III: Temporary codes for emerging technology, services, and
CPT Category I
Category I codes are the most widely used. They’re the codes used the most
by physician offices and outpatient providers. These codes are made up of
five digits and are updated annually by an AMA board. Within Category I, the
codes are broken down even further:
Evaluation and Management (E/M)
Pathology and Laboratory
An example of a Category I CPT code is: 99253 Initial inpatient consultation.
CPT Category II
Category II CPT codes collect information about the care by providing codes
for services or test results and help to measure performance. Category II CPT
codes are alphanumeric. They have four digits followed by an F. For example,
0001F is a Category II CPT code for blood pressure measured.
CPT Category III
Category III CPT codes are used for emerging technology. They’re used for
data collection and tracking for new procedures or services. Category III
codes are five characters—four digits followed by a T.
CPT Coding Basics
Just like ICD coding, CPT coding also has specific nomenclature and
guidelines. In coding, it’s important to pay attention to the symbols,
descriptions, and guidelines that appear in your book and with any coding
software that you use. The nomenclature is what will help you assign the
correct codes for reporting and reimbursement. Nomenclature is the
descriptive terms, guidelines, and identifying codes for reporting medical
services and procedures.
Another way CPT codes differ from ICD codes is that they use modifiers.
Modifiers are made up of a hyphen and then two digits, like this: -25. The
modifiers are placed after the main CPT code to supply additional details. Be
careful using modifiers, because some insurance companies will deny claims
with certain modifiers.
The following are common modifiers:
-22: The procedure was unusually complicated and took more time than
the general CPT code allows.
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Course Name:Medical Coding 1
-51: More than one surgical procedure was performed during the same
-76: The doctor performed the same procedure more than once during the
visit (same patient).
-91: The doctor repeated the same diagnostic test, usually on the same
An important part of CPT coding is understanding the place of service. As
your textbook discusses, the Evaluation and Management (E/M) section is
divided into sections: offices, hospitals, consultations. These sections are then
further subdivided.
Be sure to review the CPT code ranges for places of service on pages 136–
137 of your textbook.
Remember, E/M stands for “evaluation and management.” E/M codes
represent physician–patient encounters reported for billing. Different E/M
codes stand for different types of encounters, such as physician office or
hospital visits. Within each type of encounter, there are also different levels of
Key components meet the documentation requirements explained in the E/M
guidelines. This means that patient documentation must support the E/M code
assignment for E/M coding unless you’re coding based on time. If time is the
controlling factor, there are no specific documentation requirements for the
three key components mentioned here.
Coding for E/M is based on three key components:
Physical examination
Medical decision making
Medical decision making means the complexity of establishing a diagnosis
The number of possible diagnoses and/or the number of management
options that must be considered
The amount and/or complexity of the patient’s health record, diagnostic
tests, that must be obtained, reviewed, and analyzed
The risk of significant complications, morbidity, and/or mortality, as well as
comorbidities, associated with the patient’s presenting problem, the
diagnostic procedure and/or the possible management options
The CPT index appears after the appendix of the CPT code book. It’s
organized by main terms into four main entries:
Procedure or Service
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Course Name:Medical Coding 1
Organ or Other Anatomic Site
Synonyms, Eponyms, and Abbreviations
In medicine, an eponym is an illness, condition, or procedure named after the
person who is believed to have discovered it.
1. Read the patient record or source document completely.
2. Review the procedure to identify the main term and modifying terms.
3. Locate the main term in the CPT index.
4. Look for subterms indented below the main term.
5. Write down the tentative code range for the procedure (or each procedure if
there are more than one).
6. In the main text, locate each tentative code, reading any notes and paying
attention to symbols and nomenclature.
7. Verify that the code matches the procedure information provided in the
patient’s record.
8. If necessary, find the modifier.
9. Assign the CPT code.
Remember, the index isn’t a substitute for coding from the main portion of the
CPT book.
One of the biggest mistakes coding and billing professionals can make is to
“unbundle” CPT codes; that is, to report more codes than is required. Many
areas of CPT, such as surgery, consist of bundled codes, or a single code
used to report a group of procedures. When individual codes are reported
instead of the one CPT code that covers all the procedures, it’s known as
unbundling or fragmented billing.
Most unbundling occurs as an error. However, the CMS may view this as
fraudulent and fine an organization that’s regularly practicing unbundling.
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Course Name:Medical Coding 1
Lesson 7: HCPCS and Coding Compliance
In this lesson, we’re going to take a closer look at HCPCS, focusing on
Level II, coding compliance.
You’ll learn about selecting codes by using source documents: the actual
patient health record, whether it’s the office note, consultation report,
progress note, operative report, or diagnostic evaluation. These may be
paper based or electronic. Keeping accurate and thorough patient health
records is critical to the provider’s role of furnishing quality health care to
patients. The link between good documentation practices and proper
reimbursement is also important.
You’ll also be introduced to coding from progress notes, consultation
reports, and diagnostic reports.
 Objective 1 Explain the two levels of HCPCS and
 Objective 3 Describe federal laws, regulations, and
HCPCS modifiers.
 Objective 2 Identify code linkages and discuss
penalties relating to coding compliance.
 Objective 4 Explain the National Correct Coding
coding accuracy.
Initiative (NCCI).
Page:1 of 7
Course Name:Medical Coding 1
Text Readings
Comprehensive Health Insurance: Billing, Coding, and Reimbursement, Chapter
8 (
Additional Readings
Required Readings
HCPCS Codes (
HCPCS Modifiers (
Supplemental Readings
HCPCS Release & Code
Sets (
Health Insurance Claim Form (
National Correct Coding Initiative
Edits (
How to Use the Medicare National Correct Coding Initiative (NCCI)
Tools (
HCPCS Codes (
Note Similarities and Differences between HCPCS, CPT
Codes (
Lecture Notes
There will be many times when you’ll have to speak with insurance company
representatives—perhaps to inquire about the status of your claim, to find out
why an item or service was not paid, or to discuss other insurance-related
issues. In many situations, the insurance company representatives can be a
help to you by giving suggestions and pointing out rules that you may have
overlooked. However, sometimes you may encounter uncooperative insurance
carrier personnel. In all cases, remember to be professional and bring any
problems to the attention of your supervisor.
To work in health care, it’s imperative that you become familiar with what
constitutes correct documentation because reimbursement for the physician’s
services is based on what’s documented. Because of the importance of correct
documentation, we’ll spend some time here detailing the importance of correct
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Course Name:Medical Coding 1
It’s important to have sound health records that chronologically document all
patient care because these records serve the following functions:
They enable the physician and other healthcare professionals to plan and
evaluate the patient’s treatment.
They enhance communications and promote continuity of care among
physicians and other healthcare professionals involved in the patient’s care.
They facilitate claims review and payment.
They reduce hassles related to medical review.
They serve as a legal document to verify the care provided, which can be
helpful in defending against an alleged professional liability claim.
The health record should be complete and legible. Most physicians dictate their
patient encounters and then have the dictation transcribed. The physician
should read, sign, and date all dictated medical records before they’re placed in
the patient’s chart. A signature alongside the note indicates that the physician
read the transcription and approved the information. When Medicare audits a
medical record and the record can’t be read by at least two people, it’s
considered illegible, and the services won’t be reimbursed.
Payers differ in signature requirements, but obtaining a full signature is the best
practice. CMS, which administers Medicare, doesn’t specify whether a full
signature is required or whether initials are permitted. Many commercial payers
don’t require signature or initials, but because medical records can and often
do become legal documents, a full signature is generally the best practice.
The documentation of each patient encounter should include the date, reason
for the encounter, appropriate history and physical exam, review of lab and/or
x-ray data, assessment, and plan for care. The CPT and ICD codes reported
on the health insurance claim form should reflect the documentation in the
medical record and support the medical necessity. An important phrase to
remember in the insurance world is, “if it wasn’t documented, it wasn’t done.”
Payers define medically necessary services as those that adhere to standards
of good medical practice, match up with the diagnosis, and provide the most
appropriate level of care in the most appropriate setting. The definition of
medical necessity may differ among insurers. Medically necessary services
may or may not be covered services, depending on the health plan.
The most important step in coding protocol is to code and report only those
conditions and procedures that are documented in the medical record. If you
know a service or procedure was provided, but it’s not stated in the medical
record, either you must have the physician make an addendum to the record or
you must not code for the undocumented service.
Choosing the primary diagnosis and then linking the diagnosis to the procedure
are critical steps for proper reimbursement. Many insurance carriers have
code-linkage edits (ICD/CPT matching) built into their claims-processing
systems. The physician’s claim can be denied for ICD/CPT “mismatch.” For
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Course Name:Medical Coding 1
example, a claim is submitted and the diagnosis billed is migraine headache,
but the procedure billed is a chest x-ray. Now that’s a mismatch that probably
will kick out the claim!
“SOAP notes” are a popular method for physicians to document their findings.
Many times it’s the medical assistant or nurse who documents the patient’s
chief complaint and the description of the presenting problem. The medical
assistant or nurse can also record the patient’s current, past, and social
medical history and the patient’s family history. When a patient completes a
questionnaire as part of the registration process, that questionnaire becomes
part of the medical record as well. It’s important that the physician sign and
date any patient questionnaire and nursing notes to indicate that he or she read
the information.
Coding from operative reports can be difficult. You must have a good
understanding of medical terminology as well as a correct idea of the actual
procedure performed. Effective communication with the physician is essential
for accurate coding.
Working in a physician office, you’ll often encounter Evaluation and
Management codes. The Evaluation and Management (E/M) codes cover those
services generally considered to be the office visit, hospital visit, consultation,
or ER visit. To determine the proper code for these types of services, numerous
factors must be taken into account. These codes are used frequently by
coders. In a pediatric or family practice, it’s entirely possible that most of your
codes will come from this category.
More and more healthcare employers are learning how experienced coders can
make a difference in their office’s reimbursement practices. After you’ve gained
some billing and coding experience, you might want to consider taking a
national coding certification examination. This course hasn’t focused on coding,
except as an entry-level skill for medical billing specialists. But with experience
on the job, you can become skilled as a coder, and obtaining the certification
shows that you’re a coding professional as well as an expert. These
certifications are becoming well known in the industry, and now many
healthcare providers will only hire those who are certified for some advanced
coding positions.
In the previous lesson, we touched on HCPCS when we talked about CPT.
Remember, HCPCS is the Healthcare Common Procedure Coding System.
There are several different levels within the HCPCS classification system, with
the most commonly used level being the CPT level, or Level I, codes that we
discussed previously. Level II HCPCS codes are known as national codes.
According to the CMS, Level II codes are used mainly to identify products,
supplies, and services not included in the CPT-4 codes. These can include
Ambulance services
Durable medical equipment
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Course Name:Medical Coding 1
Nonphysician supplies
Ambulance services, durable medical equipment, prosthetics, orthotics, and
supplies are often referred to by the acronym DMEPOS.
These Level II codes were created to provide reporting and billing mechanisms
for codes not covered under CPT. Unlike the Level I (CPT) codes, which
consist of five-digit codes, the Level II HCPCS codes consist of four digits
preceded by an alphabetical character ranging from A through V.
You can access the HCPCS Level II codes (provided by the CMS for free) by
following these steps:
1. Go to the CMS website
2. Click on HCPCS – General Information.
3. Scroll down to the “Related Links” section and click on Alpha-Numeric
4. Click on 2018 HCPCS Index.
5. Click on 2018 HCPCS Index (PDF, 206KB).
6. Save the document to your hard drive for your personal use.
7. Repeat these steps to download the 2018 Alpha-Numeric HCPCS File (ZIP,
1MB) and the 2018 HCPCS Table of Drugs (PDF, 309KB).
HCPCS originally stood for HCFA Common Procedure Coding System. HCFA
was the acronym for the Health Care Financing Administration, which is now
known as the Centers for Medicare and Medicaid (CMS), thus the coding
system was named after that organization. Today, HCPCS stands for
Healthcare Common Procedure Coding System.
HCPCS was established in the 1980s to provide a standardized coding system
for describing the specific procedures and services in health care. In 1983,
HCPCS was initially created to represent physician and nonphysician services
under Medicare. As your textbook describes, prior to that time there was no
uniform system for coding procedures and services, which meant that there
was no good way to collect reimbursement. Since then the usage has
expanded. In 2003, the HHS gave authority to the CMS to maintain and
distribute HCPCS Level II codes under HIPAA. They’re updated on January 1
of each year, just like CPT (Level I) codes.
Today, Medicare, Medicaid, as well as private health insurers all use HCPCS
codes for billing and claims processing. Be sure to review the HCPCS Level II
example on page 186 of your textbook.
Page:5 of 7
Course Name:Medical Coding 1
Initially, there was also a HCPCS Level III, which included the “local codes.”
These codes were developed and used by state Medicaid agencies, Medicare
contractors, and private insurers to cover local services not identified in HCPCS
Level I or II codes. In 1996, HIPAA required CMS to adopt standards for coding
systems that are used for reporting healthcare transactions. These regulations
eliminated Level III local codes, and they were phased out on December 31,
As we discussed in the previous lesson, modifiers are two-digit (alphabetical or
alphanumeric) codes that are appended to the back of a HCPCS code to
provide additional information about the code. Think about it as a way to help
explain a procedure when there isn’t a specific code that covers it. Refer to
Table 8.2 on page 187 of your textbook to see a list of HCPCS modifiers.
Modifiers are important because they help explain things that may not seem
apparent on first glance from payers. For example, maybe the physician
performs two procedures during one surgery on one patient. The insurer may
only pay 100% of the allowed amount for the first procedure, but only a
percentage of that for the second procedure. Using a modifier that indicates
multiple procedures will help the payer better understand what to reimburse.
According to the CMS, U.S. healthcare insurers process over 5 billion claims
for payment each year. Can you imagine what that would be like if we didn’t
have a standardized coding and reporting system?
To support billing requirements, CPT codes must be supplied on a standard
form to comply with data exchange regulations. The CMS-1500 form is the
standard claim form to bill Medicare and durable medical equipment regional
carriers (DMERCs). The National Uniform Claim Committee (NUCC) is
responsible for the design and maintenance of the CMS-1500 form. Visit the
CMS to see a copy of the CMS-1500. Go to
In the previous lesson, we touched on unbundling and how it can be seen as
fraudulent if it continues to happen from one provider. As your textbook
describes, this type of fraud is covered by the Federal Civil False Claims Act.
Believe it or not, the False Claims Act (FCA) was first enacted by Congress in
1863! Then, the government was concerned that suppliers of goods to the
Union Army during the Civil War were defrauding the army. Since then (as you
can imagine), the FCA has been amended several times to reflect current
happenings. One of the current amendments to the FCA makes it illegal to
submit claims for payment to Medicare or Medicaid that are known to be false.
HIPAA created the Healthcare Fraud and Abuse Control Program to help
identify instances of fraud and abuse. As your textbook discusses, the Office of
Inspector General (OIG) works with the Department of Justice (DOJ) to
investigate and prosecute these claims.
Page:6 of 7
Course Name:Medical Coding 1
In 1996, the CMS implemented the Medicare National Correct Coding Initiative
(NCCI) to promote national correct coding methodologies and to help control
improper coding and inappropriate payments. According to CMS, “NCCI code
pair edits are automated prepayment edits that prevent improper payment
when certain codes are submitted together for Part B-covered services.” The
NCCI helps providers avoid coding and billing errors and payment denials by
telling them which procedures and services can’t be billed to Medicare for the
same patient within the same day. There’s also a NCCI for Medicaid, but it
varies greatly from the Medicare NCCI.
Be sure to review Figure 8.1 in your textbook. Review Figure 8.2 and Figure 8.3
in your textbook to see examples of the Federal Civil False Claims Act in
Page:7 of 7

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