What is Medical Coding? What are the Types of Medical Coding?

Medical Coding is the science of interpreting medical procedures and assigning codes based on the procedure’s nature, cost, intensity, clinical significance and resources used. Different types of medical codes are used within the healthcare industry for different sets of medical procedures. Medical codes are significant to the healthcare system as they help professionals classify the various medical procedures during billing, thus ensuring that hospitals send accurate bills to medical insurance companies. 

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Medical coding is a system in which medical procedures are interpreted and codes are assigned based on their nature, cost, and clinical resources used. It has become an indispensable part of the healthcare industry. Having an efficient coding system benefits healthcare providers in more ways than one. 

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Expedites the medical billing process: Medical codes help insurance companies interpret the nature of medical treatment availed by their beneficiaries. Accurate medical codes help hospitals get timely payments without any hiccups.

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Acts as a universal language for hospital personnel: Medical coding helps various medical and non-medical staff understand the nature of treatment provided to their patients. 

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Aids in medical research: Medical codes help research scholars bifurcate various medical diagnoses and treatments for research and documentation purposes.

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Helps maintain a robust revenue system: Accurate medical codes can help hospitals obtain timely payments from insurance providers, thus enabling an efficient revenue and billing cycle. 

Medical codes are of different types. They are classified into various categories to serve specific purposes. For example, medical treatments for Medicare outpatient procedures come under HCPCS codes whereas general medical treatments and diagnoses are classified as CPT codes. The following section tells us all about the different medical code types and their uses.

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A Brief History of Medical Coding

Evolution of ICD-10

Although medical coding has been in practice for a very long time, there was no uniform system that healthcare systems across the world could follow. In the early 19th century, Jacques Bertillon, a French statistician and demographer, developed the Bertillon classification system to identify causes of death and diseases. It laid the groundwork for the International Classification of Diseases (ICD) family of codes. The Bertillon classification was renamed as the International List of Causes of Death and ultimately as the ICD.

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Later, the American Public Health Association recommended that Canada, Mexico and the United States use the  International List of Causes of Death system and that it be revised every year. This classification method was later renamed the ICD after WHO took over the responsibility of revising and publishing the list of codes for hospitals worldwide to use. The WHO made significant revisions to the original classification list in the 1980s and early 90s. That resulted in a 3-volume work, the ICD-10 which was published in 1992. It eventually replaced the prevailing, two-volume ICD-9 in countries worldwide that used the classification.

Evolution of  Medical Coding in the US healthcare system

The inception of the International Classification of Diseases in the early 1940s paved the way for US healthcare’s Current Procedural Terminologies (CPT) codes family which was developed in the 1960s. These codes focused on standardised codes for diagnoses and procedures. This move was pivotal in making the billing and insurance processes hassle-free. The adoption of EHRs (Electronic Health Records) in the 1990s prompted the government medical bodies to develop more coding methodologies to help streamline the categorization of diseases and deaths.

What are the Different Types of Medical Codes?

Medical codes are classified into various types based on their category. Each type serves a specific purpose. There are four major categories of medical codes.

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HCPCS

The Healthcare Common Procedural Coding System (HCPCS) is formulated by the Centre for Medicare and Medicaid Services (CMS) to define outpatient procedures for Medicare beneficiaries.  HCPCS codes help hospitals and other healthcare providers record outpatient procedures for Medicare patients, thus facilitating a smooth billing process.

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CPT

Current procedural terminologies are codes used by hospitals and other medical institutions to define any regular medical procedure. The AMA (American Medical Association) publishes and maintains this code set. CPT codes are further divided into categories. The first category, or Category I, covers general procedures conducted in a physician’s office. Category II codes cover performance measures and quality indicators for patient care. Category III codes are used to track the usage of new services and provide documentation to the FDA. 

ICD

According to WHO, the International Classification of Disease (ICD) is a global coding system that defines medical conditions, diseases, symptoms, and procedures. Unlike HCPCS and CPT which are used only in the USA, the ICD system is adopted by WHO and used by healthcare professionals globally to indicate any popular disease, symptoms, medical conditions, and procedures.

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DRG

The codes belonging to Diagnosis-Related Groups (DRG) indicate the different in-patient services rendered to Medicare and Medicaid patients. Hospitals and private healthcare practitioners use this system to classify the patients enrolled for in-patient procedures.

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With the recent developments in the healthcare industry and with numerous new treatments being discovered every day, categorizing diseases, symptoms, and diagnoses into medical codes has become the need of the hour for hospitals and healthcare providers. As coding involves processing vast amounts of data, having an automated system helps. CombineHealth’s AI medical coding and billing software can help hospitals and private agencies improve efficiency and reduce administrative workload. 

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Medical coding involves transforming vast amounts of data such as doctor’s notes, prescriptions, follow up notes, etc. The task at hand is extensive. Here is how medical coders make life easier for patients and hospitals.

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Medical Coding Process: How It Is Done

While medical coding can be complex, most coders take certain basic steps to ensure they do their work accurately. The wrong medical code can cause havoc in the billing system. Hence, medical coders are required to check every minute detail of the data being interpreted. That said, the following steps will help you to understand how medical coding works.

Consolidating Medical Documents

The first step in the medical coding process involves coders reading and analyzing components such as doctor’s notes, diagnosis, prescriptions, etc. A thorough understanding of documents helps coders assign the appropriate medical code to the respective medical treatment.

Asking Queries

While going through the notes, if medical coding teams are unfamiliar with a clinical term or a treatment procedure, they can clear their doubts with the presiding team. This will ensure appropriate codes are assigned. 

Identify the Solution & Allot Codes

After analyzing and classifying the data into various segments, it is time to allot codes. As explained before, there are specific codes for medicines, clinical treatments, lab tests, diagnoses, etc. Coders allot the appropriate codes and update the system with the new medical codes. 

Look For Errors

Checking for errors is a non-negotiable step in medical coding. There are several ways to ensure the accuracy of codes. When coders assign medical codes, their work is reviewed several times before it is updated in the system. Large volumes of data are processed daily, making manual verification of codes difficult. CombineHealth’s AI coding software can accurately process hundreds of pages of data within a short period of time. This can save you your time and energy.

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Update the System

The final step involves coders updating the new codes to the hospital’s online database used for billing and other administrative and diagnostic purposes. 

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Medical coding has revolutionized the healthcare industry by establishing a common language for patients and healthcare providers. When done right, medical coding can help hospitals as well as other individual healthcare providers sort their billing and administrative documentation. It also makes it easier for medical staff from the different departments to access and log accurate information to the system. The coding process is extensive, however 

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FAQs

Are medical billing & coding the same?

No, both are different. Medical billing involves using medical codes to procure payment from insurance providers whereas medical coding is the process of interpreting medical information, sorting them and allotting appropriate medical codes.

How Does Combinehealth’s medical coding software help in billing?

Combinehealth’s AI powered medical coding software is designed to make the billing process more efficient and hassle-free for hospitals and individual healthcare providers. By implementing CombineHealth’s AI system for medical coding, one can be assured of an error-free system.

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How is Medical Coding Beneficial?

Medical codes have become a universal language for healthcare professionals. With the help of these codes, it is now possible to streamline billing and administrative processes. It helps medical staff understand a patient’s diagnosis, line of treatment, resources required for treatment, etc. with just a click or tap.

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