Medical coding basic terms and Guidelines

What is Medical Coding?

Every Healthcare Provider that delivers a Service receives money for these services by filing a claim with patient’s Health Insurance Carrier. This is also referred as an encounter. An encounter is defined as “a face to face contact between a healthcare professional and a eligible beneficiary.”

Codes exist for all types of encounters, services, tests, treatments, and procedures provided in a Medical office, clinic or hospital. Even patient complaints such as headaches, upset Stomach, etc have codes which consist of a set of numbers and a combination of set of numbers. The Combination of these codes tells the payer what was wrong with patient and what service was performed. This makes it easier to handle these claims and identify the provider on a predetermined basis.

Reason for the Visit /Encounter – Diagnosis Code
Service rendered - Procedure Code
Coding Systems:

The two major coding systems are

1. International Classification of Diseases – Clinical Modification – 9th Revision (ICD-9-CM) (NOW ICD 10)
2. Current Procedural Terminology (CPT)

CPT and ICD-9-CM are not the only coding systems. Here are few more coding systems that are used to code a variety of coding information:

1. CDT-3 codes
2. ABC codes
3. SNOMED codes
4. NDC codes
5. Home Healthcare (saba) codes
6. DRG systems.


1.Charge sheets that must be coded are, upon receipt by the billing account, forwarded to the coding department for diagnosis and CPT coding.

2.Medical coders code the diagnosis description given in the charge sheets according to established guidelines, using the ICD-9-CM (International Classification of Diseases, Revision 9, Clinical Modification, and Volumes 1 & 2) diagnosis coding system and CPT/HCPCS codes according to the procedure performed.. The published diagnosis/CPT coding rules under the ICD-9-CM/CPT coding system are observed.

3.Codes are selected strictly based on documentation provided by the client, and to the highest specificity as indicated in the submitted documents. When documentation is insufficient or unclear, the charges are returned to the client for clarifications.

4.Coding policies and guidelines, if any, established by the client, the coding supervisor, or insurer are followed wherever applicable during the process of coding.

5.When coders identify procedure coding or other errors in the charge information given to them, such errors are corrected with an explanatory note written on the concerned charge sheet. If the coding department decides that the errors are of such a type that will require client authorization or clarification, then such authorization or clarification is obtained from the client by the concerned billing account.

6.When a coder finds that the information on the charge sheet is insufficient to select the appropriate diagnosis or procedure code, the coder writes a note in the charge sheet stating what additional information is needed to supply the code.

7.When a given diagnosis code is not in the list of covered diagnosis codes listed in the state Medicare carrier’s LMRP (Local Medical Review Policy), the coder will code the diagnosis as documented and write “Not in LMRP” in the charge sheet. A policy can be arrived on handling denials by the operation team and client can be alerted on the same.

8.Coders, where ever possible, advise billing departments on the appropriateness of the diagnosis codes and procedure codes documented in a charge sheet, toward ensuring accurate health care claim submission. The clients are also informed of the same.

9.Coders should not alter codes or change information documented in the charge sheet, or any other medical document, unless authorized by the client, except when there are definite errors, such as typographical errors. No attempt will be made to alter the procedure or diagnosis documented by the physician or medical service provider. (See also point 6 above)

10.Upon completion of coding, the coded charge sheets are forwarded to the charge entry department of the respective billing account.

11.The work of new coders who join the department will be fully audited before file submission, until such time the coders gain the required level of accuracy.

12.A hundred percent audit of all coding work can be conducted during project transition, until such time the coders gain the required experience and accuracy levels.

13.Account specific coding policies, if applicable, will be documented


1.Follow all coding principles outline in the “Essentials of Accurate Coding,”

**Use all codes necessary to completely code all diseases and procedures, including underlying diseases.

**Refer all medical records of patients treated for multiple trauma and patients hospitalized over thirty days to the coding supervisor to verify selection of principal diagnosis before abstracting.

**E codes are used whenever appropriate to identify external codes.

2.Consult the following sources to identify all diagnoses and procedures requiring coding and to increase the accuracy and specificity of coding.

**Face Sheet-code diagnoses and complications appearing on the face sheet.

**Progress Notes-Scan to detect complications and/or secondary diagnoses for which the patient was treated and/or procedures performed.

**History and Physical-scan to identify any additional conditions; such as history of cancer or a pacemaker in situ. These conditions should be coded.

**Discharge Summary-read if available and compare listed diagnoses with face sheet. Code diagnoses and procedures listed on discharge summary but not specified on face sheet..

**Operative Reports-scan to identify additional procedures requiring coding.

**Consult previous medical records in patients admitted for follow-up of neoplasm to determine the primary and secondary sites.

**X-ray and laboratory-use reports as guides to identify diagnoses (e.g. types of infections) or more detail (e.g. type of fractures).

**Physician’s Orders-scan to detect treatment for unlisted diagnoses-the administration of insulin, antibiotics, and sulfonamides may indicate treatment of diabetes, respiratory or urinary infections which should be confirmed by checking other medical record forms.

3.Code incomplete face sheets by reviewing the above items.

**Record codes assigned in pencil on the fact sheet.

**Request supervisor’s assistance if difficulty is encountered in identifying codable data by scanning record.

**Call physician for diagnostic information only if instructed to do so by supervisor.

4.Exercise discretion in coding diagnostic conditions not identified on the face sheet or discharge summary.

**Query physician on the deficiency report if the coding question influences Identification of most specific code..
**Review all alcohol/drug abuse cases to confirm prior to coding.

5.Process special diagnostic coding situations as follows:

**V codes are used to identify encounters for reasons other than illness or injury. V codes are used as principal diagnoses for newborn admissions (V30.0-V37.0), Chemotherapy session (V58.0), Radiotherapy session (V58.1), Removal of fixation devices (V54.0), and Attention to Artificial openings (V55). For inpatient coding, avoid the use of V codes as the principal diagnosis where a diagnosis of a condition can be made.

**V codes are used in outpatient coding when a person who is not currently ill obtains health services for a specific purpose, such as, to act as a donor, or when a circumstance influences the person’s health status but is not in itself a current illness or injury. Patients receiving preoperative evaluations receive a code from category V72.8.

**Avoid using codes that lack specificity. These vague codes should not be used if it is possible to obtain the information required to assign a more specific code.

**Inpatient coding requires that signs and symptoms are coded when a specific diagnosis cannot be made or when the etiology of a sign or symptom is unknown. Do not code symptoms if the etiology is known and the symptom is usually present with a specific disease process. Example: Do not code convulsions with the diagnosis of epilepsy.

**Outpatient coding requires that diagnoses documented as “probable, suspected, questionable, rule out or working”, should not be coded. Code the condition for that visit, i.e., signs or symptoms or abnormal test results.

**Chronic conditions may be coded as many times as the patient receives treatment.

**Code abnormal laboratory tests only when noted on the face sheet by the attending physician.

**When there are more diagnoses for a hospitalization, acute conditions take precedence over chronic and at least one comorbid condition or complication should be included in the diagnoses which may be submitted to Medicare. All complications and comorbitities should be reported for calculating severity of illness.

6.Sequence diagnoses and procedures according to the “Guidelines for Sequencing and Designating Principal Diagnosis and Principal Procedure Codes.”

CPT Coding System.

Current Procedural Terminology (CPT), Fourth Edition, is a listing of descriptive terms and identifying codes for reporting medical services and procedures. The purpose of CPT is to provide a uniform language that accurately describes medical, surgical, and diagnostic services, and thereby serves as an effective means for reliable nationwide communication among physicians, patients, and
third parties

The American Medical Association (AMA) first developed and published CPT in 1966. The first edition helped encourage the use of standard terms and descriptors to document procedures in the medical record; helped communicate accurate information on procedures and services to agencies concerned with insurance claims; provided the basis for a computer-oriented system to evaluate operative procedures; and contributed basic information for actuarial and statistical purposes.

The first edition of the CPT code book contained primarily surgical procedures, with limited sections on medicine, radiology, and laboratory procedures.
The second edition was published in 1970, and presented an expanded work of terms and codes to designate diagnostic and therapeutic procedures in surgery, medicine, and the specialties. At that time, five-digit coding was introduced, replacing the former four-digit classification. Another significant change was a listing of procedures relating to internal medicine.

In the mid- to late 1970s, the third and fourth editions of the CPT code were introduced. The fourth edition, published in 1977, represented significant updates in medical technology, and a procedure of periodic updating was introduced to keep pace with the rapidly changing medical environment. In 1983, the CPT code was adopted as part of the HealthCare Common Procedure Coding System (HCPCS) (Formerly called as HealthCare Financing Administration's (HCFA) Common Procedure Coding System) . With this adoption, HCFA mandated the use of HCPCS to report services for Part B of the Medicare Program. In October 1986, CMS also required State Medicaid agencies to use HCPCS in the Medicaid Management Information System. In July 1987, as part of the Omnibus Budget Reconciliation Act, HCFA mandated the use of CPT for reporting outpatient hospital surgical procedures. Today, in addition to use in federal programs (Medicare and Medicaid), CPT is used extensively throughout the United States as the preferred work of coding and describing health care services

9. Modifiers: A modifier indicates that a service or procedure was altered by specific circumstances, but not changed in its definition or code. Modifiers are two digit numeric or alpha numeric codes that are appended to the end of CPT/HCPCS codes. Modifiers may be used to indicate that:

• A service or procedure has both a professional and technical component

• A service or procedure was performed by more than one physician

• A service or procedure has been increased or reduced

• Only part of a service was performed

• An additional service was performed

• A bilateral procedure was performed more than once

• Unusual events occurred

This field is printed along with the CPT/HCPCS Code in 24d field of the CMS-1500 Claim Form.

Modifiers that are currently approved for hospital outpatient use with CPT codes as defined by the 2002 AMA CPT manual are:

Modifier Description

-25 Significant, separately identifiable evaluation and management service by the same physician on the same day of the procedure or other service

-50 Bilateral procedure

-76 Repeat procedure by same physician

-77 Repeat procedure by another physician

Modifiers that are currently approved for use with HCPCS Level II codes as defined by the 2002 AMA CPT manual are:

Modifier Description

-LT Left side

-RT Right side

10. Diagnosis Code: Diagnosis code is used to indicate the health problem that a patient have. The first of these codes is the ICD-9-CM diagnosis code describing the principal diagnosis (i.e. the condition established after study to be chiefly responsible for causing this hospitalization). The remaining codes are the ICD-9-CM diagnosis codes corresponding to additional conditions that coexisted at the time of admission, or developed subsequently, and which had an effect on the treatment received or the length of stay. Medicare requires physicians to include a complete diagnosis code (or codes) on each claim submitted for payment. The first of these codes is the ICD-9-CM (International Classification of Diseases Ninth Revision Clinical Modification) diagnosis code describing the principal diagnosis (i.e. the condition established after study to be chiefly responsible for causing this hospitalization). A Maximum of 4 diagnosis codes can be printed on the HCFA-1500 claim form.

This field is printed in the 21st field of the CMS-1500 claim form.

11. Number of days/Units: This field contains the length of service performed. We need to enter number of days or units. This field is most commonly used for multiple visits, units of supplies, anesthesia minutes or oxygen volume. If only one service was performed the numerical 1 should be entered.

12. Billed Amount: It is the amount charged by a provider for a specific service. In other words it is the total charge value of the claim. The billed amount for a specific procedure code is based on the provider.


1.Identify all main terms or procedures included in the diagnostic/procedural statements(s).

2.Locate each main term/procedure in the Alphabetical Index. A main term may be followed by a series of terms in parentheses. The presence or absence of these parenthetical terms in the diagnosis has no effect upon the selection of the code listed for the main term.

3.Refer to any sub terms indented under the main term. These sub terms for individual line entries and describe essential differences by site, etiology or clinical type.

4.Follow cross reference instructions if the needed code is not located under the first main entry consulted.

5.Verify code selected from the Index in the Tabular List.

6.Read and be guided by any instructional terms in the Tabular List.

7.Fourth and fifth digit sub classification codes must be used where provided.

8.Continue coding diagnostic and procedural statements until all of the component elements are fully identified. This instruction applies even when no “use” statement appears.

9.Use both codes when a specific condition is stated as both acute (or subacute) and chronic and the Alphabetic Index provides unique codes at the third, fourth, or fifth digit level.

10.The term hypertensive means “due to”, but the presence of words such as “and or with hypertension” does not imply causality.

11.If the cause of a sign or symptom is specified in the diagnosis, code the cause but do not assign a code for the sign or symptom.

12.For inpatient coding, when a diagnosis statement consists of a symptom followed by comparative or contrasting diagnoses, assign codes for the symptom as well as for the diagnoses. When coding outpatient services, do not code diagnoses documented as “probable, suspected, questionable, rule out or working diagnosis”. Code the condition necessitating that visit, such as signs or symptoms, abnormal test, or other reasons.

13.Do not confuse V codes which provide for classifying the reason for visit with procedure codes documenting the performance of a procedure.

14.V codes are found in the Alphabetic Index under references such as Admission, Examination, History of, Problem, Observation, Status, Screening, Aftercare, etc.

15.When an endoscopic approach is utilized to accomplish another procedure (such as biopsy, excision of lesion or removal of foreign body), assign codes for both the endoscopy and the procedure unless the code books contain instructions to the contrary or the code identifies the endoscopic/laparoscopic approach.

16.No procedure code is assigned if an incision was not made. Code canceled surgeries to V64.1, V64.2 and V64.3. use code V64.1 if a closed fracture reduction was attempted but not accomplished.

17.Consult the Alphabetical Index first to code neoplasm in order to determine whether a specific histological type of neoplasm has been assigned a specific code.

18.Do not assign the code for primary malignancy or unspecified site if the primary site of the malignancy is no longer present. Instead, identify the previous primary site by assigning the appropriate code in category V10 “Personal history of malignant neoplasm.”

19.Cancer “metastatic from” a site should be interpreted as primary of that site and cancer described as “metastatic to” a site should be interpreted as secondary of that site.

20.Diagnostic statements expressed in terms of a malignant neoplasm with “spread to...” or “extension to...” are to be coded as primary site with metastases.

21.If no site is stated in the diagnosis but he morphologic type is identified as metastatic, code as primary site unknown and also assign the code for secondary neoplasm or unspecified site.

22.Code fractures as closed unless they are specified as open.

23.Code only the most severe degree of burn when different degrees of burns occur at the same site.

24.Assign separate codes for multiple injuries unless the coding books contain instructions to the contrary or sufficient information is not available to assign separate codes.

25.Poisoning by drugs includes drugs given in error, suicide and homicide, adverse effects of medicines taken in combination with alcohol, or taking a prescribed drug in combination with self prescribed drugs.

26.Adverse reactions to correct substances properly administered include: allergic reaction, hypersensitivity, intoxication, etc. The poisoning codes 960-979 are never used to identify adverse reactions to correct substances properly administered.

27.Complications of medical and surgical care are located in the Alphabetical; Index under Complication or the name of the condition.

28.The causes or residual illnesses or injuries are located in the Alphabetical Index under Late Effect.

29.When the late effect of an illness or injury is coded in the main classification, the E code assignment must also be one
for late effect.

No comments:

Medical Billing Popular Articles