What is Medical Coding? An Ultimate Guide

Wouldn't it be amazing if the complex world of medical diagnosis and treatment spoke the same universal language? What if there's a way to ensure nothing gets lost in translation, be it a simple check-up or life-saving surgery? This is made possible by Medical Coding, which translates healthcare services, diagnoses, procedures, and equipment into universal alphanumeric codes.  

This blog explores What is Medical Coding and how it streamlines the documentation and billing process while strengthening healthcare-insurance communication. So read on and learn how this amazing process helps healthcare run like clockwork behind the scenes! 

Table of Contents

1) What is Medical Coding? 

2) What Does Medical Coding Involve? 

3) Why is Medical Coding Important? 

4) Types of Codes Used in Medical Coding 

5) Responsibilities of a Medical Coder 

6) How is Medical Coding Performed? 

7) Essential Skills for Medical Billing and Coding 

8) Career Opportunities in Medical Coding 

9) Medical Coding Vs Medical Billing 

10) Conclusion 

What is Medical Coding? 

Medical Coding refers to transforming healthcare procedures, diagnoses, medical equipment and services into universal medical alphanumeric codes. There are three main types of medical alphanumeric codes: 

1) Current Procedural Terminology (CPT): CPT codes identify surgical, medical, and diagnostic procedures and services. The American Medical Association (AMA) developed this system, including:  

a) Procedures and contemporary medical practices 

b) Clinical labs 

c) Emerging technologies 

2) International Classification of Diseases (ICD): This code was developed by the World Health Organization (WHO) largely for health recording and data collection. These codes can classify the following: 

a) Symptoms 

b) Diseases 

c) Illnesses 

d) Causes of death  

3) Healthcare Common Procedure Coding (HCPCS): This coding system was developed by the Centers for Medicare and Medicaid Services (CMS) to help process insurance claims for Medicare or other providers. Coders can utilise them to note the following:  

a) Medical products 

b) Medical procedures 

c) Medical supplies 

d) Medical services 
 

 

What Does Medical Coding Involve? 

Medical Coding involves collecting the codes about procedures and diagnoses from medical record documentation. This can include: 

1) Physician’s transcription notes 

2) Lab results 

3) Radiologic results 

Medical Coders are tasked with making sure the codes are correctly applied during the billing process. This involves:  

1) Abstracting information from documentation 

2) Assigning the appropriate codes 

3) Generating claim to be paid by insurance providers 

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Why is Medical Coding Important? 

Medical Coding is important for the following key reasons: 

1) It translates complex medical information into universally recognised alphanumeric codes. 

2) These codes are vital for accurate documentation, claims processing and reimbursement rates. 

3) It's the bridge between insurance companies, healthcare providers, and patients. 

4) It helps with precise billing and the collection of valuable data on trends and treatments. 

5) It ensures standardised communication and appropriate reimbursement for healthcare services.
 

Types of Codes Used in Medical Coding 

Medical coding is used globally, with most countries adopting the International Classification of Diseases (ICD), as maintained by the World Health Organisation and tailored by member countries. Here are the HIPAA-mandated codes being used: 

1) ICD-10-CM: These refer to codes for diseases, injuries, causes of injuries, and activities causing them. The system uses up to seven alphanumeric characters for specific descriptions, supporting medical necessity, tracking, and MS-DRG systems.  

2) Current Procedure Terminology (CPT®): This system contains 8,000+ codes for outpatient and some inpatient services provided by healthcare professionals. 

3) ICD-10-PCS: This is a 130,000-code system for hospital-based surgical procedures in various settings, offering detailed procedural descriptions. 

4) HCPCS Level II: Originally for Medicare and Medicaid, it includes 7,000+ codes for supplies, procedures, quality tracking, and billing. 

5) Code on Dental Procedures and Nomenclature (CDT®): This system uses these five-character codes for dental and oral procedure billing. 

6) National Drug Codes (NDC): These are FDA-maintained codes of 10-13 characters track drugs prescribed, sold, and used. 

7) Medical Severity Diagnosis Related Groups (MS-DRG): This is Used by hospitals for patient stay reimbursement based on ICD-10-CM and ICD-10-PCS codes. 

8) Ambulatory Payment Categories (APC): This supports outpatient payment systems for minor surgeries and treatments, which are maintained by Centers for Medicare & Medicaid Services (CMS). 

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Responsibilities of a Medical Coder 

Here are the main responsibilities handled by a Medical Coder: 

1) Ensure the accuracy of transcribed medical records and applied codes 

2) Transcribe patient information into appropriate medical codes 

3) Examine medical documents and records for missing information 

4) Conduct chart audits to verify coding accuracy 

5) Collect, research, and file patient medical information 

6) Ensure all documents are grammatically correct 

7) Comply with medical coding guidelines, policies, and ethical standards
 

How is Medical Coding Performed? 

Here’s a step-by-step overview of how Medical Coding is done: 

1) Review Medical Documents: Coders start by reviewing medical records. This helps them understand the patient’s diagnosis and the treatments provided. 

2) Assign Codes: Using classification systems like CPT, ICD-10-CM and HCPCS, coders assign specific codes to each diagnosis and procedure. 

3) Ensure Accuracy: Coders must ensure that the codes accurately reflect the patient’s medical history and the services provided. This step is crucial for correct billing and reimbursement. 

4) Submit Claims: The coded information is then used to create claims submitted to insurance companies for reimbursement. 

5) Update Records: Finally, coders update the patient’s medical records with the assigned codes, ensuring that the information is accurate and up-to-date. 

Essential Skills for Medical Billing and Coding 

Medical Coders need a handful of technical skills and transferable skills to succeed in this sophisticated field. This table summarises these skills: 

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Career Opportunities in Medical Coding 

You can unlock various opportunities by pursuing a career in Medical Coding. Let's explore some of the most exciting options in this field: 

Medical Biller and Medical Coder 

This is the most straightforward career choice for you in this field. As a Medical Coder and biller, you'll be responsible for translating medical records into standardised codes to inform billing processes. 

Patient Services Representative 

This role is more patient-focused, and it demands strong administrative expertise. Patient Representative help individuals navigate the healthcare system and ensure they have access to the necessary resources from the beginning of their treatment journey to the end. 

Patient Registrar 

Patient Registrars occupy the front desk of a healthcare facility and are tasked with greeting patients, answering general questions and collecting sign-in information. Their core responsibilities include: 

a) Updating patient medical charts by entering information into record-keeping systems. 

b) Helping with other pre-appointment tasks. 

c) Reviewing physician notes. 

d) Scheduling follow-up procedures. 

e) Managing the release of medical records as required. 

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Medical Coding Vs Medical Billing 

Medical coding is about transforming healthcare services into codes, while medical billing is about processing payments and claims. Both help in the smooth functioning of healthcare systems. This table summarises the differences between the two: 

Conclusion 

In conclusion, Medical Coding goes beyond just numbers and letters and forms the backbone of efficient healthcare operations. It bridges the sophisticated gap between insurance companies and healthcare providers, from overseeing accurate diagnoses to seamless billing. As the healthcare industry evolves, understanding What is Medical Coding will grow even more vital, showcasing its power to transform the field as outlined in this blog. 

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