Medical Codes Explained

Explaining all of the American Medical Association (AMA) medical codes, including Current Procedural Terminology (CPT) codes, International Classification of Diseases (ICD) codes, and Healthcare Common Procedure Coding System (HCPCS) codes, simply involves breaking down these complex systems into their basic components. These codes are used for billing and documentation purposes in the healthcare industry, primarily in the United States. They help ensure that healthcare providers, insurers, and patients use a common language for services rendered.

Current Procedural Terminology (CPT) Codes

• What They Are: CPT codes are five-digit numeric codes that describe medical, surgical, and diagnostic services and are used by healthcare providers to report services to insurers for payment.
• Categories:
  • Category I: These codes represent widely used services and procedures approved by the FDA.
  • Category II: These are optional performance measurement codes that provide additional information about the quality of care.
  • Category III: These codes represent emerging technologies, services, and procedures.

Healthcare Common Procedure Coding System (HCPCS) Codes

• What They Are: HCPCS codes are used in addition to CPT codes by Medicare and Medicaid for billing purposes. They cover services, supplies, products, and procedures not included in CPT codes.
• Levels:
  • Level I: The same as CPT codes.
  • Level II: These codes are alphanumeric and cover non-physician services like ambulance rides, prosthetic devices, and prescription drugs.

International Classification of Diseases (ICD) Codes

• What They Are: ICD codes are a global health information standard for morbidity and mortality statistics, maintained by the World Health Organization (WHO). In the U.S., the ICD-10-CM (Clinical Modification) is used for diagnosis coding, and the ICD-10-PCS (Procedure Coding System) for inpatient hospital procedure coding.
• Structure:
  • ICD-10-CM: Used for diagnosis in all healthcare settings. It has a flexible structure allowing for expansion and detailed injury codes.
  • ICD-10-PCS: Used exclusively for documenting procedures in hospital settings. It’s much more detailed and specific than ICD-10-CM.

Simplified Overview

To make it simple, think of these codes as a detailed catalog of every healthcare service, procedure, diagnosis, and item used in patient care and billing. They’re like barcodes for healthcare services and products that ensure providers get paid for what they do, insurers know what they’re paying for, and patients understand what services they’re receiving. Each set of codes has its specific use case:

• CPT: For reporting medical procedures and services.
• ICD: For documenting diagnoses and reasons for care.
• HCPCS: For covering products, supplies, and services not included in CPT codes, mainly used by Medicare and Medicaid.