Orlando Harmon
Medical codes are used by insurance companies to process claims from healthcare providers and pay for health services. These codes are used to describe medical diagnoses, treatments, and procedures. CPT (Current Procedural Terminology) codes, ICD (International Classification of Diseases) codes, and HCPCS (Healthcare Common Procedure Coding System) codes are some of the most commonly used medical codes. CPT codes are used to describe medical procedures, ICD codes are used to identify health conditions or diagnoses, and HCPCS codes cover areas not included in CPT codes, such as medical equipment and ambulance services. These codes are essential for understanding medical billing and can impact what patients pay and what is covered by their insurance plans.
| Characteristics | Values |
|---|---|
| Purpose | Used by insurance providers to make decisions about requests and claims, and to determine how much to pay healthcare providers |
| Usage | Used on EOBs, insurance claim forms, and medical bills |
| Types | Current Procedural Terminology (CPT) codes, International Classification of Diseases (ICD) codes, Healthcare Common Procedure Coding System (HCPCS) codes, National Drug Codes (NDC), dental codes, psychiatric codes |
| CPT Code Updates | 2024: 230 new codes, 49 deleted codes, 70 revised codes; 2025: 270 new codes, 112 deleted codes, 38 revised codes |
| HCPCS Code Updates | 2022: Updates published in the Federal Register as an addendum to the annual Physician Fee Schedule final rule; 2023 onwards: Updates published on a dedicated webpage |
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What You'll Learn
Current Procedural Terminology (CPT) codes
- Category I: These codes have descriptors that correspond to a procedure or service. Codes range from 00100–99499 and are generally ordered into sub-categories based on procedure/service type and anatomy.
- Category II: These alphanumeric tracking codes are supplemental codes used for performance measurement. Using them is optional and not required for correct coding.
- Category III: These are temporary alphanumeric codes for new and developing technology, procedures, and services. They are used for data collection, assessment, and, in some cases, payment for new services and procedures that do not yet meet the criteria for a Category I code.
The CPT code set is constantly updated by the CPT Editorial Panel, which is supported by CPT Advisors—groups of physicians nominated by national medical specialty societies. The CPT Editorial Panel meets three times a year to review applications for new codes or revisions to existing ones. The CPT terminology is the most widely accepted medical nomenclature used across the country to report medical, surgical, radiology, laboratory, anesthesiology, genomic sequencing, evaluation, and management services under public and private health insurance programs.
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International Classification of Diseases (ICD) codes
The International Classification of Diseases (ICD) is a medical classification system that has been used for over a century. It is currently the most widely adopted statistical classification system for diseases globally. The ICD is developed and published by the World Health Organization (WHO) and is updated about once every ten years. The latest version, ICD-11, was adopted in 2019 and came into effect on January 1, 2022, replacing ICD-10.
ICD codes are diagnostic codes that describe the cause of an injury or illness. They are used to understand health recording and statistics on diseases and causes of death. The ICD-11 has a broad terminological basis that allows users to code clinical terms in records and other documents, such as COVID-19 vaccine certificates. It is almost five times the size of ICD-10, with over 14,000 different codes, and permits the tracking of many new diagnoses.
The ICD is used in over 117 countries for cause-of-death reporting and statistics. Approximately 27 countries use ICD-10 for reimbursement and resource allocation in their health systems, and some have made modifications to the ICD to better suit their needs. For example, the US utilizes its own national variant of ICD-10, called the ICD-10 Clinical Modification (ICD-10-CM), with over 69,000 diagnosis codes. Other countries that have adopted ICD-10 include Greece, Hungary, the Czech Republic, Estonia, France, Germany, and Australia.
It is important to understand ICD codes and other medical codes when reviewing Explanation of Benefits (EOB) forms and medical bills to confirm that no mistakes were made in the billing process, as coding errors can result in denied claims or increased out-of-pocket costs.
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Healthcare Common Procedure Coding System (HCPCS) codes
The Healthcare Common Procedure Coding System (HCPCS) is a set of codes used to describe things not covered by Current Procedural Terminology (CPT) codes, such as durable medical equipment, ambulance services, prosthetics, orthotics, or certain medications. HCPCS codes are also the official code set used by Medicare and Medicaid.
HCPCS is divided into two main subsystems: Level I and Level II. CPT codes make up HCPCS Level I, which is a numeric coding system maintained by the American Medical Association (AMA). CPT is a uniform coding system consisting of descriptive terms and identifying codes used primarily to identify medical services and procedures furnished by physicians and other healthcare professionals. CPT codes consist of 5 numeric digits and are updated annually by the AMA. CPT codes are also used for administrative management purposes such as claims processing and developing guidelines for medical care review. The CPT terminology is the most widely accepted medical nomenclature used across the country to report medical, surgical, radiology, laboratory, and other services under public and private health insurance programs.
HCPCS Level II is a standardized coding system used primarily to identify products, supplies, and services not included in the CPT codes. It is the national procedure code set for healthcare practitioners, providers, and medical equipment suppliers when filing health plan claims for medical devices, supplies, medications, transportation services, and other items and services. CMS updates HCPCS Level II codes throughout the year, based on factors that include public input and feedback from providers, manufacturers, vendors, specialty societies, Blue Cross, and others.
It is important to understand medical codes so that you can confirm that no mistakes were made in the billing process. These codes are used on Explanation of Benefits (EOB) forms, insurance claim forms, and medical bills. They are used to determine how much to pay healthcare providers and can affect what you pay and what is covered under your health insurance.
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National Drug Codes (NDC)
The first segment, known as the labeler code, is assigned by the FDA and identifies the labeler, such as the drug manufacturer, repackager, or distributor. The second segment, the product code, identifies the specific strength, dosage form (e.g., capsule, tablet, liquid), and formulation of a drug for a particular labeler. The third segment, the package code, identifies package sizes and types and is assigned by the firm.
The NDC will be in one of the following configurations: 4-4-2, 5-3-2, or 5-4-1. Since the NDC is limited to 10 digits, a firm with a 5-digit labeler code must choose between a 3-digit product code and a 2-digit package code or a 4-digit product code and a 1-digit package code. This results in either a 5-4-1 or a 5-3-2 configuration for the three segments of the NDC.
The NDC Directory, published by the FDA, contains information on all finished and unfinished prescription medications, over-the-counter (OTC) medications, and compounded drug products in the U.S. The directory is updated daily and includes product listings that have reached their marketing start date but have not yet reached their marketing end date. It is important to note that inclusion in the NDC Directory or assignment of an NDC number does not indicate FDA approval of a product or reimbursement eligibility by Medicare, Medicaid, or other payers.
The NDC Database includes compounded drug products reported with the marketing category "Outsourcing Facility Compounded Human Drug Product (Exempt from Approval Requirements)" and that have been assigned an NDC. Search results in the database provide information reported to the FDA within the last two years.
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CPT code surveys
Medical codes are used by healthcare professionals to describe diagnoses and treatments. These codes are important for understanding how medical billing works and can affect what you pay and what is covered by your insurance. CPT, or Current Procedural Terminology, is a standardised medical code set maintained by the American Medical Association (AMA). CPT codes are five-digit numeric codes describing a wide range of procedures, from surgery to radiology to psychotherapy. CPT codes are used for administrative management purposes such as claims processing and developing guidelines for medical care review. CPT codes are also used by healthcare providers to describe the services they provide. CPT code surveys are an important process that collects input from clinicians on how much time and skill is required to perform a service or procedure. This input is critical in establishing the value of a CPT code and making recommendations to the Centers for Medicare and Medicaid Services (CMS). CPT codes are updated annually by the AMA, with new codes added, deleted codes removed, and revised codes changed.
It is important for clinicians to participate in CPT code surveys if they meet the criteria, as their input is critical to establishing accurate values for CPT codes. By participating in these surveys, clinicians can help improve the accuracy and reliability of CPT codes, which can ultimately impact how much they are reimbursed by insurance companies for their services. CPT code surveys are also used to identify any coding errors or discrepancies that may have occurred. These surveys help to ensure that healthcare providers are correctly reimbursed for their work and that patients are not overcharged or denied claims due to coding errors.
Overall, CPT code surveys are an essential part of the CPT code system, helping to ensure that CPT codes accurately reflect the value of medical services and procedures. By participating in these surveys, clinicians can help improve the accuracy and reliability of CPT codes, leading to better reimbursement for their services and improved patient care. It is important for clinicians to stay informed about CPT code updates and participate in surveys when possible to contribute to the ongoing development and improvement of the CPT code system.
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Frequently asked questions
Medical codes are used by healthcare professionals to describe medical diagnoses and treatments. They are important for understanding how medical billing works and can affect what you pay and what is covered by your insurance.
There are several types of medical codes, including Current Procedural Terminology (CPT) codes, International Classification of Diseases (ICD) codes, and Healthcare Common Procedure Coding System (HCPCS) codes. CPT codes are used to describe medical procedures, ICD codes are used to identify health conditions or diagnoses, and HCPCS codes are used for items not covered by CPT codes, such as medical equipment or ambulance services.
Insurance companies use medical codes to process and pay for health services provided by healthcare providers. The codes help them determine how much to pay and whether the services were necessary.
Medical codes are typically found on Explanation of Benefits (EOB) forms and medical bills. The EOB outlines your medical billing history, including the codes used for your diagnosis and treatment.
