Basic Healthcare of USA

R1
SEZ, 6th floor, Building no-3
Plot no – 20 & 21, Sector-135

Noida-201301

7/25/2016

Version 1.7
[Basic US Healthcare]

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 Table of Content

 Basic Healthcare Terminologies – Page 3 to 8

 Type of Medical Insurances – Page 9 to 13

o Medicare – Page 10

o Medicaid – Page 11

o Worker’s Compensation – Page 11

o Tricare/CHAMPUS – Page 12

o Commercial and Managed Care – Page 12 to 13

 ICD – Page 14 to 16

o ICD-9 – Page 15

o ICD-10 – Page 15 to 16

 CPT and HCPCS – Page 16 to 17

 Revenue Codes – Page 17

 Modifiers – Page 17

 Sections of CPT – Page 18 to 19

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 BASIC HEALTH INSURANCE TERMINOLOGIES

PROVIDER: The physician who provides medical treatment to a patient for any illness is the provider. He
is also called the rendering physician.
PAYER: It refers to entities other than the patient that finance or reimburse the cost of health services. In
most cases, this term refers to insurance carriers, other third-party payers, or health plan sponsors
(employers or unions).
PATIENT: A patient is any recipient of health care services. The patient is most often ill or injured and in
need of treatment by a advanced practice registered nurse, physiotherapist, physician, physician
assistant, psychologist, podiatrist, veterinarian, or other health care provider.

PREMIUM: This is a periodical payment, usually monthly, made to purchase a medical insurance
coverage. The premium paid by numerous individuals to an insurance company; contribute to a fund,
which protects these individuals against the cost of medical care when they require it.

BENEFITS: The money that a patient's medical coverage pays to compensate for the medical services
provided to the patient.

BENIFICIARY: A person who is eligible for the benefits under an insurance coverage. He is either the
person who pays the premium or a dependent of that person.

SUBSCRIBER: The person who pays the premium to purchase an insurance policy. This person may
either pay the premium himself or as in most cases, the person's employer may pay the premium or a
part of it on his behalf. It is very common in the US for an employer to purchase medical policies for its
employees.

DEPENDENT: The spouse and children of the subscriber who are eligible for medical care under the
insurance contract.

PRIMARY CARE PHYSICIAN (PCP): The PCP is usually a general practitioner. He is the equivalent of a
family doctor, who when specialized treatment is required, refers the patient to a specialist. For this
reason, he is also called the Referring Physician.

HIPAA: Health Insurance Portability and Accountability Act (1996). This federal act sets standards for
protecting the privacy of your health information.

NPI (National Provider Identifier): A National Provider Identifier or NPI is a unique 10-digit identification
number issued to health care providers in the United States by the Centers for Medicare and Medicaid
Services (CMS).

TAX ID NUMBER: A number assigned by the federal government to doctors and hospitals for tax
purposes.

CMS (Centers for Medicare and Medicaid Services): The federal agency that runs the Medicare
program. In addition, CMS works with the States to run the Medicaid program. CMS works to make sure
that the beneficiaries in these programs are able to get high quality health care.

SSN (Social Security Number): In the United States, a Social Security number (SSN) is a nine-digit
number issued to U.S. citizens, permanent residents, and temporary (working) residents. (SSN Format –
XXX-XX-XXXX)

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MRN (Medical Record Number): The number assigned to the patient by the doctor or hospital that
identifies the patient’s medical record.

ACCOUNT NUMBER: Number given to the patient by the doctor or hospital for a medical visit.

EFFECTIVE DATE: The date from which a person is eligible for medical benefits under his insurance
contract. The insurance company is responsible for the person's medical bill from this day.

TERMINATION DATE: The date on which health insurance coverage ends.

INSURANCE IDENTIFICATION NUMBER: This is a unique identification number assigned to each

subscriber. The claims and any correspondence for that subscriber and his dependents will be sent under
his ID#. The insurance companies use this number to access the subscriber's account in their computer
systems.

PRIMARY INSURANCE: Many people in the US have more than one insurance coverage. They may
have up to three insurance coverage's. This is possible if; one person is the subscribers to two policies, a
person subscriber to one policy and is covered under his spouse's coverage or the person may be a
dependent of two working parents. In these cases, one insurance company takes first responsibility for
the patient's medical bills. It would pay a major portion of the bill. This would be the patient's primary
coverage.

SECONDARY INSURANCE: When a patient has more than one insurance company, the insurance that
is responsible for the balance on a bill after the primary insurance has paid, is the secondary insurance.
They will pay their portion of the bill based on what the primary has already paid. To determine their
portion of the bill they will require a copy of the primary insurance's EOB. For this reason, a secondary
claim is always sent with a copy of the primary EOB.

TERTIARY INSURANCE: The third insurance coverage for a patient is the tertiary insurance but it is not
common to find a person with three insurance coverage(s). The tertiary insurance will be responsible for
any amount left unpaid after the secondary insurance has paid.

COORDINATION OF BENEFITS (COB): A way to decide which insurance company is responsible for
payment if you have more than one insurance plan. A coordination of benefits, or "non duplication,“
clause in either policy prevents double payment by making one insurance the primary payer, and
assuring that not more than 100 percent of the cost is covered. Standard rules determine which of two
pays its benefits in full and which becomes the supplementary payer on a claim.

BIRTHDAY RULE: The Birthday Rule is an informal procedure used in the health insurance industry to
help determine which health plan is considered “primary”, when children are listed as dependents on
multiple health plans. Under the birthday rule, the health plan of the parent whose birthday comes first in
the calendar year is designated as the primary plan, according to the National Association of Insurance
Commissioners. Note that it doesn't matter which parent is older, because the year of birth is not a factor.
If birth day of both the parents is same, the insurance with longer duration would be the primary insurance
for the child. Where the parents are either divorced or separated, the plan of the parent who has legal
custody will be considered primary.

CLAIM: A medical bill that is sent to an insurance company for processing.

IN-PATIENT: A person admitted to a hospital for medical care. (When a patient stays in the hospital for
more than 24hrs)

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OUT PATIENT: A person who receives treatment in a physician's office or a hospital but does not require
hospitalization. (When a patient stays in the hospital for less than 24hrs)

INSURANCE CLAIM NUMBER: A number given to a medical service by Insurance Company.

ASSIGNMENT OF BENEFITS (AOB): “Assignment of Benefits” is a legally binding agreement between

patient and his/her Insurance Company, asking them to send the reimbursement checks directly to the
Healthcare Provider.

EXPLANATION OF BENEFITS (EOB): The notice you receive from your insurance company after
getting medical services from a doctor or hospital. It tells you what was billed, the payment amount
approved by your insurance, the amount paid, and what you have to pay.

DATE OF SERVICE (DOS): The date(s) when treatment was provided.

DATE OF BILL: The date the bill for your services is prepared. It is not the same as the date of service.

BILLED AMOUNT: This is the amount charged by a physician as a compensation for his services. The
billed amount will reflect on the claim against the treatment that was performed.

ALLOWED AMOUNT: Most insurance companies have a fixed payable amount for each of the different
services performed by the physicians. They fix this amount based on various in-house calculations like
cost of the treatment, geographical location of the practice, average charge of all physicians for that
procedure etc. Insurance companies will pay the allowed amount regardless of how much the physician
bills.

INSURANCE PAYABLE AMOUNT: How much the Insurance Company pays for the treatment, minus
any deductibles, coinsurance, or charges for non -covered services.

WRITE-OFF/CONTRACTUAL ADJUSTMENT: When the physician's billed amount is more than a

participating insurance company's allowed amount, the insurance company will pay it's allowed amount
and the difference between the billed and the allowed amount will be written off or adjusted. Let us take
an example to see how a participating and a non-participating physician gain or lose when collecting from
an insurance company. The insurance company taken in this example is Medicare, a federal-government
program and so let's follows their policies. They pay 80% or the allowed in the case of a participating
provider. They pay 80% or 95% of the allowed amount in the case of a non-participating with the
Insurance Company.

OUT OF POCKET EXPENSE: A medical bill or a part of a medical bill paid by a patient out of his own
pocket because of non-payment of his insurance company or because of instructions from his insurance
company is called an out of pocket expense. Deductibles, co-insurance co-payment and balance bill fall
under “out of pocket expenses”. It is a fixed $ amount once this amount meets, insurance companies pay
100% on the claim.

DEDUCTIBLE: This is an initial and fixed amount paid by the patient to the provider as medical expenses
before his/her coverage starts paying for the services. Some insurance companies have a yearly
deductible, which means that money should be paid by patient before his/her insurance starts paying
medical bills for that year, other insurance have a lifetime deductible, which means that the patient will
have to pay for his treatment until a certain limit (like $5000) and then the insurance would start paying till
his coverage is valid.

Purpose of Deductible is to avoid the exploitation of the policy by the patients.

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Cost sharing - Deductible and Premium are inversely proportional to each other.
CO-INSURANCE: A percentage cost share between a patient and his different insurance payers is called
as co-insurance. It’s a percentage of the allowed amount that a patient is required to pay which may be in
addition of deductible & co-pay.

COPAYMENT: It’s a nominal amount just like a consultation fee which a patient needs to pay on every
visit till out of pocket expensed not met.
Insurance companies use these co-pays in part to share expenses with a subscriber.
The concept of giving co-pay upfront helps insurances avoid unnecessary visits a patient wants to make
to a doctor for nontrivial injuries/illness.

BALANCE BILL: When a non-participating primary insurance company pays a part of a claim, the
balance on the claim can be billed to the patient or the secondary insurance. This is called balance
Billing. The balance bill would therefore be the difference between the physician's billed amount and the
non-participating company's allowed amount for a service.

Participating Provider: A doctor or hospital that agrees to accept your insurance payment for covered
services as payment in full, minus your deductibles, co-pays and coinsurance amounts. A participating
Contract is one in which the physician accepts a payment of the insurance company's allowed amount as
full payment, for any of that insurance company’s beneficiaries. This is regardless of how much the
physician billed for this services. If the physician bills over the allowed amount, the insurance company
pays the allowed amount and the difference is written off.

Billed amount – Allowed Amount = Contractual Adjustment. (Par Provider)

Non-Participating Provider: A doctor, hospital, or other healthcare provider that is not part of an
insurance plan’s doctor or hospital network. A non participating contract is one in which the physician
does not have contract with the insurance company. A provider that doesn’t accept the terms for contract
with an insurance company is called as Non Participating provider. The doctor can bill a non-participating
insurance company whatever he wants and will get paid according to their allowed amount. The
difference here is that the doctor can bill the patient for the balance.

Billed amount – Allowed Amount = Balance Bill (Flipped to Patient account for payment)

CREDENTIALING: The process of obtaining, reviewing and verifying a provider's Credentials. The
documentation related to licenses, certifications, training and other qualifications for the purpose of
determining whether the provider meets the MCO's (Managed Care Organization) pre-established criteria
for participation in the network. The standard form used for credentialing is W-9 form.

FEE SCHEDULE: A list of all the medical services and the allowed amount (pre-determined prices on all
the medical services) is called a fee schedule. This can be obtained from any Insurance company and
can be used to verify the payments made by the insurance company.

CONTRACT MAXIMUM: Some insurance companies have a maximum payable amount on certain
illnesses or policies. The insurance policy may say that it will pay a limited amount on a specific illness or
a limited amount for a calendar year. The total amount payable on a patient's policy based on his/her
contract is called the contract maximum. For example, a patient may be covered for $5000 per year for
dental surgery.

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if he patient's dental surgery bills exceed that amount in a calendar year, he/she will be responsible for
the excess.

REFERRAL: Approval needed for care beyond that provided by your primary care doctor or hospital. For
example, managed care plans usually require referrals from your primary care doctor to see specialists or
for special procedures.

PRE-AUTHORIZATION/PRE-CERTIFICATION: Some insurance contracts require a pre-authorization or

a pre-certification for specific services. This is the process of informing the insurance company about a
service to be performed, for example, if a patient comes in for an eye surgery and if his insurance card
says that any treatment related to the eye needs to be pre-certified, the clerk at the doctor's office will call
the Insurance company and let them know that an eye surgery is to be performed on the patient. The
insurance companies will give a pre-certification number, which is to be mentioned on the claim.

Claim Form Types:

(i) HCFA1500/CMS1500: The Health Care Finance Administration's standard form for submitting
provider service claims (Professional Claim) to third party companies or insurance carriers. HCFA 1500 is
now called CMS 1500.

(ii)UB04 (Uniform Billing): A standard form used by hospitals to file insurance claims
(Institutional Claim) for facility charges, also known as the CMS-1450 form. The Center for Medicare &
Medicaid Services (CMS) and the National Uniform Billing Committee have approved the UB-04 claim
form.

TYPE OF BILL (TOB): A bill that shows what type of care is being billed, such as hospital inpatient,
hospital outpatient, skilled nursing care, etc. These are 3 digit numeric codes used on hospital claim.

e.g., Inpatient (Original Claim) TOB – 111, Inpatient (Corrected Claim) TOB – 117, Outpatient (Original
Claim) TOB – 131, Outpatient (Corrected Claim) – 137

PLACE OF SERVICE: It refers to the physical location where the services performed.

Common Place of service codes

● Office (11)
● Home(12)
● Urgent care facility(20)
● Inpatient hospital(21)
● Outpatient hospital(22)
● Emergency hospital(23)
● Skilled nursing facility(SNF)(31)
● Hospice care(34)
● Other place of service(99)

CLAIM FILING LIMIT: A time limit under which claim should be filed with the insurance companies to
qualify for reimbursement. All Insurance companies have their own Filing limit. The Insurance companies
would reject the claim/s if they aren’t filed or received within the specified time-frame.

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CAPITATION: Capitation is a fixed dollar amount per plan member per month paid to providers
regardless of medical utilization. The payment structure shifts the financial risk from the insurance
company to the physician or hospital accepting payment.

e.g., Aetna pays Dr. Johnson $20 per member per month to care for all Aetna patients who have
Dr. Johnson as their primary care provider. If Dr. Johnson has 100 Aetna members assigned to
him, he will get $2000 per month to provide care to all the member.

DURABLE MEDICAL EQUIPMENT (DME): Medical equipment that can be used many times, or special
equipment ordered by your doctor, usually for use at home.

Diagnosis-Related Groups (DRGs): A payment system for hospital bills. This system categorizes
illnesses and medical procedures into groups for which hospitals are paid a fixed amount for each
admission.

Ambulatory Payment Classifications (APC): A Medicare payment system that classifies outpatient
services so Medicare can pay all hospitals the same amount.

CLIA: Clinical Laboratory Improvement Amendments (CLIA) of 1988. An objective of the CLIA is to
ensure the accuracy, reliability and timeliness of test results regardless of where the test was performed.

MEDICARE CROSSOVER: Crossover is the transfer of processed claim data from Medicare operations
to Medicaid (or state) agencies and private insurance companies that sell supplemental insurance
benefits to Medicare beneficiaries.

ABN (Advance Beneficiary Notice)

ABN is a notice which Medicare requires for health care providers to issue to Medicare patients as a
definite way to aware them to the fact that Medicare may not pay for certain services or tests prior to
having the services or tests performed in an outpatient setting.

Notice allows the patient to make an informed decision about whether they want to receive the services
and accept full financial responsibility if Medicare does not pay.

Importance of ABN for Provider

 When an ABN is issued and signed by the patient, the provider can freely bill them for the non-
covered charges.
 If an ABN is not issued, the provider may not bill the non-covered services to the patient.
 If a patient refuses to sign the ABN, make sure to document the ABN with this information. Unless
the service is critical to the health and safety of the patient, it may be a good idea not to perform
the service.
Contents of ABN

Six mandatory fields that must be filled out on an ABN to be considered valid
i. Health care provider's name, address and telephone number
ii. The patient name and Medicare Health Insurance Claim Number (HIC)
iii. Description of services believed to be non-covered
iv. Reason services may not be covered by Medicare
v. The estimated cost of the services
vi. Signature of patient or patient representative and date

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Insurance Process Flow

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 Medicare
 Medicare is a federal insurance, which primarily takes care of the healthcare needs of the older
people above 65 years of age. Medicare came into existence from the year 1965.
 Medicare is administered by CMS. Norms & guidelines are uniform across all the 50 states in US.
Medicare insurance id format is 9 numeric followed by Alpha SUFFIX.
Eligibility for the Coverage

 65 + years of age
 Permanent Disabled individuals
 End-stage renal disease

Medicare Parts

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  Medicare Part A

Individual becomes automatically eligible for Medicare part A if he/she attains any one of the mentioned
conditions.

 Pays only for facility charges.

 Covers inpatient hospital care.
 Examples of services covered :
i. Skilled Nursing facility
ii. Hospice care
iii. End stage renal disease.

 Medicare Part B

 Supplements Part A and is purchased separately.

 Pays for physician charges.
 Covers outpatient care.
 Examples of services covered :
i) Office visits
ii) Consultations

 Medicare Part C

 Is a Managed Choice plan.

 A person should have Medicare Part A & Medicare Part B to be eligible for Medicare Part C plan.
 It has all the features of a Managed Choice Plan.

 Medicare Part D

 Medicare Part D is for Drug Prescriptions and Durable Medical Equipment’s.

Medicaid
 Medicaid is a Federal Insurance that is run by the states i.e., norms & guidelines differ from one
state to another
 Medicaid is basically for people under poverty line.
 Policy came into existence in the year 1965.
 No standard insurance id format for Medicaid.
 People who are eligible for any one of the Government funds are eligible for Medicaid.
 Medicaid can never be a primary insurance when the Patient has some other insurance with him.

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  Eligibility

 Income at or below federal poverty level

 Infants born to Medicaid eligible pregnant women.
 Adoption care or foster care assistance programs.

 Features

 Funded by federal and state governments

 Can access care from any doctor or facility
 Pre-authorization for elective procedures.
 Low reimbursement to providers
 Last payer
 No patient responsibility

Worker’s Compensation
 Workers Compensation (WC) is a program which covers job related injuries and illness.
 Employees who meet with employment related accidents are covered to have their medical costs
as well as be entitled for disability.
 Employer takes up the insurance and pays the premium for the policies.
 The entire premium is paid by the Employer and is not shared between the employer and
employees

Coverage of WC

 Injuries that were sustained as a result of work or at the workplace. As long as the injury is job-
related, it's covered.

CHAMPUS/TRICARE
 TRICARE formerly known as Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS), is a health care program of the United States Department of Defense Military
Health System.
 CHAMPUS is a US federally funded health program that provides beneficiaries with medical care
to military personnel and their dependents.

CHAMPVA: The Civilian Health and Medical Program of the Department of Veterans Affairs
(CHAMPVA)

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 Commercial Insurance
Commercial Insurances are the Private Insurance companies which are associated with various Health
Care Providers and provide Medical Insurance to Individuals in lieu of fixe premium. There can be various
types of coverage's provided by the insurance companies.
E.g.: BLUE CROSS BLUE SHIELD, AETNA (US HEALTHCARE, UNITED HEALTHCARE, OXFORD,
CIGNA.

MANAGED CARE ORGANIZATION

An insurance plan that requires patients to see doctors and hospitals that have a contract with the
managed care company, except in the case of medical emergencies or urgently needed care if you are
out of the plan’s service area

 Insurance enters into a contract with the providers in Managed Care Plan.
 Managed Care Plan provides cost effective and efficient services to the patients.
 Patient gets benefited on the covered services listed in the contract.
 Patient’s get massive discounts and benefits when getting these services.

PPO: Preferred Provider Organization

 PPO is made up of doctors and/or hospitals that provide medical service to a specific group or
association.
 Physicians provide medical services to the policyholders, employees, or members of the
sponsor(s) at discounted rates and may set up utilization control programs to help reduce the cost
of medical care.
Features of PPO
 Purchased through employer or enrollee
 Large pool of contracted providers (facilities and doctors)
 Deductibles are always incurred in these plans
 Unrestricted access to specialized care

HMO: Health Maintenance Organization

 HMO members must receive their medical treatment from physicians and facilities within the
HMO network.
 In HMO, member chooses a primary care physician (PCP) who is the first contact for all medical
care needs.
 PCP provides general medical care and must be consulted before member can see a specialist.
Because of this control system, HMO costs tend to increase less rapidly than other insurance
plans.
Features of HMO
 Purchased through employer or enrollee
 Limited pool of contracted providers
 No deductibles
 Minimum Co-pay per incidence
 PCP (primary care physician) acts as gatekeeper to specialized care

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 COBRA
 COBRA stands for the Consolidated Omnibus Budget Reconciliation, Act. (1985)

 Gives employees the right to pay premiums for and keep the group health insurance that they
would otherwise lose after they

i) Reduce their work hours,

ii) Quit their jobs, or lose their jobs
 Most people can keep the insurance for up to 18 months. Some people may be able keep it a
few months longer.

 COBRA also lets family members choose to keep health insurance after member’s job loss or
other qualifying event that would normally cause them to lose the coverage they have through
member’s employer.

 COBRA applies to nearly all employers with 20 or more employees. A few states require even
smaller employers to offer COBRA.

 The length of time you can keep COBRA coverage depends on your qualifying event. If major
medical coverage ends because employment ends (other than for gross misconduct), or because
working hours are reduced, member and his qualified dependents can keep coverage under the
employer’s health insurance for up to 18 months by paying for the full cost of the coverage.

The Affordable Care Act (ObamaCare)

 ObamaCare (the Affordable Care Act) is a US healthcare reform law that expands and improves
access to care and curbs spending through regulations and taxes.

 The Affordable Care Act’s main focus is on providing more Americans with access to affordable
health insurance, improving the quality of health care and health insurance, regulating the health
insurance industry, and reducing health care spending in the US.

Coding
Coding is a very important and critical function in the entire Medical Billing cycle. In Coding function,
initially professional Coders interpret Medical Records or the transcribed data/text and convert them to
standard codes accepted by all insurances across US. Thus in coding, the medical coders after
interpreting the Medical record and getting the Diagnosis (nature of illness/injury info) and
procedure/service (treatment info), encode the same into STANDARDIZED CODES.

Codes given by the coders can be broadly classified into two types, Procedure & Diagnosis:

 Procedure Codes – Represents the Procedure/treatment or service done to the patient.

 Diagnosis Codes – Represents the Nature of Illness / Injury details.

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  It is a language, which is universally acceptable to all the parties involved in the Health care of a
patient; the physician, (the coder, the person billing the charges), the insurance carrier.

 More technically speaking; health information coding is the transformation of the written
descriptions of diseases, injuries and procedures into numeric or alphanumeric codes.

Medical Transcription
The transcriptionists listen to the recordings dictated by physicians and other health care professionals
over the tape and transcribe them into medical reports, office notes, consultations and operative reports.

The purpose of transcribed medical data is,

a) To be used for claim reimbursement from carriers and
b) To provide legible medical information on the patient which can be coded by a medical coders, using
standard codes for the purpose of claim submission.

ICD- International Classification of Diseases

A coding system that translates written diagnoses into numeric (ICD-9) or alpha numeric codes (ICD-9 or
ICD-10). These are used to code the diseased conditions, conditions due to external causes (accidents
etc) or the reasons for medical service.

ICD codes have also helped develop statistically derived treatment protocols for the treatment of disease.
I.e. based on this diagnosis –

 This treatment is normally provided, works the best and is most cost effective.
 The treating physician determines the ICD codes that will be billed. It represents a patient’s
condition and is maintained in the patient’s file for life. Therefore it must be extremely accurate.

ICD-9-CM
*(Valid till 09/30/2015)

The International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM)

ICD-9 STRUCTURE

May be complete as a 3-digit code or may require 1-2 digits after the decimal in order to gain specificity.
For example: 3-digits (486 for pneumonia)
4-digits (401.9 for hypertension)
5-digits (786.50 for chest pain)

V CODES

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Classification of factors influencing health status and it is a Preventive care. These are the codes which
are provided to deal with circumstances other than a disease or injury.
Category: (V01-V85)
For e.g.:
Annual physical examination- V70.0
Need for prophylactic vaccination against poliomyelitis- V04.0
Cardiac pacemaker-V45.01
Routine infant/child health check-V20.2

E-CODES

Supplementary classification of external causes of injury and poisoning, these codes were developed by
the World Health Organization (WHO) as a supplemental code for use with the International Classification
of Diseases (ICD).

Category: (E800-E999)
For e.g.:
Accidental poisoning by antibiotics-E856
Dog bite- E906.0
Gun-shot injury- E970

ICD-10-CM
*(Effective from 10/01/2015)

 The ICD-10 code set provides a significant increase in the specificity of the reporting (compared
to ICD-9), allowing more information to be conveyed in a code.
 The ICD-10 code set has been expanded from five positions in ICD-9 (first one alphanumeric,
others numeric) to seven positions (alphanumeric).
 The ICD-10 codes use alphanumeric characters in all positions, not just the first position as in
ICD-9.
 As of the latest version, there are 68,000 existing codes in ICD-10, as opposed to the 13,000 in
ICD-9.

ICD-10 STRUCTURE

Codes in the ICD-10-CM code set can have three, four, five, six, or seven characters. Many three-
character codes are used as headings for categories of codes; these three-character codes can further
expand to four, five, or six characters to add more specific details regarding the diagnosis.

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  The first three characters of an ICD-10 code designate the category of the diagnosis.

 The next three characters (characters three through six) correspond to the related etiology (i.e.,
the cause, set of causes, or manner of causation of a disease or condition), anatomic site,
severity, or other vital clinical details.

 The 7th character is only used in certain chapters to provide data about the characteristic of the
encounter. Examples of where the 7th character can be used include injuries and fractures.

Current Procedural Terminology 4TH Edition

Current Procedural Terminology (CPT) is a coding system developed by the American Medical
Association (AMA) in 1966, to convert the medical, surgical and diagnostic services rendered by the
healthcare providers into five-digit numeric codes.

 The CPT code enables the providers to communicate both effectively and efficiently to third-party
payers about the procedures and services provided to the patients.
 These are numeric codes
 E.g. 99215 & 93000

HCPCS- Healthcare Common Procedure Coding System

National HCPCS - Healthcare common procedure coding system

These are commonly referred to as the HCPCS codes. It was established in 1978 as a way to
standardize identification of the supplies, materials and equipments etc which are not included in the
CPT. For example Inject-able drugs, wheelchairs, oxygen, dental etc.

 Updated annually by the CMS

 Alphanumeric codes where the 1st character is an alphabet (A-V), followed by 4 numeric
characters.
 Some carriers like Medicare have alphanumeric codes instead of numeric (CPT) for certain
procedures e.g., Influenza vaccine for a Medicare patient would be coded as G0008.

Local HCPCS- Healthcare common procedure coding system

These again are alphanumeric codes but are not valid on a national level; instead these are region
specific and are assigned by state Medicare carriers.
 The 1st character is an alphabet (W-Z) followed by 4 numerals but the most notable difference is
that these codes are not common to all carriers.
 Individual carriers assign these codes to procedures of their own discretion.
 But the carriers must send written notification to the physicians and suppliers in their area when
these local codes are required.
 These codes are currently not in use.

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 Revenue Codes
Revenue codes are 3-digit numbers that are used on hospital bills to tell the insurance companies either
where the patient was when they received treatment, or what type of item a patient might have received
as a patient.

 A medical claim will not be paid if this is missing from a bill.

 Revenue codes go along with procedure codes.
 When putting them in a charge master, you would add the correct revenue code to the CPT code
you were going to use for a particular department.
 It's the use of revenue codes which allows hospitals to use the same CPT code in multiple
departments because it will show which department the services were provided in.

Global Surgical Fee

A “global surgical fee” includes all necessary services performed by the physician before, during, and
after a surgical procedure.

Medicare payment for a given surgical procedure includes:

 Pre-operative and intra Operative services
 Complications
 Post-operative care.
Procedure codes with ninety (90) follow-up days are considered major surgeries. Procedure codes with
zero (0) or ten (10) follow-up days are considered minor surgeries.

Modifiers
Modifiers are two digit numeric/ alpha Numeric / alphabetic codes which are added with the procedure
codes to alter the services without changing the procedure codes.

Uses of Modifier

 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
 A bilateral procedure was performed
 A service or procedure was provided more than once
 Unusual events occurred

List of Modifiers:

21- Prolonged Evaluation and Management Service

22- Unusual Procedural Service
23- Unusual Anesthesia
24- Unrelated Service and Management Service by the Same Physician during a post operative period
25- Significant, Separately Identifiable Evaluation and Management Service by the same Physician on the
same day of a procedure or other Service.
26- Professional Component
32- Mandated Service
47- Anesthesia by Surgeon
50- Bilateral Procedure

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51- Multiple Procedures
52- Reduced Service
53- Discontinued Service
54- Surgical Care Only
55- Postoperative Management Only
56- Preoperative Management Only
57- Decision for Surgery
59-Distinct Procedural Service
62-Two Surgeons
76-Repeat Procedure by Same Physician
77-Repeat Procedure by another Physician
78-Return to the Operating Room for a Related Procedure during the Post-operative Period.
80-Assistant Surgeon
99-Multiple Modifiers

Sections of CPT Codes

 EVALUATION & MANAGEMENT (99201 TO 99499)
 ANESTHESIOLOGY (00100 TO 01999,99100-99140)
 SURGERY (10040 TO 69990)
 RADIOLOGY (70010 TO 79999 )
 PATHOLOGY & LABORATORY (80048 TO 89399)
 MEDICINE (90281 TO 99199

OFFICE VISIT

 New patient (99201 – 99205)

 Established patient (99211 – 99215)

HOSPITAL INPATIENT SERVICES

 Initial hospital care (99221 – 99223)

 Subsequent hospital care (99231 – 99233)
 Discharge hospital care (99238 – 99239)

CONSULTATIONS

 Office consultation (99241 – 99245)

 Hospital consultation (99251 – 99255)
 (Medicare usually do not accept these codes)

NURSING FACILITY SERVICES

 Initial nursing facility care (99304 – 99306)

 Subsequent nursing facility care (99307 – 99310)
 Other nursing facility services (99318)
 Nursing facility discharge services (99315 – 99316)

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