WHAT IS MEDICAL CODING: What Is It, Examples, Types & What They Do

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Medical professionals and insurance professionals can comprehend patient treatments, diagnoses, and services; thanks to the use of medical codes in the healthcare sector. The various medical terminologies that the codes describe are frequently known to those who utilize medical codes. Understanding this kind of medical jargon will help you input codes more accurately if you’re considering a career as a medical coder. In this post, we will define what is medical coding, its types, and example with its job description.

Preamble: What Is Medical Coding 

Medical coding is the technique of representing different components of health care, such as diagnoses, procedures, medical equipment, and services that clinicians provide to patients, using shorter alphanumeric numbers. These codes are uniform and make it easier for professionals in the healthcare and insurance industries to comprehend crucial details about a patient’s medical condition and course of treatment. Every time you see a healthcare specialist, they will review your medical history, evaluate your condition, recommend a course of treatment, and capture all of this information to build your medical record. This is called medical coding.

Medical coders examine patient files, which may include paperwork, physician notes, results of diagnostic tests, and prescriptions. They submit a claim to finance and insurance after classifying a patient’s ailment with medical codes. Medical codes can help healthcare and finance professionals understand a patient’s need for treatment and allow payment.

Why Do We Need Medical Coding?

The documentation of what was discovered, chosen, and carried out serves as the foundation for the healthcare revenue stream. Documenting a patient’s diagnosis, test results, and therapy ensures high-quality reimbursed visits. The patient’s personal health records must be simple to understand and follow throughout any subsequent complaints and treatments. This is noteworthy given the hundreds of millions of US visits, procedures, and hospitalizations.

How is medical coding carried out?

The best medical coders are thus those who have received training and certification. An illustration of a typical day in the life of a medical coder is shown below. A Medical Coder often starts the workday by going over the batch of patient notes from the previous day for evaluation and coding after settling into the office and obtaining a cup of coffee. Depending on the therapeutic environment (outpatient or facility), the type of records and notes may necessitate a specific level of specialization.

Example of Medical Coding 

Although there are countless medical coding and related terminologies, it is important to understand some fundamental types and terms. To help you comprehend medical codes better, look at the samples of medical coding vocabulary in these typical code classifications:

#1. Example of Medical Coding: Current Procedural Terminology (CPT)

A helpful form of the medical code classification system is Current Procedural Terminology (CPT). Some of the most often used codes used by those working in the healthcare industry are defined in the CPT. These codes can be used to describe a variety of medical services and procedures, including operations and diagnostic tests. The following terms are crucial for understanding CPT codes:

  • Medical professionals typically use Category I codes since they contain a wide range of services. They are one of the largest code collections. Codes covering numerous medical procedures, health technology services, and other therapies fall under this category.
  • When a patient has been diagnosed and has undergone a number of therapies, you can continue to track their health using category II codes. For example, current levels of nutrients or chemicals in their test reports and the status of their immunizations are some examples of Category II codes for patient history.
  • Codes for category III: They frequently refer to more recent and novel services as well as those that are undergoing various stages of clinical trials. The medical coding vocabulary used for this category frequently alludes to a patient’s medical issues and the ways in which the services help with patient treatment and care.
  • E/M codes, which stand for evaluation and management, detail the assessments made by medical professionals and the therapies patients require to manage their conditions. These codes frequently reflect common patient services, like outpatient therapy or consultations.
  • CPT code pricing schedule: The CPT code fee schedule lists the prices for each type of therapy under several categories. You can ensure that each patient or their insurance receives an appropriate charge by understanding the fee structure, which will enable you to double-check billing information.

#2. Example of Medical Coding: International Classification of Diseases (ICD)

Another popular categorization system for medical codes that identifies the fundamental nature of a patient’s sickness or disability is the International Classification of Diseases (ICD). These codes can be used in conjunction with others to thoroughly describe a patient’s diagnosis, condition, and course of treatment to medical personnel or billing and insurance specialists. Some medical abbreviations that can assist you in understanding ICD codes include:

  • E-codes: E-codes can describe external injuries in medical records. Falling, swallowing dangerous substances, and car accidents are a few examples of external causes.
  • V-codes: V-codes can indicate preventative care during annual checkups or family history-related medical treatments.
  • NOS: A NOS code is displayed when a healthcare provider cannot diagnose a patient. Even after receiving test findings, the doctor may continue to attempt to diagnose and administer treatment.
  • NEC: The NEC code can be used to classify a disease when no other codes are available. This can happen when doctors give extensive diagnoses but billing and insurance officials only need the simplest diagnosis number.
  • Dx: Dx is useful when submitting ICD codes for a patient’s history or billing. You can use a patient’s medical records to determine ICD diagnoses and CPT services.

#3. Example of Medical Coding: Healthcare Common Procedure Coding System (HCPCS)

The Healthcare Common Procedure Coding System (HCPCS) offers information about some medical services that aren’t included in the CPT codes. Healthcare workers use HCPCS to record services for Medicare, Medicaid, insurance companies, and other payers. The following are examples of vocabulary related to HCPCS codes:

  • Level 1 codes: The first level of HCPCS codes, equivalent to CPT codes, define a doctor’s procedures, treatments, and services. Medicare and Medicaid accept these codes when healthcare providers charge them for CPT-like services.
  • Level 2 codes: Level 2 HCPCS codes cover medical supplies, medications, and other outpatient treatments not covered by CPT. Level 2 codes are crucial for coding accuracy and specificity.
  • Level 3 codes: HCPCS Level 3 codes can bill governmental agencies and private insurers. As they are location-specific, you might not use them regularly.
  • Medicare: Medicare is a government-sponsored health insurance program for seniors and disabled people. To distinguish between billing for diagnosis, treatments, and equipment, this insurance employs HCPCS codes.
  • Medicaid: Medicaid helps low-income households afford health insurance. HCPCS codes used to bill Medicaid differently, help the Medicaid office understand patient services.

Types of Medical Coding 

There are various types that are utilized for particular purposes under the overall categorization system for medical coding. For instance, healthcare professionals describe diseases and their symptoms using diagnostic codes, whereas they use procedural codes to denote surgical or medical operations. Understanding the types of medical coding systems might help you better comprehend their function and goal.

The classification types that are employed in the field of medical billing and coding are briefly described in the list that follows.

#1. ICD-11

The International Classification of Diseases (ICD)-11, the most recent revision, is meant to take the place of ICD-10 as the next global standard for diagnostic codes. ICD-11 was introduced in January 2022 and is used to precisely categorize everything, including illnesses and different symptoms. As one of the types of medical coding, it updates several diseases’ classification categories, broadens the criteria of sexual health, and adds new diagnoses including the immune system and sleep-wake disorders.

#2. ICD-10-CM

The clinical modification (CM) of the previous ICD, ICD-10, is thus the ICD-10-CM. The degree of detail in this version of the ICD satisfies the reporting requirements in the United States and is intended for use in clinical settings. The level of detail in ICD-10-CM is likewise different from that in regular ICD-10 codes. Because they provide more information regarding the severity of a disease or condition, the codes in ICD-10-CM are particularly helpful for clinical, outpatient applications.

#3. ICD-10-PCS

The procedural-focused ICD, ICD-10, is known as ICD-10-PCS. The ICD-10-PCS has more specific codes for operations and equipment and is used in inpatient settings, in contrast to the ICD-10-CM, which is intended for the more thorough classification of diseases and disorders.

#4. CPT

Hence, “current procedural terminology” (CPT) informs relevant parties about diagnostic, surgical, and medicinal procedures. Physicians and other healthcare workers use CPT to describe patient treatments. Its main objective is to standardize how these operations are communicated for administrative and analytical purposes.

#5. HCPCS Level II

Based on CPT, the Healthcare Common Procedure Coding System Level II, or HCPCS, is used to categorize non-physician services, including ambulances, medications, and prosthetics that fall outside the purview of CPT.

What Is Medical Coding Job Description 

After a visit, a medical coder, also known as a certified professional coder, is in charge of analyzing the patient’s medical records and converting the data into codes that insurers use to process patient claims. They are responsible for validating treatments with the medical personnel, locating any gaps in the record, and sending paperwork to the insurance companies for payment.

What is the Role of a Medical Coder?

Medical coders enhance communication with insurance companies in hospitals, clinics, and other healthcare facilities. They spend the majority of their time manually updating patient files with medical codes after evaluating patient records. Medical Coders use well-established procedures to assign codes to patient files that make it simple for insurers to identify the types of care that a patient’s plan covers. Medical coders also compile evidence to support their coding decisions and refute any claims that have been unfairly refused. They review every aspect of a patient’s visit, including the diagnostic procedures, consultations, in-office procedures, and the prescription that was provided.

Medical Coder Skills and Qualifications

Medical coders are employed by healthcare facilities and are in charge of standardizing medical equipment, processes, and diagnoses into codes that are used for submitting insurance claims. To do this, a medical coder needs the following abilities and credentials:

  • thorough knowledge of anatomy, medical terminology, and physiology
  • proficiency with computers, including quick and accurate typing
  • Mathematical abilities
  • Good communication skills, both in writing and speaking.
  • Organizing abilities
  • the capacity to protect the confidentiality and high integrity of medical information
  • strict focus on details
  • having data entry and transcribing skills
  • anticipated salaries for medical coders

The typical hourly wage for a medical coder is $22.10. However, this compensation rate can change based on the qualifications and expertise of a candidate.

Criteria for Medical Coder Education

A medical coder should possess the education and training required for the position. Although each business has different educational requirements, most medical institutions desire a Medical coder to have a master’s degree or at least a bachelor’s degree. However, the majority of entry-level positions demand passing a certification program or a bachelor’s degree. Health administration, medical billing, and coding, healthcare administration, health information management, or a similar subject of study are appropriate concentrations for certifications, bachelor’s degrees, and master’s degrees.

Criteria for Medical Coder Experience

Medical coding standards and methods, including ICD-9, CPT, ARG, and ASA, among others, should be familiar to a skilled medical coder. Expertise with program administration and health records, as well as other clinical services, is a plus. Medical coders should have at least two years of relevant experience, gained through employment or voluntary work.

What Tasks Does a Medical Coder Perform Every day?

Like other medical office employees, medical coders typically work conventional business hours. When a patient has finished their session, the medical coder examines their chart or file and organizes the data from it into various categories. The medical coder consults medical coding standards and conducts research to get the appropriate code if they are unsure of what kind of code to use for a particular treatment. In order to submit the codes to the patient’s insurance company or to a medical biller on their team, they meticulously arrange the codes in the proper order. If a submission has a problem, they examine the current codes and record any adjustments.

What Is Medical Coding Salary

According to the Bureau of Labor Statistics (BLS), the median annual compensation for medical billing and coding professionals is $46,660, or $22.43 an hour, but there are several factors that can affect your ability to make that much. For instance, medical billers and coders in New Jersey make $67,130 annually, which is significantly more than the national average. Moreover, certified coders make 27% more money than uncertified coders, according to the AAPC. We’ll delve into medical billing and coding wage aspects in this article, including how much you can earn in each state, the places with the highest salaries, and how medical coders’ and billers’ pay varies depending on where they work.

Medical billers and coders get a variety of salaries depending on a variety of circumstances. AAPC These variables include geography, type of workplace, specialty, certification, and experience. After accounting for these variances, the BLS determined that the median annual wage for medical records and health information professionals in 2021 would be $46,660, or $22.43 an hour.

Your Potential Salary Rises with Certification

Non-certified coders earn an average pay of $47,200 annually, while qualified coders receive an average compensation of $60,097 annually, according to the AAPC. With two certifications, the average wage rises to $64,712. According to the AAPC, medical coders—both qualified and uncertified—earn $54,797 per year on average.


Also, the majority of health information technologists receive benefit packages, which may include tuition reimbursement, insurance, sick leave, paid time off, and other things.

What Exactly do you do in Medical Coding? 

Analyzing medical records and assigning codes will be among your primary job responsibilities. When patients need their insurance company to pay a claim, your codes will be useful, and accurate coding will help to guarantee that the provider is paid by the insurer promptly.

Is Medical Coding Hard? 

While occasionally challenging, medical billing and coding are by no means insurmountable

Is Medical Coding an IT Job? 

Medical coders are in charge of converting doctors’ reports into practical, standardized medical codes.

How Many Years Course is Medical Coding? 

A medical coding course can be finished in 1 to 3 years.

Which Language is Used in Medical Coding? 

Look at the most secure and reliable programming languages utilized in the creation of healthcare applications. Among the most used programming languages worldwide are Python, HTML, and Java

What are the 2 Types of Medical Coding?

The International Classification of Diseases (ICD) and the Current Procedural Terminology (CPT) are two widely used classification systems for medical coding.


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