The Truth About Medical Codes: It`s More Than a Bunch of Numbers

   Medical coding is far more than just filling in the blanks on a claim form and assigning numbers to services, procedures, supplies, and diagnoses. Medical codes are but one piece in the enormous mosaic of documentation that payors, litigators, and government officials use to track and pay for our nation's healthcare delivery and to measure its outcomes.

   Coding serves as a communication vehicle to insurers, making it known who was treated, why, what was done, how much was billed, and where and by whom the services were provided. When claims are completed properly, coding enhances and accelerates the payment process and assists in maintaining the financial health of a provider organization. A financially stable provider organization is able to keep its doors open to patients and can keep the stream of paychecks flowing to its employees. On the other hand, incomplete or improperly filed claims can be suspended for review, denied, or result in reduced payments. All of these events negatively affect the provider organization's ability to maintain a healthy cash flow, retain employees, compete in the marketplace, invest in new technologies and services, and provide quality care.

   Improperly filed claims also can increase risk of allegations of fraud and abuse. The Health Insurance Portability and Protection Act (HIPPA) of 1996 established healthcare fraud as a federal crime and expanded this to include all health insurance plans. It is reasonable to assume that payors might suspect that providers who improperly manage claims also may not bill properly. A false claim is one that contains any inaccurate statement made for the purpose of obtaining payment, including but not limited to claims with errors in dates, physician provider numbers, and place of service. However, the government is more concerned about trending (a provider's practice of submitting exactly the same coding and documentation on every claim for a particular diagnosis or procedure) than individual clerical errors.

ICICD-9-CM, CPT, HCPCS9-CM, CPT, HCPCS

   The Health Insurance Portability and Protection Act requires the adoption of standards for code sets that are part of all healthcare transactions. The Act directs the use of Volume I and II, ICD-9-CM (International Classifications of Disease, Ninth Revision, Clinical Modifications) for the coding of all diagnoses in any setting. ICD-9-CM Volume III is to be used for coding all inpatient procedures. All ambulatory and physician services use a combination of CPT (common procedural terminology) and HCPCS (Health Care Financing Administration's Common Procedural Coding System). HCPCS apply to other items such as durable medical equipment, orthotics, prosthetics, and medical supplies. These code sets are updated annually - ICD-9-CM in October, CPT in January, and HCPCS in December.

Who is Responsible for Code Sets?

   Various agencies are responsible for maintaining and updating medical code sets. ICD-9-CM, Volumes I and II are maintained by the National Center for Health Statistics (NCHS) and the Centers for Medicare and Medicaid Services (CMS), both federal agencies. These codes are used by hospitals to report diseases, injuries, and impairments.

   ICD-9-CM, Volume III, is maintained by CMS and is used by hospitals to report procedures or other actions taken on inpatients to prevent, diagnose, treat, and manage diseases, injuries, and impairments.

   HCPCS are a combination of Level 1 (CPT) codes maintained by the American Medical Association (AMA), and Level 2 codes maintained by CMS, Blue Cross/Blue Shield Association of America, and the Health Insurance Association of America.

How are Medical Codes Used?

   Accurate and complete coded data must be available to all healthcare settings to improve the quality and effectiveness of patient care, to ensure equitable healthcare payment, and to permit valid research and analytical studies of aggregate coded data. The need has never been greater for a national cooperative effort to recognize and apply uniform terminology and coding guidelines. Accurate and complete coded data allow payors to:
   * Establish uniform reimbursement levels
   * Track provider resource utilization patterns
   * Monitor patient outcomes
   * Analyze the quality of patient care
   * Develop future healthcare policies
   * Monitor healthcare fraud and abuse issues
   * Establish benchmarking data to maintain a competitive edge in the healthcare marketplace
   * Write coverage policies and contractual agreements.

   A healthcare provider's compliance with established coding guidelines may help to:
   * Reduce the administrative costs associated with the appeal process
   * Respond to compliance issues related to sections of HIPAA legislation
   * Improve relations with both patients and providers
   * Maintain a positive cash flow and remain competitive in the marketplace.

What Do Codes Mean to Clinicians?

   How and why does this matter to clinicians caring for patients with wounds, ostomies, and continence problems? One of the outstanding difficulties within our scope of practice is trying to grasp the size and cost of our patient population by disease, acuity, clinical setting, and type of wound or surgery. For example, we have struggled for years to understand the size and cost of the ostomy population, the number and type of new ostomy surgeries performed each year, the number of ostomy-related complications, hospital re-admissions, and other specifics related to the surgery. The problems and delay in having this data fall directly into the lap of our coding databases. These databases contain inconsistencies and local interpretations between institutions, diseases, and patients created by those who assign codes and submit claims. How can healthcare be compared or measured if the data collection methods are not the same or if coding is influenced by reimbursement issues? Without quality coded healthcare data, appropriate planning and responsible resource allocation required for future healthcare in the United States will never become a reality.

Resources

   Payer's Guide to Healthcare Diagnostic and Procedural Data Quality, 2001 Edition. The American Health Information and Management Association. 2001. Available at: www.ahima.org/infocenter/payersguide. Accessed September 23, 2002.

   National Center for Health Statistics (NCHS). Available at: www.cdc.gov/nchs. Accessed September 23, 2002.

   Centers for Medicare and Medicaid Services. Available at: www.cms.hhs.gov/paymentsystems. Accessed September 22, 2002.