1. California Medical Bill Reviewer Re-Certification
Unit 1: Workers’ Compensation Benefit Program
Module 8: Medical Coding

2. Let’s start by discussing the importance of medical coding systems...
Overview
In this module, you will learn about different types of codes for diagnosis, treatment, and even drugs and supplies.
Can you imagine the havoc that would result if medical providers all used different coding systems for the same types of services?
Let’s start by discussing the importance of medical coding systems...
Part I: The Basics
The Importance of Medical Coding Systems
Part I: The Basics
The Importance of Medical Coding Systems

3. Why are Codes So Important?
In order for medical information to be clearly communicated across physicians, medical professionals, bill reviewers, and researchers, standardized coding systems were adopted. Coding system have the following benefits:
Allow accurate communication between physicians, patients, medical reviewers, bill processors, and even researchers nationwide.
Benefit 1
Allow easy identification of specific procedures, services, supplies, and even diagnoses.
Benefit 2

4. Codes, Codes, and More Codes!
There are several different medical coding systems.
Codes important in medical billing are:
International Classification of Diseases (ICD-9) Codes
Current Procedural Terminology (CPT) Codes
Health Care Procedure Coding System (HCPCS) Codes
Revenue Codes
Diagnosis Related Group (DRG) Codes
National Drug Codes (NDC)
State-specific Codes

5. Diagnosis Codes
Before payment for medical services is allowed, the reason the injured worker is being treated, or the diagnosis, must be identified on the bill.
Therefore, in order to effectively communicate diagnoses consistently and accurately, physicians use what are known as ICD-9, or diagnosis, codes.
Let’s take a look…

6. International Classification of Diseases, 9th Revision
International Classification of Diseases (ICD-9) System: identifies almost any potential condition, with a high degree of detail.
ICD-9 Code Characteristics:
Numeric codes.
Three digit codes, with one or two decimal places.
Listed in numerical order.

7. ICD-9 Codes
As you can see, the five digit coding system is very specific.
This specificity allows the clinician to give an accurate picture of the patient’s condition with a single code.
EXAMPLE
377: Disorders of optic nerve and visual pathways
377.1: Optic atrophy
The fifth digit is required. These digits are used to record the information substantiated in the patient’s records.
377.12: Post-inflammatory optic atrophy

8. Surgical Section Characteristics:
ICD-9 Surgical Section
The ICD-9 also has a surgical section.
Surgical Section Characteristics:
Example
Identifies most surgical procedures, not in the detail CPT does, but still quite extensive.
Organized similar to other ICD-9 codes.
Codes consist of two digits with one or two decimal places.
08.0 Incision of Eyelid.
08.01 Incision
of Lid Margin.

9. Supplementary Information
The ICD-9 reference also includes supplementary information.
Within the supplementary information is a tabular list, which lists disorders by code. In addition to standard codes, the list includes:
E Codes
V Codes
Let’s take a look…

10. Supplementary Information
Supplementary codes for external causes of injury and poisoning.
Supplementary codes for factors influencing health status and contact with health services.
E828: Accident involving animal being ridden.
V11: Personal history of mental disorder.
V67: Codes for follow-up examination.
E845: Accident involving spacecraft.
E Codes
V Codes

11. Supplementary Information
V codes and E codes CANNOT be primary diagnoses since they provide only supplementary information and not the primary disease or condition of the patient.

12. CPT Codes
Current Procedural Terminology (CPT): a standardized numeric medical coding system maintained and updated annually by the American Medical Association (AMA).
Used by physicians and other health care professionals to report and charge for services rendered.

13. Category I Code Characteristics:
Category I CPT Codes
Category I Codes: codes used to identify procedures and treatments.
Category I Code Characteristics:
Five digit numeric codes.
Codes and detailed descriptions uniformly identify:
Services
Procedures
Treatments
DO NOT include codes used to separately report medical items or services that are normally billed by non-physicians.

14. CPT Organization
The CPT is divided into six major sections of Category I codes.
Evaluation and Management
Anesthesia
Surgery
Radiology
Pathology
Medicine
Each section is then divided into subsections that classify and describe similar services.

15. Category II Code Characteristics:
Category II CPT Codes
Category II Codes: codes used to track trends in medical management.
Category II Code Characteristics:
Alphanumeric codes.
Four numeric digits, followed by an “F.”
0005F: Osteoarthritis assessed
These codes are NOT reimbursable.
These codes can only be used for tracking and research.

16. Category III Code Characteristics:
Category III Codes
Category III Codes: codes used to identify emerging technology.
Category III Code Characteristics:
Alphanumeric codes.
Four numeric digits, followed by a “T.”
0091T: designates a total lumbar disk replacement.
Correspond to new procedures that are under evaluation and have not been assigned a permanent code.
May be reimbursable.
Values are not usually available. Therefore, an RN typically assigns a value based on procedures of similar complexity and time.

17. HCPCS Characteristics:
HCPCS Codes
HCPCS Codes: codes used to identify many supplies and some services not coded in the CPT.
HCPCS Characteristics:
Alphanumeric codes.
Five digits: a single letter followed by 4 digits.
Arranged from A0000-V9999.
Listed by subject.
There are 2,400 HCPCS codes for:
Transportation
Durable Medical Equipment
Supplies
Injections
Drugs
Services

18. HCPCS Codes
Similar to CPT codes, HCPCS codes are organized in major sections.
There are some HCPCS that are profession- or specialty-specific, by definition.
In general, HCPCS codes listed within a specific section are not restricted in use by a specific profession or specialty group.
For example, “D” codes are used for dental services and supplies. Although unlikely, a non-dental provider could bill from this specific section.

19. HCPCS Billing and Pricing Information
Unlike some CPT codes, HCPCS codes can be billed for multiple units.
Pricing for all other codes is entered into the bill review system from Ingenix software, and is updated quarterly.
California has state-specific pricing for some HCPCS codes commonly billed on workers’ compensation bills.
Pricing accounts for:
Provider Type
Average Billed Price
Cost
Frequency Billed
Region

20. Facility Codes
You probably know there are unique sets of codes used specifically for facility bills known as revenue codes and DRG codes. We will begin with revenue codes…
Revenue
Codes
Revenue Codes
DRG Codes

21. Revenue Code Characteristics:
120
324
Revenue Codes
258
272
Revenue Codes: codes used to categorize and charge for all hospital related costs.
Revenue Code Characteristics:
Costs include:
Numeric codes.
Three digit numbers.
Organized by major sections.
Each major section is divided into sub-sections.
Room and board
Operating room
Pharmacy
Other miscellaneous costs during an inpatient stay

22. Revenue Codes Revenue codes are organized by subsection.
Sub-sections are indicated with a number 1-9 in the 3rd placeholder.
For example, the pharmacy revenue code is The pharmacy sub-sections are:
Generic drugs: 251
Non-generic drugs: 252
Take-home drugs: 253

23. Revenue Code Specificity
Some revenue codes are very specific.
Revenue Code 367: codes specifically for a kidney transplant because there are so many specific costs associated with that hospital stay.
Other revenue codes are less specific.
Revenue Code 402: codes for any type of ultrasound because any ultrasound procedure costs the hospital about the same in supplies and labor.

24. DRG Codes
Now that you are familiar with revenue codes, we will discuss the second type of code used to bill for facility services—DRG Codes…
Revenue Codes
DRG
Codes
DRG Codes

25. DRG Code Characteristics:
DRG Codes
Diagnosis Related Group (DRG): a coding system used for billing facility services.
DRG Code Characteristics:
Contains 559 valid groups that classify patients into similar cost groups.
Three digit numerical codes.
Related principal diagnoses are listed under the related DRGs.

26. DRG: Case Mix & Hospital Cost
The DRG system was developed to relate the case mix to hospital costs.
Case mix is
determined by:
Severity of illness
Prognosis
Treatment difficulty
Need for intervention
Case Mix:
the patient pool of a medical facility, reflective of patients’ need for resources.

27. So, How Are DRGs Determined?
DRGs relate case mix to the resource intensity.
DRGs are assigned using the following factors:
Resource Intensity:
Principal diagnosis & up to 8 additional diagnoses
Principal procedure & up to 5 additional procedures
Age
Sex
Discharge status
how many hospital resources are needed to meet that patient’s needs.
It is important to know that diagnoses and procedures are designated by ICD-9 codes.
Remember, ICD-9 codes can be used to identify both diagnoses AND surgical procedures.

28. DRG reimbursement is a set amount, regardless of:
DRG Payment System
The primary diagnosis plays a major role in the DRG that is assigned.
DRG reimbursement is a set amount, regardless of:
Length of stay
Amount of supplies
Number of staff required to treat a patient
Therefore, it ultimately determines how much the facility is paid!

29. National Drug Code (NDC)
Let’s also look at drug codes!
National Drug Code (NDC)
NDC: unique code which is a universal product identifier for human drugs. 
National Drug Code Characteristics:
11-digit codes.
All human drugs are recognized and reported using a National Drug Code.
NDC pricing is updated routinely and uploaded into the bill review system.

30. National Drug Code (NDC)
The list may include:
Manufactured Drugs
Prepared Drugs
Propagated Drugs
Compounded Drugs
Processed Drugs
The Drug Listing Act of 1972 requires registered drug establishments to provide the Food and Drug Administration (FDA) with a current list of all drugs that are commercially distributed.

31. National Drug Codes How do they work?
When an NDC code is entered into the bill review system, it pulls up the pricing associated with the drug for the specific dosage.
The unit field indicates the quantity of drug that was dispensed or used.
This quantity is then entered into the formula used to calculate the reimbursement for the drug charge.

32. Summary The importance of medical coding systems.
Facility Codes: The difference between revenue and DRG codes.
Diagnosis Codes: What they code for and how they are used.
National Drug Codes: What they code and how they are used.
Procedure Codes: The difference between CPT and HCPCS codes.