What is Procedural Coding?

Computer hardware and accessories nowadays support various types of coding for a variety of purposes. Procedural coding is a straightforward process that combines several steps of a calculative sequence to achieve the desired result. It is a type of medical classification that aids in the identification of specific surgical, medical, or diagnostic procedures. It begins as soon as a patient enters the premises of a healthcare provider. These coding systems have significantly aided the process of insurance claims and billing.

Codes used in medical services

In almost all areas of medical care, Healthcare Common Procedure Coding System (HCPCS) and Current Procedural Terminology (CPT) codes are used. From minor fevers to coughs and colds to surgeries and therapies, all medical services are available. Even experts may be unable to use CPT and HCPCS codes because they necessitate a thorough understanding of anatomy, as well as other medical terms and the complexities of the CPT and HCPCS codes. To record all CPT and HCPCS codes correctly, it is critical that the code sets are well understood, that all services are properly grouped, and that treatment procedures are clearly laid out. These procedure codes highlight the code set's standardization.

Current Procedure Terminology (CPT) Codes

CPT codes are beneficial to both healthcare professionals and insurance companies. CPT code assigns specific codes to various medical processes that are prescribed to the individuals concerned. CPT codes are currently used for invoicing at medical facilities using ICD-10-CM and ICD-9-CM. The ICD-10-CM and ICD-9-CM primarily deal with the diagnosis. It is beneficial to ensure uniformity in the identity of services, which will make it easier for insurers to decide on insurance claim reimbursement. Each action is assigned a 5 digit numeric CPT code set, with the 5th character being an alpha character in some components of this CPT code set. The American Medical Association defined CPT codes for the rest of the world. This CPT code is made up of three procedure code categories, which are as follows:

  1. Category I: It contains the most frequently used codes. It classifies services, devices, procedures, medical drugs, injuries, and diseases.
  2. Category II: Measures, tests, quality of treatment and care. Category II code set is aimed at quality control of medical services provided. This Category II code set is optional and is not a substitute for the CPT code set.
  3. Category III: Category III is the latest super specialty facilities especially of healthcare.

Healthcare Common Procedure Coding System (HCPCS) codes

The Centre for Medicare and Medicaid Services (CMS) is the organization that created HCPCS codes. These are the specific codes used by medical insurers to process medical insurance claims. These codes are updated on an annual basis. These are divided into two levels:

  1. Level I: It is the broad category that physicians use to identify their services.
  2. Level II: Except for physicians, healthcare providers provide services. The level II codes are revised and updated on a quarterly basis. It's important to remember that HCPCS code set Level II begins where CPT codes end.
HCPCS CodesDescription
U0001CDC 2019 Novel Coronavirus Real-Time RT-PCD Diagnostic Test Panel
U0002Coronavirus SARS-nCoV using any technique, multiple types or subtypes includes all targets
HCPCS codes

Processing of insurance claim

  1. Recoding the Code: The doctor usually records the code for the various services provided to the customer, including all procedures and tests performed.
  2. Verification: After thoroughly reviewing all of the patient's documents and the information recorded by the doctor, a professional medical coder will recheck and confirm all of the codes recorded. The authorized person prepares and authorizes the final bill.
  3. Claim submission: The documents and invoices are then transferred to the insurance company for the insurance claim to be processed.
  4. Claim Processing: The insurer processes the payment based on the information provided and pays the doctor, as well as asking the insuree to pay any amount due in excess of the claim processed.

Applications of procedural coding

  1. Discharge paperwork 
  2. Billing
  3. Insurance processing
  4. Summary explaining insurance benefits

Future growth prospects

The sudden outbreak of Covid-19 has had a huge impact on health insurers, as the number of people who have medical insurance has increased like never before. Over the last two years, the health and finance sectors have been the two most important drivers of the economy. The Global Health Crisis has created numerous opportunities for growth in the healthcare sector. In addition, the CPT and HCPCS codes help to streamline insurance claims across the country. Previously, whenever an insurance claim was required, it was the patient's responsibility to approach the insurance company and claim the insurance amount, as well as pay the doctor's bill before receiving the insured amount. However, the hospitals now file the claim and receive reimbursement from the insurance company.

Context and Applications

This topic is significant in the professional exams for both undergraduate and graduate courses, especially for

  • Bachelors in Computer Science
  • Masters in Computer Science
  • Masters in Computer Applications

Practice Problems

Question-1 Who records the codes into the system on examination of the patient?

  1. Coder
  2. Doctor
  3. Insurance Company
  4. Accounts Department

Answer: (b) Doctor

Explanation-The first recording of the code for the services provided to the patient is always fed into the software and authorized by the doctor.

Question-2 Who introduced CPT (Current Procedural Terminology)?

  1. American Medical Association
  2. Government of India
  3. Indian Council of Medical Research
  4. Indian Institute of Technology (IIT) Madras

Answer: (a) American Medical Association

Explanation- It was the American Medical Association that had introduced the CPT codes.

Question-3 Which category of services is covered by the Level I HCPCS code?

  1. Orthopedics
  2. Surgeons
  3. Psychiatrist
  4. Physicians

Answer: (d) Physicians

Explanation-The Level I HCPCS code is specifically meant for the services provided by the physicians.

Question-4 Which is the one reason for the limited use of CPT and HCPCS codes?

  1. Complex use
  2. Costly
  3. Scarcity of skillful staff
  4. All the above.

Answer: (d) All the above

Explanation-The relatively low key of the CPT and HCPCS codes is attributed to all the reasons enlisted primarily counting complex use, costly procedure, and scarcity of skillful staff.

Question-5 What is the frequency of updating the codes?

  1. Quarterly
  2. Annually
  3. Monthly
  4. Five-years

Answer: (b) Annually

Explanation- The codes are updated on an annual or yearly basis.

Common Mistakes

Students learning about the importance of procedural coding frequently fail to grasp the larger picture of the role of medical insurance in the economic outflow. Students must thoroughly research the impact of CPT and HCPCS codes on the total number of claims settled by insurance companies.

  • Medical billing
  • Healthcare coding
  • Procedural coding

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