Terminology for Medical Billing and Coding
This lesson provides an overview of Current Procedural Terminology (CPT), a coding system that helps identify medical services and procedures. It introduces key concepts and explains how CPT codes are used in medical billing and coding for insurance reimbursement.
Introduction
John has worked at the hospital for many years and is ready to teach Ron how to code medical records for insurance reimbursement. Ron is starting his new job at South Hospital in the billing and coding department.
How Does Current Procedural Terminology Work?
In 1966, the American Medical Association (AMA) introduced a coding system to standardize the identification of medical services. This system, known as Current Procedural Terminology (CPT), labels a variety of medical procedures including:
- Diagnostic tests
- Surgeries
- Laboratory and radiology tests
- Anesthesiology
- Therapy services
- Hearing and vision care
- Transportation
- Evaluation and management services
Since its creation, CPT has undergone multiple updates and serves as a means of communication among healthcare professionals, patients, hospitals, and insurance companies. It is also useful for medical chart reviews and claims processing.
Each CPT code is composed of five characters (numbers and letters) to specify the type of medical service. A computerized system is used to enter Current Procedural Terminology codes for reporting purposes.
Training and Use of CPT Codes
Ron and John have both completed training in the latest version of CPT codes as it is a complex system. This required them to become well-versed in areas including:
- Anatomy
- Medical terminology
- Insurance company policies
- Bundling procedures when necessary
- Proper use of modifiers
These two-character designations (modifiers) are used to indicate unique circumstances or further describe a procedure. They were jointly created by the AMA and CMS.
Ron and John are now discussing the three categories of CPT codes together.
Terminology Used in Current Procedural Terminology
Each year, thousands of CPT codes are updated. They are divided into three categories:
- Category 1: A five-digit code that labels a procedure (ranges from 00100 to 99499). Services labeled are approved by the Food and Drug Administration (FDA), are performed by healthcare professionals, and are documented and proven. These codes are broken down into six sections:
- Surgery
- Radiology
- Medicine
- Evaluation
- Anesthesiology
- Pathology and laboratory
- Category 2: An optional five-character alphanumeric code that helps identify quality of care delivered; used for measuring performance.
- Category 3: A temporary code for new and emerging services, technologies, and procedures. This temporary code is generated in order to collect data and assess new medical practices; procedures may or may not be FDA-approved and must be part of ongoing research. Healthcare professionals rarely perform these procedures.
CPT code category 1 refers to surgery. The CPT code for surgery is category 1.
As a result, Ron understands that he will be focusing more on category 1 CPT codes and modifiers than category 2 or category 3.
When Ron is out of his orientation period and working alone, he plans on reviewing CPT coding references and online resources and training tools made available by the AMA.
To ensure Ron is using the CPT codes correctly, John will watch him complete his work.
Summary of the Lesson
The American Medical Association (AMA) created Current Procedural Terminology (CPT) in 1966 to establish a standardized way of identifying medical services. This system uses five-character codes to designate diagnostic, anesthesiology, laboratory, radiology, surgical, vision and hearing, physical and occupational therapy, transportation, and evaluation and management services.
Some codes may also have a two-character modifier to indicate special circumstances or provide further details about a procedure.
CPT codes facilitate communication among departments and assist with medical record reviews and insurance claims. They are organized into three categories:
- Category 1: FDA-approved procedures
- Category 2: Optional tracking codes used for performance measures
- Category 3: Ongoing research procedures that may not be FDA approved
The information on this site is for informational purposes only and should not be construed as medical advice.