What is Medical Coding and Why is it Important in Healthcare?

The role of a medical coder in the healthcare industry is much like that of a translator that transforms doctors’ language into universal and specific codes understood by medical professionals. Codes may contain sensitive information about patient conditions, doctor’s diagnoses, prescriptions, and patient reports. Moreover, the purpose of coding information is to serve the insurance companies’ needs so that the required amount can be acquired.

Medical coders in that regard hold the critical responsibility of coding accurate information so that communication gaps can be properly filled. There are skills and techniques that developers must learn to code languages without flaws. Or, misrepresentation of information may result in malware on both sides of the patient and the insurance company.

What is medical coding?

US healthcare providers issue medical billing codes that include healthcare diagnoses, medical services, procedures, and equipment for an insurance provider to reimburse the patient. Medical billing codes are universal alphanumeric statements taken from healthcare record documentation, such as transcription of physician’s notes, and laboratory and radiologic results.

They convey the patient’s current health state. Medical coding professionals go through this process to ensure codes are applied in the correct manner. They try to eliminate errors so insurance providers get the right information.

Medical coding professionals abstract information from documentation, assign pertinent codes and create a claim to deliver it to insurance providers. This is so that healthcare providers get paid. A healthcare provider’s coding happens at each patient’s healthcare visit. The doctor reviews the complaint and medical history.

A healthcare provider makes an expert assessment and diagnoses the problem based on the patient’s current health status and previous medical history. Meanwhile, he documents the visit, including the patient’s ongoing record and how the healthcare provider gets paid.

The generated medical codes in the process translate that documentation into standardized codes that provide the following information to the payer:

  • Diagnosis of the patient
  • Medical necessity for services, treatment, or supplies the patient received
  • Services, treatments, and supplies provided to the patient
  • Any abnormal circumstances or medical conditions that affect those treatments and services

Essentially, the musician unfolds and interprets the written music, using their instrument to produce the intended result. It is imperative for medical professionals to understand the anatomy, physiology and details of the services, and the rules and regulations of payers.

Our dental billing company offer effective patient care in terms of data accuracy. We update our services based on numerous trends in the healthcare sector so that we can give insurance companies accurate information.

Why do we code patient information?

Coding medical information in healthcare is needed because there are various common symptoms that the patient explains to the doctor. Suppose even for the common flu, there will be a patient visit to the doctor that includes the description of symptoms like cold, dry throat, etc. This information is recorded in every visit in which the patient explains his condition, the diagnosis procedure, and the prescribed medicines or treatments that the doctor highlights. Moreover, the information is collected and contains the reports that the doctors make to transfer to the insurance company that will pay the amount for reimbursement.

However, certain conditions are more sensitive, such as if the patient approaches the doctor with different types of diabetes or certain injuries or illnesses for which more significant treatment is needed. As illness increases, so does the amount of information required to be transferred to insurance companies.

The Centers for Disease Control (CDC) states that over 1.4 billion patients visited doctors last year. Moreover, the number is likely to remain constant or exceed. These visits included physician offices, hospital outpatient facilities and emergency rooms. Following the states, if only five pieces of information were coded of all these, estimates touch up to 6 billion pieces of information per individual transferred each year. As a result, the healthcare industry is able to use more efficient methods of transferring information through certain codes and a massive amount of data.

How does uniform documentation ease the process?

Apart from applying codes to the information, medical coders use uniform documentation to make research more efficient. Coding allows uniform documentation as several states have similar codes. For example, there is a similarity in codes for Streptococcal Sore Throat in both Hawaii and Arkansas. Government and healthcare agencies can track and analyze medical trends and diagnoses more efficiently by researching a vast amount of data.

Let’s consider the example of if the CDC wants an analysis of the constant prevalence of pneumonia in a certain area, there may be limited documentation and data available. However, they can access to more efficient data by applying ICD-10-CM codes for pneumonia.

Similarly, administrations can benefit greatly from coding by tracking medical treatment information and effectiveness. Moreover, medical agencies are also allowed to analyze information like the cause of certain incidences or diseases, and the effective treatments they are providing. This is done by researching various sources quickly.

Types of medical codes in practice.

Medical coders need to learn three types of codes usually used in the healthcare industry.


ICD or International Classification of Diseases ranks first among various codes. The code was established by the World Health Organization in the late 1940s and has been updated periodically for over 60 years since its inception. These codes help medical coders create a uniform vocabulary for diagnosing injury, illness, and death.

For instance, ICD-10-CM is the code currently being used in the United States. Ten refers to its tenth version, whereas CM denotes clinical modification. Thus, the technical name given to the code by NCHS, or the National Center for Health Statistics is International Classification of Diseases, Tenth Revision, and Clinical Modification.

The clinical modification of these significantly increased codes for diagnosis while making the process more flexible for medical coders. This is essential for the profession. Thus, consider the significance of clinical modification by following the number ICD-10 code has 14000 codes. ICD-10-CM’s clinical modification adds 68000 codes.

ICD codes in healthcare are used to record the diagnosis of a doctor and the condition of a patient, which is essential for insurance companies. However, medical billers need to pay attention to using certain codes to identify the disease and treatment. The claim may be rejected if the coder lists the Strep Throat diagnosis as the medical justification for an X-ray.


Current Procedure Terminology or CPT codes are used to record actions performed in the physician’s office for the patient. AMA owns the copyrights to the code, which it sets and maintains. Furthermore, these codes are updated annually.

These are five-digit numbers categorized into three main categories. However, the first category is more often used that has six ranges corresponding to six major medical fields. For instance, Surgery, Anesthesia, Evaluation and Management, Pathology and Laboratory, Radiology, and Medicine.

The second category of CPT codes is performance and measurement. Usually used in recording radiology and laboratory results. Category II codes are optional; they cannot replace Category I codes. These codes are helpful for other doctors and healthcare providers, and the AMA anticipates that Category II codes will lessen the administrative burden on doctors’ offices by giving them access to more and better data about the effectiveness of healthcare providers and facilities.

The third category of CPT codes covers emerging medical technology and trends in the healthcare industry.


Another name commonly used for the Healthcare Common Procedure Coding System is “Hick Picks”. These are also a set of codes based on the same CPT codes, however, developed by CMS and maintained by the AMA. HCPCS codes cover services like prosthetics, durable medical equipment, ambulance rides, and certain drugs and medicine that CPT does not cover.

HCPCS is one of the significant codes in Medicaid and Medicare that codes can use. This code covers hospital care, medical and Medicaid Services, and chemotherapy drugs. Moreover, the code is divided into two main categories, the first being identified, while the second is divided into 17 sections. Each of these sections has an area of specificity like a medical, laboratory, and rehabilitative medical services that these codes cover.

Similar to the CPT codes, these codes are also likely to correspond with diagnosing codes measuring the medical procedure. Thus, the medical coder has a delicate responsibility to ensure that the information of outpatient conditions matches the diagnosis report and is described accurately via a CPT code.

Why is medical coding important?

In the healthcare industry, medical coding is essential because patients require several clinic visits, hospitalizations, or medical consultations. Documentation included in all these visits includes information such as the diagnosis criteria, medical conditions that the patient suffers, the causes, and the treatment prescribed.

The information like the patient’s diagnosis and required Medicare is tracked and processed by the medical coder. This is so that their insurance provider can have accurate information regarding the patient’s condition and the amount required for recovery. To avoid any default, medical coders must ensure that coding procedures are handled properly.

The critical role of medical billing and coding in healthcare.

Medical coders and healthcare billers have a critical role in providing critical patient information to the healthcare provider. They basically provide a link between an insurance provider and a healthcare service. As processing information is not easy, they spend their days translating medical language into easy-to-understand codes that help insurance companies process the claim.

Similar to how a computer needs programming to run your favourite programmes. Computer programmers or coders make these programmes. The text, graphics, and images you see on the monitor’s screen are produced by the computer’s ability to communicate with the many programs running in the background.

Difference between medical billing and coding

Although the aim of medical billers and coders is the same, the roles they perform are separate. However, their roles overlap, as they support each other to complete the task. There are some distinctions in the following:

Education and training

What are some incredibly valuable medical coding skills?

Medical coding services require high analytical skills coupled with effective communication and customer service skills. Professionals are needed to use coding software and HCPCS.

Communication skills

Medical billing and coding professionals often remain engaged with other coders and billers, patients and insurance companies, and healthcare professionals. A comprehensive command of medical jargon is necessary for them to excel as they use them every day. They also clarify disputes with insurance companies and answer patients’ billing questions. Having superior communication skills is imperative for the job.

Thorough knowledge of billing and coding software

Medical billing and coding professionals use billing software every day. Knowledge of coding software in this regard is a fundamental component that professionals need to excel. Some of the software we use daily include CodeLink Online and 3M. A coding professional should control this software.

Customer service experience

Medical billers and coders interact with patients and insurance companies regularly, so handling their queries, requests and inquiries with expert customer experience is essential to their job. The world of insurance billing is complex and involves intricacies, and patients may not always understand technical terms or healthcare jargon. Therefore, medical coding professionals should have the right skills in order to be able to deal with the inquiries of patients and meet their needs.

Knowledge of HCPCS

HCPCS is the national, standardized code used to file claims that billing and coding professionals use in their services. The code includes key services completed during the patient’s visit such as procedures, drugs administered, supplies and equipment utilized, and nonphysician services. A professional should have a thorough understanding of this code for success in the medical billing and coding profession.

FAQs about medical billing and coding

What is medical coding?

Medical coding is used to record patient information, including universal codes understandable by insurance companies. They will further process the information by determining the patient’s condition and Medicare coverage needed to ensure recovery.

Why is coding a diagnosis significant?

Coding a diagnosis is important as it provides information to the insured about the amount they will pay and the amount they own. In addition to coding diagnoses, insurance policies are also required for certain medical services.

How are medical coders important?

Coders are critical for the healthcare industry as they smooth the process for health insurance companies. It is difficult for them to list each claim, procedure, illness status, and treatment before reimbursement. Thus, there is a system of assigning codes to each claim, and coders are responsible for making sure that the process goes smoothly.

Why are coding guidelines so significant?

Coding guidelines are important as they serve as guidance for coders to follow in order to make the practice better. As a result of these guidelines, every coder and biller follows the same practice.

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