Coding

Use of standardized coding systems is essential for Medicare and other health insurance programs to ensure that claims are processed in an orderly and consistent manner. Standardized coding systems provide a uniform language for nationwide claims processing of medical, surgical, and diagnostic items and services.

A major goal of an effective code set is to strike a balance that sufficiently identifies and differentiates items and services, and also results in a manageable system that health care professionals and administrative staff can efficiently use in submitting claims. Regular and other planned updates that accommodate new technology and changes in medical practice, without the administrative burden to health care providers of sporadic updates, increase confidence that the most current code sets are used.

Coding is distinct from coverage of a new technology; assignment of a new code does not automatically imply coverage by any payer. CMS may assign either an existing code that describes a similar item or service, a miscellaneous code (e.g., a not elsewhere classified code or a not otherwise specified code), or a new code for payment purposes, whichever is appropriate based upon Healthcare Common Procedure Coding System (HCPCS) coding criteria as applied to the individual technology.

This section discusses the coding systems used on Medicare claims; the statutory authority for coding use; general principles for coding updates; and a description of the International Classification of Diseases 10th Revision (ICD-10) and HCPCS code sets.

Statutory Authority - HIPAA

Recognizing the increasing role of electronic transactions between providers and insurers and the confusion and inefficiencies resulting from diverse ways of handling these transactions, Congress required, in the Administrative Simplification title of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Pub. L. No. 104-191), adoption and use of national standards governing the nature and content of electronic transactions in health care. This guide focuses on the HIPAA requirements related to national code sets, including associated operational guidelines.

The standard, national medical coding and classification systems adopted under HIPAA identify medical items and services and are essential for ensuring that electronic medical claims are processed in a consistent and efficient manner by all payers of healthcare services. Codes for medical diagnoses, procedures, services, and equipment are included in different coding and classification systems and are maintained and updated by different entities. This page briefly describes the coding and classification systems that may be relevant for new devices, therapeutics, and diagnostics, and identifies the HIPAA designated maintainer for each system. This page also includes links to additional resources.

In most cases, new items and services are described by existing procedure codes. However, some new technologies may warrant differentiation through the creation of new codes. The existence or addition of a code, in itself, is not a guarantee of coverage or payment on the part of Medicare or any other payer/insurer.