Medical Billing and Coding

Medical Billing and Coding

In order to properly code a bill for medical necessity, it is important to understand the electronic medical record. This record contains information about the patient’s health both before and after the treatment and has the data needed to assure a payer that the treatment was necessary.


  • Explain the contents of the medical record.
  • Describe SOAP notes—subjective, objective, assessment, and plan.
  • Explain operative reports function in medical necessity coding.
  • Explain National and Local coverage determinations. Medical Billing and Coding

Submission Details:

  • Submit the report as a 5- to 10-page Microsoft Word document. Use APA standards for citations and references.
  • Cite a minimum of three outside peer-reviewed sources to support your assertions and save it as SU_HCM1201_W3_Project_LastName_FirstInitial.doc. Submit the report to the Submissions Area by the due date assigned.

Overview Of HCPCS Two levels of codes are associated with HCPCS, commonly referred to as HCPCS level I and II codes: ● HCPCS level I: Current Procedural Terminology (CPT) ● HCPCS level II: national codes The majority of procedures and services are reported using CPT (HCPCS level I) codes. However, CPT does not describe durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), as well as certain other services reported on claims submitted for Medicare and some Medicaid patients. Therefore, the CMS developed HCPCS level II national codes to report DMEPOS and other services. (Medicare carriers previously developed HCPCS level III local codes, which were discontinued December 31, 2003. Medical Billing and Coding Medicare administrative contractors (MACs) replaced carriers, DMERCs, and fiscal intermediaries. HCPCS Level I HCPCS level I includes the five-digit CPT codes developed and published by the American Medical Association (AMA). The AMA is responsible for the annual update of this coding system and its two-digit modifiers. (CPT coding is covered in Chapter 7 of this textbook.) HCPCS Level II HCPCS level II (or HCPCS national codes) were created in 1983 to describe common medical services and supplies not classified in CPT. HCPCS level II national codes are five characters in length, and they begin with letters A–V, followed by four numbers. Medical Billing and Coding HCPCS level II codes identify services performed by physician and nonphysician providers (e.g., nurse practitioners and speech therapists), ambulance companies, and durable medical equipment (DME) com- panies (called durable medical equipment, prosthetics, orthotics, and supplies [DMEPOS] dealers). Orthotics is a branch of medicine that deals with the design and fitting of orthopedic devices. Prosthetics is a branch of medicine that deals with the design, production, and use of artificial body parts.


● Durable medical equipment (DME) is defined by Medicare as equipment that can with- stand repeated use, is primarily used to serve a medical purpose, is used in the patient’s home, and would not be used in the absence of illness or injury. ● Durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) include artifi- cial limbs, braces, medications, surgical dressings, and wheelchairs. ● Durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) dealers supply patients with DME (e.g., canes, crutches, walkers, commode chairs, and blood- glucose monitors). DMEPOS claims are submitted to DME Medicare administra- tive contractors (DME MACs) that replaced durable medical equipment regional carriers (DMERCs) that were awarded contracts by CMS. Each DME MAC covers a specific geographic region of the country and is responsible for processing DMEPOS claims for its specific region. When an appropriate HCPCS level II code exists, it is often assigned instead of a CPT code (with the same or similar code description) for Medicare accounts and for some state Medicaid systems. (Other payers may not require the report- ing of HCPCS level II codes instead of CPT codes, so coders should check with individual payers to determine their policies.) CMS creates HCPCS level II codes: Medical Billing and Coding

For services and procedures that will probably never be assigned a CPT code (e.g., medications, equipment, supplies) ● To determine the volumes and costs of newly implemented technologies New HCPCS level II codes are reported for several years until CMS initiates a process to create corresponding CPT codes. When the CPT codes are published, they are reported instead of the original HCPCS level II codes. (HCPCS level II codes that are replaced by CPT codes are often deleted. Medical Billing and Coding If not deleted, they are probably continuing to be reported by another payer or government demonstra- tion program.) ExAMPlE: HCPCS level II device code C1725 is reported for the surgical supply of a “catheter, transluminal angioplasty, nonlaser method (may include guidance, infu- sion/perfusion capability)” during vascular surgery. Thus, when a CPT code from range 35450–35476 is reported for a transluminal balloon angioplasty procedure, HCPCS level II device code C1725 is also reported as the surgical supply of the catheter. cOding tip: HCPCS LeveL ii NatiONaL COdeS The HCPCS level II national coding system classifies similar medical prod- ucts and services for the purpose of efficient claims processing. Each HCPCS level II code contains a description, and the codes are used primarily for billing purposes. ExAMPlE: DMEPOS dealers report HCPCS level II codes to identify items on claims billed to private or public health insurers. HCPCS is not a reimbursement methodology or system, and it is important to understand that just because codes exist for certain products or services, cover- age (e.g., payment) is not guaranteed. The HCPCS level II coding system has the following characteristics: ● It ensures uniform reporting of medical products or services on claims. ● Code descriptors identify similar products or services (rather than specific prod- ucts or brand/trade names). ● HCPCS is not a reimbursement methodology for making coverage or payment determinations. (Each payer makes determinations on coverage and payment outside this coding process Medical Billing and Coding

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