Coding FAQs

What are the different types of Medical Coders?

Professional Fee Coders – Code diagnoses, procedures, and evaluation and management services for a physician encounter to support professional billing. 

Hospital Outpatient Coders - Code all conditions and procedures documented for a patient encounter in the hospital outpatient and emergency settings to support facility billing of these claims.

Facility Inpatient Coders – Code all diagnoses and procedures documented for hospitalized patient encounters and establish the billed DRG based on diagnosis sequence, procedures, comorbidities and complications.

What is the difference between HIMS (Facility) Coding and Medical Associates (Professional Services) Coding?

The facility coding staff reviews the medical record to code for the supplies, setting and services provided by the facility.  For bedded outpatients and inpatients, the documentation within the entire record is reviewed at discharge for to determine appropriate diagnosis and procedure codes to support services provided by the facility for the entire stay. 

The professional coding staff reviews the medical record to code for the services provided by the physician (or other professional staff).  Documentation is reviewed daily to determine appropriate diagnosis codes and evaluation/management levels to support services provided by the physician for that day.

What coding systems are used?

ICD-9-CM (Volumes 1 and 2) is the medical classification system used for the collection of information regarding disease and injury.  ICD-9-CM (Volume 3) is used when reporting surgery and procedures for inpatients. 
CPT-4 and HCPCS are the classification systems used for hospital reporting of outpatient procedures and physician service reporting. 

What is a DRG?

Diagnosis Related Group (DRG) is a system used to classify hospital cases into groups based on diagnoses, procedures, age, sex, discharge status, and the presence of complications and comorbidities.  These groups are the basis for reimbursement and replaced the “cost based” reimbursement method once used by Medicare and other payers.

What is Case Mix Index?

Case mix index (CMI) is a relative value assigned to a diagnosis related group of patients in a medical care environment and is used to determine the allocation of resources to care for or treat patients in the group.  In a nutshell, a higher case mix index indicates the hospital’s inpatients are more clinically complicated therefore require more resources.
What is “upcoding” and “undercoding”?

Upcoding involves coding and billing for a higher-paying service than what was actually performed.

Undercoding involves the failure to capture and code/bill for the true intensity or amount of work actually performed.

How does facility coding impact the hospital’s revenue?

Hospitals are reimbursed by Medicare for inpatient admissions under the Inpatient Prospective Payment System (IPPS).  Under the IPPS, the diagnoses and procedures are assigned codes that are then grouped into MS-DRG’s.  These MS-DRG’s have assigned associated relative weights, which determine reimbursement.  The higher the relative weight, the higher the reimbursement.  MS-DRG’s are affected by complications and comorbidities, which can increase the severity of illness and risk of mortality of a patient.  Typically, more resources are used to care for a more severely ill patient, therefore it is critical for documentation to be clear and concise so that all diagnoses and procedures can be captured in order to assure appropriate MS-DRG assignment.

Hospitals are reimbursed for outpatient services and procedures under the Hospital Outpatient Prospective Payment System (HOPPS).  Under the HOPPS, most procedures are assigned to Ambulatory Payment Classifications (APC’s), which determine the methodology of payment and reimbursement amount for each procedure.

How does physician documentation affect facility coding?

Without consistent, complete documentation in the medical record, accurate coding cannot be achieved.  Therefore, the importance of good documentation cannot be overemphasized.  This involves a joint effort between the healthcare provider and coder, and is essential to achieve complete and accurate documentation, code assignment, and reporting of diagnoses and procedures.