OF SERVICES PROVIDED:  BILLING CODES

Coding systems commonly used in the United States:

  • International Classification of Diseases, 10th Revision, Clinical Modification, United States version (“ICD-10-CM”)
  • International Classification of Diseases, 9th Edition, United States version (“ICD-9-CM”)
  • Current Procedures and Terminology -4 (CPT-4) primarily for office-based and procedures oriented care

Health care is managed by insurance entities, managed care organizations, and the government by such programs as Medicare and Medicaid by the terms and conditions used to pay providers. There are certain elements necessary for system-based practice to work. One of the elements is a common language of services provided. A classification system is used to allow for uniform accounting and billing.

A classification system is used to allow for uniform accounting and billing

For example, Diagnosis Related Groups (“DRG’s) was implemented by the U.S. federal government in the early 1980’s as a payment tool for hospitalized Medicare patients. This Medicare inpatient prospective payment system (“PPS”) was developed to be useful for managerial purposes and takes into account the following:

  1. Class definitions based on information routinely collected on hospital abstracts
  2. Manageable number of classes
  3. Similar patterns of resource intensity within a given class
  4. Similar types of patients in a given class from a clinical perspective.

Some Factors Considered in the Development of Medicare inpatient prospective payment system (“PPS”)

  • Class definitions based on information routinely collected on hospital abstracts
  • Manageable number of classes
  • Similar patterns of resource intensity within a given class
  • Similar types of patients in a given class from a clinical perspective

Coding systems commonly used in the United States include: International Classification of Diseases, 10th Revision, Clinical Modification, United States version (“ICD-10-CM”); International Classification of Disease, 9th Edition, United States version (“ICD-9-CM”) primarily for inpatient care; and Current Procedures and Terminology -4 (CPT-4) primarily for office-based and procedures oriented care.  “CPT“ is registered trademark of the American Medical Association (AMA).  The “CPT 2014“ files were released on Thursday, August 29, 2013.  “CPT” is the most widely accepted medical nomenclature to report medical procedures and services under public and private health insurance programs.  The International Classification of Diseases (ICD) is designed to promote international comparability in the collection, processing, classification, and presentation of mortality statistics.  The ICD has been revised periodically to incorporate changes in the medical field. The Tenth Revision (ICD-10) differs from the Ninth Revision (ICD-9) in several ways although the overall content is similar:  (1) ICD-10 is printed in a three-volume set compared with  ICD-9’s two-volume set; (2) ICD-10 has alphanumeric categories rather than numeric categories; (3) some chapters have been rearranged, some titles have changed, and conditions have been regrouped; (4) ICD-10 has almost twice as many categories as ICD-9; and (5) some fairly minor changes have been made in the coding rules for mortality.

In 1988, the Centers for Medicare and Medicaid Services (CMS), funded a study from the Harvard School of Public Health, that evaluated the resources and costs associated with delivery of physician services. The results of this study led to the introduction in 1992 of the Resource-based Relative Value Scale (RBRVS), which is a system for describing, quantifying, and reimbursing physician services relative to one another. The RBRVS incorporates three components of physician services – physician work, practice expense, and professional liability insurance (PLI).  A relative value unit (RVU) is assigned to each of the work, practice expense and PLI (aka Malpractice) components. The RBRVS system uses the definitions and procedure codes developed by the American Medical Association in their Current Procedural Terminology (CPT). This coding system is currently used by Medicare, Medicaid and many private payers to reimburse physician services.

Resource-based Relative Value Scale (RBRVS) RBRVS incorporates 3 components of physician services & a relative value unit (RVU) is assigned to each components:

  1. Physician work;
  2. Practice expense; and
  3. professional liability insurance (PLI) as known as Malpractice.

An RVU is an abbreviation for Relative Value Unit. Physician services are reported using the Current Procedural Terminology (CPT) coding system. For each CPT code, each of the three components of physician work (see #1 above) is assigned an RVU and the sum is the total RVU for that CPT code.

For example: Work RVU + practice expense RVU + professional liability insurance RVU = Total RVU. The total RVU is multiplied by the conversion factor to obtain the reimbursement for that CPT code.

In addition, “Healthcare Common Procedure Coding System” (HCPCS) codes are numbers assigned to every task and service a medical practitioner may provide to a Medicare patient including medical, surgical and diagnostic services. Since everyone uses the same codes to mean the same thing, they ensure uniformity.  There are two sets of HCPCS codes. The first set, HCPCS Level I, are based on and identical to CPT codes, the codes developed by the American Medical Association. Level II HCPCS codes are used by medical suppliers other than physicians, such as ambulance services or durable medical equipment. These are typically not costs that get passed through a physician’s office so they are dealt with by Medicare or Medicaid differently from the way a health insurance company would deal with them.

The Affordable Care Act references HCPCS codes.  For example, under the Affordable Care Act the term “primary care services” means services identified, as of January 1, 2009, by the following HCPCS codes (and as subsequently modified by the Secretary): (i) 99201 through 99215; (ii) 99304 through 99340; and (iii) 99341 through 99350.