What are the 4 steps of medical coding?

Accurate medical coding is crucial to ensure healthcare providers are reimbursed correctly for their services and to maintain precise patient health records. However, medical coding can be complex and challenging, requiring a thorough understanding of medical terminology, anatomy, and coding guidelines. To streamline this process, medical coding professionals follow a standardized set of steps that help them accurately assign codes to medical procedures and diagnoses. The process of medical coding can be broken down into four essential steps, each of which plays a crucial role in the accuracy and efficiency of the coding process. This article will explore the four steps of medical coding and their importance in the healthcare industry. Understanding these steps is crucial for healthcare professionals, including medical coders, providers, and insurance companies.

Basic Steps of Coding

Before diving into the medical coding process steps, let’s take a view at some aspects of medical coding.

What is Medical Coding, and why is it needed?

At its core, medical coding converts medical reports and clinical documentation into alphanumeric codes representing specific medical conditions, services, and procedures.
There are several reasons why medical coding is necessary. Some of these reasons include the following:

• Medical coding ensures that healthcare providers are accurately reimbursed for their services.
• Medical coding ensures that healthcare providers comply with the rules and regulations set by government agencies such as the Centers for Medicare and Medicaid Services (CMS).

Step 1- Abstract the documentation

Abstracting documentation is the process of extracting relevant information from a patient’s medical record and using that information to assign the appropriate codes for billing and reimbursement purposes. The medical coder reviews the medical record to identify and extract the critical information needed for coding. This information includes the patient’s diagnosis, medical procedures performed, medications administered, and other relevant data.

Challenges in abstracting documentation

• Abstracting documentation can be challenging due to the complexity and variability of medical records.
• Medical records can vary widely in format, content, and level of detail.
• Additionally, medical coders must be able to navigate multiple coding systems, each with its own rules and guidelines.

To overcome these challenges, medical coders must have strong critical thinking skills, attention to detail, and the ability to work effectively under pressure.

Steps Involved in Abstracting the Documentation

1. Review the medical record: The first step in abstracting is thoroughly reviewing the patient’s medical record. This includes reviewing all relevant documents, such as the physician’s notes, lab reports, imaging studies, and other diagnostic tests.


2. Identify the relevant information: Once the medical record has been reviewed, the next step is identifying the relevant information. This includes the patient’s demographic information, medical history, current symptoms, diagnosis, and treatment provided.

Step 2- Identify the diagnoses and procedures to be coded

According to the American Medical Association, identifying diagnoses and procedures is the foundation of the medical coding process. Medical coders must accurately identify and document the diagnoses and procedures performed during the patient’s encounter with the healthcare provider. This information is then translated into standardized codes that accurately reflect the services provided.

Several factors affect the identification of diagnoses and procedures in medical coding. These factors include:

• The complexity of the medical condition
• The nature of the medical procedure
• The documentation provided by the healthcare provider

Step 3- Assign codes to the highest level of specificity

One of the most critical steps in medical coding is assigning codes to medical services. This step requires accuracy and attention; otherwise, errors can occur. Medical coding errors can lead to denied claims, revenue loss, and potential compliance issues. If you require complete accuracy in your clinical documentation auditing, abstraction, and procedural coding, look no further than MedsIT Nexus medical coding services.

According to a study published in the Journal of AHIMA, coding errors can result in lost revenue for healthcare providers. The study found that an average of 9.5% of claims contained coding errors, resulting in an estimated $36.2 billion in lost revenue for healthcare providers in the United States in 2016.

How to Assign Codes to the Highest Level of Specificity?

The following steps can be taken to ensure codes are assigned to the highest level of specificity:

Understand Medical Terminology

Medical coding requires an understanding of medical terminology. Healthcare providers should ensure that coders know medical terminology and can interpret medical records accurately.

Follow Coding Guidelines

Assigning codes to the highest level of specificity requires adherence to coding guidelines. Healthcare providers should ensure that coders are aware of coding guidelines and can apply them appropriately.

Use Specific Codes

Using specific codes is essential to assigning codes to the highest level of specificity. Healthcare providers should ensure that coders use the most specific codes and avoid using unspecified codes whenever possible.

Step 4- Confirm medical necessities

One of the critical steps in medical coding is confirming medical necessities. Medical necessity refers to the appropriateness of a medical service or procedure based on the patient’s diagnosis and the standard of care.
Confirming medical necessities has a significant impact on the healthcare industry.

1. It helps prevent unnecessary medical procedures and reduces healthcare costs. According to a report by the Office of Inspector General, Medicare paid $1.9 billion in improper payments for outpatient services that were not medically necessary.
   
   
2. Confirming medical necessities is crucial for medical coding accuracy.
   
   
3. It ensures that healthcare resources are used efficiently and prevents unnecessary costs.

Steps to find the correct ICD-10 code

• Find the condition in the alphabetic index
• Check the code in the Tabular List to see if there are special instructions.
• Read the code’s instructions
• Add a Seventh Character for Injury or Trauma
  
  
  1. A is for the initial encounter
  2. D for a subsequent encounter for sequela
     
     
• If glaucoma, you have to add a seventh character (be aware of varying degrees of severity)
  
  
  1. 0 for stage unspecified
  2. 1= mild
  3. 2=moderate
  4. 3=severe
  5. 4=indeterminate

How to Confirm Medical Necessities

The following are the steps involved in confirming medical necessities:

1. Review the patient’s medical history: The medical coder should review the patient’s medical history to understand the patient’s diagnosis and previous medical procedures.


2. Review the physician’s notes: The physician’s notes provide information on the medical services or procedures and the reason for the services or procedures.


3. Review diagnostic reports: Diagnostic reports provide objective evidence of the patient’s condition and help confirm the medical necessity of the services or procedures provided.


4. Review billing codes: The medical coder should review the billing codes used to ensure they accurately reflect the services or procedures provided.


5. Consult with the physician:If there is any doubt about the medical necessity of a service or procedure, the medical coder should consult with the physician to confirm the appropriateness of the service or procedure.

What are the four major coding systems?

ICD-10-CM

• The International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) is a diagnostic coding system used to classify and code various medical diagnoses and procedures.
• It was developed by the World Health Organization (WHO) and is used in many countries worldwide.
• ICD-10-CM includes more than 70,000 codes, which are organized into chapters based on the type of condition being diagnosed.

CPT

• Current Procedural Terminology (CPT) is a medical coding system that describes and codes medical procedures and services.
• It was developed by the American Medical Association (AMA) and is used primarily in the United States.
• CPT codes are used for billing for medical procedures and services provided by healthcare providers and insurance companies to determine reimbursement rates.

HCPCS Level II

• The Healthcare Common Procedure Coding System (HCPCS) Level II is a coding system that describes and codes medical supplies, equipment, and services.
• It was developed by the Centers for Medicare and Medicaid Services (CMS) and is used primarily in the United States.
• HCPCS Level II codes are used for billing purposes and by insurance companies to determine reimbursement rates.

ICD-10-PCS

• ICD-10-PCS (International Classification of Diseases, 10th Revision, Procedure Coding System) is a coding system developed by the World Health Organization (WHO) to classify medical procedures.
• It is designed to complement ICD-10, which is used to classify diagnoses.
• It contains codes for medical and surgical procedures and diagnostic procedures such as imaging studies and laboratory tests.