Chapter 6
Procedural Coding
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Learning Objectives
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Explain the purpose and importance of
coding for professional services.
Define terminology used in CPT.
Demonstrate an understanding of CPT code
conventions.
Describe various methods of payment by
insurance companies and state and federal
programs.
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Learning Objectives (cont’d.)
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Describe the process in which the Healthcare
Common Procedure Coding System
(HCPCS) and a Relative Value System (RVS)
are used to create a fee schedule.
Interpret the meaning of CPT code book
symbols.
Identify the complexity of Evaluation and
Management codes.
Compare a surgical package and a Medicare
global package.
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Learning Objectives (cont’d.)
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Explain various types of code edits.
Explain how to choose accurate procedure
codes for descriptions of services and
procedures documented in a patient’s
medical record.
Explain correct usage of modifiers in
procedure coding.
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Chapter 6
Lesson 6.1
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Procedure Coding
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Procedure coding: the transformation of
written descriptions of procedures and
professional services into numeric
designations (code numbers).
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Procedure codes are a standardized method
used to precisely describe the services
provided by physicians and allied health
professionals.
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Three Levels of
Medicare HCPCS Coding
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Level I: The AMA CPT codes and modifiers
(national codes)
Level II: CMS-designated codes and alpha
modifiers (national codes)
Level III: Codes specific to regional fiscal
intermediary or individual insurance carrier
(local codes) and not found in either levels I
or II
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Current Procedural Terminology
(CPT)
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Five-digit system for coding services
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Two-digit add-on modifiers
Represents diagnostic and therapeutic services
System of choice from CMS
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Code Selection Formula
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Physician or provider service = CPT code
Supplies = HCPCS national code
Instructions to use from carrier = local code
Integrative healthcare products = Alternative
Billing Codes (ABCs)
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Methods of Payment
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Fee schedule
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Usual, customary, and reasonable
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Multiple schedules can be used
Consistent charges and uniform application
Three fees determine reimbursement
Relative value scales or schedules
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Units (RVUs) based on median charges for all
physicians during a given time period
Conversion factors translates units to dollars
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Usual, Customary, and
Reasonable Calculations
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Relative Value Studies
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Resource-based Relative Value Scale
(RBRVS)
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To distribute Medical dollars more equitably
To control escalating costs from UCR
Fee schedule based upon relative values
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Relative Value Unit (RVU)
 Geographic adjustment factor (GAF)
 Monetary conversion factor (CF)
 RVU x GAF x CF = Medicare $ per service
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Relative Value Studies (cont’d.)
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Format and Content of the CPT
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Main sections are divided into categories and
subcategories according to
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Anatomic body system
 Procedure
 Condition
 Description
 Specialty
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CPT Code Book Symbols
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Evaluation and Management
Section
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Divided into three sections
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Office visits
• New patients
• Established
Hospital visits
• Initial visit
• Subsequent visits
Consultations
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Elements of E/M Codes
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History
Examination
Medical decision making
Nature of presenting problem
Counseling
Coordination of care
Time
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Subsections of E/M
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Hospital inpatient services
Consultation
Critical care
Pediatric and neonatal critical care
Emergency care
Preventative medicine
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Selecting an E/M Code
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Determine category
Determine subcategory
Note key components
Note contributory factors
Determine appropriate E/M level and code
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Evaluation and Management
Section from CPT
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Selection of Evaluation and
Management Codes
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Selection of Evaluation and
Management Codes (cont’d.)
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CPT Code Digit Analysis
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Code Selection Criteria for
Consultation
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Code Selection Criteria for
Consultation (cont’d.)
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Code Selection Criteria for
Consultation (cont’d.)
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E/M Levels
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Surgery Section
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Always start with the operative report
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Assign code for postoperative diagnosis
Assign codes for additional diagnoses
Attach documentation to the claim form
Code only documented procedures
Confirm all diagnosis and procedure codes
Be sure to use appropriate modifiers
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Surgical Package
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Includes:
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
The operation
Local infiltration; topical anesthesia or metacarpal,
metatarsal, or digital block
 Subsequent to the decision for surgery, one related
E/M encounter on the date immediately before or on
the date of procedure (including history and physical)
 Immediate postoperative care, including dictating
operative notes and talking with the family and other
physicians
 Writing orders
 Evaluating the patient in the post-anesthesia
recovery area
 Typical postoperative follow-up care (hospital visits,
discharge, or follow-up office visits)
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Surgical Package and Global
Package
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Repair of Lacerations
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Multiple Lesions
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Supplies
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Other Surgery Services
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Incident-to services
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Services done by allied health professionals
Physician must be present in the office suite
Prolonged services, detention, or standby
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Physician has spent more than the normal amount
of time with the patient
 Standby services are billed over 30 minutes
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Unlisted Procedures
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Codes assigned for unusual procedures
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Supporting documentation is required to justify the
procedures
Comprehensive list of unlisted codes is at the
beginning of each section.
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Medicare Component Edits
Criteria
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Code combinations that are specified as
“separate procedures” by the CPT
Codes that are included as part of a more
extensive procedure
Code combinations that are restricted by the
guidelines outlined in the CPT
Component codes that are used incorrectly
with the comprehensive code
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Mutually Exclusive Edits Criteria
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Code combinations that are restricted by the
guidelines outlined in the CPT
Procedures that represent two methods of
performing the same service
Procedures that cannot reasonably be done
during the same session
Procedures that represent medically
impossible or improbable code combinations
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Bundled Codes
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Bundling: to group codes together that are
related to a procedure
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Unbundled Codes
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Unbundling: coding and billing numerous
CPT codes to identify procedures usually
described by a single code
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Unbundled Codes (cont’d.)
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Downcoding and Upcoding
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Downcoding: when a coding system of an
insurance carrier converts a code to reduce
the level of codes on an insurance claim
Upcoding: the deliberate manipulation of
CPT codes for increased payment
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Code/Payment Tracking Log
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Chapter 6
Lesson 6.2
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Modifiers
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Modifiers can indicate:
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A service or procedure has either a professional or
technical component.
A service or procedure was performed by more than
one physician or in more than one location.
A service or procedure has been increased or
reduced.
A service or procedure was provided more than
once.
Only part of a service was performed.
An adjunctive service was performed.
A bilateral procedure was performed.
Unusual events occurred.
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Code Modifier Examples
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Surgical Decision Flow Charts
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Surgical Decision Flow Charts
(cont’d.)
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Surgical Coding Examples
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Surgical Coding Examples
(cont’d.)
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Surgical Coding Examples
(cont’d.)
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HCPCS Level II
Alphanumeric Modifiers
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CPT Modifier Codes
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CPT Modifier Codes (cont’d.)
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CPT Modifier Codes (cont’d.)
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CPT Modifier Codes (cont’d.)
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CPT Modifier Codes (cont’d.)
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CPT Modifier Codes (cont’d.)
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CPT Modifier Codes (cont’d.)
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CPT Modifier Codes (cont’d.)
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CPT Modifier Codes (cont’d.)
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CPT Modifier Codes (cont’d.)
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Steps for Effective Coding
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Always read the Introduction section at the beginning of
the code book.
Read the guidelines at the beginning of each of the six
sections of the book.
Read the notes and special subsection information
throughout the Surgery, Radiology, Pathology, and
Medicine sections.
Use the index at the back of the book to locate a specific
item by generalized code numbers, NOT by page
numbers.
Locate the code number in the code section and read
through the narrative description to locate the most
appropriate number to apply to the patient’s procedure.
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Steps for Effective Coding
(cont’d.)
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When trying to locate an E/M code, identify the place or
type of service rendered.
Then identify whether the patient is new or established
and locate the category or subcategory.
Review any guidelines or instructions pertaining to the
category or subcategory.
Read the descriptors of the levels of E/M service. Identify
the requirements necessary for code assignment.
Make sure the components necessary were performed
by the physician and documented in the chart, and then
assign the E/M code.
Transfer the five-digit code number to the claim form
exactly as given for each procedure.
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