Insurance codes are used by your health plan to make decisions about how much to pay your doctor and other healthcare providers. Typically, you will see these codes on your Explanation of Benefits and medical bills.
An Explanation of Benefits (EOB) is a form or document that may be sent to you by your insurance company several months after you had a healthcare service that was paid by the insurance company.
Your EOB is a window into your medical billing history. Review it carefully to make sure you actually received the service being billed, the amount your doctor received and your share are correct, and that your diagnosis and procedure are correctly listed and coded.
Importance of Insurance Codes
EOBs, insurance claim forms, and medical bills from your doctor or hospital can be difficult to understand because of the use of codes to describe the services performed and your diagnosis. These codes are often used instead of plain English and it may be useful for you to learn about these codes, especially if you have one or more chronic health problem.
For example, millions of Americans have type 2 diabetes along with high blood pressure and high cholesterol. This group of people is likely to have more health services than the average American and, therefore, will need to review more EOBs and medical bills.
Health plans, medical billing companies, and healthcare providers use three different coding systems. These codes were developed to make sure that there is a consistent and reliable way for health insurance companies to process claims from healthcare providers and pay for health services.
Current Procedural Terminology
Codes Current Procedural Terminology (CPT) codes are used by physicians to describe the services they provide. Your doctor will not be paid by your health plan unless a CPT code is listed on the claim form.
CPT codes are developed and updated by the American Medical Association (AMA). Unfortunately, the AMA does not provide open access to the CPT codes. Medical billers who use the codes must purchase coding books or online access to the codes from the AMA.
The AMA site allows you to search for a code or the name of a procedure. However, the organization limits you to no more than 25 searches at a time. You can access this tool at CPT Code/Relative Value Search. Also, your doctor may have a sheet (called an encounter form or "superbill") that lists the most common CPT and diagnosis codes used in her office. Your physician's office may share this form with you.
Some examples of CPT codes are:
- 99201 - office or other outpatient visit for the evaluation and management of a new patient
- 93000 - electrocardiogram
- 36415 - collection of venous blood by venipuncture (drawing blood)
Healthcare Common Procedure Coding System
The Healthcare Common Procedure Coding System (HCPCS) is the coding system used by Medicare. Level I HCPCS codes are the same as the CPT codes from the American Medical Association.
Medicare also maintains a set of codes known as HCPCS Level II. These codes are used to identify products, supplies, and services not included in the CPT codes, such as ambulance services and durable medical equipment (wheelchairs and hospital beds), prosthetics, orthotics, and supplies that are used outside your doctor's office.
Some examples of Level II HCPCS codes are:
- L4386 - walking splint
- E0605 - vaporizer
- E0455 - oxygen tent
Medicare provides an online list of Level II codes at HCPCS 2013 Index.
International Classification of Diseases
The third system of coding is the International Classification of Diseases, or ICD codes. These codes, developed by the World Health Organization (WHO), identify your health condition, or diagnosis. ICD codes are often used in combination with the CPT codes to make sure that your health condition and the services you received match.
For example, if your diagnosis is bronchitis and your doctor ordered an ankle X-ray, it is likely that the X-ray will not be paid for because it is not related to bronchitis. However, a chest X-ray is appropriate and would be reimbursed.
Some examples of ICD-10 codes are:
- E66.0 - obesity due to excess calories
- F32.0 - mild depression
- S93.4 - sprained ankle
A complete list of diagnosis codes (known as ICD-10) can be found on the WHO web site.
Using the three coding systems can be burdensome to a practicing physician and busy hospital staff and it is easy to understand why coding mistakes happen. Because your health plan uses the codes to make decisions about how much to pay your doctor and other healthcare providers, mistakes can cost you money.
A wrong code can label you with a health-related condition that you do not have, cause over payment to your doctor and thereby increase your out-of-pocket expenses, or your health plan may deny your claim and not pay anything. Typically, your doctor, the emergency room, or hospital may miscode the services you received, either coding the wrong diagnosis or the wrong procedures. Even simple typographical errors can have significant consequences.
For example: Doug M. fell while jogging. Because of pain in his ankle, he went to his local emergency room. After having an X-ray of his ankle, the ER physician diagnosed a sprained ankle and sent Doug home to rest. Several weeks later Doug got a bill from the hospital for more than $500 for the ankle X-ray. When his EOB arrived, he noticed that his health plan had denied the X-ray claim.
Doug called his health plan. It took a while to correct an error made by the billing clerk in the emergency room. She accidentally put a wrong number in Doug's diagnosis code, changing S93.4 (sprained ankle) to S90.4 (jaw injury). Doug's health plan denied the claim because an X-ray of the ankle is not a test that is performed when someone has a jaw injury.
There are several steps in the process of filling out and submitting a medical claim. Along the way, the humans and computers involved in the process can make mistakes. If your claim has been denied, don't be shy about calling both your doctor's office and your health plan.