Medicare Billing Codes: A Guide for Healthcare Facilities

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Written by Diana Campion, MSN, APRN, ANP-C Education Development Nurse, Content Writer, IntelyCare
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Reviewed by Katherine Zheng, PhD, BSN Content Writer, IntelyCare
A physician works out the medicare billing codes for her medical office.

Medicare provides federal healthcare insurance coverage for individuals 65 years or older. It also covers younger people with specific disabling conditions, such as end-stage kidney disease (ERSD). With the government reimbursing one in every five healthcare dollars for Medicare costs, it’s vital for every healthcare facility to know how to submit claims for reimbursement, including the correct assignment of Medicare billing codes.

Billing Medicare can be a complicated process for any healthcare provider or facility. Fortunately, you’re not alone. The following resources will help you break this system down into easier, more straightforward segments, so you can better understand your responsibilities when billing Medicare and their reimbursement rates. We’ll focus on demystifying Medicare codes for billing by discussing why they’re essential and examining the different types of codes that can apply.

What Are Medicare Billing Codes and Why Are They Important?

Billing Codes for Medicare: Definition

Medicare utilizes a standardized coding system for orderly and consistent billing of patient and resident healthcare services. These unique codes are known as billing codes. Other government insurance agencies and commercial insurance companies follow Medicare’s coding system as well.

Importance

As more than 5 billion health insurance claims are processed annually by government and commercial health plans, following this coding system is essential to prevent any payment delays or denials of your submitted Medicare claims, which could significantly burden your budget.

Another crucial reason for understanding Medicare billing codes is to prevent fraud, which is punishable by the Department of Justice (DOJ) under the False Claims Act. In a single fiscal year, the DOJ won more than $2.2 billion in settlements and judgments from civil cases involving fraud and false claims against the government.

The submission of incorrect billing codes, intentionally or unintentionally, is considered a form of Medicare fraud. Including coding and billing compliance in your mandatory annual training is an excellent way to safeguard your facility from this liability. Medicare identifies different types of improper coding and billing claims some of which are described in the following table.

Improper Coding and Billing Definition
Billing for Services Not Rendered Billing services not provided
Billing for Worthless Service Billing services of such low quality that they’re virtually worthless; for instance, billing for poorly treated bed sore would classify as failure to provide adequate decubitus ulcer care
Exclusion from Federal Healthcare Programs Those practitioners excluded can’t receive payment from federal healthcare programs for any items or services they furnish, order, or prescribe
Lack of Medical Necessity Billing for medically unnecessary services
Services Rendered by an Unlicensed or Excluded Provider Billing services performed by an improperly supervised or unqualified employee, i.e., a medical student
Unbundling Billing separately for services already included in a global fee, such as billing an evaluation and management service the day after surgery
Upcoding Using billing codes that reflect a more severe illness than existed or a more expensive treatment than was provided

What Are the Different Types of Medicare Billing Codes?

Now that you’ve gained insight into what Medicare codes for billing are and their importance to your claim submission process, we’ll explore the various types of billing codes. Medicare created the National Correct Coding Initiative (NCCI) Manual as a resource and reference for healthcare facilities to support their adherence to correct billing codes.

Medicare’s overall billing code system is the Healthcare Common Procedure Coding System (HCPCS), consisting of Level I Current Procedural Terminology (CPT) and Level II HCPCS codes. You can perform CPT and HCPCS code lookup by downloading the ‘Code List’ published on the Centers for Medicare & Medicaid Services (CMS) website. In addition to reviewing these codes, we’ll briefly address the International Classification of Disease-10 (ICD-10) diagnosis codes and their relationship to billing codes.

Level I CPT Codes

Level I, or CPT Category 1, Codes are created and updated annually by the American Medical Association to provide physicians and healthcare professionals with a uniform language for coding medical services and procedures. There are other categories of CPT codes, but they aren’t associated with medical coding. Level I CPT codes increase efficiency by:

  • Streamlining reporting
  • Increasing accuracy and efficiency
  • Processing claims
  • Developing guidelines for medical care review

Each CPT Category I code has a description corresponding to a specific medical procedure or service, such as a regular office visit with your healthcare practitioner or a skin biopsy procedure. Codes are primarily five digit numeric and organized into the following six sub-categories by a range of codes based on procedure/service type:

Level 1 CPT Codes

Sub-category Code Range
Anesthesia 00100–01999
Surgery 10021–69990
Radiology Procedures 70010–79999
Pathology and Laboratory Procedures 80047–89398
Medicine Services and Procedures 90281–99607
Evaluation and Management 99202–99499

Level II HCPCS Codes

The HCPCS Level II standardized coding system is alpha-numeric (one letter followed by four numeric digits) and covers products, supplies, and services not found within the CPT code system. For example, this specific type of Medicare billing code includes ambulance services or durable medical equipment such as a cane or walker. CMS defines and updates the HCPCS Level II codes throughout the year as necessary, which are also subcategorized into smaller groups by type of service or equipment.

HCPCS Level II Code Types

B Codes:

Enteral and Parenteral Therapy

C Codes:

Temporary Codes for Use With Outpatient Prospective Payment System

E Codes:

Durable Medical Equipment (DME)

G Codes:

Procedures / Professional Services (Temporary Codes)

H Codes:

Alcohol and Drug Abuse Treatment Services / Rehabilitative Services

J Codes:

Drugs Administered Other Than Oral Method, Chemotherapy Drugs

K Codes:

DME for Medicare Administrative Contractors (MACs)

L Codes:

Orthotic and Prosthetic Procedures, Devices

M Codes:

Medical Services

P Codes:

Pathology and Laboratory Services

Q Codes:

Miscellaneous Services (Temporary Codes)

R Codes:

Diagnostic Radiology Services

S Codes:

Commercial Payers (Temporary Codes)

T Codes:

Established for State Medical Agencies

U Codes:

Codes for Coronavirus Lab Tests

V Codes:

Vision, Hearing and Speech-Language Pathology Services

ICD-10 Codes

The ICD-10 is a clinical catalog system created and managed by WHO that provides diagnosis codes for conditions, diseases, abnormal results, etc. CMS updates its list of valid ICD-10 codes annually.

While ICD-10 codes are not technically billing codes, they’re essential because physicians and treating practitioners need to include them when submitting their claims to Medicare. These codes provide the reason or evidence for the healthcare services provided or equipment ordered.

Example: Medicare may deny a claim for a physical therapy visit without any associated ICD-10 codes, whereas it would more readily approve a billing claim that included the code for left incomplete rotator cuff tear.

Looking for More Insights Into Healthcare Compliance?

Now that you have a better understanding of Medicare billing codes, you may be interested in broadening your knowledge about compliance topics. The IntelyCare newsletter provides helpful, straightforward healthcare guides that take the angst out of managing government rules and regulations at your facility.


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