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Chapter 2 -Lesson 5, 6, 7,

Procedure Coding

When a doctor determines the ailment of a patient during an examination, this is called a diagnosis. The doctor may then perform what is a called a procedure, which is the action the doctor takes to fix the patient's problem.

For instance, let's say that Bob has been treated for a broken leg and you are the medical claims specialist filing Bob's bill with the insurance company. You wouldn't write, "cast, lower right leg" for the procedure his doctor performed. Instead, you would write the procedure code in the space for the procedure on either the HCFA-1500 or 1450 form.

Procedure codes are used by insurance companies to determine the amount of reimbursement. As a medical claims specialist, you might be asked to check these codes, or to fill in the procedure codes for certain bills. This lesson will show you how to find the correct procedure codes by using the CPT (Current Procedural Terminology).

Note: You can use the CPT books or database software to access all of the codes. We highly recommend the software as it is easier to use and increases your productivity.

The first step in effective coding is knowing how to find the correct codes. In order to do this, you must know how the CPT books work and how it is organized, divided and updated.

The organization of the CPT book

The CPT book is divided into six code sections, each containing categories and subcategories according to the codes.

The sections of the CPT code book include ranges of five-digit numbers (no decimals):

1. Evaluation and Management (E/M) 99201 to 9949

2. Anesthesia 00100 to 01999 and 99100 to 99199

3. Surgery 10040 to 69979

4. Radiology, Nuclear Medicine and Diagnostic Ultrasound 70010 to 79999

5. Pathology and Laboratory 80002 to 89399

6. Medicine 90701 to 99199

As you can see, the six sections of the CPT code book don't overlap within the codes. If you code a surgical procedure, it will have a code between 10040 and 69979. It will never be coded as, say, 70020. The code 70020 is reserved for the radiology, nuclear medicine and diagnostic ultrasound section.

Each individual section is further divided according to where on the body the procedure was performed. Additionally, codes depend on the specific procedure, description and specialties.

In addition to the 6 sections, the CPT code book also contains four appendices:

A. Modifiers

B. A summary of additions, deletions and revisions of codes

C. An update to short descriptors

D. Clinical example supplement

You use the index at the back of the book to find the specific procedure you are looking for. The numbers listed in the index are not page numbers, but rather are general code numbers. These are what you use to find the page on which the code you need appears. The index is organized by main terms in alphabetical order.

Codes can be researched four ways. You can look in the index for any of the following types of terms:

1. Procedure or service itself

2. Condition

3. Synonyms, eponyms, and abbreviations

4. Anatomic site

These are three symbols used throughout the CPT book. These symbols are meant to highlight entries that are new or changed in some manner.

A solid dot in front of a code number indicating a new code.

A solid triangle in front of a code number indicates a description change.

* A star follows some codes to identify certain surgical procedures.

So if you are looking through the CPT code book and you see a code preceded by a solid dot, you know that is new to the version of CPT you have. Conversely, if the code has a triangle next to it, you know the code is not new, but the description of that code has changed. This is one reason why it's important to be using the most up-to-date version of CPT.

In addition to the solid dot and the solid triangle, some codes are highlighted with a star or asterisk. Starred codes are surgical codes-- the star indicates these codes are for surgical procedures only. We will explain why this is important later in this lesson.

Divisions of Sections

Many of the sections in the CPT book are further divided according to the specific type of procedure, or the location of the procedure. Let's discuss each section of the CPT book in more detail.

Evaluation and Management

In the CPT book, the evaluation and management (E/M) section consists of different categories each have from three to five levels, depending on different factors.

First, the medical claims specialist who needs to find an E/M code needs to determine the appropriate category of where the procedure took place. Was it in the office, hospital inpatient, outpatient or consultation? Each one of these places has a different category of CPT codes.

Common CPT Terms

When a patient has not seen a particular doctor within the past three years and then goes to see him, the patient is considered to be a new patient. On the flip side, a person who has received professional services from a physician within the past 3 years is considered to be an established patient. These two classifications are important in coding because the codes for a new patient are often different from those of an established patient.

You can also look up codes in the CPT book according to different levels of care provided. Look at these examples.

  Concurrent Care is when two or more doctors provide similar services on the same day to the same patient.
  Hospital Care is evaluation and management services provided to hospital inpatients.
  Counseling refers to a discussion with a patient (or the patient's family) that includes one or more of the following: diagnostic results, doctor's impression of the situation, recommended tests, risks and benefits, prognosis, instructions (both treatment and follow up) and/or risk-factor reduction.
  A consultation is the opinion or advice rendered by a doctor at the request of another physician or agency in order to help with the evaluation of a patient's problem. Consultations can take place in many places, including an extended care facility, home, hospital or office. Their codes range from 99241 through 99275.
  Emergency Care is given by the physician in a hospital emergency department and includes codes from 99281 to 99285. When advanced life support is used, the code 99288 is included, and if office services are provided on an emergency basis, the code 99058 is used.
  Critical Care is the care of critically ill patients. Constant bedside attention for the medical situation (cardiac problems, bleeding, etc.) is required.

The above examples of sections demonstrate the first rule of coding – find the right place. If you know where to look, finding the code is much easier.

Using the CPT Code Book:

To be an effective, accurate medical claims specialist, you need to know the proper methods for procedure coding (and also diagnostic coding, but we'll cover that later). Why is this important? Well, remember how insurance companies frown upon inaccurate claims? Consider this scenario.

You are an independent medical claims specialist working with Dr. John Woodward. You receive the day's bills from Dr. Woodward's office, and you quickly fill out the HCFA - 1500 for each one. However, when you come to the final bill, something doesn't click. An established patient came to see Dr. Woodward. The doctor wrote a diagnosis code for a "fractured left radius" and a procedure code for "boot cast, right leg". You know the codes entered by the doctor represent this diagnosis and procedure because on the encounter form these codes are explained in plain English next to the numerical code. You also know that putting the lower right leg in a cast does a broken radius absolutely no good.

After calling Dr. Spartan's office, you discover the diagnosis -- a fractured left radius -- is correct. But the procedure performed was actually a "cast, lower arm" on the left side. The code for this procedure might be on the encounter form and all you need to do is correct the information. However, if the procedure code does not appear on the encounter form, you will need to find it in the CPT book. To find the proper code, you will follow these steps.

1. First, look in the index of the CPT book for the procedure. Find the alphabetical listing:

Cast, Application Short Arm 29075

2. Next look under that code (29075) in the surgery section:

Surgery Musculoskeletal Casts 29075 elbow to finger (short arm)

See the following example from the CPT book.


29000 - Application of halo type body cast (see 20661-20663 for insertion)

29010 Application of Risser jacket, localizer body; only

29015 including head

29020 Application of turnbuckle jacket, body; only

29025 including head

29035 Application of body cast, shoulder to hips;

29040 including head. Minerva type

29044 including one thigh

29046 including both thighs

29049 Application; plaster figure-of-eight

29055 shoulder spica

29058 plaster Velpeau

29065 shoulder to hand (long arm)

29075 elbow to finger (short arm)

29085 hand and lower forearm (gauntlet)

3. The correct code for this procedure is 29075.

Using the CPT book, you should be able to find the procedure you are looking for by looking up any of the information covered in each section. You could look under cast for the procedure, or radius for the anatomic site. Although the exact code may not be listed in all places, most of these terms will contain a cross-reference for you to follow.

For example, under Radius for the anatomic, you will see a cross-reference that says: See also - Arm, lower. When you look up Arm, lower, you'll find Cast applications.

If the code is not in one class of entry, move to the next, and the next and finally, the next. You should be able to find most procedures.

After finding the code in the index, turn to the appropriate page in the CPT book for more details. Read through the description to locate the most appropriate code for the procedure.

There will be a code for your exact situation. Do not just write the first one that looks close. Read through the entire list of related codes and find the one that fits perfectly. Remember, in order for us to get the doctor's reimbursed, we must be as accurate as possible with every claim. If doctor's aren't getting paid because of our lack of accuracy, they won't be needing your services.

Note: Medical Insurance Claims Adjusters are constantly screening your claims for errors. Their job is to make sure that claims with errors either don't get paid or don't get paid on time.

Write the appropriate code on the insurance form. Double-check that you have not transposed numbers or left out any necessary information. If there is a modifier (we will cover modifiers later on in this lesson), add it here.

If you cannot find an appropriate code, you need to go to the end of the section you are searching and find a five-digit code for Unlisted Procedures. This code ends in -99. Write that number in the procedure space on the insurance form, then attach an explanation of the procedure.

Remember, the six CPT sections are divided according to the procedure performed. Look at the table:

Procedure Code Range


All E/M codes begin with 9.

Anesthesia codes begin with 0, with the exception of codes 99100-99140, which are used for particularly difficult circumstances


00100-01999 and 99100-99140


Surgery: All surgery codes begin with 1, 2, 3, 4, 5 or 6, depending on the anatomical location:

Location Range

Integumentary System 10040-19499

Musculoskeletal System 20000-29909

Cardiovascular/Respiratory System 30000-39599

Digestive System 40490-49999

Urinary/Reproductive System 50010-58999

Maternity 59000-59899

Endocrine, Nervous, Eye and Auditory 60000-69979

Radiology All radiology codes begin with 7 70010-79999

Pathology & Laboratory All pathology and laboratory codes begin with 8 80002-89399

Medicine All medicine codes beginning with 9. 90700-99199

The appendices are arranged somewhat differently, with information given for explanation purposes.

Appendix A - Modifiers

A modifier is a two-digit number added to the procedure code that allows a more specific description of the service provided by the doctor to coder. Modifiers are found in Appendix A of the CPT code book.

For example, the doctor sees a new cardiology patient who does not speak English. This patient requires a translator. The examination, which typically takes 60 minutes, lasts 100 minutes. By adding the modifier -21 (which indicates a prolonged evaluation and management service) to the procedure code 99205 (office or other outpatient visit), the doctor is able to charge a higher fee for the examination, because of the extra time, and not have the charge denied for being above the usual and customary fee charged.

Appendix B - Summary of Additions, Deletions and Revisions

All additions, deletions and revisions to the current CPT code book you are using will be noted in Appendix B, with a short explanation of the action taken. An example might look like this:

28171 Terminology revised

31266 Code deleted. To report use 31255 and 31276

60001 Code added. Aspiration of thyroid cyst

This appendix helps the coder stay on top of changes made to the CPT code book.

Appendix C - Update of short descriptors

Code description changes for the current year are noted in Appendix C of the CPT code book. Here are some examples:

33573 Add: Open coronary endarterectomy

57460 Revise: Cervix excision

93255 Delete

Appendix D - Clinical Examples Supplement

If you have a question about an E/M code, check this appendix. Appendix D lists many E/M codes and goes into detail about when to use each code. It provides valuable help to medical claims and billing specialists.

Coding Examples

1. A bilateral salpingectomy (removal of the fallopian tubes) is performed. You look in the index section of the CPT book and find either the anatomic site (fallopian tube) or the procedure (excision). Here are the listings in the CPT index:

Fallopian Tube excision 58700, 58720

> Or

Excision fallopian tubes 58700, 58720

Then look under the codes listed. They are in the Surgery section.

Surgery: Female Genital System

58700 salpingectomy, complete or partial, unilateral or bilateral.

58720 salpingo-oophorectomy, complete or partial, unilateral or bilateral

The correct code is 58700. (Code 58720 is for removal of fallopian tubes AND ovaries.)

2. Joe broke his middle toe. After x-rays, the doctor only needed to tape the toe for the fracture to heal. To code this you first look in the index.

Fracture phalanx, toe closed treatment 28510, 28515


Toe see phalanx Phalanx, toes fracture closed treatment 28510, 28515

Then look under the codes listed in the Surgery section.

Surgery: Musculoskeletal

28510 closed treatment of fracture, phalanx, other than great toe; without manipulation

28515 with manipulation, each

The correct code is 28510 because the doctor did not need to set the bone of the fracture.

Let's review now the steps you need to follow to use the CPT book to code procedures.

Procedure Coding Concepts

In order to determine which code is correct, and ensure maximum accurate reimbursement for your clients, you need to know about some specific concepts in coding.

The first concept is simple: Always code the principal procedure first. The principal procedure is the main service performed for the condition listed as the primary diagnosis. After the principal procedure, if the doctor performs other services for the primary diagnosis, these are considered concurrent procedures and are listed under the principal procedure.

However, even this simple rule requires some special consideration. Surgery, anesthesia and multiple procedures all offer their own specific coding requirements. Often procedures get combined -- procedures commonly performed together may have a single code. If you use the correct code, you will eliminate future problems for your clients, your office or the hospital.

Surgical Concepts

Surgical procedures often contain special coding considerations. For example, lacerations are classified into three sections: simple, intermediate and complex. The class depends on the extent of the laceration.

Simple lacerations are superficial, involving only the uppermost layers of skin. Intermediate and complex lacerations involve damage to tissue below the skin level. These may require more extensive repair, including reconstructive surgery. Such repair, whether it is to a simple, intermediate or complex laceration, is coded according to the sum of the length of the repairs. This length is always measured in centimeters (cm). The sum of the length means that if there is more than one laceration, you add the length of each laceration together and then code the entire group with one code.

A patient comes in to the office with three intermediate lacerations (caused by broken glass) on her right arm. The doctor treats her and repairs the lacerations. The encounter form notes each of the three lacerations:

Laceration 1: 10 cm

Laceration 2: 14 cm

Laceration 3 22 cm

To bill this, you must add up the total length of the lacerations. You DO NOT code each laceration individually. Instead, you find the code for the total length of the lacerations. For this example, you would code for laceration repair of 46 cm.

This grouping together of procedures is not uncommon. In fact, in surgical procedures and multiple procedures, a single code might cover everything the doctor does. This type of coding is known as bundling or packaging.

Bundling or Packaging

According to the Surgery section of the CPT, most procedure codes for surgical procedures include local infiltration, metacarpal/digital block or topical anesthesia and routine follow-up care. This group of procedures is coded with a single code and is called a package for surgical procedures. If the surgery you are coding is part of a package, you DO NOT code the other parts of the package individually. The surgery code is the only one you use.

Sometimes a surgical procedure doesn't include a package. These procedures are indicated with a star (*) next to them in CPT book. Be sure to become familiar with the CPT book, and keep it up to date. The CPT book is revised each year, and you will need to get each annual revision because some surgeries might become part of packages (and other information might change).

If you bill for individual parts of a surgical package, you are said to be unbundling that package, a process that insurance companies consider illegal. Unbundling increases costs and if it is done intentionally, it is considered fraud.

Although you now know the basic steps for coding, we still need to cover a few more items before you are ready to practice procedure coding.


With the wide range of possible procedures available to doctors, and the huge number of circumstances possible, the five digit code is often not specific enough for insurance companies. The insurance companies require the bills to have a modifier that provides more information. However, not all modifiers are used with every section of the code book. There are specific modifiers for each section.

Modifiers are listed in Appendix A. They are used to indicate that unusual circumstances occurred in the procedure. Examples of such unusual circumstances are; extra time spent, extra personnel used, a repeat procedure performed. The modifiers used in each section are also listed in the guidelines at the beginning of each appropriate section in the CPT book.

You need to be familiar with modifiers so you can properly code bills. Modifiers can affect reimbursement. Failure to use modifiers correctly will result in a rejected claim or reduced payment.

Sometimes a procedure will need more than one modifier. Multiple modifiers are used when multiple procedures are performed on the same day or doctor visit. To code this situation, first use the usual five-digit code, then add the modifier -99. Then add the modifiers after the -99. List the primary procedure first, and then the secondary procedure with the modifier. So your code might look like this:

59510 Cesarean section deliver

58700-51 Excision of fallopian tubes.

Or you can code it without modifiers by using a third code:

59510 Cesarean section delivery

58700 Excision of fallopian tubes

09951 Multiple procedures

As you can see, coding requires accuracy. Insurance companies often have computers that review claims and search for unbundling or other errors. You must find the correct code for each procedure and remember to list the principal procedure first.

Relative Value Studies

Insurance companies use computers and special software to check the validity of claims. In addition, they also use relative value studies to check claims.

More than 40 years ago, the California Medical Association produced the book California Relative Value Studies. The book presented coded procedures with relative value studies (RVS) -- unit values that indicated the relative value of each procedure. These unit values took into account the time, overhead cost and skills required to perform each procedure.

Relative value studies have been performed by third parties, such as insurance companies. One such book is Relative Values for Physicians, which is widely accepted by insurance companies and by the Federal Trade Commission (FTC). The FTC is involved to ensure doctors aren't creating their own relative values, because this would violate anti-trust laws. Currently the Resource-Based Relative Value Scale (RBRVS) is being used to phase in a Medicare fee schedule. The RVRVS was produced by HCFA.

This is the way relative value studies (RVS) work. A procedure is given a unit value based on a single base unit. This base unit changes from year to year, but the unit values for procedures remain fairly constant. Some revisions are made to reflect changes in technology or other factors, but for the most part, the relative values stay the same. For example, let's say the base unit is $200. If a procedure is rated at 0.75, or 75%, of the base unit ($200). This procedure, therefore, is valued at $150.

If another procedure is rated at 1.5 base units, that procedure is valued at $300. Now the beauty of the RVS system is the revision process. To increase the relative values to reflect such changes as inflation, for example, all the RVSA producer needs to do is change the base unit.

If the base unit were increased from $200 to $250, then our first procedure, valued at 0.75 units, would be valued at $187.50, an increase over the $150 it was valued at before. The procedure rated at 1.5 base units would be worth $375.

The RVS system is used by many insurance companies. You must check with each company to determine if and how it uses RVS.

Now that we know how much a procedure is worth, how do we go about determining payment?

Methods of Payment

Insurance companies and government programs have different methods of determining their liability on claims. There are basically four ways of determining payments:

1. Fee Schedules

2. Relative Value Studies

3. Usual, Customary and Reasonable (UCR)

4. Diagnosis-Related Groups

We discussed relative value studies in the previous section, and we will cover diagnosis-related groups in depth later in this course. This section will focus on fee schedules and usual and customary.

Fee Schedules - A fee schedule is a listing of medical procedures followed by their accepted charges. Some medical offices have more than one fee schedule for the same procedures (although some states prohibit this arrangement). Typically, fee schedules are affected by the participation of the doctor's office in government programs and managed care.

If a practice accepts Medicare, the fee schedule must reflect this. By law, the fees on the Medicare fee schedule cannot exceed those on the non Medicare fee schedule.

When a practice is involved in a managed care contract, such as an HMO or PPO, it can have many fee schedules. It can have one for each managed care company it is involved with, including co-payments and allowable charges (knowing that each contract specifies what will be paid for each procedure). The practice might also have a non-managed care fee schedule and one for a government program such as Medicare or Worker's Compensation.

The doctor can evaluate and change fee schedules to reflect changes in his or her situation. Inflation, changes in technology or new contracts with managed care companies can all affect fee schedules.

Usual, Customary and Reasonable

A large consideration of Medicare and other insurance providers is a concept known as usual, customary and reasonable. Usual Customary and Reasonable (UCR) is a standard that considers three fees. The usual fee is what a typical doctor normally charges for a service.

Customary refers to the amount normally charged by most physicians in the community for a service. Reasonable fee is based on the appropriateness of the charge considering all the circumstances. The fee that is reimbursed is based on consideration of the usual fee, the customary fee and the reasonable fee.

In addition to UCR, Medicare considers two other factors: actual charge and prevailing charges. The actual charge is the amount a doctor actually bills a patient for service. The prevailing charge reflects the average, or median, charge of a cross section of doctors in similar settings (practice size, city size) for the same service. 

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