My first day of clinic as a resident, I was feeling pretty confident. After all, this was the moment I prepared for during my 4 years of medical school. I did all the things I was trained to do: I went into the room, set an agenda, did a focused history and physical, came up with an assessment and plan, presented to a faculty member, put in the orders, and moved on to the next patient. Since my medical school and residency used the same electronic medical record, I was already familiar with the system, which helped my flow through the day. At the end of the day, I was just finishing up my notes so that I could go home. The last step would just be to click the “Close Encounter” button that would indicate that all my work was officially finished, and everything could be filed in the patient’s chart. As I clicked the button, the system indicated: “REQUIRED: NO LEVEL OF SERVICE FOR THIS ENCOUNTER“.

Wait, what? What is this “level of service”. Nobody talked about “level of service” in medical school… is that like a rare genetic disorder? That seemed unlikely though, since every one of the charts had this flag. What could every one of my patients have… oh wait, maybe “level of service” is another word for “diabetes”… no, that doesn’t seem right. I asked a second year resident in the charting room what to do, and they said, “Is it a new patient or old patient? If new, click the new patient level 3, if old, click the old patient level 3.” Oh ok then. Problem solved, at least temporarily. I clicked level 3 on everyone, closed out my note, and went home.

This scenario might not be too far off from your own residency experience. With the implementation of electronic medical records into practices, the job of assigning billing codes that was often previously given to a ancillary staff member in the office (who would go through our notes and use that to bill) is now being diverted back to the physician. What that means though, is that residents now are required to assign billing numbers before we can finish our clinic days. If your program doesn’t have an electronic medical record, you may be carrying around a piece of paper and required to check or circle things that represent diagnoses, a level of service/E&M code, and any procedures done. Without necessarily realizing it, we’re billing and coding through these activities, because each each diagnosis, level of service, and procedure we click, check, or circle is associated to a code. So what’s the problem? If we can just click, circle or check it, then we’re doing our job right?

The clincher is this, each code is associated with rules. You can only use certain codes in certain instances, otherwise, your claims may be rejected and your practice won’t get paid for what you’ve done, or you may unknowingly be engaging in billing fraud if your note doesn’t match the documentation requirements needed to justify a code. So in order of us to do our job correctly, legally, and and get paid for what we do, we need to use the codes in a way that is compliant with insurance company rules… but hard to do when we’re not taught about what codes means and the rules associated with each.

If you’re getting to this point, and going, “Wait, so what’s level 3? What’s E&M?” then you’re probably where most of us were when we leave medical school. So the purpose of this post is to give a basic definition of the codes you’re likely encountering in your practice. The codes that you are seeing every day generally fall into 2 general categories: CPT and ICD-9 codes. I’ll go into more detail on each below.

– CPT stands for “Current Procedural Terminology” and is the code for
anything that gets done in an office or hospital. These codes are usually 5 digits, so any 5 digit code you see on your billing sheet or electronic medical record system likely represents a CPT code. Luckily the hospitals still have billers that take our in-patient notes and turn them into codes, so I’m going to focus on out-patient CPT codes.
In my mind, I further break CPT codes down into E&M codes and
procedure codes.

1) E&M stands for “Evaluation and Management” – If I
simplify it, it is a fancy way to say office visit where we evaluate and
manage a patient. As we know, office visits can either be
problem-based, “I stubbed my toe, and have hypertension… which
is higher because my toe hurts… and maybe because I don’t take my
meds”, or preventive (“I’m here for my physical”, but should not have ANY History of Present Illness, otherwise you’re doing BOTH a preventive visit AND a problem focused visit and you actually need to bill for both, but we’ll get to that in my next post). If you’re doing a problem based visit, the patient will be either a new patient or established patient, which are coded differently with the assumption that new patients would take longer. If you’re using an electronic medical record, you can likely click new patient level __, or established patient level __ to indicate this. If you’re circling or checking on a sheet of paper, you’ll usually see a code like 99201 – 99205 next to new patients and 99211 – 99215 for established patient. The last digit in each category you’ll notice run from 1-5 (i.e. 99203), and that last digit represents the level of service, with 1 being the most basic visit, and 5 being the most complicated. However, if it is a preventive care visit, you have to use an entirely different code, often based on the age of the patient coming in. Your system may allow you to click that code, or you have to type it in manually (I’ll share those codes in my next post).

2) Procedure code – The other type of CPT code is specifically for procedures that you did with the patient. If you lifted a finger, there’s
probably a code for it. Even filling out a school form or doing smoking
cessation >3 mins count as separate billable “procedures”. For family medicine, common codes may be excisional biopsies or joint injections, just as examples. 

– ICD 9: Stands for “International Classification of Diseases” or simply
diagnosis code. It is a number attached to diagnoses you’re assigning
the patient. These codes are the ones that have a decimal place in them. So for instance, obesity has the diagnosis code of: “278.00”. All the visit diagnosis that you’re
putting in are translating into these codes. These codes matter because it tells insurance companies what diseases you’re trying to treat. Let’s say you have a patient with a BMI of 41.4 that you want to refer to bariatric surgery. You assign “Obesity” as their diagnosis, which corresponds to a ICD-9 code of “278.00”. Seems ok right? The problem is, the insurance company comes back and says, “No… you can’t do that, sorry, we don’t do bariatric surgery for obese people”. Wait what? The reason would be, the indication for bariatric surgery for this insurance might be a patient that’s morbidly obese, which is a ICD-9 code of “278.01”. The numbers after the decimals usually indicate more detail about a diagnosis, and that level of detail is often necessary to justify the treatment you are recommending. Without proper ICD-9 codes, you’re not communicating properly what disease you’re trying to treat. Even something as benign as a
flu shot without being linked to the diagnosis
of “needs flu shot” can get denied. In practice, just be sure every treatment you’re doing is associated with an appropriate ICD-9 code, and when choosing ICD-9 codes, be as specific as possible. On a side note, we’re currently still using ICD-9, but just be aware that the next version (ICD 10) is going live in October 1, 2014, which will be even more complicated because there will be more ways to assign details (including laterality of a lesion, or what trimester a pregnant patient is in), so the general name of the game is, be as detailed as possible and start practicing now.

Alright, so you should have a basic understanding now of the types of codes that exist, what they look like so you can recognize a CPT vs. ICD-9 code generally, and what they mean. This will set the stage for the 3rd and final post (coming in around a week), where I’ll go over the documentation requirements that justify each level of service so you know: 1) How to assign the appropriate level for each patient, and 2) What is required in your note to justify your billing. Hope this is helpful!

Author: Raymond Tsai, MD, MS is a Family Medicine resident at UCLA. MD from Stanford University School of Medicine and MS in Health Policy and Management from Harvard School of Public Health. Follow him on Twitter (@RayCTsai) or see his personal blog about health living.