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Professional Medical
Coding Curriculum
Volume 1
2007
Introduction
The American Academy of Professional Coders (AAPC) would like to introduce the Professional
Medical Coding Curriculum (PMCC) for 2007. This material was developed in order to help
billers/coders and other medical professionals better understand the rapidly changing medical
coding and billing environment.
The AAPC has prepared a program of study that is aimed at providing the most up-to-date information relating to CPT, HCPCS, and ICD-9-CM procedural and diagnostic coding.
The course curriculum is presented in a 22 chapter format. Chapters include medical terminology,
anatomy overviews, CPT, HCPCS Level II, and ICD-9-CM coding issues organized in a way
that is consistent with the most current guidelines. The course also includes end of chapter
review questions to enhance comprehension of the material covered. A midterm and final examination also are provided. Students may choose to test for the Certified Professional Coder (CPC)
certification upon successful completion of the PMCC.
In an effort to make this manual more effective, we have included the following icons:
Coders Tip
American Academy of Professional Coders
Example
On the Horizon
Class Exercise
Medicare
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Introduction
Two Volume Student Edition

The two volume student edition provides descriptions of the diagnosis and procedure coding
systems, as well as the fundamentals of medical terminology, patient record documentation, and
the rules and regulations that apply to the health industry. The first volume covers these fundamentals and gives a broad background in the process of coding. Since the rules and regulations
setting is a dynamic process that changes often without notice, the Academy has created a separate
booklet in the PMCC curriculum that lets you and the student keep up-to-date via computer
access. The Coders Resource Handbook directs coders to electronic resources of rules and regulations, such as the administrative provisions of the Health Insurance Portability and Accountability
Act (HIPAA) of 1996, and the web sites of various federal agencies, specialty medical groups,
professional affiliates, and health information centers. The booklet breaks the more complicated
sites into a system of faster access, such as where to find the ICD-9-CM addenda through the
National Center of Health Statistics.
Volume 1 introduces students to the current code setsICD-9-CM, CPT, and HCPCS Level
II codesand outlines the evolution of coding and documentation in the physician office and
medical facility. A supplement to the ICD-9-CM chapter gives an overview of the two code
sets contemplated for the futureICD-10-CM and ICD-10-PCS. A final chapter in the second
volume explains the development of an expanded CPT coding system in relation to the demands
of health care reporting and statistical analysis.
Volume 1 also progresses into chapter-by-chapter descriptions of the CPT manual, and incorporates the fundamentals of terminology and documentation laid out in the earlier chapters. For
example, the 15 chapters devoted to CPT coding relate diagnosis coding to procedural coding
in the interest of medical necessity. Through text and examples, the students will learn the type
of information that must be documented in the patient record to support the appropriate choice
of codes.
Volume 2 continues the chapter-by-chapter descriptions of CPT code ranges and concludes
with two appendices an alphabetical listing of medical terms and their definitions. The questions cover material taken from both volumes and help get your students ready for the Academys
Certified Professional Coder (CPC) certification exam. The CPC study guide is an optional preparation tool available through the Academy. A midterm and final examination will be provided
which mirror the National Certification exam (multiple choice) format.
Terminology is incorporated into the text or introduced according to the code range of the
particular procedure or service. Illustrations from the Ingenix series of clinical coding books give
a visual interpretation of procedures chosen from every range of codes.
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2007 PMCCVolume 1
Introduction
Disclaimer
Decisions should not be based solely upon information within this study program. All judgments
impacting a coders career and/or an employer must be based upon individual circumstances
including legal/ethical considerations, local conditions, payer policies within the geographic area,
new or pending government regulations, etc.
The American Academy of Professional Coders (AAPC) expressly disclaims responsibility or
liability for any adverse outcome from the use of this study program for any reason, including,
but not limited to, undetected inaccuracy, opinion and analysis that might prove erroneous or
amended, or a coders misunderstanding or misapplication of extremely complex topics.
Information in this study program is based on CPT, ICD-9-CM, and HCPCS rules and regulations. However, application of the information in this text does not guarantee claims payment.
Inquiries of local carriers bulletins, policy announcements, etc., should be made to resolve local
billing requirements. Payers interpretations may vary from those in this study program. Finally,
the law, applicable regulations, payers instructions, interpretations, enforcement, etc., may change
at any time.
The AAPC has obtained permission from various individuals and companies to include their
material in this manual. These agreements do not extend beyond this study program. It may not
be copied, reproduced, dismantled, quoted, or presented without the expressed written approval of
the Academy or the sources contained within.
No part of this publication covered by the copyright herein may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means (graphically, electronically, or mechanically,
including photocopying, recording, or taping) without the expressed written permission of the
publisher.
Medicare Disclaimer
This publication provides the student with coding and reimbursement examples and explanations,
of which many are taken from the Medicare perspective. The coder, however, should understand
that while private payers typically take their lead regarding reimbursement rates from Medicare, it
is not the only set of rules to follow.
While federal and private payers have different objectives (such as the age of the population
covered) and use different contracting practices (such as fee schedules and coverage policies), the
plans and providers set similar elements of the quality in common for all patients. Nevertheless, it
is important to consult with individual private payers if you have questions regarding coverage.
Introduction
Publisher
Product Manager

Kris Taylor
Technical Editors Robin Linker, CPC, CPC-H, CCS-P, MCS-P, CPC-P, CHC
Carrie Severson, BSN, CPC, CPC-H
Copy Editor
Desktop Publishing
Janet C Lynn
Tina M Smith
A special thank you to all who have expressed ideas and contributed feedback for updating the
material in this book. Your contributions are appreciated.
2007 American Academy of Professional Coders

2480 South 3850 West, Suite B, Salt Lake City, Utah 84120
800-626-CODE (2633), Fax 801-236-2258, www.aapc.com
All rights reserved.
ISBN 978-1-932760-83-0 (Volume 1)
ISBN 978-1-932760-81-4
(2 Volume set)
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2007 PMCCVolume 1
Table of Contents
Chapter 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Medical Coding and Compliance
Medical coding terminology and issues are introduced, including the meaning and importance of a compliance program in a medical setting. The significance of accuracy, ethics, and
continuing education are emphasized.
Introduction....................................................................................................................... 1.1
Coding Resources............................................................................................................... 1.1
Basic Language of Coding.................................................................................................. 1.2
Provider Types................................................................................................................... 1.2
Federal Regulations............................................................................................................ 1.6
Ethics for the Medical Coder........................................................................................... 1.10
Medical Record................................................................................................................ 1.12
Claims Processing ........................................................................................................... 1.13
Fraud and Abuse.............................................................................................................. 1.15
Conclusion....................................................................................................................... 1.18
Chapter 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Anatomy and Word Elements
Basic human anatomy is provided and reviewed. The meanings of medical and surgical terms
are reviewed and how they are broken down for interpretation.
Introduction....................................................................................................................... 2.1
Anatomy............................................................................................................................ 2.1
Structure of the Human Body............................................................................................ 2.2
Integumentary System........................................................................................................ 2.3
Musculoskeletal System...................................................................................................... 2.5
Cardiovascular System........................................................................................................ 2.7
Lymphatic System.............................................................................................................. 2.8
Respiratory System (Pulmonary System)............................................................................ 2.9
Digestive System................................................................................................................ 2.9
Urinary System................................................................................................................2.10
Reproductive System........................................................................................................2.10
Nervous System ..............................................................................................................2.11
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Introduction
Organs of SenseEye......................................................................................................2.11
Organs of SenseEar......................................................................................................2.12
Endocrine System............................................................................................................2.13
Hemic System..................................................................................................................2.14
Immune System...............................................................................................................2.15
Introduction to Medical Terminology.............................................................................2.17
Chapter 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Documentation and Coding Guidelines
Accurate documentation of procedures and services is paramount for coding and reimbursement. In this chapter, students will be introduced to the rules and guidelines necessary.
Introduction....................................................................................................................... 3.1
Documentation.................................................................................................................. 3.1
Privacy Regulations............................................................................................................ 3.3
Importance of Documentation and Coding....................................................................... 3.5
CMS Document Requirements.......................................................................................... 3.6
SOAP................................................................................................................................. 3.6
Basic Documentation......................................................................................................... 3.8
Acronyms and Abbreviations.............................................................................................3.11
Surgery Services and Operative Reports............................................................................3.11
Nonphysician Provider Services........................................................................................3.21
Radiology Services.............................................................................................................3.22
Pathology and Laboratory Services....................................................................................3.26
Documentation Issues for Teaching Physicians.................................................................3.35
Chapter 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1
ICD-9-CM
Diagnostic coding through medical necessity, coding guidelines, and how-to steps are presented
along with coding conventions, coding tips, and understanding ICD-9-CM Volumes 1 and 2.
An addendum introduces the ICD-10 format, which is informational only and not included
in the CPC examination.
Introduction....................................................................................................................... 4.1
Medical Necessity and ICD-9-CM Codes.......................................................................... 4.2
Basic ICD-9-CM Coding conventions............................................................................... 4.6
ICD-9-CM Volumes 1 and 2............................................................................................. 4.9
Supplementary Classification Section: V & E Codes........................................................4.34
Introduction.....................................................................................................................4.45
ICD-10-CM....................................................................................................................4.45
Chapters........................................................................................................................... 4.49
Code Structure................................................................................................................. 4.50
Locating a Code in ICD-10-CM..................................................................................... 4.51
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2007 PMCCVolume 1
Introduction
Chapter 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
Introduction to CPT and HCPCS
Understanding CPT and HCPCS codes in relation to reporting physician and/or other
provider procedures and services are discussed. This chapter also introduces the basics of
formatting, terminology, modifiers, and the two levels of HCPCS codes used in Medicare and
most private payer claims.
Introduction....................................................................................................................... 5.1
HCPCS Abbreviations and Acronyms................................................................................ 5.2
Level ICPT Codes and Modifiers................................................................................. 5.3
CPT Codes and ICD-9-CM Codes................................................................................. 5.5
Level IINational HCPCS Codes and Modifiers............................................................5.14
HCPCS Modifiers.............................................................................................................5.19
Chapter 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
Evaluation and ManagementPrinciples
Evaluation and management (E/M) codes are described with the fundamentals in preparation
and application to medical claims. Each section explains a topic pertinent to E/M coding such
as the definitions of key components, reporting consultations, emergency department visits,
critical care, preventive medicine, and home health services.
Introduction....................................................................................................................... 6.1
E/M Process....................................................................................................................... 6.2
Specific Coding Guidelines and Conventions...................................................................6.14
Outpatient Office Based Services......................................................................................6.14
Hospital Observation Services (9921799220).................................................................6.15
Consultations (9924199255)..........................................................................................6.16
Emergency Department Services (9928199288).............................................................6.23
Pediatric Critical CarePatient Transport (9928999290)..............................................6.24
Critical Care (9929199292)............................................................................................6.25
Inpatient Pediatric and Neonatal Critical Care (9929399296)........................................6.26
Nursing Facility Services (9930499318)..........................................................................6.28
Domiciliary, Rest Home, or Custodial Care Services (9932499337)...............................6.29
Home Services (9934199350).........................................................................................6.29
Prolonged Services (9935499359).................................................................................. 6.29
Case Management Services (9936199373)..................................................................... 6.31
Care Plan Oversight Services (9937499380).................................................................. 6.32
Preventive Medicine Services (9938199429).................................................................. 6.32
Newborn Care (9943199440)........................................................................................ 6.33
Special Evaluation and Management Services (9945099456)......................................... 6.34
Miscellaneous (99499)..................................................................................................... 6.35
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Introduction
Chapter 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
Evaluation and ManagementSupplemental Information
From the basics of E/M coding, the students advance to actual reporting of these codes based
on provider information. A step-by-step approach to E/M auditing is presented with the
various types of audits common to medical practices. Newborn Care (99431-99440)
Chart Auditing................................................................................................................... 7.1

E/M Services...................................................................................................................... 7.2
Key ComponentExamination....................................................................................... 7.10
General Multisystem Examination................................................................................... 7.13
Office or Other Outpatient Services (9920199215)....................................................... 7.29
Observation Care Discharge (99217)............................................................................... 7.31
Consultations (9924199255)......................................................................................... 7.35
Consultation vs. Referral.................................................................................................. 7.36
Emergency Department Services (9928199285)............................................................ 7.37
Pediatric Critical Care Patient Transport Services (9928999290).................................. 7.38
Critical Care Services (9929199292).............................................................................. 7.38
Inpatient Neonatal and Pediatric Critical Care (9929399296)....................................... 7.40
Nursing Facility Services (9930499310)......................................................................... 7.41
Domiciliary, Rest Home (Boarding Home) or Custodial Care Services (9932499337).. 7.43
Home Services (9934199350)........................................................................................ 7.44
Prolonged Physician Services (9935499359).................................................................. 7.45
Case Management Services (9936199373)..................................................................... 7.47
Care Plan Oversight Services (9937499380).................................................................. 7.48
Preventive Medicine Services (9938199397).................................................................. 7.50
Newborn Care (9943199440)........................................................................................ 7.52
Special Evaluation and Management Services (9945099456)......................................... 7.52
Other Evaluation and Management Services (99499)...................................................... 7.53
Final Selection of E/M Code............................................................................................ 7.53
Audit Process................................................................................................................... 7.53
Chapter 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
Surgery Guidelines and Concepts
Surgical codes are arranged in sections according to body systems (eg, integumentary, digestive), which are divided according to the type of procedure performed. The AMAs coding
modifiers and coding guidelines are defined.
Global Surgical Package..................................................................................................... 8.1

Modifiers............................................................................................................................ 8.8
2007 PMCCVolume 1
Introduction
Chapter 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1
Integumentary System
Descriptions of each section of surgery codes are in-depth and begin with the integumentary
system. Definitions and anatomical descriptions give an overview of these code ranges, which
are updated annually to reflect any changes in health care.
Introduction....................................................................................................................... 9.1
Anatomy............................................................................................................................ 9.1
Diagnosis Coding............................................................................................................... 9.5
CPT Procedure Coding.................................................................................................... 9.5
Chapter 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1
Musculoskeletal System
One of the largest sets of codes in the CPT is the musculoskeletal system. The application,
relevant definitions, anatomical descriptions, and an overview of the various procedures are
demonstrated.
Introduction....................................................................................................................10.1
Basics of Anatomy...........................................................................................................10.2
Diagnosis Coding............................................................................................................10.4
CPT Procedure Coding.................................................................................................10.7
Nervous System Codes Related to Musculoskeletal System.............................................10.29
Chapter 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
Respiratory System
Students are introduced to respiratory diseases with subsequent treatment and the functions of
the systems organs. The respiratory system codes with the application and proper documentation are defined.
Introduction.....................................................................................................................11.1
Anatomy..........................................................................................................................11.1
Documentation................................................................................................................11.2
CPT Procedure Coding..................................................................................................11.5
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Preface
Coding is a language that conveys medical information uniformly. The alpha and numerical
arrangement of codes provides a complete, as is possible, description of a diagnosis, a medical
procedure, or a supply in a condensed format, for example:
Diagnostic Codes
040.82
Toxic shock syndrome
455.1
Internal thrombosed hemorrhoids
616.2
Cyst of Bartholins gland
Procedure Codes
44970
Laparoscopic appendectomy
55100
Drainage of scrotal wall abscess
70030
Radiologic eye exam for detection of foreign body
Supply Codes
A4625
Care kit for new tracheostomy
L0210
Thoracic rib belt
J0696
Ceftriaxone sodium, per 250 mg
The ordering of the numbers and letters in the sequence is based on several factors such as the body
system affected, and variables that can alter a diagnosis or procedure. New medical information
and advances in technology demand constant revision of code sets and various public and private
agencies are responsible for the annual and semiannual updates to diagnostic, procedure, and
supply codes. The development of code sets and their subsequent maintenance will be discussed
later in greater detail.
Coders translate the narrative of the patient medical record into the codes used to report the
diagnosis, procedure, or supply. The consistent application of codes transcribed from the patients
medical record for import to a medical claim is imperative in the process of health care reimbursement. A health care provider is paid according to the procedures or services given in direct correlation to the patients condition.
The diagnostic code relates the patients condition to a disease process (morbidity reporting).
A procedure codewhat medical service was performedmust be tied to the diagnosis code
to prove medical necessity. The procedure called a laparoscopic appendectomy (44970) would
certainly raise a red flag if reported in relation to a diagnosis of toxic shock syndrome (040.82)
and a care kit for a new tracheostomy (A4625).
In additionand every bit as valuablea numeric diagnosis code is the basis for reporting the
cause of an individuals death (mortality reporting). The information provided by the diagnostic
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Preface
code is vital to the data epidemiologists and others use to compile statistical summaries regarding
the status of our nations health.
Coding is a complicated business and the following introduction will alert you to the complexities
of the profession. As you will grow to understand, coding is not a skill picked up overnight. The
ability to code correctly and appropriately can take years to master. Beginning coders should have
a basic background in anatomy and medical terminology in addition to course work that focuses
on coding. Preparatory programs should stress the hands-on of coding directly from the medical
record. And, thats just the start of your profession.
The education of a professional coder continues; it never ends. Federal authorities that administer
the Medicare and Medicaid programs count on the team efforts of coding and billing staff to
help keep health care costs under control. The words fraud and abuse will take on increasing
meaning relative to the integrity of coding and its relationship to reimbursement. Coding credentials demonstrate the integrity the individual has for the profession.
The ability to translate the medical documentation of health care providers into codes takes a
critical understanding of the alphanumerical and numerical language and structure of coding. A
professional coder must know, for example, how to select a code for a leg cast applied to stabilize
a fracture of the femur and when the code for the cast is included in the global procedure. The
language that coding and reimbursement has generated is, yet, another task required of the coding
profession that will be covered in this educational series of the American Academy of Professional
Coders (AAPC).
Coding involves strict attention to detail. An incorrect ordering of the numberssay a transposition of any two numbers in a four to five digit codeis an apparent occupational hazard.
Numbers or letters in the wrong order could change the read of a diagnosis from an acute to
chronic condition or, in the worst-case scenario, provide erroneous and even potentially damaging
information about the patients health as recorded in the medical record. The medical record
follows an individual for life and the information it contains heavily influences subsequent health
care and coverage.
A world without codes is difficult to imagine, especially if you entered the coding profession
during the past decade. The history of modern day coding in Americas health industry had its
beginning at about the same period that the American astronaut, Neil Armstrong, became the first
man to walk on the moon.
In 1969, the year of our historic moon walk, the documentation in codes of services and procedures in the patient chart was in relative infancy. The diagnostic coding system, the International
Classification of Diseases and its clinical modification, was much older comparatively but, like the
procedure coding system, it did not demand near the amount of attention to detail as in todays
medical environment.
So, why is there the emphasis now placed on correct and appropriate coding? The escalation
in health care costs has accelerated the scrutiny of medical claims. Federal and private health
care payers want to control costs despite a dichotomy of advancing medical technology and the
spending it takes to provide the type of coverage society demands. Medical claims tell a story and
if the diagnosis and subsequent procedures tell competing stories, theres a problem.
Its the coders job to set the story right.
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2007 PMCCVolume 1
Preface
Code Sets
Diagnostic Coding
The World Health Organization (WHO) took over the job of international classification after
World War II as part of its charter to bridge peace through health care. At that time, few countries had an extensive knowledge or understanding of modern concepts of health education. Most
medical faculties were of the old school, which was devoted to sanitation and hygiene rather than
actual decreases in the prevalence of disease. The variety of methods of diagnosis used in different
countries made it difficult for doctors to assess the findings in other countries.
Over the past nearly 60 years, WHO has established six centers to assist countries with problems
encountered in the classification of diseases and, in particular, in the use of the ICD. They are
located in Paris (for French language users), Sao Paulo (for Portuguese), Moscow (for Russian),
and Caracas (for Spanish); there are two centers for English language users, in London and, for
North America, in Washington, D.C.
The classification system has been revised several times, with each introducing a concept integral
to the respective era of publication. For example, the title of the sixth revision was amended to
clarify the content and to reflect the progressive scope of the classification beyond diseases and
injuries. In the updated classification, conditions were grouped in a way that was felt to be most
suitable for general epidemiological purposes and the evaluation of health care and it extended the
scope of the classification to nonfatal diseases.
The ninth revision improved its suitability for use in statistics in the evaluation of medical care
and the tenth revision, the International Statistical Classification of Diseases and Related Health
Problems (ICD-10) adopted in 1993, is adapted for the central payment of medical services. The
United States made the transition in 1999 to the tenth revision of the International Classification
of Diseases for coding mortality (death statistics); whether the United States will do the same for
morbidity (disease) coding, is still under discussion.
The WHO published the International Classification of Diseases for Oncology (ICD-O) in 1976 for
use in cancer registries in collaboration with the International Agency for Research on Cancer and
the United States National Cancer Institute.
Procedure Coding
In 1983, CPT was adopted as part of the Health Care Financing Administrations (HCFA)
Common Procedure Coding System (HCPCS) (now known as the Centers for Medicare and
Medicaid Services [CMS] and the Healthcare Common Procedure Coding System). HCPCS
(pronounced hick-picks) is a two level system of codes, as follows:
Level ICurrent Procedural Terminology (CPT)
Level IIHealthcare Common Procedure Coding System (HCPCS)
Current Procedural Terminology
The Current Procedural Terminology, what we refer to as CPT, made its American debut in 1966.
The American Medical Association (AMA) developed and maintains the CPT code set, and there
have been four major revisions during the past nearly 50 years.
The first edition represented early attempts to standardize terms and descriptors in the medical
record based on four digits codes describing primarily surgical procedures, with limited sections
on medicine, radiology, and laboratory procedures. Similar to the intent of diagnostic coding, the
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Preface
AMA system was arranged to contribute basic data for statistical purposes. Four years later, in
1970, a second edition introduced five digit codes and expanded terms, and designated diagnostic
and therapeutic procedures in surgery, including internal medicine and other specialties. The
fourth edition, published in 1977, introduced a system of periodic updates that include the additions, revisions, and deletions of codes, modifiers, descriptions to codes, and instructional notes.
Twenty years later, the CPT 5 Project was initiated to address the coding needs of various
nonphysician health care professionals and the use of new medical health care procedures and
technologies. Since then, the AMA has added Category II codes (performance measurements) and
Category III codes (new technology) to the CPT manual. The standard procedure codesthose
that are reported on medical claimsare considered Category I codes. The AMA recommends the
use of Category III codes in place of Category I unlisted codes, when practical.
Two versions of CPT are available: the Current Procedural Terminology and the Current Procedural
Terminology Specially Annotated for Hospitals. The latter manual contains all the information found
in CPT plus Medicare guidelines and notations applicable to outpatient hospital coding.
Healthcare Common Procedure Coding System

Development of Level II of the HCPCS started in the 1980s to identify products, supplies, and
services not included in the CPT-4 codes, for example, ambulance services and durable medical
equipment, prosthetics, orthotics, and supplies (DMEPOS) when used outside a physicians office.
The code structure is a single alphabetical letter followed by four numeric digits.
The Americas Health Insurance Plans (AHIP), the Blue Cross and Blue Shield Association
(BCBSA), and the Centers for Medicare and Medicaid Services (CMS) maintain the code set.
With the exception of temporary codes, Level II alphanumeric procedure and modifier codes are
updated annually on January 1. Temporary codes, which begin with G, K, or Q, are updated on
a flow basis throughout the year.
National Codes
The Administrative Simplification Section of the Health Insurance Portability and Accountability
Act (HIPAA) of 1996 required the Department of Health and Human Services (HHS) to name
national standards for electronic transaction of health care information. This includes transactions
and code sets, national provider identifier, national employer identifier, security, and privacy. The
Final Rule for transactions and code sets issued on August 17, 2000, named CPT (including
codes and modifiers) and HCPCS as the procedure code set for:
n
n
n
n
n
n
n
Physician services
Physical and occupational therapy services
Radiological procedures
Clinical laboratory tests
Other medical diagnostic procedures
Hearing and vision services
Transportation services including ambulance
The Final Rule also named ICD-9-CM Volume 1 and 2 as the code set for diagnosis codes,
ICD-9-CM Volume 3 for inpatient hospital services, CDT for dental services, and NDC codes
for drugs. CPT codes are required for outpatient facility reporting. All health care plans and
providers who transmit information electronically must use established national standards.
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2007 PMCCVolume 1
Preface
History of WHO Documents at http://www.who.int/library/historical/access/who/index.en.

shtml#chronicle
Chronicle of the World Health Organization, Volume 1, 1947 at http://whqlibdoc.who.int/ hist/
chronicles/chronicle_1947.pdf
CPT Process at http://www.ama-assn.org/ama/pub/category/3882.html
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Introduction
Health care in the twenty-first century is more complex and litigious than anyone could have
predicted. Becoming a certified coder is the best defense for both the student and employer.
Membership in a national professional organization, such as the American Academy of
Professional Coders (AAPC), lends integrity to ones credentials and provides a large network of
coders for support. The structure of the AAPC at the local chapter level affords opportunities vital
to keeping on top of the coding profession. The Certified Professional Coder (CPC) certification
identifies individuals who exhibit or achieve a baseline level of coding expertise in the industry, and
the Professional Medical Coding Curriculum (PMCC) is designed to provide a comprehensive,
although introductory, education for individuals with no coding experience as a preparation for
the certification examination.
Medical coding consists of a system designed to uniformly represent and report medical services
with a five digit CPT Level I HCPCS code or an alphanumeric Level II HCPCS code. The
process of assigning a CPT code to a procedure or service is dependent on both the supporting
documentation and the procedure recorded. Assignment of an ICD-9-CM diagnosis code, which
must also be well-documented in the medical record, is required to support medical necessity.
Coding is but one integral step in the process of reimbursement for a medical service or surgical
procedure and instrumental to the mortality (death) and morbidity (disease) statistics maintained
internationally. Coding does not occur in a vacuum and the certified coder must be savvy to the
issues surrounding medical insurance and government regulations in addition to understanding
codes, their application, and the rules for using them correctly.
Coders Tip
Medical necessity refers to services rendered to a patient (person who presents with signs
and symptoms) to affect a cure or change in the condition for which the patient is being
seen. The medical record should have supporting documentation that the services ordered,
rendered, and/or billed were necessary based on current standards of medical care.
Coding Resources
Although the focus of this course is coding, the manual, in many cases, will point the student to
related resources for correct coding. The rules or conventions for making these assignments come
directly from the American Medical Association (AMA) for CPT codes and from the American
Hospital Association (AHA) for ICD-9-CM codes. The AMA publishes a newsletter called the
AMA CPT Assistant that clarifies the definition, intentions, and other particulars for specified
CPT codes. This information explains how to code the service correctly. They also publish a
manual called CPT Changes: An Insiders View that comes out yearly, highlighting all new codes
along with rationales and examples. The AHA Coding Clinic is a newsletter published by the AHA
to promote correct use/assignment of both ICD-9-CM diagnosis and ICD-9 procedure codes.
1.1
These two organizations and their publications generally provide the rules and conventions for
what is considered technically correct coding. For Internet users, the AAPC publishes a Coders
Resource Handbook that is available to students and instructors.
Basic Language of Coding

Insurance and medical coding professionals have a language unique to the health care industry and
they must be well-versed in the terminology to navigate the industry. The following section introduces concepts germane to the coding industry. Many of the topics in this chapter are discussed in
detail in later chapters. A second section in the chapter covers compliance issues.
Provider Types
A primary care provider (PCP) serves as a gatekeeper into a managed health care system and usually
specializes in family medicine, internal medicine, pediatric medicine, or obstetrics and gynecology.
Physician extenders (midlevel providers) pertain to providers such as nurse practitioners (NP)
APRN (advanced practice registered nurse), physicians assistants (PA) and clinical nurse specialists (CNS). These midlevel providers perform an important duty and in many states can practice
autonomously. In 1997, the Balanced Budget Act gave these providers the right to have their
own billing numbers. The physician extender also may have a collaborative relationship, which
Medicare defines as a process in which the midlevel provider works with one or more physicians
to deliver health care services, with medical direction and appropriate supervision, as required by
the law of the state in which the services are furnished.
A nonparticipating provider, or nonpar, describes a provider who elects not to participate with
a given health care plan. In some instances, the provider can bill the patient for the difference
between the allowed amount and his/her fee for the service provided. Some health plans have
limitations on how much the patient can be billed. The health plan will often send the payment to
the patient and the patient will be responsible for paying the provider. A participating provider, or
par provider is contracted with a third party payer to participate with the policies, procedures,
and fees for a health plan.
Individual Medicare carriers assign a Provider Identification Number (PIN) to physicians practicing in their jurisdiction. The PINs are unique to each carrier and are not to be confused with
the National Provider Identification (NPI). A physician can have several different PINs but only
one NPI. The NPI is used for CMS control over the entry of providers/suppliers into the Medicare
program. It also facilitates specific ongoing periodic monitoring of claims and other criteria to
ensure that all providers/suppliers continue to meet requirements.
The National Provider Data Bank (NPDB) is a database established by the Department of Health
and Human Services (HHS) for the purpose of maintaining information regarding malpractice litigation or claim judgment, suspension or revocation of license, adverse action regarding
competence or conduct taken by a hospital, health maintenance organization (HMO), health care
facility, peer review organization, or professional society against a physician.
A managed care organization (MCO) includes HMO, preferred provider organization (PPO), and
Point of Service plans.
A health maintenance organization (HMO) is a prepaid health plan. HMO members pay a
monthly premium in exchange for maintenance care, including doctors visits, hospital stays, emergency care, surgery, lab tests, x-rays, and therapy. An HMO arranges for the care either directly in
its own group practice and/or through doctors and other health care professionals under contract.
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Choices of therapy, doctors, and hospitals may be limited to agreements with the HMO to provide
care. Exceptions may be made in emergencies or medically necessary.
A preferred provider organization (PPO) is an organization that contracts with physicians to
provide services at a reduced rate in exchange for patient volume associated with the organization.
Patients must use a provider in the PPO network or suffer higher out-of-pocket costs.
Medicare
Every coder should be acquainted with the Centers for Medicare and Medicaid Services (CMS)
of the Department of Health and Human Services (HHS). CMS has administrative responsibility
for regulating the Medicare and Medicaid programs. Medicare was established under the Social
Security Act of 1965 to provide health care benefits to the elderly and certain other groups.
Medicare Part A pays for inpatient hospitalization, many outpatient services and procedures,
skilled nursing facility care, and home health care. Typically, a local Medicare Fiscal Intermediary
administers the funds for this program. Claims for Medicare Part A are submitted on a UB-92
form (CMS-1450).
Medicare Part B pays for outpatient and provider services. Typically, a local or regional Part B
Medicare carrier will administer payment for Medicare Part B claims. Medicare Part B services
are submitted on a CMS-1500 form.
The term assignment indicates that the physician agrees to take Medicares allowable charge as
payment in full. Medicare pays 80 percent of its allowable charge for the service and the patient is
responsible for the remaining 20 percent of the Medicare approved amount. Special provisions for
certain screening services may not be subject to deductibles or coinsurance.
Reimbursement
Within the business aspect of practicing medicine and/or surgery, each patient encounter is subject
to the parameters of a process known as the reimbursement process. This process represents the
big picture in health care at the level of the patient encounter. The coder, whether CPC, CPC-H,
or CPC-P, may play a variety of roles in this process and should be aware that coding, although
essential, is just one step along the way to gaining reimbursement for services rendered.
Reimbursement involves layers of regulations and forms. Many private payers (insurers other than
the federal government) follow the same regulations or have modified the Medicare program regulations to fit their beneficiaries. Subrogation of benefits is a term used by payers for determining
assignment of financial responsibility.
The physician fee schedule lists all of the fees associated with the services typically rendered by
a provider or group of providers in daily practice. CPT and HCPCS codes identify the services
covered by the fee schedule. Noncovered services are for those with no coverage or benefit
permitted. A good example is cosmetic services, which are often deemed noncovered services.
Noncovered services are usually the financial responsibility of the patient.
Medicare
The Resource Based Relative Value Scale (RBRVS) is based on the resources required to
provide the service; there are three units to a physicians service and each one is called a
relative value unit (RVU). The three units are physician work expense, practice expense,
and professional liability insurance. The values are based on either historical charges for
the procedure or the resources required to perform the service. The three values are added
together and adjusted using the Geographic Practice Cost Indices (GPCI) assigned by
1.3
CMS for the geographic location where the services are rendered. Factoring GPCIs into
the fee schedule makes payment equitable and relative to the geographic area where the
services are rendered. The final outcome is multiplied by a national conversion factor (CF)
to arrive at the amount that CMS will pay for each service under the fee schedule. The
RBRVS values are published annually in the Federal Register along with comprehensive
rules outlining how services are to be reported, grouped, and modified in for reimbursement purposes.
CMS publishes regulatory information in the Federal Register, laying the foundation for
coding and reimbursement. CMS regulations are free to the public under the Freedom
of Information Act. Lacking the funds to do individual research and development on the
same grand scale as the government, many third party payers will adopt all or a portion of
the CMS rules and regulations.
The CMS Manual System (online) replaces the familiar paper-based manuals, including
Medicare Coverage Issues (pub. 6), Medicare Hospital (pub. 10), and Medicare Carriers
Manual (pub. 14, parts 1, 2, 3, and 4). Ten publications are destined for the transition;
however, do not expect an immediate and complete change over; CMS planned a transition that continued through 2006.
The new online CMS Manual System is organized by function and in a 20-publication
hierarchy that begins at Publication 100-01 (Medicare General Information, Eligibility
and Entitlement) and goes through Publication 100-20 (One Time Notifications).
Publication 100 is reserved for introductory materials, including reasons behind the manual
restructuring.
Each online publication includes links to the individual chapters and links to the online
templates for one time notifications, business requirements for contractors, and confidential requirements for contractors (formerly known as program memorandums).
CMS developed a detailed crosswalk to guide the user from a specific section of the old
manual to where the information now appears in the new manuals. As an example, the
Medicare Benefit Policy Manual (Publication 100-2) is the new online manual replacing
the current paper-based Medicare general coverage instructions, excluding National
Coverage Determinations. The new online manual is comprised of sections from the
Carriers Manual, Intermediary Manual, and various provider manuals, as well as Program
Memoranda. Publication 100-3 contains the national coverage determinations.
The system is called the online CMS Manual System and is located at http://www.cms.
hhs.gov/manuals.
Commercial carriers vary between the RBRVS and the RVP (Relative Values for
Physicians) when setting their contract fee schedules.
Forms and Notices
The CMS-1500 is a standardized medical claim form used for submitting Medicare Part B charges
to third party payers for physicians and other providers services, procedures and allied supplies.
CMS assigns two digit specialty indicators to denote a physicians specialty (eg, OB/GYN, cardiology for coding and reimbursement purposes). Place of service (POS) codes are two digit indicators assigned by CMS to the various places where a physician or other health care provider renders
a medical service or procedure. The POS is required on the CMS-1500 claim form.
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The Advance Beneficiary Notice (ABN) is a written notification the beneficiary and physician
must sign prior to rendering a service to a Medicare beneficiary. There are three forms of an ABN:
general, physician-ordered lab tests, and the home health ABN. A HCPCS modifier such as GA
must be appended to the service in question on the CMS-1500 form. Once a Medicare beneficiary signs the ABN, he or she is lawfully liable for the charges if Medicare denies payment for
the service as not medically necessary. The provider is liable when the patient is not notified in
advance and Medicare denies coverage.
The Explanation of Benefits (EOB) and Explanation of Medicare Benefits (EOMB) are the published
explanations that accompany private payer or Medicare payments or denials of health care benefits.
An encounter form (Charge Ticket, Superbill) is used to record all services and diagnoses applicable to an individual patient encounter. Often the form will list services frequently performed and
associated diagnoses. This form is also used as the routing slip for which the billing and coding
information are transferred to all CMS-1500 forms for claim submission.
A notice of exclusion from Medicare benefits (NEMB) alerts Medicare beneficiaries in advance
that Medicare does not cover certain items and services because either they do not meet the definition of a Medicare benefit or the law excludes them (eg, when the use of an ABN is not appropriate). There is an NEMB (eg, form CMS-20007) for general use in any case and other NEMBs
customized for certain items and services.
Other Coding Schemes

There are a variety of code sets available and more in development daily as health care has moved
to the electronic medical record. The codifying of data is a growing field for those seeking
new and inventive methods for storing medical data and retrieving it in a concise, meaningful,
and timely manner.
DSM IV, published by the American Psychological Association, classifies mental disorders and
addictions in greater clinical detail than what is provided (or intended) in the ICD-9-CM. In
2005, the appendix of Mental disorders was dropped from Volume 1 ICD-9-CM. The acronym
DSM IV refers to the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition.
Advanced Billing Contract (ABC) codes are alphanumeric representations of alternative medicine, nursing and other integrative health care interventions, established by the Foundation for
Integrative Healthcare, and an information product and consulting service firm called Alternative
Link. The codes describe health care interventions in a detail not available in CPT. The design
of ABC codes supports over 11 million code combinations and since the systems original development in 1996, approximately 4,200 codes have been assigned. The codes address alternative
medicines to include acupuncture, herbal medicine, massage therapy, bodywork, naturopathy,
Ayurvedic medicine, chiropractic, homeopathy, nursing, and midwifery. ABC codes consist of five
alphabetic characters, followed by a two alphanumeric character code modifier. The initial five
characters describe health care interventions (eg, services and supplies). The two character optional
code modifiers describe current and emerging categories of licensed health care practitioners that
deliver the health care interventions described by the prior five character ABC code.
Regulatory and Accreditation Agencies

The Medicare program is highly regulated. The Office of Inspector General (OIG), of the HHS,
is mandated by public law to engage in activities to test the efficiency and economy of government
programs to include investigation of suspected health care fraud or abuse. The OIG publishes
voluntary compliance programs to help physicians and other entities adhere to health care regula-
1.5
tions; the compliance plans include extensive information about the importance of correct and
appropriate medical coding.
The National Committee for Quality Assurance (NCQA) is a private not-for-profit organization
that serves as a watchdog for the preservation of health care quality in the realm of managed care.
It offers a variety of credentials for Managed Care Organizations (MCO). Certification by NCQA
identifies an organization that maintains a high standard of health care for its beneficiaries.
The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) is a not-for-profit
organization, established more than 50 years ago, to evaluate the quality and safety of care for
health care organizations. To maintain and earn accreditation, organizations must have an extensive on-site review by a team of JCAHO health care professionals, at least once every three years.
Federal Regulations
The Omnibus Budget Reconciliation Act of 1989 (OBRA 89)
OBRA replaced the reasonable charge payment mechanism with a fee schedule for physicians
services. Part of this payment approach requires the establishment of a national conversion factor.
The conversion factor is computed by determining the median point of fees for a similar group of
medical services. The national conversion factor (CF) is a dollar amount, established by congress,
used to multiply the RBRVS values (after geographical adjustments) to set a fee for each procedure
in the Medicare Fee Schedule. OBRA 89 requires the Secretary of Health and Human Services
to recommend to the congress, by April 15 of each year, an update to the fee schedule conversion
factor for the following calendar year.
The Health Insurance Portability and Accountability Act (HIPAA)

HIPAA (Public Law 104-191) was passed in 1996 to amend the Internal Revenue Code of 1986
to improve portability and continuity of health insurance coverage in the group and individual
markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to
promote the use of medical savings accounts, to improve access to long-term care services and
coverage and to simplify the administration of health insurance. The law applies directly to three
groups referred to as covered entities:
Health Care ProvidersAny provider of medical or other health services, or supplies, who transmits
any health information in electronic form in connection with a transaction for which standard
requirements have been adopted.
Health PlansAny individual or group plan that provides or pays the cost of health care.
Health Care ClearinghousesA public or private entity that transforms health care transactions
from one format to another.
The Administrative Simplification provisions of HIPAA include: privacy rule, electronic transactions and code sets, security, and unique identifiers. They represent the following:
Privacy Rule
The Privacy Rule creates national standards to protect individuals personal health information
and gives patients increased access to their medical records. The rule covers health plans, health
care clearinghouses, and those health care providers who conduct certain financial and administrative transactions electronically.
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Find the Privacy Rule, as well as background and general information, technical support, and other
relevant information at www.aspe.hhs.gov/admnsimp.
Electronic Transactions
Electronic Data Interchange (EDI) refers to the ability to transmit and receive information electronically, which includes health claims and associated attachments. Electronic Transaction Standards
have been developed for the following exchanges of information that providers conduct:
n
n
n
n
n
n
n
Health care claims or equivalent encounter information

Health care payment and remittance advice
Health care claims status
Eligibility inquiry
Referral certification and authorization
Claims attachment (standards forthcoming)
First report of injury (standards forthcoming)
Code Sets
Code sets are the codes used to identify specific diagnosis and clinical procedures on claims and
encounter forms. The CPT and ICD-9-CM codes that you are familiar with are examples of
code sets for procedure and diagnosis coding. Other code sets adopted under the Administrative
Simplification provisions of HIPAA include codes sets used for claims involving medical supplies,
dental services, and drugs.
Current Procedural Terminology (CPT), published by the American Medical Association, is a

compendium of descriptions that depicts the various medical services and procedures available.
A comprehensive review of CPT history, structure, coding conventions, and coding concepts is
included in this manual.
The International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) is
an international coding classification for diseases, anomalies, syndromes, external causes of injury,
chemical imbalances, genetic illnesses, and administrative reasons for an encounter with health
care. The National Center for Health Statistics (NCHS) adds the clinical modifications (CM) to
ICD-9-CM for use in the United States.
Current Dental Terminology (CDT) refers to the coding used by dental offices to submit and
process dental claims.
The Healthcare Common Procedure Coding System (HCPCS), also known as Level II codes,
was created to describe supplies, procedures, and services that may not be found in Level I CPT
and/or to provide greater specificity of descriptions.
Security
The security regulation adopts administrative, technical, and physical safeguards required to
prevent unauthorized access to protected health care information. The HHS published final
instructions on security requirements in the Federal Register on February 20, 2003. Small health
plans were extended an additional year and had to comply by April 20, 2006.
1.7
Identifiers
HIPAA requires that health care providers, health plans, and employers have standard national
numbers that identify them on standard transactions. The Employer Identification Number
(EIN), issued by the Internal Revenue Service (IRS), was selected as the identifier for employers
and was adopted effective July 30, 2002.
The National Provider Identifier (NPI) was adopted as the standard unique health identifier for
health care providers to use in filing and processing health care claims and other transactions. The
compliance dates for all but small health plans is May 23, 2007; and the compliance date for small
health plans is May 23, 2008.
The law does provide for fines for noncompliance. The secretary of HHS may impose a civil
monetary penalty (CMP) on any person or covered entity violating any HIPAA requirement. The
civil monetary penalty for violating transaction standards is up to $100 per person per violation and
up to $25,000 per person, per violation, of a single standard per calendar year. CMS, however, has
focused attention on voluntary compliance and guidance and considers a monetary fine as a last
resort. For full understanding of HIPAA regulations and compliance relating to providers, see the
HIPAA Act via the CMS web site along with the compliance plan programs on the OIG web site.
Medicare Prescription Drug, Improvement, and Modernization Act of 2003

Theres more to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA) than a drug coverage package. The public law, approved December 8, 2003, also affects
Medicare payment rates to physicians, adds a twice yearly code release for new technology, and
signals more work on HIPAA privacy regulations.
The prescription drug package outlined standard coverage benefits for FY 2006. The package
included an annual deductible of $250, and required insurers to cover 80 percent of beneficiary
drug costs up to the initial coverage limit of $2,000. Beneficiaries covered costs between $2001
and $3500, and Medicare covered costs once the beneficiary reached the $3500 catastrophic outof-pocket threshold. The law also provides full premium subsidy and reduction of cost-sharing for
individuals with incomes below 135 percent of the federal poverty level.
Administrative changes to Medicare include a transfer of responsibility for Medicare appeals,
expedited access to judicial review of Medicare appeals, provision for recovery of overpayments,
and changes in the reassignment provisions.
The Medicare law also amends the Federal Food, Drug, and Cosmetic Act with regard to the 30
months of Food and Drug Administration approval for any new drug in certain circumstances
and forfeiture of the 180 day marketing exclusivity period by the first new drug applicant to a
subsequent applicant.
The AMA has developed an overview to inform physicians about the Medicare changes most likely
to affect their practices and to help them get ready as the implementation process begins.
The new law is most well-known for the addition of a prescription drug benefit, but it will also
have a major impact on:
n
n
n
n
n
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Physician payment rates

Preventive services that Medicare covers
Regulatory requirements and paperwork
Drugs administered in physician offices
Medicare managed care
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The overview is available at http://www.ama-assn.org/ama/pub/category/12084.html.
Stark Law
The Stark Law refers to legislation regarding financial kickbacks between hospitals and providers
for referrals. Kickbacks between vendors and providers are also addressed. A kickback is a financial
inducement or reward for sending businesses to either a provider and a hospital, or a provider and a
DME supplier, or a provider to provider situation. For example, if a physician sends all of his patients
to one certain hospital supply store and gets 10 percent cash back on all sales that result from his
referrals, this situation is considered a kickback. Providers and/or facilities that have joint ventures are
advised to check their ventures out in regard to making sure there are no Stark violations.
There are exceptions to the Stark Law. Preventive screening tests, immunizations, and vaccines are
exempted from the Stark regulations as long as they meet the relevant frequency limits mandated
by CMS and are reimbursed by Medicare based on the fee schedule, and as long as the billing and
claims submissions otherwise comply with federal law and the arrangement does not otherwise
violate the Anti-kickback Statute.
The Clinical Laboratory Improvement Amendments (CLIA)

CLIA regulations were established in 1988 and adopted by Medicare and Medicaid. CLIA regulations determine the types of laboratory studies that can be performed by each laboratory. All
laboratories must be certified based on CLIA standards. Once certified, the laboratory can bill
Medicare or Medicaid using the certification number assigned. Some facilities are able to obtain a
CLIA Waiver designation that limits the lab services they can perform.
Class Exercise 1.1
Match the abbreviation to the definition.
1. ______ CDT
a. CMS database of bundled services
2. ______ CMS
b. Dental codes
3. ______ DSM IV
c. Assignment of financial responsibility
4. ______ PCP
d. Centers for Medicare and Medicaid Services
5. ______ NCCI
e. Psychiatric diagnoses
6. ______ EOB
f. Current Procedural Terminology
7. ______ POS
g. National Committee for Quality Assurance
8. ______ CPT
h. Explanation of Benefits
9. ______ Subrogation of Benefits
i. Primary care provider
10. ______ NCQA
j. Place of service
1.9
Ethics for the Medical Coder

Access to a patients records is a part of the coders work. Patient confidentiality is a patients right
and should never be violated. The privacy regulations of the Health Insurance Portability and
Accountability Act (HIPAA) of 1996 establishes the privacy safeguard standards that covered
entities must meet, but it gives covered entities the flexibility to design their own policies and
procedures to meet those standards. The requirements are flexible and scalable to account for the
nature of each entitys business, and its size and resources. Covered entities must:
1. Adopt written privacy procedures. These include who has access to protected information, how
it will be used within the entity, and when the information may be disclosed. Covered entities
will also need to take steps to ensure that their business associates protect the privacy of health
information.
2. Train employees and designate a privacy officer. Covered entities will need to train their
employees in their privacy procedures, and must designate an individual to be responsible for
ensuring the procedures are followed.
The Privacy Rule does not prohibit use, disclosure, or requests of an entire medical record. A
covered entity may use, disclose, or request an entire medical record, without a case-by-case justification, if the covered entity has documented in its policies and procedures that the entire medical
record is the amount reasonably necessary for certain identified purposes. In making nonroutine
requests, the covered entity may also establish criteria to assist in determining when to request the
entire medical record. No justification is needed when the minimum necessary standard does not
apply, such as disclosures to a health care provider for treatment or disclosures to the individual.
The role of the professional medical coder will often be that of emissary and educator with
providers and other members of the office staff. Patience and tolerance will serve best, even in
times of extreme frustration. In the latter part of this chapter, setting up compliance plans will
be explained. Using them to affect change will best serve everyone involved. The coders job is to
teach and implement strategies for correct coding. When a coder is compromised on the job by
coding policies deemed fraudulent, he or she should try to resolve the problem using the compliance program. Only when all avenues have failed should a coder consider reporting a provider to
the authorities.
A coder should never change a providers billing or coding information without informing the
provider. If a provider fills out a charge ticket and signs it, that document is a legal record and
should never be altered. Good communication skills will serve as invaluable tools to accomplishing
a professional job. Open dialogue with the provider is the key to success for everyone in coding.
Coders Tip
The professional medical coder has a duty to code medical services and procedures to the
best of his/her ability. It is imperative that the coder knows his/her limitations and asks
for help from the provider or a more experienced coder when in doubt. No one knows
everything there is to know about coding, as the rules and the codes, combined with the
regulatory errata, change on an almost daily basis. The important point is that the coder
knows where to look for the information needed. The AMA, national specialty medical
societies, and local carriers can all serve to provide important information. It is more
important to get the correct answer than to portray false knowledge. The coders golden
rule is, If its not documented, it cant be billed.
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The AAPCs Code of Ethics is clear, concise, and leaves no room for personal interpretation.
Compliance with this established ethical conduct has enabled the AAPC to grow to over 48,000
members worldwide.
Ethics is a standard of conduct that indicates how one should behave, based on moral duties
and virtues.
American Academy of Professional Coders Code of Ethics

Members of the American Academy of Professional Coders shall be dedicated to providing the
highest standard of professional coding and billing services to employers, clients, and patients.
Professional and personal behavior of AAPC members must be exemplary.
AAPC members shall maintain the highest standard of personal and professional conduct.
Members shall respect the rights of patients, clients, employers, and all other colleagues.
Members shall use only legal and ethical means in all professional dealings, and shall refuse to
cooperate with, or condone by silence, the actions of those who engage in fraudulent, deceptive,
or illegal acts.
Members shall respect and adhere to the laws and regulations of the land, and uphold the mission
statement of the AAPC.
Members shall pursue excellence through continuing education in all areas applicable to their
profession.
Members shall strive to maintain and enhance the dignity, status, competence, and standards of
coding for professional services.
Members shall not exploit professional relationships with patients, employees, clients, or employers
for personal gain.
Above all else, we will commit to recognizing the intrinsic worth of each member.
This code of ethical standards for members of the AAPC strives to promote and maintain the
highest standard of professional service and conduct among its members. Adherence to these
standards assures public confidence in the integrity and service of professional coders who are
members of the AAPC.
Failure to adhere to these standards, as determined by AAPC, will result in the loss of credentials
and membership with the American Academy of Professional Coders.
Class Exercise 1.2
1. Both the service rendered and the ___________
support the CPT and ICD-9-CM codes.
must be well-documented to
2. CMS publishes regulatory information in the ________________

3. Reimbursement is a _______________ .
4. The golden rule for coding CPT services is:
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5. It is permissible for the coder to change CPT and/or ICD-9-CM codes once a
provider has listed or circled them on an encounter form.
a. True
b. False
6. All discussions regarding a patients medical care and diagnoses should take place only
between the coder and the physician and far from the public ear.
a. True
b. False
7. Identify (by circling) each of the mandates that members shall do per the American
Academy of Professional Coders Code of Ethics.
a. Maintain highest standard of personal and professional conduct.
b. Respect the rights of patients, clients, employers, and all other colleagues.
c. Must be dually certified as a CPC and CPC-H.
d. Use only legal and ethical means in all professional dealings.
Medical Record
The medical record, when serving as a medical document, outlines the patients care and treatment
rendered. It is imperative that all services provided to a patient be supported and documented in
the medical record.
The medical record serves many functions in todays health care. It can be used as a tool for
patient care, medical research, health care statistical measurements, and as a supporting tool for
reimbursement. The medical record has been evolving for years to the more recent development
of the electronic medical record. The first standards for medical record documentation were laid
down in the early 1900s by the American College of Surgeons (ACS) in their struggle to establish
standards of patient care in the hospital setting. Many of the specifications laid down by the ACS
in the 1919 Minimum Standards for Medical Records are still in effect today.
The patients chart can also be a legal document that should not be tampered with, falsified, or
altered in any manner that would cause the loss of, or suppression of, data. The chart should never
be published or released to anyone without the patients expressed permission. The medical record
often serves in many court cases for medical malpractice judgments as the final piece of definitive
evidence.
When it comes to compliance issues, the medical record supports not only treatment compliance
but also patient compliance. The medical record documentation must support and/or drive the
coding of medical services/procedures.
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Claims Processing
Adjudication
Adjudication refers to processing of insurance claims for the purpose of reimbursement. Many
third party payers have electronic edits built into the claims adjudication system. When a claim
comes into the payer billing system electronically, the payer system targets specific CPT codes,
modifiers, CPT to CPT code relationships, and/or CPT code to ICD-9-CM code relationships
and denies them up front before the claim is processed for payment.
The National Correct Coding Initiative (NCCI) is a database developed by CMS of CPT
coding relationships that identifies CPT services considered inherently included (bundled) in
other services. The database also identifies fragmentation or unbundling of services that could
be captured with a single CPT code. When one procedure is included in another procedure, it
should not be billed separately. The NCCI database triggers the claims adjudication system to
throw out one of the bundled codes as denied services. Knowledge of CPT coding and the procedures represented by each CPT code is imperative to avoid listing two CPT procedure codes on
a claim that are either unbundled or mutually exclusive. This list does not necessarily reflect the
CPT guidelines.
Appealing a Claim
An appeal is a request for review regarding a disputed carrier claim decision. This is often a process
that requires careful investigation as to why a particular service on a claim was denied, disallowed
or was not paid according to the contractual terms and obligations. Appealing claims has secured a
vital role for the coder in the reimbursement process. To correctly appeal a claim, one would need
to understand correct coding guidelines and principles. It is only through the appeal process that
claims are reconsidered even though the appeal doesnt necessarily guarantee payment.
Appeals involve reviewing the Explanation of Benefits (EOB) in comparison to the codes
submitted and the medical record documentation. It may require the provider to submit a letter
or additional information to support the claim. The need for appeal may have resulted from a
coding/billing error or may be a payer processing error. This list does not necessarily reflect the
CPT guidelines.
Medicare
The CMS appeal process is tiered by defined levels and may involve a request for a
hearing. The Medicare program issues a brochure that outlines the process physicians
should follow when appealing a claim denial. The brochure outlining the specific steps can
be downloaded by going to http:/cms.hhs.gov/medlearn/appeals_broch.pdf.
Edit Systems
Edit systems vary by commercial carrier and do not necessarily reflect the CPT guidelines when
processing claims. Many carriers use automatic claim scrubbers or claim check systems to electronically field services against their bundling edit parameters. CMS utilizes the NCCI (National
Correct Coding Initiative) when determining which services will be paid separately during the
same encounter. The multitude of variances by other payers poses a challenge to all involved in the
reimbursement process and sometimes necessitates the need for a coder to be involved in contract
negotiations.
1.13
First Level of Appeal: Review

A review is an examination of a claim made by carrier personnel that is independent of those
originally involved. The appellant (the individual making the appeal) has 120 days from the date
of the initial claim determination to file an appeal. A review can be requested in writing or over
the telephone to the local Medicare carrier. No monetary threshold is required to be met.
Second Level of Appeal: Hearing Officer Hearing
A hearing may be requested if the appellant is dissatisfied with the review decision and the difference between the billed amount and the Medicare allowed amount (less any outstanding deductible) is $100 or more. A Medicare-appointed hearing officer (HO) will conduct the hearing and
determine if the carriers decision followed guidelines.
Third Level of Appeal: Administrative Law Judge
If at least $100 remains in controversy following the HO decision, a request can be made within
60 days of receipt of the HO determination for an Administrative Law Judge (ALJ). The HO
decision will include instructions for obtaining an ALJ hearing. Hearing preparation procedures
are set by the ALJ.
Fourth Level of Appeal: Departmental Appeals Board Review
If the appellant is dissatisfied with the ALJ decision, he or she may request a review by the
Departmental Appeals Board (DAB). There are no requirements regarding the amount of money
in controversy. The request for a DAB review must be submitted within 60 days of receipt of the
ALJ decision, and should specify the issues and findings by the ALJ being contested.
Fifth Level of Appeal: Judicial Review in US District Court
If $1,000 or more is still in controversy following the DAB decision, judicial review before a US
District Court judge may be considered. The appellant must request a US District Court hearing
within 60 days of receipt of the DAB decision.
Auditing
An audit is an action of comparing physician records, claims, and medical records to verify
expected treatment outcomes, medical necessity of services, appropriate documentation to support
fees, and reasonable charges for services rendered. Audits may be conducted by the OIG, Medicare,
Medicaid, or other insurance carriers. Under the OIG compliance programs, offices/facilities
should be doing internal audits as needed.
A prospective audit refers to auditing patient records against proposed billing information. The
audit, in this case, is conducted on encounters that have not yet been billed. This type is considered
optimal, as there is no knowledge of false claims payments (eg, payments for services that should
not have been made based on provider documentation).
A retrospective audit (or postpayment audit) is the act of auditing paid claims. This backward look
at provider documentation and comparison to billing information and EOBs is usually performed
when looking to make corrections for problems found in a prospective audit. The OIG has indicated that at times, retrospective audits may be very beneficial in uncovering incorrect coding
patterns and/or compliance issues.
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2007 PMCCVolume 1
Medicare
In December 1995, the first federal audit was conducted for the Clinical Practice Plan
of the University of Pennsylvania (CPUP). A random sample of 100 claims submitted
between 1989 and 1994 was selected. The audit methodology was to review the 100
targeted charts and extrapolate the fines and amounts of overpayments across the practice
plan. This audit was the first in a long line of physicians at teaching hospitals (PATH)
audits. The government, in its effort to cut waste and overspending to the Medicare
program, decided to hold providers to the rules for submitting charges to Medicare
beneficiaries in the educational setting. Up until then, teaching physicians were not always
present and/or could not show their participation in the patient care process through
entries in the medical records. Since resident salaries are paid through Part A funds from
CMS, it was considered double dipping to bill for services performed by the residents and
not by the attendant who submitted the claims.
Some of the findings of this audit illustrate problems that have been alleviated or corrected
with utilization of trained coders and auditors. The findings that caused the greatest problems for CPUP physicians were:
n
Billing inappropriately for services actually performed by resident physicians

n High level consultations being billed without reference to services actually
performed
n Inadequate documentation for many different types of billed services
The formulation of the first compliance plan was actually a part of the federal sentence for
CPUP. Requirements for a compliance program were court ordered and included:
n
n
n
n
n
Implementation of monitoring and auditing procedures

Mandatory education and training of physicians and billing personnel
Designation of chief compliance officer
Creation of a hot line for reporting noncompliance
Centralized billing
Fraud and Abuse

Fraud is an intentional representation that an individual knows to be false or does not believe
true despite understanding that the representation could result in some unauthorized benefit to
himself/herself or some other person.
The most frequent kind of fraud arises from a false statement or misrepresentation made or caused
to be made that is material to entitlement or payment under the Medicare program.
The violator may be a physician or other practitioner, a hospital or other institutional provider, a
clinical laboratory or other supplier, an employee of any provider, a billing service, a beneficiary, a
Medicare carrier employee, or any person in a position to file a claim for Medicare benefits.
Under the broad definition of fraud are other violations, including:
n
Offering or acceptance of kickbacks

n Routine waiver of copayments
n Fraudulent coding activities include unbundling, undercoding, and upcoding
1.15
The act of unbundling refers to the separate reporting (coding) of services or procedures inherently
part of another service or procedure. To unbundle, also called fragmenting services, is considered
fraud. The Correct Coding Initiative has helped to identify many unbundling issues.
Billing for a service that is less than that actually rendered and/or documented is considered
undercoding. Many providers see this methodology as a safe practice for coding and billing their
services. This practice, according to the OIG and CMS, is considered a prosecutable form of fraud,
as it is thought to create an incentive for patients to frequent the physicians office.
Upcoding or overcoding refers to the practice of coding and billing for a service that is worth more
when a lesser service has been provided and/or documented. Undercoding may be misconstrued as
an incentive for overutilization or substandard care.
Abuse is a term associated with providers whose medical, business, or fiscal practices fall outside
accepted parameters that may result in the services not being considered medically necessary,
services or procedures not consistent with professional standards, improper reimbursement, or
overuse.
Fraudulent or Negligent Coding Practices

There are two types of fraudcivil and criminalas defined by the Federal False Claims Act,
which covers diverse schemes to obtain government funds in violation of contract, as well as
schemes to avoid paying for benefits and services received from the government. Civil and criminal
types of fraud pertain to listing services for reimbursement that were not actually performed,
documented, or medically necessary.
False Claims Act

The False Claims Act imposes civil liability on any person or entity who submits a false or fraudulent claim for payment to the United States government. The False Claims Act also prohibits
making a false record or statement to get a false or fraudulent claim paid by the government and
conspiring to have a false or fraudulent claim paid by the government.
The False Claims Act allows an individual, often referred to as a whistleblower, who knows about
a person or entity who is submitting false claims to bring a suit, on behalf of the government, and
to share in the damages recovered as a result of the suit. The whistleblower bringing the case is
called a qui tam relater.
Compliance
The Operation Restore Trust (ORT) program, launched in May of 1995, was an effort to restore integrity in the Medicare program. ORT was designed to demonstrate new partnerships and approaches
in finding and stopping fraud and waste in the Medicare and Medicaid programs. Its mission was
to identify and penalize those who willfully defraud the Medicare and Medicaid programs (federally funded programs). In the first year, a total of 38.6 million dollars was returned to the Medicare
Trust Fund as a result of judgments for both criminal restitution and civil settlements with monetary
penalties.
The OIG has published several formats for implementing compliance plans in a variety of settings.
HIPAA applied federal fraud and abuse laws to all federally funded health care programs (except
the Federal Employees Health Benefit Program). Provisions were incorporated for a mandatory
exclusion from participation in Medicare or Medicaid for any individual convicted of health care
fraud or controlled substance abuse. The toughest change of all came with revision to criminal
laws for false claims statements that included jail time for Whoever makes any materially false,
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2007 PMCCVolume 1
fictitious or fraudulent statements or representations or makes or uses any materially false writing
or document knowing the same to contain false, fictitious, or fraudulent statements or entries in
connection with the delivery of payment for health care benefits, items or services, shall be fined
or imprisoned not more than five years or both.
The mere existence of a well-integrated compliance plan is a mitigating factor under federal
sentencing guidelines.
Class Exercise 1.3
1. What does ORT stand for?
2. What does CMP stand for?
3. Define the acronym PATH audits.
4. The existence of a compliance plan is a mitigating factor for avoiding jail time under
US sentencing guidelines.
a. True
b. False
5. Name the two main types of health care fraud.
6. Give an example of a kickback.
7. What is a prospective audit?
8. What is upcoding?
9. Why is undercoding a problem?
1.17
Conclusion
Coding represents a huge challenge in todays fast paced, litigious health care industry. A coder
faces a multitude of challenges from the provider they serve, the AMA, CMS, and other third
party payers. The best defense is always a good offense, which includes certification and the opportunity to network with others in the same situation. Welcome to the first step in achieving coding
certification by studying the Professional Medical Coding Curriculum.
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2007 PMCCVolume 1
End of Chapter 1 Questions

1. List the three code sets currently in use for medical coding.
a.
b.
c.
2. Who determines procedural coding policy for the provider?
3. What is the name of the coding newsletter published by the entity identified in answer 2
above?
4. What entity provides diagnosis and procedural policy for ICD-9-CM?
5. What is the name of the coding newsletter published by one of the entities identified in answer
4 above?
6. What is the name of the form providers use to submit outpatient medical claims?
7. Medicare Part B pays for what type of services?
8. Define accepting assignment in Medicare terms.
9. It is most important for the coder to always have an answer ready to every question.
a. True
b. False
1.19
10. The medical document or medical record serves as:

a. A tool for patient care or medical research
b. A tool for patient care, medical research, and diagnostic profiling
c. A tool for patient care, medical research, statistical measurements, and to support
reimbursement
d. A document used to support reimbursement
11. Why is medical necessity important to coders?
12. The Health Insurance Portability and Accountability Act (HIPAA) of 1996 includes privacy
provisions. How do the provisions affect the medical patient?
13. The Resource Based Relative Value Scale breaks physician services into three components.
What are the three components?
14. Explain the purpose of the security provision of HIPAA.
15. List the provisions of HIPAA that affect the administration of a physicians office.
16. A doctor insists that a coder list CPT codes on a CMS-1500 form and those services are not
documented on the medical record. The coder is told that not following these instructions is
considered insubordination and he/she will be fired. Provided there is a compliance plan in
place, what should the coder do first?
17. In the event there is still no compliance in question 16, what should the coder do next?
18. What area of concern does the Stark Law cover?
19. Why would an office use a superbill?
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2007 PMCCVolume 1

Introduction
The key to successful coding is having a thorough knowledge of human anatomy as well as the
ability to understand the medical terminology used to describe and document medical procedures
and services. This chapter introduces the student to the basic elements of human anatomy such as
bone structure, muscles, and the cardiovascular system. The medical terminology section introduces the student to the various components of medical terms and their definitions. Word elements,
such as combining forms, prefixes, and suffixes will be discussed. Vocabulary and terminology are
introduced in each of the subsequent chapters, as they pertain to the subject matter covered.
Anatomy
There are multiple organ systems in the human body. An organ system is a set of body parts that
depend on each other to function toward a mutual objective. The body parts functioning as a
system would not be able to achieve the mutual objective alone. The following organ systems will
be addressed briefly here and in greater depth in subsequent coding chapters as relevant:
n
n
n
n
n
n
n
n
n
n
n
n
Integumentary
Musculoskeletal
Cardiovascular
Lymphatic
Respiratory
Digestive
Urinary
Reproductive
Nervous
o Organs of sense
Eye
Ear
Endocrine
Hematologic
Immune
2.1
Structure of the Human Body

The structure of the human body falls into four categories:
n
Cells
n Tissues
n Organs
n Systems
Each structure is a highly organized unit of smaller structures.
The cell is the basic unit of all living things. Human anatomy is composed of cells that vary in size
and shape according to function.
n
Cell membrane forms the boundary of the cell

n Cytoplasm makes up the body of the cell
n Nucleus is the small, round structure in the center of the cell
n Chromosomes are located in the nucleus of the cell; they contain genes that determine
hereditary characteristics
Tissue is a group of similar cells that perform a specific task.
n
Muscle tissue produces movement

n Nerve tissue conducts impulses to and from the brain
n Connective tissue connects and supports various body structures: adipose (fat) and osseous
(bone)
n Epithelial tissue is found in the skin, lining of the blood vessels, respiratory, intestinal,
urinary tracts, and other body systems
Organs are two or more kinds of tissue that together perform special body functions. As an
example, the skin is an organ composed of epithelial, connective, and nerve tissue.
Systems are groups of organs that work together to perform complex body functions. For example,
the nervous system is made up of the brain, spinal cord, and nerves. Its function is to coordinate
and control other body parts.
Body Cavities
The body is not a solid structure as it appears on the outside, but it has five cavities, each containing
an orderly arrangement of internal organs.
1. Cranial cavity is a space inside the skull, or cranium, containing the brain.
2. Spinal cavity is the space inside the spinal column containing the spinal cord.
3. Thoracic, or chest cavity, is the space containing the heart, lungs, esophagus, trachea, bronchi,
and thymus.
4. Abdominal cavity is the space containing the lowest portion of the esophagus, the stomach,
intestines (excluding the sigmoid colon and rectum), kidneys, liver, gallbladder, pancreas,
spleen, and ureters.
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2007 PMCCVolume 1
5. Pelvic cavity is the space containing the urinary bladder, certain reproductive organs, part of
the large intestine and the rectum.
Membranes
Membranes line the internal spaces of organs and tubes that open to the outside, and they also line
body cavities. There are five types of membranes: mucous membranes, serous membranes, synovial
membranes, meninges, and the cutaneous membrane.
Mucous MembranesLine the interior walls of the organs and tubes that open to the outside of
the body, such as those of the digestive, respiratory, urinary, and reproductive systems. These
membranes consist of an epithelium overlaying a layer of connective tissue.
Serous MembranesLine cavities, including the thoracic cavity and internal organs (eg, heart).
They consist of a layer of simple squamous epithelium overlaying a layer of connective tissue.
Serous membranes support the internal organs and compartmentalize the large cavities to hinder
the spread of infection.
Synovial MembranesLine joint cavities and are composed of connective tissues. They secrete
synovial fluid into the joint cavity; this lubricates the ends of the bones so that they can move
freely.
MeningesComposed of connective tissue found within the cranial cavity and serve as a protective covering of, the brain and spinal cord.
Cutaneous MembraneForms the outer covering of the body and consists of a thin outer layer of
stratified squamous epithelium attached to a thicker underlying layer of connective tissue.
Integumentary System
The largest organ system in the body is comprised of the following structures:
n
Skin
n Hair
n Nails
Layers of Skin
These structures work together to serve a purpose and/or

provide the following functions within the body:
n
Protection from injury, fluid loss, and microorganisms (eg, bacteria, virus, fungus, yeasts)
n Temperature regulation
n Fluid balanceexcretion
n Sensation
Skin
Two layers make up human skin: the dermis and the
epidermis. Each layer and its components are listed below.
It is important for the coder to be familiar with the various
layers and be able to apply this knowledge when choosing the
appropriate CPT code. See illustration 2-A.
Sebaceous gland
Hair follicle
Arrector pili
muscle
Thick-skin
epidermis
Epidermis
Hair shaft
Dermis
Pacinian corpuscle
Hair matrix
Sweat
(eccrine gland)
Sensory nerve
Hypodermis
(subcutaneous
layer)
Bulb
Blood vessels
Illustration 2-A. source: Ingenix
2.3
Epidermis
The epidermis is composed of four to five layers called stratum. The number of layers of stratum
varies based on where the epidermis is located. The stratum lucidum layer is normally found only
on the palms of the hands and the soles of the feet. The various strata are:
Stratum CorneumAlso called the horny layer; outermost layer.
Stratum Lucidum (Palms and Soles)Clear layer.
Stratum GranulosumLayer of granular cells.
Stratum SpinosumComposed of prickle cells.
Stratum BasaleDeepest of the five layers, made of basal cells. The skin reproduces itself in this
layer by mitosis (cell division).
Dermis
The dermis is located just under the epidermis. It also has two layers of stratum, which are
listed below:
Stratum PapillareThin layer interlocked with the epidermis.
Stratum ReticulareLayer of connective tissue.
Coders Tip
The term connective tissue includes a number of different tissues that have a common
feature. They support and connect the tissues of the body. Connective tissue is divided
into four general groups: connective tissue proper, cartilage, bone, and blood.
The dermis contains many important structures that nourish and innervate the skin.
n
Vessels carrying blood and lymph

n Nerves and nerve endings
n Glands
n Hair follicles
Hypodermis is a term used synonymously with subcutaneous. It is not considered to be a layer
of the skin. The subcutaneous tissues are mostly composed of fatty or adipose tissue plus some
areolar tissue. The hypodermis serves to protect the underlying structures, prevent loss of body
heat and anchor the skin to the underlying musculature. The fibrous connective tissues referred to
as superficial fascia are included in this layer.
It is imperative to understand the stratification of the tissue layers and the structures that lie within
when coding for surgical procedures throughout the body, but most particularly those procedures
performed to the integument. When applying CPT codes found in the 10000s chapter, the coder
will need to know in which layer the provider was working.
Hair and Nails

Hair
By 22 weeks, a developing fetus has its lifetime of hair follicles, which averages five million with
the concentration on the head (one million). Follicles are never added during life and as the size of
the body increases, the density of the hair follicles on the skin decreases. Hair on the scalp grows
about .3 to .4 mm/day or about six inches per year. Hair has two separate structures: the follicle
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2007 PMCCVolume 1
and the shaft. The follicle contains several layers. At the base a projection, called a papilla, are
capillaries that nourish the bulb. The cells in the bulb divide every 23 to 72 hours. Inner and outer
sheaths protect and mold the growing hair shaft surrounding the follicle. The inner sheath ends at
the opening of the sebaceous gland, which secretes sebum that may pocket to cause benign lesions
on the scalp (removal of these benign cysts are reported using CPT codes from the 1140011471).
A muscle, called the erector pili, attaches to the outer sheath and causes the hair to stand up when
it contracts. The shaft is composed of keratin in three layers: the medulla, cortex, and cuticle.
Pigment cells in the cortex and medulla give hair its characteristic color.
Nails
The fingernail is made of keratin that acts as a protective plate and as a counterforce to the
fingertip to increase the sensory input of touch. Nails grow
all the time, but their rate of growth slows down with age
and poor circulation. Fingernails grow faster than toenails
at a rate of 3 mm per month; toenails grow about 1 mm per
Skull
month.
The nail is divided into six specific partsthe root, nail
bed, nail plate, eponychium (cuticle), perionychium, and
hyponychium. The root, also known as the germinal matrix,
lies beneath the skin behind the fingernail and extends
several millimeters into the finger. The root produces most
of the volume of the nail and the nail bed and its edge is the
white, crescent-shaped structure called the lunula. The nail
bed, called the sterile matrix, extends from the edge of the
lunula to the hyponychium. The nail bed contains the blood
vessels, nerves, and melanocytes (melanin-producing cells).
The nail plate is the actual fingernail, made of translucent
keratin. Blood vessels underneath give the nail its pink
appearance; the grooves along the inner length of the nail
plate anchor the nail to the nail bed. The cuticle, also called
the eponychium, is between the skin of the finger and the
nail plate that fuses the skin of the finger to the nail plate.
The perionychium, also known as the paronychial edge, is
the skin that overlies the nail plate on its sides and is the
site of hangnails, ingrown nails, and an infection of the
skin called paronychia. The hyponychium is the junction
between the free edge of the nail and the skin.
CPT codes in the 10000 range address procedures and
services relative to the integumentary system.
Cervical vertebrae
First rib
Sternum
Maxilla
Mandible
Clavicle
Scapula
Humerus
Twelfth rib
Radius
Lumbar
vertebrae
Ulna
Carpals
Ilium
Metacarpals
Sacrum
Ischium
Pubis
Phalanges
Femur
Patella
Tibia
The musculoskeletal system is a system of muscles, joints,
tendons, and ligaments that provides movement, form,
strength, and protection. Various muscle and bone types
work together in this body system. See illustration 2-B.
Fibula
Tarsals
Metatarsals
Phalanges
Illustration 2-B source: Ingenix
2.5
Bones
Bones are composed of rigid connective tissue and provide the following functions:
n
n
n
n
n
n
Form the skeleton

Provide the chief means of support for the body
Provide the mechanism for motion
Protect vital organs
Serve as a factory for blood cells (eg, marrow)
Store calcium, phosphorus, and magnesium salts
Bones, classified according to the shape of the bone, are:

LongBone in the limbs (eg, the femur and humerus).
ShortBones found in the carpal bones of the wrist and tarsal bones of the ankle.
CuboidalAlso referred to as short bone.
TubularAlso referred to as long bone.
IrregularVertebrae or zygoma
Flat BonesConsist of a layer of spongy bone between two thin layers of compact bone; crosssection is flat, not rounded. Flat bones have marrow, but lack a bone marrow cavity. The skull and
ribs are examples.
SesamoidFormed within the tendons; cartilaginous in early life and osseous in the adult. The
patella is the largest sesamoid bone in the body.
Cartilage and Joints

Cartilage is a type of flexible connective tissue that is nonvascular (has no blood vessels). Cartilage
is a matrix made of chondrocytes, collagen, and cells called proteoglycans.
Joints and articulating surfaces are synonymous and provide a connection between two or more
parts of the skeleton. Joints are classified according to the type of connective tissue at the articulating surfaces. There are three types: fibrous, cartilaginous, and synovial. Most joints are synovial
and have the following characteristics:
n
Articular cartilage that covers the bone ends

n Joint cavity lined with a synovial membrane, which secretes a thick, viscid, slippery
mucous that cushions the joint and allows smooth motion
n Joint capsule of fibrous connective tissue that surrounds and provides stability of the joint
n Accessory ligaments that give reinforcement
Human Skeleton
The human skeleton is divided into two partsthe axial and appendicular skeleton. The breakdown for these is:
Axial Skeleton
n Skull
n Hyoid and cervical spine (neck)
n Ribs
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2007 PMCCVolume 1
Sternum
n Vertebrae
n Sacrum
Appendicular Skeleton
n Shoulder girdle
n Pelvic girdle
n Extremities
Muscles
Muscles have the property of contractility. They also provide form and produce heat for the body.
There are three types of muscles found in the body and they are:
Skeletal MuscleMuscle is attached to the skeleton; contraction of skeletal muscle is under voluntary control. Also
called striated muscle.
Cardiac MuscleMuscle makes up the wall of the heart.
Also called heart muscle.
Smooth MuscleMuscle is found in the walls of all the
hollow organs of the body (except the heart). Its contraction
reduces the size of these structures; movement generally is
considered involuntary (not under voluntary control).
In CPT , the chapter containing the 20000 codes pertains
primarily to the musculoskeletal system. The section of codes
is laid out based on anatomical regions and structures.
Cardiovascular System
This system is comprised of the heart and the blood vessels.
See illustration 2-C.
Blood Vessels
The human body contains three types of blood vessels:
arteries, veins, and capillaries.
The arteries take oxygenated blood away from the heart.
They are often depicted as red in anatomical drawings to
depict the red color of oxygenated blood. These vessels get
smaller as the arteries go out into the extremities turning
into arterioles, and eventually they comprise the arterial
side of the capillary bed. The venous side of the circulation
begins in the venous side of the capillary bed enlarging to
form venules and eventually forming veins. Most veins bring
deoxygenated blood, which is dark reddish brown in color,
back to the heart. Veins are often depicted in illustrations as
blue, which is not a true physiological depiction. Capillaries
are tiny vessels, usually a single cell layer thick. They are
Cardiovascular System
Posterior auricular
Occipital
Superficial temporal
External carotid
Internal carotid
Right common
carotid
Right
subclavian
Brachiocephalic
Thoracic
aorta
Left common carotid

Thyrocervical trunk
Left subclavian
Axillary
Deep brachial
Celiac
Renal
Brachial
Superior
mesenteric
Inferior
mesenteric
Radial
Interosseous
Common
iliac
Internal iliac
Ulnar
Superficial
palmar arch
External iliac
Common femoral
Deep femoral
Popliteal
Femoral
Posterior tibial
Peroneal
Anterior tibial
Dorsalis pedis
Medial plantar
Lateral plantar
Plantar arch
Illustration 2-C source: Ingenix
2.7
semipermeable and facilitate the exchange of fluids, oxygen, nutrients, and wastes between local
tissues and the blood stream.
Heart
The adult heart is often compared to the size of the human fist and usually weighs less than one
pound. The heart pumps blood to two distinct systems for circulation. The first system is the
pulmonary circulation, which receives deoxygenated blood from the right ventricle via the right
and left pulmonary artery. The blood is circulated through the pulmonary vascular tree in the
lungs and sent back into the left atrium of the heart through the right and left pulmonary veins.
Oxygenated blood is pumped from the left side of the heart out to the systemic circulation from
the left ventricle to the aorta.
The heart is made of muscle called the myocardium. The myocardial tissues allow electrical
impulses to pass quickly across the muscle fibers as part of the hearts unique electrical conduction
system.
The CPT codes 3301038242 address surgical procedures to the cardiovascular system.
Lymphatic System
Cervical
lymph nodes
The lymphatic system is comprised of lymph vessels and nodes. This system serves to collect excess
fluid from the interstitial spaces (a potential space between tissues) and returns it to the heart. The
veins reabsorb fluid pushed from the arterioles into the capillary beds; the lymph picks up any excess
fluid. This system operates without a pump by using a series
Lymphatic System
of valves to ensure that the fluid travels in one direction back
to the heart. See illustration 2-D.
Intercostal
lymph nodes
Entrance of
thoracic duct into
subclavian vein
Lymphatic Vessels
Cisterna
chyli
Spleen
Axillary
nodes
Lumbar
nodes
Thymus
Retrosacral
nodes
Thoracic
duct
Mesenteric
nodes
Iliac
nodes
Intestinal
nodes
Inguinal
nodes
Mesocolic
nodes
Illustration 2-D source: Ingenix
2.8
The lymphatic vessels are structured in a similar fashion to

blood vessels. Lymphatic capillaries are closed off at one end.
Once the lymph fluid is picked up, it is circulated to increasingly larger lymph vessels called lymphatics. The lymphatics
empty their contents into either the right lymphatic duct
or the thoracic duct. Both of these ducts are situated in the
thoracic cavity. The right lymphatic duct collects from the
right arm, right side of the head and right side of the thorax.
The thoracic duct collects lymph from the rest of the body.
In order for the body to maintain an appropriate volume of
circulating blood, it is necessary to put all of this fluid back
into the main system of circulation. Both of the lymphatic
ducts empty their contents into the subclavian veins. The
right lymphatic duct empties into the right subclavian vein
and the thoracic duct empties into the left subclavian vein.
Spleen
The spleen is an organ of the lymphatic system in the left
upper abdomen that filters and destroys red blood cells that
are no longer efficient. It serves as a blood-forming organ early
in life and later as a storage unit for extra red blood cells and
platelets.
2007 PMCCVolume 1
The CPT 3830038999 codes address surgical procedures

of the lymphatic system.
Respiratory System (Pulmonary System)

The respiratory system functions to swap carbon dioxide for
oxygen. Air inspired through the nose and mouth passes to
the lungs through a series of branching airways known as the
bronchial tree. This series of structures connects the lungs
to outside air containing oxygen. At the smallest branch of
the bronchial tree the airways are called bronchioles. Each
of these bronchioles narrow further until they end in a tiny
pouch called an alveolar sac. Gases are exchanged across the
single cell layer of tissue comprising the alveolar sac into
the pulmonary circulation. Capillaries from the pulmonary
circulation are also a single cell layer thick. They form a bed
around each alveoli; gas is exchanged between the alveolus
and the capillaries via the principles of diffusion (molecules
flow from levels of higher concentration to lower concentration). See illustration 2-E.
Respiratory System
Paranasal sinuses
Nasopharynx
Oropharynx
Epiglottis
Larynx
Left
bronchus
Tracheal cartilages
Right bronchus
Left lung
(two lobes)
Visceral pleura
(covers lungs)
Parietal pleura
(lines chest)
Rib cage
Diaphragm
Right lung
(three lobes)
Illustration 2-E source: Ingenix
Digestive System
The feeding tube begins in the mouth and ends at the anus. This continuous structure winds
its way through several body cavities and encompasses a multitude of structures and organs.
The system mechanically and chemically breaks down food into minuscule or molecular size for
absorption into the blood stream for use at the cellular level.
Food enters the digestive system via the mouth. The teeth and tongue mechanically break food
into small particles to provide greater exposure/surface area for the chemical processes that follow.
Chewing is also called mastication. The salivary glands that surround the mouth secrete saliva, which
is comprised primarily of water, mucus, electrolytes and salivary
amylase. Saliva aids in early phases of chemical digestion and
Digestive System
liquefaction of the food. The food is swallowed and peristalsis
in the esophagus moves food down through the upper thoracic
cavity into the stomach. See illustration 2-F.
Oral cavity
Stomach and Small Intestine

The opening to the stomach is referred to as the cardiac
orifice. The fundus of the stomach is the rounded upper
portion of the stomach above the body of the stomach.
The body of the stomach is the main portion and the lower
portion of the stomach is referred to as the pyloric antrum
with the pyloric sphincter leading out to the duodenum (first
one-third of the small intestine). The food moves through
the stomach into the small intestine, which is divided into
three separate sections. The first one-third of the small intestine is the duodenum, the second one-third is the jejunum,
and the distal one-third is the ileum (not to be confused with
the ilium, a bone in the pelvis).
Salivary glands
Pharynx
Esophagus
Liver
Stomach
Gallbladder
Pancreas
Duodenum
Jejunum
Mesentery
Colon
Ileum
Rectum
Anus
Illustration 2-F source: Ingenix
2.9
Large Intestine
Urinary System (Male)

Adrenal gland
Kidney
Bladder
Upper ureter
Urethra
Prostate (male)
Illustration 2-G.1 source: Ingenix
Urogenital
System (Male
Male Urogenital
Systemand Female)
Deep
inguinal ring
Bladder
Ductus
deferens
Seminal
vesicle
Rectum
Pubic
bone
Penis
Urethra
Corpus
cavernosus
Glans
(corpus spongiosum)
Foreskin
Prostate
Bulbourethral gland
Testis
Epididymus
Scrotum
Urethral
orifice
Female Urogenital System

Uterine
(fallopian)
tube
Ovary
Uterus
(fundus)
Pubic
bone
Cervix
Bladder
Clitoris
Urogenital
diaphragm
Urethral
orifice
(meatus)
Rectouterine
pouch
(of Douglas)
Labia
minora
Labia
majora
Rectum
2.10
Ancillary Organs
Ancillary organs such as the pancreas, liver, and gallbladder
also are considered parts of the digestive system since the
chemicals they produce are necessary for the chemical
break down of food. The digestive (or exocrine) pancreas is
responsible for making digestive enzymes that are secreted
into the intestines to help digest food. The gallbladder stores
bile that is produced in the liver. Bile secreted into the intestines from the gallbladder helps the body digest fats.
The CPT 4049049999 codes address surgical procedures
of the digestive system.
Urinary System
The production of urine for the excretion of metabolic wastes
along with fluid and electrolyte balance is the main function
of the urinary system. This system also provides transportation
and temporary storage of urine prior to the intermittent process
of urination. The key structures of this system are the kidneys,
ureters, urinary bladder, and urethra. The kidney also secretes
some hormones giving it endocrine function as well.
The male and female urethras are quite different anatomically in position and length; however, they perform the
same function and are treated similarly for many surgical
procedures in the coding genre. See illustration 2-G.1 and
2-G.2.
CPT codes dealing with the urinary system are found
primarily in the 5001053899 range.
Reproductive System
Anus
Illustration 2-G.2 source: Ingenix
The large intestine begins just after the ileocecal valve at the
cecum with the appendix attached at the bottom. There are
four portions to the colonascending, transverse, descending,
and sigmoid or pelvic colon. The ascending colon proceeds
from the ileocecal valve upward to the hepatic flexure, becomes
the transverse colon, and then turns downward to become the
descending colon at the splenic flexure. The descending colon
gives way to the sigmoid colon and ends at the rectum. The
internal and external anal sphincters at the terminus of the
rectum control the flow of fecal material leaving the body.
Vaginal
canal
The organs of the reproductive system differ greatly between

male and female, however, their functions are quite similar.
Reproduction is achieved through the male production of a
23-chromosome gamete called a sperm and a 23-chromosome gamete called an egg produced by the female reproductive system. The female also houses, feeds, and protects
2007 PMCCVolume 1
the growing fetus through the gestational period. The

male and female reproductive organs include external and
internal genitalia.
Nervous System
Brain
Male Genitalia
External genitalia for the male include the testes, epididymis,
scrotum, and penis. Internal organs for the male genital
system include the prostate gland, seminal vesicle, and
Cowpers glands. There is also a system of tubes and ducts
that sperm travel through to leave the body. It is comprised
of the vas deferens, ejaculatory duct, and the urethra.
Female Genitalia
External genitalia for the female includes the vulva, labia
majora and minora, clitoris, external opening of the vagina,
also called the introitus, opening of the urethra or urinary
meatus, Skenes glands (found on either side of the urinary
meatus), and Bartholins glands (found on either side of the
introitus). Internal organs for the female genital system include
the vagina, uterus, two fallopian tubes, and two ovaries.
Spinal
cord
Brachial
plexus
Musculocutaneous
Intercostal
Radial
Subcostal
Median
Lumbar plexus
Deep branch
of radial
Superficial
branch
of radial
Sacral
plexus
Ulnar
Femoral
Sciatic
Muscular
branches
of femoral
The CPT codes for the male and female genitourinary

systems can be found in the 5400058999 range.
The nervous system is an enormous network of nerve

fibers that traverses the human body. The nervous system
is composed of a central portion and a peripheral portion.
The brain and spinal cord are the components of the central
nervous system (CNS). The peripheral nervous system
includes the cranial and spinal nerves.
The nervous system functions as both the central operator
and central intelligence for the body. It regulates bodily
functions, provides for an internal method of communication between the brain and other organs, as well as between
the organism and the environment. The brain regulates
subconscious body functions such as respiratory rate, body
temperature, and peristalsis of the intestines. It also sends
signals from the finger to the brain when a hot, cold, or
sharp object is encountered. See illustration 2-H.
Procedures of the nervous system are found primarily in the
60000 range of CPT codes (6100064999).
Organs of SenseEye
Organs of sense are classified as a subsection in the nervous
system as they ultimately coalesce in nerve endings called
Saphenous
Common
peroneal
Nervous System
Tibial
Deep
peroneal
Superficial
peroneal
Illustration 2-H source: Ingenix
The Eye
Choroid (uvea)
Sclera
Cornea
Iris
Pupil
Anterior
chamber
Posterior
chamber
Ciliary body
Conjunctiva
Vitreous
body
Lamina
cribrosa
Lens
Hyaloid
canal
Optic
nerve
Optic disc
Fovea
Globe
Retina
(eyeball)
Illustration 2-I source: Ingenix
2.11
sensory receptors. The sensory organs receive and filter sensory input, which is ultimately interpreted in the central nervous system.
The eye, the sense organ of sight, is a complex structure situated in the bony orbit or socket formed
by seven bones: frontal, maxillary, sphenoid, lacrimal, malar bone, ethmoid, and palatine bones.
The eyeball has three layers: the retina (innermost), choroid (middle), and sclera (outermost). It is
separated into an anterior segment filled with aqueous humor and a posterior segment filled with
vitreous humor. The crystalline lens separates the two segments. See illustration 2-I.
Anterior Segment
The cornea is the clear portion of the eyeballs outer layer and comprised of multiple layers, which
include an outer epithelial layer, a middle layer of fibrous connective tissue, and an inner layer of
endothelium.
The conjunctiva lines the eyelids with a mucous membrane. The conjunctiva wraps around the
eyeball and ends at the junction of the sclera and the cornea, also called the limbal junction. The
crystalline lens is a clear structure that is convex on both sides to refract light as it enters the eye.
The anterior segment has two chambers, referred to as an anterior chamber and a posterior chamber.
The aqueous humor is a watery substance that fills the anterior and posterior chambers of the anterior
segment of the eye. It is responsible for intraocular pressure in the eye. The ciliary processes located in
the posterior chamber produce the fluid that travels through the pupil to the anterior chamber where
the fluid drains into the trabecular meshwork through the anterior angle.
The iris is a part of the middle layer of the eye that has the pupil in the center and a double layer
of pigmented retinal epithelium giving color to the iris. The ciliary body pertains to a portion of
the vascular coat between the iris and the choroid. The ciliary processes and the ciliary muscle
comprise the ciliary body. Three structures come together to form the uvea, choroid, ciliary body,
and iris. The choroid is the intermediate coat of the eye that furnishes nourishment to the other
parts of the eyeball.
Posterior Segment
A clear gel-like substance filling the posterior segment of the eye is called the vitreous, which is
also responsible for intraocular pressure and prevents the eyeball from collapsing. The retina is the
portion of the posterior segment that serves as a light receptor. It has rods and cones. There is a
yellow area on the retina where the cones are in high concentration. This is called the macula lutea.
The optic nerve (sensory receptor for the eye) emerges in the posterior segment in the posteriormost regions and is known as the optic disc or blind spot.
There are many adnexal or accessory structures to the eye such as the eyelids, eyelashes, and the
lacrimal system. There are six ocular muscles that work in opposition to move the eye in multiple
directions to facilitate a good field of vision.
Ophthalmology has its own vocabulary and is a very specialized field of medicine and coding.
There are two types of services that pertain to the eye: vision services and surgical services. Surgical
services on the eye can be found in the 6509168899 range of CPT codes. Vision services can be
found in the 9200292499 range of CPT codes.
Organs of SenseEar
The ear works in tandem with the auditory nerves to send auditory impulses to the temporal lobes
of the cerebrum. These structures, working together, form the auditory apparatus. The ear has
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2007 PMCCVolume 1
three distinct and separate anatomical divisions: the outer

ear (external ear), middle ear (tympanic cavity), and inner
ear (labyrinth). The auditory apparatus utilizes the ear to
capture sound waves and transmit or conduct them into
the tiny hair cells in the organ of Corti. Dendrites (nerve
endings) of the sensory neurons for hearing are found in the
bottom of those tiny hair cells.
Otology (the study of the ear) is also a very specialized field
of medicine and coding. There are two types of services that
pertain to the ear: audiometry services (hearing testing) and
surgical services. Surgical services on the ear can be found
in the 6900069979 range of CPT codes.
Auditory processing, also called central auditory processing,
refers to the means by which we make sense of what we hear.
An auditory processing disorder refers to the abnormal interaction of hearing, neural transmission, and the brains ability
to make sense of sound. People with auditory processing
disorders may have normal hearing, but they have difficulty
understanding auditory information. This may be apparent
by difficulty understanding speech in the presence of noise,
problems following multistep directions, and difficulty with
phonics or reading comprehension. A diagnosis depends on
a battery of audiometric tests, administered by an audiologist. The range 9260192604 is used to report diagnostic
analysis of cochlear implants. See illustration 2-J.
Endocrine System
The endocrine system is comprised of glands. A gland is
a group of cells that secrete or excrete chemicals called
hormones. Glands secrete hormones that elicit an effect on
tissues other than themselves. Glands can be found in a
variety of locations throughout the body. Each gland and its
associated hormone have a cause and effect that is unique.
See illustration 2-K.
The following are glands found in the human endocrine
system:
Adrenal GlandsDuctless, pyramid-shaped glands are situated near the top of each kidney. There are two separate
structural parts of the adrenal gland. The inner portion is
called the medulla and the outer portion is the cortex. Each
structure performs a separate function. The medulla secretes
epinephrine and norepinephrine. The cortex secretes several
steroids (eg, glucocorticoids, mineral corticoids and adrenal
estrogens and androgens).
Carotid BodyStructure made of epithelial-like cells is
located on each side at the bifurcation (division) of the
common carotid artery. This has a vascular/sinusoidal bed
The Ear
Helix
Scaphoid
fossa
External
acoustic
canal
Ossicular
chain
Semicircular
canals
Cochlear
nerve
Malleus
Incus
Stapes
Tympanic
membrane
(eardrum)
Concha
Lobule
Cochlea
Detail of
ossicular chain
The tympanic membrane is a thin, sensitive tissue and is the gateway

to the middle ear; the membrane vibrates in response to sound waves
and the movement is transmitted via the ossicular chain to the internal
ear . Many surgeries to the middle ear involve repair to the tympanic
membrane and reconstruction to the various components of the
ossicular chain .
Illustration 2-J source: Ingenix
Endocrine System
Pineal
Hypothalamus
Pituitary
Parathyroids
Thyroid
Adrenals
(suprarenal)
Thymus
gland
Thoracic
duct
Pancreas
Ovary
(female)
Testis
(male)
Illustration 2-K source: Ingenix
2.13
and a large network of nerve fibers from the glossopharyngeal nerve. This configuration works
together to measure the concentration of oxygen, carbon dioxide, and free hydrogen atoms in the
blood. This chemoreceptor organ regulates respiration and pH balance. Although not a true endocrine structure, it is made of both glandular and nonglandular cells. CPT includes procedures on
this structure in the endocrine family of CPT codes.
Parathyroid GlandSmall round bodies are located on the posterior side of the thyroid gland and
imbedded in the connective tissue surrounding it. The number of these bodies varies, but there are
usually four. These glands regulate calcium and phosphorus metabolism.
Pituitary GlandAlso called the hypophysis cerebriSingle (unpaired) gland has two separate
parts located in an area of the brain just under the hypothalamus. The first portion is called
the posterior pituitary or neurohypophysis. The posterior pituitary secretes oxytocin, a hormone
responsible for uterine contractions and the let down reflex of milk in response to a babys suckling, and Vasopressin, an antidiuretic. The anterior pituitary manufactures the adrenocorticotrophic hormone (ACTH), thyroid stimulating hormone (TSH), follicle stimulating hormone (FSH),
luteinizing hormone (LH), growth hormone (GH) (somatotrophin), melanocyte stimulating
hormone (MSH), and prolactin (PRL).
Thymus GlandComposed of lymphoid tissue and located in the mediastinum of the chest. The
precise functions of this gland are still not entirely known. This gland helps regulate humoral
(circulating defenses versus cellular defenses) immune functions. The gland does much of its work
in early childhood and is at its largest size shortly after birth. By puberty, it is at its smallest size
and may be replaced by fat.
Thyroid GlandRegulates metabolism and serum calcium levels through the secretion of thyroid
hormone and Calcitonin, respectively. This bilobed, ductless gland is located in the neck just below
the thyroid cartilage of the trachea. The two lobes sit on either side of the trachea and are joined
by a small band of tissue called the isthmus.
When the endocrine system and the nervous system work together, they form a system of internal
communication for the human body.
The CPT 6000060699 codes address surgical procedures to the endocrine system.
Hemic System
The hemic system involves the blood. Red cells, white cells and platelets are made in the marrow
of bones, especially the vertebrae, ribs, hips, skull, and sternum. These essential blood cells fight
infection, carry oxygen, and help control bleeding. Plasma is a pale yellow mixture of water,
proteins and salts, and acts as a carrier for blood cells, nutrients, enzymes, and hormones.
Red CellsDisc-shaped cells containing hemoglobin, which enables the cells to pick up and deliver
oxygen to all parts of the body.
White CellsThe bodys primary defense against infection.
PlateletsForm clusters to plug small holes in blood vessels and assist in the clotting process
Hemoglobin transports oxygen and carbon dioxide in the blood. It is composed of globin, a group
of amino acids that form a protein, and heme, which contains iron atoms and imparts the red
color to hemoglobin. Hemoglobin is an important determinant of anemia (decreased), dehydration
(increased), polycythemia (increased), poor diet/nutrition, or a malabsorption problem.
Most tests of the hematologic system are performed in the clinical laboratory. The procedures on
the blood and its components are covered in the 80000 range of CPT codes.
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2007 PMCCVolume 1
Immune System
The immune system is classified as a separate system from the hematologic system; however, most
immune cells have their origins in the hematologic system. In medicine, the study of the immune
system (immunology) and the study of allergies often go hand in hand since an allergic response is,
in fact, an immune response. The human immune system is the bodys final line of defense against
invading microorganisms, harmful chemicals, and foreign bodies. There are two kinds of immune
cells: B cells and T cells. Several types of cells protect the body from infection (eg, neutrophils,
lymphocytes, monocytes, eosinophils, and basophils). Neutrophils are the bodys main defense
against infection and antigens. High levels may indicate an active infection; a low count may indicate a compromised immune system or depressed bone marrow (low neutrophil production).
Lymphocytes are involved in protection of the body from viral infections such as measles, rubella,
chickenpox, or infectious mononucleosis. Elevated levels may indicate an active viral infection and a
depressed level may indicate an exhausted immune system; or, if the neutrophils are elevated, an active
infection. Monocytes fight severe infections and are considered the bodys second line of defense against
infection. Elevated levels are seen in tissue breakdown, chronic infections, carcinomas, leukemia (monocytic), or lymphomas. Low levels indicate a good state of health. The body uses eosinophils to protect
against allergic reactions and parasites; elevated levels may indicate an allergic response. A low count
is normal. Basophilic activity is not fully understood but it is known to carry histamine, heparin, and
serotonin. High levels are found in allergic reactions, low levels are normal.
Coders Tip
Antigens elicit an immune response in the body. Antigens that enter the body from the
environment include:
n
Inhaled macromolecules (eg, proteins on cat hairs that can trigger an asthma attack)
n Ingested macromolecules (eg, shellfish proteins that trigger an allergic response)
n Molecules that are introduced beneath the skin (eg, on a splinter or in an injected
vaccine)
Antibodies are immune system-related proteins called immunoglobulins. Some antibodies
destroy antigens directly; others indirectly by making it easier for white blood cells to destroy the
antigen.
Clinical lab tests performed on the function and health of the immune system are found in the
8600086804 range of CPT codes and performed in the clinical laboratory.
Class Exercise 2.1
1. Which of the following terms is not an anatomical system?
a. Hematological
b. Endocrine
c. Psychological
d. Cardiovascular
2.15
2. The CPT codes for the male and female genitourinary systems can be found in
which range of the CPT manual?
3. Which of the following terms is not in reference to a component of the skin?

a. Dermis
b. Epidermis
c. Hypodermis
d. Stratum lucidum
4. Which of the following anatomical sites is not a part of the axial skeleton?
a. Skull
b. Shoulder girdle
c. Hyoid and cervical spine (neck)
d. Ribs
5. The patella is a good example of what class of bone based on its shape?
6. Which of the following structures do not have specific procedures listed in the 30000s
chapter of CPT?
a. Heart
b. Lungs
c. Sternum
d. Arteries
7. What is the purpose of a gland?
8. Which of the following structures does not have a CPT code range assigned in the
40000 range of codes?
a. Liver
b. Spleen
c. Pancreas
d. Gallbladder
9. List the five types of membranes.
10. Which structure separates the anterior and posterior segments of the human eye?
2.16
2007 PMCCVolume 1
Introduction to Medical Terminology

Coders are called on to verify the relationship between provider documentation and CPT,
HCPCS, and ICD-9-CM codes. Therefore, the coder must have a working knowledge of the
language of medicine. In order to obtain an understanding of medical terminology, you must have
a working knowledge of the word parts or elements used to form medical terms. Understanding
medical terms is best accomplished by:
1. Breaking a word into its parts or elements (eg, prefixes, suffixes, root words, and/or combining
forms).
2. Understanding the application, structure, and/or function of each word and/or anatomical
site/body system.
3. Using words and their elements and relating them to applicable scenarios and/or an anatomical
site/body system.
The objectives for learning medical terminology are to:
1. Develop an understanding of the language of medicine.
2. Acquire an understanding of the procedural and diagnostic terms that will be encountered in
coding manuals and all forms of medical documentation.
3. Introduce the elements of medical terminology (along with standard abbreviations).
4. Provide an opportunity for the coder/student to apply this knowledge in an effective way to
further the individuals coding competence.
Medicine has a language of its own. Medical language possesses a historical development that has
taken place over thousands of years. The majority of medical terms in use today have Greek and
Latin origins that were created over 2,000 years ago. There are two ways that the language of
medicine may be learned:
n
Memorization of medical terms

n Integrate word parts/elements to form medical terms
Memorization of medical terms is tedious; breaking the medical terms down into word parts and
learning how they fit together is the key to understanding them. When studying medical terminology, anatomy, physiology, and documentation, be alert to repetition of certain prefixes, suffixes,
root words, and/or combining elements throughout both this text and the coding books. Most of
the medical terms available are a combination of two or more of the word elements. The interpretation of a medical term involves examining each separate word part. The sum of the parts gives
meaning to the entire word when each part is translated separately and recombined.
Coders Tip
All terms cannot be broken down exactly, or even consistently, in this manner. There are
always exceptions to the general rules of word formation. A medical terminology course
is strongly encouraged prior to taking the PMCC course. All coders are encouraged to
keep a medical dictionary close at hand as a ready reference. Look words up as they are
presented and make a note of the meaning in your CPT, ICD-9-CM, or HCPCS book,
as appropriate.
2.17
Word Elements
Words used to describe complex structures, procedures, and concepts are often complex and as
difficult to spell as they are to pronounce. The words used in medicine are often formulated by
joining a combination of word parts. These words serve to tell a story and to create a vocabulary where terms are readily identified based on common components. For example, the word
cardiomyopathy tells a provider that the patient has a diseased heart muscle. When one sees
the combining form cardio, it is apparent that this word element pertains to the heart. It can be
used in a variety of combinations with different word elements to relate a plethora of descriptions,
illnesses, and conditions to the heart. The word cardiomyopathy paints a detailed clinical picture
using a single word.
The following list of various word elements includes:
Root WordsRoot words are terms that can stand alone as the main portion of a medical term.
Root words can also be used as combining forms. A prefix, suffix, and/or combining vowel may
accompany it. The root word is the word part that holds the fundamental meaning to the medical
term and each medical term contains at least one root or base word.
PrefixPrefixes are typically attached to the beginning of a word to modify or alter its meaning.
Not all medical terms will contain a prefix. Prefixes often (not always) indicate location, time,
or number. Note that the dictionary lists other meanings for the word prefix, however, only the
definition applicable to the topic is listed here.
SuffixSuffix comes from the Latin to fix beneath and as such, it is traditionally attached to
the end of a word to modify or alter its meaning. Use of a suffix can also be used to change the
words use in sentence structure. An example is the ing in suturing. A suture is the name given
to material used to place surgical stitches. Suturing is the act of placing the surgical stitches. Not
all medical terms will have a suffix. In medical terms, suffixes frequently indicate the procedure,
condition, disorder, or disease.
Coders Tip
The word diabetes is typically the proper name of a common endocrine condition. When
the suffix -ic is added to the word, it becomes diabetic and is now classified as an adjective. There are several suffixes that indicate pertaining to, changing a word from a noun
to an adjective. These are -ac, -al, -eal, -ic, -ous, -tic, such as asthmatic means pertaining
to asthma; necrotic means pertaining to death.
Combining VowelA combining vowel is often added to a root or base word to facilitate pronunciation. The combining vowel is usually an o and is used between a root word and a suffix. The
combining vowel is not used when the suffix begins with a vowel. When the suffix begins with a
consonant, it is appropriate to use the combining vowel.
Combining FormsWord parts typically describe the anatomical locationcardio (heart), or
colorcyano (blue). Root words can serve as combining forms.
Due to Greek and Latin origins of medical terms, the conventions for changing from singular to
plural endings are dictated by a specific set of guidelines as in table below.
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2007 PMCCVolume 1
Word EndingsConventions for Changing from Singular to Plural

Medical Term Ends in
a
Form Plural by
e
Example Singular
concha
Example Plural
conchae
ex or ix
ices
calix
calices
itis
Change tis to tides
nephritis
nephritides
is
es
hemarthrosis
hemarthroses
nx
Drop x and add ges
larynx
larynges
on
Drop on and add a
ganglion
ganglia
um
Change um to a
bacterium
bacteria
us
Change us to i
sulcus
sulci
Erlich, Medical Terminology for Health Professionals, page 4
Building Words from Word Elements

Combining Forms
acr/o
Meaning
extremities, top
cyan/o
blue
cyt/o
cell
derm/o
skin
dermat/o
skin
erythr/o
red
leuk/o
white
melan/o
black, dark
poli/o
gray
xanth/o
yellow
The following examples of prefixes often cause confusion:

Combining Forms
a-
Meaning
without, away from
hypo-
low, decreased
hyper-
high, increased
intra-
within
inter-
between
2.19
The following examples of suffixes often cause confusion:

Combining Forms
-itis
Meaning
inflammation
-lysis
reduction or relief of
-megaly
enlarged
-otomy
incision
-ectomy
remove surgically
-ostomy
artificial opening surgically created
-rrhaphy
suture
-rhexis
rupture
-rrahgia
excessive flow
-rhea
flowing
Medical Terms
The medical terms composing this list may be broken down into word elements or parts. This
translation will give the approximate meaning of the complete medical term. If further explanation
is needed beyond the literal translation, a medical dictionary may be used.
Example
My/o = muscle
pathy = disease
Myopathy = disease of the muscle
Erythr/o = red
cyte = cell
Erythrocyte = red cell (referring to blood)
Certain terms or word elements that are consistently associated with the major body systems
(addressed earlier in this chapter) are listed below. Terms specific to each body system will be
addressed in the corresponding chapters in this text.
2.20
Terms
Cardi/o
Definition
Heart
System
Cardiovascular
Arteri/o
Arteries
Cardiovascular
Ven/o
Veins
Cardiovascular
Phleb/o
Veins
Cardiovascular
Or/o
Mouth
Digestive
Esophag/o
Esophagus
Digestive
Gastro/
Stomach
Digestive
Enter/o
Small Intestine
Digestive
2007 PMCCVolume 1
Terms
Col/o
Definition
Large Intestine
System
Digestive
Hepat/o
Liver
Digestive
Pancreat/o
Pancreas
Digestive
Adren/o
Adrenals
Endocrine
Gonad/o
Gonads
Endocrine
Hem/o
Blood
Hematologic
Hemat/o
Blood
Hematologic
Hidr/o
Sweat Glands
Integumentary
Seb/o
Sebaceous Glands
Integumentary
Dermato/o
Skin
Integumentary
Cutane/o
Skin
Integumentary
Lymph/o
Lymphatic Structures/Fluids
Lymphatic
Splen/o
Spleen
Lymphatic
My/o
Muscles
Musculoskeletal
Fasci/o
Fascia
Musculoskeletal
Ten/o
Tendons
Musculoskeletal
Oste/o
Bones
Musculoskeletal
Arthr/o
Joints
Musculoskeletal
Chondr/o
Cartilage
Musculoskeletal
Neur/o
Nerve
Nervous
Encephal/o
Brain
Nervous
Myel/o
Spinal Cord
Nervous
Ocul/o
Eyes
Nervous/Sense
Ophthalm/o
Eyes
Nervous/Sense
Ot/o
Ears
Nervous/Sense
Oophor/o
Ovaries
Reproductive/Female
Hyster/o
Uterus
Reproductive/Female
Metr/o
Uterus
Reproductive/Female
Metri/o
Uterus
Reproductive/Female
Uter/o
Uterus
Reproductive/Female
Nephr/o
Kidneys
Urinary
2.21
Terms
Ureter/o
Definition
Ureters
System
Urinary
Cyst/o
Bladder
Urinary
Vesic/o
Bladder
Urinary
Urethr/o
Urethra
Urinary
Erlich, Medical Terminology for Health Professionals page 34 & 35
Medical Abbreviations
Medical abbreviations serve as a form of shorthand for the medical professional. Unfortunately,
some abbreviations have dual interpretations. The safest use of abbreviations is to spell the abbreviation out in its full form when in doubt. Each medical office should keep a list of approved
medical abbreviations for both the coder and the transcriptionist. PMCC Chapter 3 describes the
standards for abbreviations in medical documentation.
References
Heuther, S and McCance, K, Pathophysiology, C.V. Mosby, St. Louis, 1990, page 755.
Ehrlich, A., Medical Terminology for Health Professionals, 3rd edition, Delmar Publishers, San
Francisco, 1997, pages 4-5 and 7.
Fulton-Schools Winkler Science Project: Human Anatomy and Physiology at http://fulton.ed
zone.net/cites/winkler-science/team2/chap4.html#tissues.
What You Need to Know About Dermatology at http://dermatology.about.com/library /
blnailanatomy.htm.
Puget Sound Blood Center at http://www.psbc.org/default.htm.
Healthy Hearing [Health_Hearing_Newsletter@newsletter.healthyhearing.com].
Cell Based Wellness Systems at http://www.carbonbased.com/.
2.22
2007 PMCCVolume 1

For questions 110, match the term with the definition.
1. _____ Splen/o
a. Urinary Bladder
2. _____ Ten/o
b. Skin
3. _____ Ot/o
c. Uterus
4. _____ Hidr/o
d. Small Intestine
5. _____ Vesic/o
e. Spleen
6. _____ Metr/o
f. Tendon
7. _____ Enter/o
g. Kidney
8. _____ Phleb/o
h. Ear
9. _____ Cutan/o
i. Sweat Gland
10. _____ Nephr/o
j. Vein
11. Take the following words, break them into their components (fill in the blanks) and describe
their meaning in the space provided (hint: define each component and then determine the
words meaning).
a. Cardiomegaly
_______ /_ _____ /_ _____
b. Pericardiocentesis
_______ /_ _____ /_ _____ /_ _____
c. Lithotomy
_______ /_ _____ /_ _____
2.23
2.24
d. Lithotripsy
_______ /_ _____ /_ _____
e. Neuralgia
_______ /_ _____
f. Myalgia
_______ /_ _____
g. Gastroenteritis
_______ /_ _____ /_ _____ /_ _____
h. Poliomyelitis
_______ /_ _____ /_ _____ /_ _____
i. Rhinorrhea
_______ /_ _____ /_ _____
j. Dysmenorrhea
_______ /_ _____ /_ _____ /_ _____
2007 PMCCVolume 1
12. Transform the following medical terms into the pleural forms.
a. Conjunctiva
_____________________
b. Bacillus
_____________________
c. Bacterium
_____________________
d. Vertex
_____________________
e. Thorax
_____________________
f. Cortex
_____________________
g. Vertebra
_____________________
h. Bronchus
_____________________
i. Sulcus
_____________________
j. Hemarthrosis
_____________________
13. Write in the CPT code set (eg, 10000s, 20000s) which would best include surgical services
for the given anatomic system.
a. Integumentary
_____________________
b. Musculoskeletal
_____________________
c. Cardiovascular
_____________________
d. Nervous
_____________________
e. Respiratory
_____________________
f. Urinary
_____________________
g. Eye
_____________________
h. Lymph
_____________________
i. Reproductive
_____________________
j. Endocrine
_____________________
2.25

Introduction
Coders need to understand the concept of documentation before assisting in auditing and
measuring records. Physicians often look to the office staff for assistance in areas where documentation style, content, and/or amount are issues. Documentation allows evaluation of the patients
progress, and includes a statement of the physicians clinical approach to stated and observed
signs, symptoms, and complaints. It promotes communication between health care providers. The
review and payment of claims are made possible through the linkage of the chosen diagnosis and
procedure codes resulting from, and discoverable within, the documentation found in the medical
record.
Issues of quality or continuity of medical care are settled by comparing and evaluating supporting
documentation. Concurrent or retrospective review relies upon documentation in the medical
record. Verification of the care provided is based upon review of the medical record. Malpractice
and cases of negligence have depended solely upon the presence or absence of clear, concise, and
legible documentation in a patients record. In addition, medical necessity issues are often settled
by supporting documentation for a procedure or diagnosis found on a billing form.
Documentation
Documentation is the recording of pertinent facts and observations about an individuals health
history, including past and present illnesses, tests, treatments, and outcomes. The medical record
chronologically documents patient care to:
n
n
n
n
n
n
n
Enable the physician and other health care professionals to plan and evaluate the patients
immediate treatment, and to monitor his/her health care
Enhance communication and promote continuity of care among physicians and other
health care professionals involved in the patients care
Facilitate claims review and payments
Assist in utilization review and quality of care evaluations
Reduce complicated medical reviews
Provide clinical data for research and education
Serve as a legal document to verify the services (eg, in defense of an alleged professional
liability claim)
Because payers have a contractual obligation to enrollees, they may request additional documentation to validate that services provided were:
n
Appropriate to the treatment of the patients condition
Medically necessary for the diagnosis and/or treatment of an illness or injury
Coded correctly
Reported correctly for the site of service
3.1
Covered Services
Covered services are those services that are payable in accordance with the terms of the benefit plan
contract by the payer. Such services must be documented and medically necessary for payment to
be made.
Medical Necessity
Payers define medical necessity as services or supplies that are:
n
In accordance with standards of good medical practice

n Consistent with the diagnosis
n The most appropriate level of care provided in the most appropriate setting
The definition of medical necessity may differ among payers. Medically necessary services often
depend on the benefit plan.
Documentation Standards
Some of the most critical questions a coder should ask about the standards of documentation are:
1. Is the reason for the patient encounter documented in the medical record?
2. Are all services that were provided documented?
3. Does the medical record clearly explain why support services, procedures, and supplies were
provided?
4. Is the assessment of the patients condition apparent in the medical record?
5. Does the medical record contain information on the patients progress and on the results of
treatment?
6. Does the medical record include the physicians plan for care?
7. Does the information in the medical record provide a reasonable medical rationale for the
setting and services that are to be billed?
8. Does the information in the medical record support the care given when another health care
professional must assume care or perform medical review?
The better the documentation is, the easier to identify the procedures and select the right codes
and modifiers. One of the best ways a physician can speed the coding process and ensure optimum
reimbursement is by dictating precise operative reports.
Documentation Criteria
The following criteria apply to documentation and frequently preface bulletins and local coverage
determinations:
1. The medical record should be complete and legible. Every page in the record should contain
the patients name or ID number.
2. The documentation of each patient encounter should include the date; the reason for the
encounter; appropriate history and physical exam; review of lab, x-ray data, and other ancillary
services, if appropriate; assessment; plan for care (including discharge plan, if appropriate); and
legible identity of the observer.
3. Past and present diagnoses should be accessible to the treating and/or consulting physician.
3.2
2007 PMCCVolume 1
4. The reasons for and results of x-rays, lab tests, and other ancillary services should be documented or included in the medical record.
5. Relevant health and risk factors should be identified. Medication, allergies, and adverse reactions should be prominently noted in the record.
6. The patients progress, including response to treatment, change in treatment, change in
diagnosis, and patient noncompliance should be documented. The documentation for each
encounter needs to be complete to avoid relying on prior chart entries.
7. The written plan for care should include, when appropriate, treatments and medications,
specifying frequency and dosage, referrals and consultations, patient/family education, and
specific instructions for follow-up.
8. The documentation should support the intensity of the patient evaluation and/or the treatment, including thought processes and the complexity of medical decision making.
9. The CPT/ICD-9-CM codes reported on the health insurance claim form or billing statement
should reflect the documentation in the medical record for each date of service.
10. When a consultation has been requested, there should be a confirmed note from the consultant in the medical record, along with the appropriate written opinion and or advice from the
requesting physician or appropriate source.
Privacy Regulations
No discussion of documentation is complete without an overview of the administrative simplification provisions of the Health Insurance Portability and Accountability Act (HIPAA) of 1996. The
act was created to protect individuals against the loss or decrease in benefits related to work status
and also to standardize the way information about an individuals health is transmitted and how
the information is protected from unwarranted intrusion. The administrative simplification provisions address electronic transmission of medical claims, which is required for all Medicare claims
submitted by covered entities (defined in the next section), standardized code sets, which include
ICD-9-CM, CPT, and HCPCS Level II codes, and privacy regulations that give the patient
greater voice in the release of protected health information. Under transmission standards, physicians must take steps to secure electronically transmitted patient information from unauthorized
disclosure and interception, including establishing policies and safeguards governing the gathering,
storing, use, and disclosure of identifiable patient information.
Documentation and protecting patient information are central to privacy regulations, which
went into effect in April 2003. Privacy regulations affect coders and their part in protecting
patient information should be written into the compliance plan governing the physicians office.
HIPAA sets a national standard for accessing and handling medical information and health care
providers, health plans, and other health care services that operate in all states and must abide by
the minimum standards set by HIPAA. Any state is free to adopt laws that give more privacy, but
it cannot take away the basic rights given by HIPAA. National standards include the right of the
patient to see, copy, and request to amend their own medical records. The provider can charge for
copies of records, but HIPAA sets limits on the fees.
In addition, the provider must give patient notice of the HIPAA privacy rule, which explains
patient rights under the rule and how a patient may file a federal complaint in the event the patient
believes these rights have been violated. The provider must keep an accounting of disclosures,
although there are several exceptions to the accounting requirement. For example, accounting is
3.3
not required when records are disclosed to the many individuals who see your records for treatment, payment, and health care operations (TPO). Those involved in TPO do not need to be
listed in the disclosure log.
Providers must make exceptions to the way medical information is conveyed, per patient request.
For example, a patient might prefer that telephone calls about treatment be made to the home
rather than the office, or the patient might want notices, like appointment reminders, sent to a
post office box instead of the home address. Patients also may designate individuals privy to health
information such as family members, close friends, or relatives.
The HIPAA Standards Office of the Centers for Medicare and Medicaid Services is responsible
for transactions and code sets, security, and identifiers for providers, insurers, and employers for
use in electronic transactions. The Office of Civil Rights (OCR) of the Department of Health and
Human Services is responsible for the implementation and oversight of privacy regulations. For
more about state laws, visit the web site of the Health Privacy Project at www.healthprivacy.org.
Covered Entities
The HIPAA Privacy Rule pertains to three categories of covered entitieshealth care providers,
health plans, and health care clearinghouses. Health care providers are covered if they transmit
health information electronically. As long as information is transmitted electronically, health
care providers include doctors, hospitals, staff involved in treatment, laboratories, pharmacists,
dentists, and many others that provide medical, dental, and mental health care or treatment.
Health plan means almost any plan that pays for the cost of medical care. This includes health
insurance companies, health maintenance organizations, group health plans sponsored by an
employer, Medicare and Medicaid, and virtually any other company or arrangement that pays
for health care. Health care clearinghouses can be any number of organizations that work as a go
between for health care providers and health plans, such as a billing service that takes information
from a doctor and puts it into a standard coded format.
The federal government is pushing ahead with plans to develop electronic health records. In April
2004, President George W. Bush called for the majority of Americans to have an electronic health
records within 10 years and signed an executive order that established a national coordinator for
health information technology.
The coordinator has since established four goals: bringing electronic health records into clinical
practice, electronically connecting clinicians to other clinicians, personalizing electronic health
records for consumer use, and the packaging and reporting of clinical data for population
health. The coordinator is working with several private and federal groups, such as the National
Committee for Vital and Health Statistics, to reach the goals.
Class Exercise 3.1
1. Name four reasons why documentation is important.
a.
b.
c.
d.
3.4
2007 PMCCVolume 1
2. What are covered services?
3. Payers define medically necessary services or supplies as consisting of these three elements:
a.
b.
c.
4. In regard to x-rays, lab tests, and other ancillary services, documentation should include
the _ ________ and __________ of those services in the medical record.
5. Each page of the medical record should contain the patients ___________ or
_ ________________.
Importance of Documentation and Coding

In many specialties, the coders greatest liability is a lack of familiarity with anatomy, physiology,
and terminology. Coupled with a busy physicians assumption that relayed information has been
understood and submitted for payment, billing problems can occur.
Physicians who furnish explicit diagnoses and/or procedures to the coding staff are taking the first
step towards appropriate reporting for statistical data and reimbursement. With clear information,
the coder can choose accurate and specific diagnosis and procedure codes.
Since the phase-in of RBRVS in 1992, Medicare has instituted strict rules and regulations
governing payment. Some procedures, if billed, will invoke penalties. Others have limited or
restricted payment. A specific follow-up period is stated for major and minor procedures with strict
rules governing postoperative complications.
Medicare offers seminars and distributes carrier bulletins, letters; and newsletters for office education. The Federal Register also provides regulatory rules to the general public. With all of these
tools available, the office staff is expected to know the rules and adhere to them.
PPO, HMO, Medicaid, TRICARE/CHAMPUS, Workers Compensation, and many private
insurers employ their own rules regarding coding and reimbursement. If participating in a
network, even more restrictions apply.
In todays regulatory environment, postpayment review and audit are increasingly prevalent realities. Many now have the capability to cross-reference all physician billings for a 24 hour period.
3.5
Good documentation is the only defense for the physician in these cases. The auditors motto
is, Not documented, not done. If the medical record shows no evidence of the performed test,
procedure, or service, the reimbursement must be returned and an overpayment and possible
interest penalty paid.
Overutilization, overcharging, and suspect billing practices can also result in an audit. If abuse or
fraud is suspected in the Medicare or Medicaid programs, the government may call an investigation and, in cases of guilt, levy monetary penalties.
The best course for any coder is to stay informed. Read, attend seminars and workshops, subscribe
to newsletters, attend payer meetings, analyze Explanation of Benefits (EOB); and work closely
with the provider relation representatives in the respective payer offices. Monitor claims and do not
hesitate to ask for a review if too little or nothing was paid on a claim believed to be valid.
CMS Document Requirements

The May 9, 1992, HCFA, (now CMS) bulletin for Associate Regional Medicare Administrators,
Issue 9, describes documentation requirements. The decision from CMS is: 1) progress notes
should stand alone, making it unnecessary to search earlier notes to determine the reason for
the encounter, 2) the SOAP format system is satisfactory although absolute compliance is not
required, and 3) the complexity of the medical decision making process is determined through the
physicians narrative.
A rule of thumb for coders: Coding summary forms cannot be used as a substitute for documentation in the medical record.
Medical schools and intern/residency programs often advocate the SOAP format because of its
simplicity and popularity. This format allows for the statement of subjective and objective factors
as well as the physicians assessment of plan for the patients care and follow-up. As mentioned,
CMS recommends it as a documentation prototype.
SOAP
The SOAP format is a nationally recognized and commonly accepted method of recording patient
visits. SOAP is an acronym for:
SubjectivePatients complaint.
ObjectiveVisible or observable findings.
AssessmentIntegration of subjective and objective treatment plans.
PlanTreatment plans.
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2007 PMCCVolume 1
SOAP Format
S
Subjective complaints, presenting problems, etc.
O
Objective factors, observable findings
A
Assessment, diagnostic process, probable diagnosis(es), total impression based on subjective and
objective factors
P
Plan for treatment to include medications, tests, return visit information, medication side effects,
instructions for notifying office, etc.
A standard format, like SOAP, is a valuable way of recording patient encounters in an organized
and consistent manner. Without a systematic approach, patient information can turn into a
lengthy, rambling, disorganized narrative that varies from physician to physician.
Another benefit of the SOAP format is its similarity to the elements of the evaluation and management (E/M) levels of service, as outlined in CPT. By using the SOAP format, the individual
components of an E/M service is easily recognized in the chart and is more straightforward.
Many variations on this style exist and one such example is CHEDDAR, which takes the SOAP
philosophy several steps ahead. CHEDDAR stands for: chief complaint, history, exam, details,
drugs and dosage, assessment, [plan for] return, revisit, etc. This added information can only help
in the event of postpayment review or audit.
CHEDDAR Format
C
Chief complaint, presenting problems, subjective statements
H
History; social and physical history of presenting problem as well as contributing information
E
Examination, including extent of body systems examined
D
Details of problem and complaints
D
Drugs and dosagefor example, a list of current medications used
with dosage and frequency
A
Assessment of observations adding all known factors into either possible or defined diagnosis(es)
as well as orders for diagnostic testing, lab testing, etc., medication changes, and warnings
regarding side effects, etc.
R
Return visit information, if applicable
3.7
Diagnosis with Payment Potential

Accurate documentation enables the coder to make the correct coding choices. As an example, if
the physician documents or circles a nonspecific diagnosis, the coder is left to select from several
generic codes in ICD-9-CM. If the medical professional indicates a specific problem, however, the
coder is able to select a more exact and accurate code with better reimbursement potential.
Example
The physician determines that a patient should be scheduled for a diagnostic cardiac
catheterization. All signs, symptoms, and other diagnostic tests have pointed to an occlusion, even though the patient has not experienced a myocardial infarction. If the physician
indicates coronary artery disease (CAD) or arteriosclerotic heart disease (AHD) to the
billing office, generic codes must be selected to report the reason for the cardiac catheterization. If the physician states occlusion without infarction, which is the best notation
to describe the patients condition, the coder can select a more specific code that indicates
medical necessity.
Basic Documentation
Prompt Entries
With a physicians active schedule and the number of patients seen each day, it would be extremely
difficult for a physician to remember all details of each patient encounter. For that reason, information should be entered in the patients chart at the time of service, or immediately following
the service.
The importance of timely entries is more critical in cases where the patient is undergoing a complicated set of services by different health care providers. The patients chart becomes a vehicle for
communication between the providers involved with the patients care. If entries are not made at
the time of service, crucial information may be missing when another provider needs to refer to the
patients chart. This lack of documentation could have a negative impact on the patients medical
treatment.
Medicare
According to CMS, Section 30.6.1 A, 2nd paragraph, it states, The service should be
documented during, or as soon as practicable after it is provided in order to maintain an
accurate medical record.
Dictation for Documentation

Dictation should be an efficient, thorough, and organized method for recording patient information. In fact, more and more physicians are switching from handwritten notes to dictated notes
because they are able to record more information in less time. Also, some malpractice insurance
companies now mandate that all notes be dictated. As the saying goes, If you cant read it, it was
not documented and/or done.
Physicians dictating their patient notes must take special precautions. Often there is a delay
between the patient visit and when the information is placed in the chart. It may take several days
for the transcriptionist to transcribe the recorded information and return it to the physician who
then reviews it for accuracy, signs it, and places it in the patients chart. Any corrections should be
made before it becomes part of the record. During this time, it may be necessary for the physician
to enter into the chart a written summary of the services rendered on that date. The summary must
3.8
2007 PMCCVolume 1
contain enough information about the patient encounter that it could be used in place of the transcription in case of loss, misfiling, or inaccuracies. Remember, it must be legible to all readers.
Date and Time

The date and time should accompany all entries. Including the time of service is also important
so the events of a patients medical treatment may be reconstructed at a later time. A patient who
receives one medical treatment followed by another event and more medical treatment at a later
time on the same date is an example. If the time of the service is significantly different from the
time of the chart entry, both times should be recorded in the chart. These steps are major factors
in a physicians defense in a malpractice case.
The amount of time spent with a patient for a consultation or a procedure is an important factor
in some coding circumstances. While most CPT codes do not include a time element, there are
some codes (eg, critical care, preventive medicine counseling, and prolonged physician attendance)
that require the physician to record the amount of time spent.
When documenting time spent providing critical care or prolonged attendance services, always
subtract the time spent providing other services coded. In other words, calculate only the time
spent providing critical care or prolonged attendance and not the time spent on other services.
Signatures
Medicare requires a legible identity for services provided/ordered. The method used (eg, hand
written, electronic, or signature stamp) to sign an order or other medical record documentation for
medical review purposes in determining coverage is not a relevant factor. Rather, an indication of
a signature in some form needs to be present. Payers have been cautioned against denying a claim
on the sole basis of type of signature submitted.
Physicians using alternative signature methods (eg, a signature stamp) should recognize that there
is a potential for misuse or abuse with a signature stamp or other alternate signature methods. For
example, a rubber stamped signature is much less secure than other modes of signature identification. The individual whose name is on the alternate signature method bears the responsibility for
the authenticity of the information being attested to. Physicians should check with their attorneys
and malpractice insurers in regard to the use of alternative signature methods.
Many private payers do not require a signature or initials, but because medical records can, and
often do, become legal documents, a full signature is generally the best practice. When billing for
outpatient hospital facilities, signatures become a major concern.
Cosignatures
Medicare
Medicare reimbursement does not depend on the physicians cosignature on a nonphysician provider (NPP) chart. CMS rules for NPP services allow the NPP to submit the
bill under his or her own provider number. Insurers other than Medicare may adopt
Medicares rules on incident to billing, or may write their own rules. If an NPP conducts
a visit with a new patient, the practice must make a choice: either bill the visit under the
NPPs provider number or bill the visit under the physicians provider number, (incident
to), and have the physician, not the NPP, perform and document the portions of the
evaluation relevant to the procedure code. The physicians signature or writing agree on
an NPs evaluation will not suffice for Medicare.
3.9
Coders Tip
Malpractice carriers and state rules for NPP services may impose regulations on cosignatures and time frame requirements. Providers are encouraged to verify with state regulatory agencies for specific NPP guidelines and billing instructions.
Signatures on Dictation
According to Medicare guidelines, the physician must sign dictated notes before they are placed
in the patients chart. A signature alongside the note indicates the physician read the transcription
and approved the information.
Electronic Signatures
Electronic signature systems use a code or other means to uniquely identify each physician having
access to the system. The physician signs an electronic record by entering his or her code into
the system. Congress included provisions to address the need for security and electronic signature
standards and other administrative simplification issues in the Health Insurance Portability and
Accountability Act of 1996 (HIPAA), Public Law 104-191, which was enacted on August 21, 1996.
The standards have not been finalized. The HIPAA proposed standard would require certain security service features such as message integrity, nonrepudiation, and user authentication.
Class Exercise 3.2
1. All payers employ the same rules concerning coding and reimbursement.
a. True
b. False
2. To monitor reimbursement and coding patterns by providers, payers conduct
_ ________________________________________ .
3. The acronym SOAP stands for:
4. In the SOAP format, the integration of subjective and objective treatment plans is
found in the _ _____________ portion of the documentation.
5. If the physician documents an unspecified diagnosis on the progress note but circles
a more specific diagnosis on the encounter form, the coder may choose the more
specific diagnosis for the submission of the claim when verifying the coding information is correct.
a. True
b. False
6. According to Medicare guidelines, dictated notes must be __________ by the physician before they are placed in the patients chart.
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2007 PMCCVolume 1
Acronyms and Abbreviations

Standard acronyms, understood by the general medical community, serve as an excellent shorthand tool for physicians. These acronyms are acceptable in the medical record as long as they are
commonly recognized. Physicians should avoid using any personalized or specialty specific abbreviations. The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) publishes
a minimum list of dangerous abbreviations, acronyms, and symbols. Beginning January 1, 2004,
the following items must be included on each accredited organizations do not use list:
Abbreviation
U (for unit)
Potential Problem
Preferred Term
Mistaken as zero, four, or cc Write unit
IU (for international unit)

Mistaken as IV (intravenous) Write international

or 10 (ten).
unit
Q.D.,
Q.O.D.
(Latin abbreviation for
once daily and every
other day)
Mistaken for each other.

The period after the Q can
be mistaken for an I and
the O can be mistaken
for I.
Write daily and every

other day
Trailing zero (X.0 mg)

Decimal point is missed.
[Note: Prohibited only
for medication-related
notations]; Lack of leading
zero (.X mg)
Never write a zero by

itself after a decimal
point (X mg), and always
use a zero before a
decimal point (0.X mg)
MS
MSO4
MgSO4
Write morphine sulfate

or magnesium sulfate
Confused for one another.

Can mean morphine sulfate
or magnesium sulfate.
Surgery Services and Operative Reports

Few medical services involve more intricate detail than a complicated surgery. The same surgical
procedure is often done different ways on different patients. Blanket assumptions cannot be made
about the way procedures are conducted.
The only visible account of a surgery, after completion, is the incision site on the patients body,
which rarely reveals clues about the procedure itself. Documentation provides the only source of
specific information about the surgical procedure and must clearly present exactly how the service
was handled in each particular instance. Without sufficient documentation, reconstruction of a
previous procedure can be extremely difficult.
Any procedure performed in an operating room, with or without a general anesthetic, usually
requires a formal dictated operative note. An operative report should be completed for all procedures that warrant a signed patient consent form.
Minor office procedures, or bedside procedures, done under a local anesthetic are often adequately
documented with a brief dictated or hand written chart note.
3.11
Example
A service that does not meet Medicares definition of a physician service will not be
reimbursed and Medicare does not reimburse for all physician services. For example,
regular physical examinations, health maintenance screening, and counseling for well
patients are assumed by the general public to be physician services, but these services
are not within Medicares definition of covered services. According to Medicare rules,
physicians must notify patients through an Advance Beneficiary Notice (ABN) if there is
a chance that the procedure or service is not covered. ABNs allow beneficiaries to make
informed consumer decisions about receiving items or services for which they may have
to pay out-of-pocket and to be more active participants in their own health care treatment decisions. More information about the ABN is available on the Medicare Learning
Network at http://www.cms.hhs.gov/medlearn/refabn.asp.
Documentation for Operative Notes

Coding operative reports requires participation from physicians and the entire medical staff. In
a clinical facility, the physician, coder, biller, manager/administrator, ancillary staff, and nursing
staff act as a reimbursement team. A facility, no matter how small, requires a team approach.
Every professional should work and support the other professionals to achieve the common goal of
accurate and appropriate reimbursement.
Originally, documentation was generated and used by physicians as a source of information about
a patients care. After providing a medical service or performing a surgical procedure, a physician
would keep notes on important information about the patient visit or procedure. This information
was kept in a patient folder where it could be easily referred to, when necessary.
Approximately 20 years ago, the physician and medical staff alone reviewed a patients medical
record. Documentation was not submitted to payers, Medicare did not request copies, and the
chances of a medical record becoming a legal document in a malpractice case were small. As a
result, standards for recording information were not developed. Physicians could be detailed or lax
in their documentation since they were often the only ones referring to the patients chart.
In the mid 1970s, however, the role of documentation in medicine changed abruptly. The reason
for this change was the dramatic increase in nationwide medical malpractice claims. Since many
medical liability suits are filed years after the initial care, the physician is not likely to remember all
the details. Medical records often provide the main source of information about the patients care.
These patient records have become a legal document critical in reconstructing the elements of the
patients medical care. They can also be the physicians only defense against charges of malpractice
or insurance fraud and are instrumental in cases of litigation including the False Claims Act.
The steps involved in accurate documentation and operative report coding include:
n
n
n
n
n
n
3.12
Patients name and demographics

Detailed dictation by the physician
A complete operative report prepared by the medical transcriptionist and correct interpretation by the coder
Report what was actually done, avoiding codes based on reimbursement value
Recognizing that coding is not only a reimbursement tool used by payers, it is also a documentation tool that is part of the patients medical history
A written account of the history, diagnosis, and procedures performed
2007 PMCCVolume 1
An operative report may appear to be written in a different language. Medical language is Latin
or Greek based and is understood within the medical community because of its specificity. Coders
must have an understanding of medical terminology as well as a correct concept of the actual
procedure performed. Good communication with the physician is essential for accurate coding.
Coders Tip
The False Claims Act imposes civil liability on any person or entity who submits a false or
fraudulent claim for payment to the United States government. In health care, the False
Claims Act prohibits making a false record or statement to get a false or fraudulent claim
paid by the government and conspiring to have a false or fraudulent claim paid by the
government. A person found in violation of the act must repay three times the amount
of damages suffered by the government plus a mandatory civil penalty of at least $5,500
and no more than $11,000 per claim. The False Claims Act allows an individual, referred
to as a whistleblower, who knows about a person or entity who is submitting false claims
to bring a suit, on behalf of the government, and to share in the damages recovered as a
result of the suit. The whistleblower is called a qui tam relator.
Dictation Guidelines for Operative Reports

Many surgical procedures require the submission of an operative report with the claim form
before payment will be made. The insurance adjudicator evaluates each coded service with details
described in the operative report. For Medicare, these codes are identified as BR (by report) or
C (carrier). If a code has a C status, it will be reimbursed only after a manual review of the documentation by the carrier. If the dictation does not justify the code, it is denied and the provider
has the option of appealing the claim.
The key to effective operative report dictation and coding is to identify, describe and code each
separate procedure performed. Never lump the procedures together if they are described as specific,
individual services. Do not be misled by the word summary. The summary must contain enough
information about the surgical procedure that it could be used to recreate the operative report in
the event of the loss of the transcription. Many surgical procedures can now be reported with one
CPT code. It is important to read the body of the operative report and not code from the procedure line at the top of the note. The body of the report must support the procedure line as well as
the postoperative diagnosis. The operative report should contain the following items:
n
n
n
n
n
n
n
n
n
Patients name and demographics

Date and time of procedure
Names of surgeon, cosurgeon, assistant surgeon
Anesthetic and anesthesiologist
Medical necessity of the procedure for the treatment of the patients condition (preoperative diagnosis)
Postoperative diagnoses
Title of procedure
Indication for surgery
Details of procedure(s)
o Patient preparation including cleansing, medications, enemas, anesthesia
o Medications used
o Summary of the procedures performed and techniques used
3.13
n
n
n
n
n
n
Instruments and/or machinery used

o Depth and extent of incisions
o Clinical findings during the procedure
o Nature, location, and depth of resections
o Depth of instrument penetrations through body orifices or cavities
o Foreign bodies observed or removed
o Nature and amount of material drained
o Location, number, and size of lesions excised, biopsied, curetted, frozen, exposed to
laser light or otherwise removed
o Nature, source, and size of specimens sent for pathological examination (results of
pathological examinations must be incorporated into the patients medical record
when they are received)
o Reference to any appliances, hardware, etc., left in patient
Complications and unusual services
Immediate postoperative condition
Estimate of blood loss and replacement
Fluids given and invasive tubes, drains and catheters used
Signature
Instrument and sponge count
While all elements may not be necessary on every report, their importance increases with the
complexity of the procedure. A biopsy, for example, does not require the same level of detail as an
open laparotomy procedure.
Elements of the Operative Report

Preoperative DiagnosisThe preoperative diagnosis is often a presumed diagnosis, as findings
during and after surgery can lead to a different postoperative diagnosis.
Postoperative DiagnosisThe postoperative diagnosis is a more definitive diagnosis, based on intraoperative findings. This diagnosis is the basis for ICD-9-CM code selection and must be supported
in the body of the report.
Title of ProcedureThe operative report must include a listing of all procedures performed, usually
in chronological order. If eponyms are used, add a technical description to ensure proper understanding for anyone who may see the chart. Procedures performed by the anesthesiologist are
also listed here. Do not code from this section but use it as a guide when reading the body of the
procedure.
SurgeonsAll surgeons involved with the procedure should be listed, including the primary
surgeon, cosurgeons, and assistant surgeons.
For surgical procedures with more than one surgeon, the primary surgeon is responsible for the
procedural note. A resident, intern, or assistant can dictate the note, but the primary surgeon must
indicate agreement by reading and signing it.
Do not confuse cosurgeons with assistant surgeons. Cosurgeons, usually called in to handle a
particular area of expertise, have shared responsibility in the procedure and must record their
involvement. Cosurgeons should dictate their own note showing their specific involvement in the
3.14
2007 PMCCVolume 1
procedure(s). Assistant surgeons only provide assistance when needed. They do not have their own
responsibilities and do not dictate a separate note.
When cosurgeons dictate a portion of the procedure, they should make clear at what point they
became involved, such as, Dr. A performed an abdominal hysterectomy. I then proceeded with a
resection of the rectum and colon and performed a colostomy. After finishing, I turned it over to
Dr. B, who removed the bladder and transplanted the ureters.
Due to the complex nature of some surgeries that require the expertise of several cosurgeons, the
dictation can become very complicated. The best way to handle such a situation is for one of the
surgeons to be placed in charge of the overall dictation. That surgeon then gives an overview of the
entire procedure describing each surgeons role and how that role fits into the procedure as a whole.
Each surgeon then dictates his or her involvement in the procedure in descriptive terms.
Anesthesia and AnesthesiologistThe type of anesthesia used should be reported with the name of
the anesthesiologist or nurse anesthetist. It is often helpful to note the anesthesia time as well.
IndicationsNoting indications helps establish the medical necessity of the procedure and gives
a good foundation for coding. Include a brief history or summary of the cause for the surgical
intervention.
Procedure in DetailThe procedure in detail constitutes the ultimate source of documentation for
the procedure, and payers consider it the final resource for payment decisions. It should read like
a step-by-step report of the operation and be as descriptive as possible using phrases that reflect
CPT terminology. Include the structures and layers of tissues involved, as well as the length of all
incisions and the size of all pertinent normal or abnormal structures.
Eponyms do not provide sufficient information about the procedure and how it is performed.
The description should include a report of any abnormalities or special circumstances, and most
importantly, any complications or differences in approach.
The nature of the complication should be reported, as well as the amount of time taken, in relation
to the length of the surgery. If one hour of a nine hour surgery was spent dissecting adhesions, it
should be stated in the documentation. Not only will this practice make the documentation more
complete and accurate, it is necessary to support a higher level of coding.
ComplicationsAny intraoperative misadventure should be summarized in the complications
section of the operative report. Specific information about the complications and the steps taken
to deal with them belong in the body of the report.
Some physicians feel that documenting a complication, unusual situation or misadventure that
could result in an unfavorable outcome only increases the risk of a malpractice suit. Attorneys agree
however, that not reporting these problems raises suspicion in the event of litigation.
Unusual ServicesAny time a procedure involves services that are unusual or unique, they should
be documented in the patient record with an explanation of why the procedure was unusual. For
instance, did it involve dissecting extensive adhesions or was unusual anatomy discovered. If the
unusual circumstance involved a nonstandard approach or some other unique way of accomplishing the procedure, that information should be in the documentation.
When dictating unusual services, the physician should state that the procedure was unusual and
explain how it compares to the same procedure under normal circumstances.
3.15
Postoperative ConditionThe condition of the patient at the completion of the surgery, as well
as the disposition (postoperative location of the patient), should be documented in the operative
report, whether the patient is stable in a recovery room or critical in the intensive care unit.
Additional InformationThe following elements should be included in the documentation where
applicable: Estimated blood loss (compared to the normal range), type, and quantity of intraoperative fluids given (such as blood), catheters, tubes, or drains left in the patient (eg, intravenous
blood lines, urinary catheters, or drainage systems). Also, include any foreign bodies intentionally
left in the operative site.
Alternative TherapiesThe report must indicate that the patient was given adequate information to
sign an informed consent, including information on alternative therapies secondary to increasing
liabilities involved in operative procedures.
The alternative therapies are individually named in the consent form and state the risks and
benefits of each one, along with a statement outlining the risks and benefits of the current surgery.
The physician should note that the patient indicated an understanding of their discussion.
Read Before SigningAs with other types of services, if dictation is the method used to document
an operative report, the surgeon must read the transcription before signing it.
The transcription may contain inaccuracies and spelling errors. To ensure this does not become part
of the patients permanent medical record, the physician must read the transcription completely
before signing. The transcription is not official technically until signed, so changes can be made
prior to a signature. A copy should also go into the patients clinic chart so that two separate copies
are maintained, making cross-referencing easier.
Documentation in general whether written or transcribed, should be completed during or as soon
as possible in order to maintain an accurate medical record.
Authentication
Authentication of a medical record serves as proof that the author has written and verified the
contents. The Code of Federal Regulations (CFR, section 482.24 (c) (1), outlines the authentication
rules very clearly. State laws and by laws may sometimes allow for specific provisions however it is
imperative that providers realize that they are liable for the content even if the records are not read
or signed. An audit could find records incomplete when unsigned.. The regulation is listed below.
CFR 482.24(c)(1) All entries must be legible and complete, and must be authenticated and dated
promptly by the person (identified by name and discipline) who is responsible for ordering, providing,
or evaluating the service furnished. (i) The author of each entry must be identified and authenticate his
or her entry. (ii) Authentication may include signatures, written initials, or computer entry.
Additionally, the Interpretive Guidelines for 482.24(c)(1) state:
The parts of the medical record that are the responsibility of the physician must be authenticated by
this individual. When nonphysicians have been approved for such duties as taking medical histories or
documenting aspects of physician examination, such information shall be appropriately authenticated by
the responsible physician. Any entries in the medical record by house staff or nonphysicians that require
counter signing by supervisory or attending medical staff members shall be defined in the medical staff
rules and regulations.
3.16
2007 PMCCVolume 1
Office Operative Reports

The degree of detail contained in a physicians office operative report will probably be dictated by
how the notes are transcribed in the office. Phrases and work forms can be developed that allow the
transcriptionist to do operative reports while accommodating the necessary components required
by many carriers. The physicians signature should go at the bottom of the report along with the
signed date. Smaller offices may wish to develop a fill in the blanks form for each type of routine
or uncomplicated surgery, or write directly on the progress notes. Either way, the surgery should
be documented so the notes clearly demonstrate the patients name, date of service, procedure,
necessity, diagnosis, preoperative measurement of lesion, site, repair type, postoperative diagnosis,
postoperative site measurement, patient instructions, signature of operating physician, and date of
signature.
Key phrases could be included such as enable closure, restoration of anatomical site, reconstructive, or functional and/or best cosmetic result. This terminology can only increase the accuracy
of the medical record while still satisfying the carriers criteria for billing.
Each surgery section and subsection includes rules that physicians and coders must follow.
Reading and Coding Operative Reports

The following points offer a methodical approach to deciphering and coding surgical records:
1. The original operative report should not be marked up; a copy to work off should be available as notes are made.
2. When scanning an operative report, if a copy of the note is permitted, a ruler and highlighter
may serve as invaluable tools to use for coding and research. This is not part of the permanent
medical record and should never be used as a replacement to the original, or placed in the
patients chart.
3. First, look at the operative note to verify what procedure was performed; there may be additional procedures listed. Before coding additional procedures separately, make sure that they
were not part of the main procedure. Some procedures are inherent to others. For example, a
surgeon may record in the operative note that he/she did an exploratory laparotomy (a surgical
opening into the abdominal wall). However, in the process he/she discovers that the appendix
must be removed. In this situation, the appendectomy would be coded but not the exploratory
laparotomy because it was the diagnostic part of the basic procedure. In CPT, an exploratory
laparotomy is a separate procedure.
4. The coder should code only the operations that were actually documented in the body of the
operative report. If there is a discrepancy between the operative report and the procedure line,
the physician should be consulted. If additional procedures were performed, the physician may
document the operative report with an addendum.
5. Care should be taken when referenced codes have a note following them stating separate
procedure. A separate procedure is a service that is performed as part of a larger procedure
and would not be coded separately. If the separate procedure is the only surgical procedure
performed, or is unrelated to the major procedure being done at the same time, it can, at times,
be a reportable service.
6. Terms such as undermining (cut in a horizontal fashion), take down (to take apart), or lysis of
adhesions are part of major surgical procedures and should normally not be coded separately.
3.17
7. Once the CPT codes have been determined, the corresponding ICD-9-CM diagnosis code
must be assigned. Usually there is a preoperative and postoperative diagnosis stated at the
beginning of the operative report. The report must be scanned to ensure all procedural and
diagnostic codes have been identified. The postoperative diagnosis is the primary diagnosis
and if any additional diagnostic statements are present, they should be reported as a secondary
diagnosis. If there are any further questions, check with the surgeon. Remember, the diagnoses
listed on the postoperative diagnosis line must be supported in the body of the report.
8. Reference other parts of the patients chart by examining the pathology report, history, etc., to
ensure that the correct diagnosis code for the procedure performed was chosen. For example,
a pathology report would indicate if a biopsied lesion was benign or malignant and thus affect
the diagnosis.
9. Become familiar with certain surgical terms such as the following:
ResectionSurgical removal of a section or segment of an organ or body structure.
TransectionA cutting or section made across the long axis of a structure.
BisectionDivision by cutting into two parts.
Blunt DissectionSeparating tissue with a finger or blunt instrument without cutting.
Sharp DissectionA separation of tissues using a sharp instrument for cutting, such as a scalpel.
AnastomosisThe joining together, such as two hollow organs, two arteries, or veins.
10. Note the position of the patient during surgery, especially for back procedures. The patients
position indicates different approaches that a surgeon may use to perform a procedure and will
assist in selecting the correct code.
11. When reviewing operative notes, identify which surgical approach was used. For example, code
58820 states that this procedure is drainage of an ovarian abscess from a vaginal approach,
whereas code 58822 states drainage of ovarian abscess, abdominal approach. The selection of
the correct code will depend on the surgical approach used.
12. Any unusual details should be noted, including special instruments or other aids. If multiple
procedures are performed, they should be noted. If they can be billed separately and are not
inherent in a major procedure, modifiers may be needed to alert the payer that multiple
procedures were done. Read all paragraphs of the operative report. If more than one surgeon
participated in the surgery, clarify the additional providers role (62 cosurgeon, 66 team
surgery, 80 assistant at surgery, 81 minimum assistant surgeon, or 82 assistant surgeon). These
modifiers are placed, as appropriate, following the five digit CPT surgery code. A good rule to
followif the specific surgery always requires another procedure, the main procedure is usually
the code selected.
These tips should aid the coder in reading and understanding technical operative reports to achieve
the maximum and justifiable level of reimbursement.
When coding operative reports, the following list is useful and is intended to help in the understanding of operative reports and choosing the correct CPT code(s):
3.18
Approach
Findings
Indication
2007 PMCCVolume 1
Closure
Index/code range(s)
Correct CPT codes
Applicable modifiers
n Rationale for CPT code choice
Lesions
When documenting procedures involving lesions, it is important to record the size of each lesion.
If the actual size of the lesion is not documented, coders and payers commonly downcode to the
smallest size available for reporting purposes. When measuring the size of a lesion, consider the
following:
1. Lesions should be measured prior to infiltration.
2. Lesions should be measured in centimeters. The measurement total should also include the
narrowest margin required to fully excise the lesion.
3. It is not acceptable to use the lesion size reported in the pathology report. The lesion may have
been placed in a solution that could have caused it to shrink or expand and therefore the size
reported, may be inaccurate.
4. Recording the precise size is needed to accurately code and involves the actual numeric size
(2 cm), not just in terms like small, medium or large. The CPT book illustrates the correct
measurement of a lesion in the Integumentary section.
CMS reviews each claim with more than five surgical procedures (involving lesion destruction)
that are performed on one patient, the same day. Some states automatically review claims for more
than one lesion destruction per patient, per day. Appropriate documentation of lesion destruction
consists of the following: diagnosis(es); anatomic diagram indicating the site(s), size and number
of lesions treated; the method of destruction, and any extenuating circumstances.
Skin and Grafting

Skin grafting is reported in square centimeters, but burns are often documented by percentage of
total body surface area (TBSA) affected. A simple rule for determining the extent of a patients
burn is to consider the palm of the hand is equal to approximately one-half of one percent of the
total body surface area. Another method for determining body surface in adults is the rule of nines.
The total body surface equals 100 percent. Of this:
n
n
n
n
n
The head is 9 percent

Each arm is 9 percent
Each side of the trunk (front or back) is 18 percent
Each leg is 18 percent
The perineum is 1 percent
To convert the percentage of TBSA in a large male adult to square centimeters, multiply the
percentage by 2.0 square meters or 20,000 square centimeters.
3.19
Danger of Assumptions
Coders must learn to apply the terminology used in CPT and the language of payers. For coding
purposes, the word deep does not tell how many layers were involved although physicians may
think the term indicates complex repair. According to CPT guidelines, the repair of a deep
laceration could be listed under the codes for intermediate or complex repairs. Stating that a
procedure was done in the usual manner may or may not be clear to the coder, and it may be
completely unclear to an auditor or court of law. Use words like simple, intermediate, or complex.
Describe the procedure with words such as basic, uncomplicated, standard, normal, complicated,
difficult, or unusual. The provider should expand upon those words and give more details.
Operative Report Checklist

Problems occur when dictation is incomplete or unclear. A three hour surgery cannot be described
adequately in two paragraphs. A physician cannot rely on a staff coder or an insurance adjudicator
to be aware of details and procedures that are not fully explained or included in the report.
Complete details and documentation make a decided difference in the coding and consequently,
the correct reporting of any surgical procedure. Applying the following suggestions will help
ensure accurate and correct reporting of procedures.
1. The dictation should match the seriousness of the circumstances and procedures. If there
were extensive complications, the words extensive complications should be included in the
report. Words or phrases like very difficult, complicated, unusual circumstances, extensive,
and multiple, or ordinary, uncomplicated, and simple, help the coder verify the appropriate
codes and modifiers to describe the service rendered. It is essential that the selected codes are
validated by the operative report.
2. Modifier 22 for unusual services may not be added unless the operative report states that
unusual services were performed beyond the context of the normal procedure. When these
unusual services are performed, document the extra time and skill required and add modifier
22 to the procedure code.
3. The length of time spent on each procedure should be specified, especially if the time spent is
of unusual duration.
4. The length of all repairs should be specified. The centimeter size directly influences the coding
options and payment. Unless the length is stated in the operative report accurately, correct coding
for the repair procedures (ie simple, intermediate, and complex) will be difficult to determine.
The layers of skin, subcutaneous tissue, down to the bone, that are involved in a procedure should
be documented. In some cases, the depth of involvement will determine the code selected to
describe the procedure. For lesion excisions, specify the diameter of the lesion.
5. Time spent in prolonged attendance should be documented.
6. Unusual circumstances and the use of special instruments or aids, such as an operating microscope or fluoroscopic assistance, should be recorded. There are several modifiers to describe
specific circumstances (eg, the use of a surgical team or an assistant surgeon). The time spent
using an operating microscope, fluoroscopic assistance or other special aids should also be
documented.
3.20
2007 PMCCVolume 1
Nonphysician Provider Services

Physicians are not the only ones who provide medical care to patients. Many medical services
are provided by nonphysicians such as registered nurses, physician assistants, nurse practitioners,
certified registered nurse anesthetists, and registered physical therapists. All are licensed to provide
specific services under the supervision or direction of a physician. While the care they provide is
usually in conjunction with the physicians service, there are instances when nonphysician practitioners act independently. The documentation requirements for nonphysicians are the same as
those for physicians, with the addition of information concerning the physicians role in directing
or supervising care.
When documenting nonphysician services, the physician should note the need for and level of
involvement of the nonphysician provider. Also, the level of supervision should be provided. Many
services require direct physician involvement. Other services only require a referral from a physician. It is important to know the specific requirements and indicate in the medical record the
appropriate level of participation.
In general, private payers reimburse services rendered by nonphysicians as long as they are
within the scope of practice for their state and/or in conjunction with the physicians services. In
some instances, nonphysicians may bill their services separately, per state rules, regulations, and
licenses.
Medicare
Incident to services are services that are provided by nonphysician providers employed by
the physician. They include nurses, physicians assistants, anesthetists, psychologists, technicians, and occupational and physical therapists. All of this health care is billed as if the physician had furnished the services. To qualify as an incident to service, it must be:
n
An integral part of a doctors diagnosis or treatment

Provided under the direct supervision of a physician
n Performed by an employee or leased employee of the physician
n Typically performed in a physicians office or clinic
n
These services do not have to be associated directly to a specific physician action. It may be a part
of a doctors treatment plan. If the incident to service is part of a patients care and furnished
during that care, Medicare should cover it.
The physician does not have to be in the same room with the NPP performing the service.
However, the physician must be in the office suite and readily available to provide assistance
and direction throughout the time the provider is performing the service. A telephone link is not
enough to qualify presence of the physician. Medicare has different levels of supervision requirements of which coders need to be aware.
The Balance Budget Act of 1997 states that beginning January 1, 1998, Medicare will reimburse 85
percent for services performed independently by a physicians assistant, nurse practitioner, or clinical
nurse specialist under general supervision without restrictions on settings. This percentage does
not apply to the technical portion of diagnostic services. These services will be paid at 100 percent.
Reimbursement will only be made if facility or other physician charges are not paid in connection
with the service.
Physicians assistants, nurse practitioners, and clinical nurse specialists may provide and be paid
for physician services if legally authorized by the state in which services are provided. With the
3.21
exception of PAs, these NPPs do not need to be employed by a physician to bill under his or her
own provider number. This provision does not replace the incident to reimbursement rules.
Since incident to is a CMS rule, other carriers may simply utilize the State Scope of Practice.
Each state will vary as to the individual requirements for the NPP and for the supervising physician. In years past, countersignatures were always required, however many states do not mandate
this practice any longer. Malpractice carriers should also be contacted as they may still require a
countersignature or provide additional instruction to the supervising physician. Organizations
such as the American Academy of Nurse Practitioners (www.aanp.org), or the American Academy
of Physician Assistants (www.aapa.org), are just a few resources that may be utilized to keep the
coder and physician up to date on regulatory changes.
Class Exercise 3.3
1. Why is it important for the diagnoses to be linked to each service or procedure that
is performed?
2. When reviewing operative notes and before selecting a CPT code for a procedure, it
is important to note the ___________ that was used by the surgeon. (page 3.18)
3. To qualify as an incident to service for Medicare, the service of a nonphysician
provider must be:
a.
b.
c.
d.
4. What step should the coder take if there is a discrepancy between the operative report
and the procedure line?
Radiology Services
The radiology section describes the imaging of radiology procedures including special procedures,
computed tomography, magnetic resonance imaging, ultrasonography, nuclear medicine, and
radiation oncology. The four subsections are:
n
Diagnostic radiology (including computed tomography and magnetic resonance imaging)

n Diagnostic ultrasound
n Radiation oncology
n Nuclear medicine
3.22
2007 PMCCVolume 1
Documenting Radiology Services

Radiology dictation is the basis for interpreting the written radiology report, which often serves
as the only basis for the coding and submission of claims by nonphysician staff. Coding from the
report requires at least some basic knowledge of the radiology procedure performed. For example,
interventional procedure coding requires information on the access and the location of selective
catheterizations and the services provided as a result of the findings. The report should include
clinical indications and precise anatomical and radiological terminology. The patients chart also
should include information regarding the need for custom treatment devices (eg, mantle field
block and the physicians participation in their design, supervision, and construction).
The following list identifies the elements to document in support of medical necessity and
complexity:
n
n
n
n
n
n
n
n
Number of views (when an exam does not meet the criteria of the code, it may have to be
reported with an unlisted procedure code)
Unilateral and/or bilateral views (bilateral views performed for comparison are coded as a
single procedure)
Limited or complete
With or without KUB
With or without contrast material (type and amount)
With or without flow
Ultrasound procedures and noninvasive vascular diagnostic studies (NVDS)
Complete or limited follow-up
Coverage for fluoroscopy support services may be denied if the documentation does not include the
referring physicians order to do the work or when documentation lacks the physician interpretation of the output.
Combined Services
If a combination of services is performed in the same session for the patient, each should be
separately documented in the written report, either delineated in the same report or described in
separate reports the radiologist generates from each of the services provided.
Special Procedures
Urographic and cystographic procedures require codes describing the providers supervision and
interpretation of the exams and additional codes that describe the catheter insertion and/or injection procedure.
Teaching Physicians
The teaching physician may bill for the interpretation of diagnostic radiology and other diagnostic
tests if the interpretation is performed or reviewed by a physician other than a resident. Only the
teaching physicians signature is required on an interpretation he or she personally performed. If
the resident prepares and signs the interpretation, the teaching physician must indicate that he or
she personally has reviewed the image and the residents interpretation and either agrees or edits
the findings. A teaching physicians countersignature to the residents interpretation is insufficient
documentation.
3.23
Medicare Coverage
Medicare policies change on a continuous basis; while the following is current as to time of publication, check the appropriate Medicare policy for up-to-date accuracy.
Mammograms
A diagnostic mammogram is performed in the presence of symptoms or signs of breast disease,
such as nipple discharge or bleeding. A physician or qualified nonphysician practitioner must
order the exam, which Medicare covers as often as is medically necessary. A rule out diagnosis
is insufficient for determining medical necessity and documentation must include a physicians
interpretation of the results.
Screening mammography refers to a radiographic procedure for the early detection of breast
cancer in an asymptomatic woman. The exam includes a physicians interpretation of the results
of the procedure and Medicare covers a mammography provided to a woman at her direct request,
without a physicians order.
Staging Breast Cancer
Medicare covers positron emission tomography (PET) for staging of breast cancer, including PET
full and partial ring scanners as an adjunct to standard imaging modalities for staging patients
with distant metastasis or restaging patients with recurrence or metastasis, and for monitoring
treatment response for patients with locally advanced and metastatic breast cancer.
Bone Mass Measurement Study
To qualify for Medicare coverage of a bone mass measurement study, one of the following
must apply:
n
n
n
n
n
Estrogen deficiency and at clinical risk for osteoporosis

Vertebral abnormalities indicative of osteoporosis, low bone mass, or vertebral fracture
Glucocorticoid therapy equivalent to 7.5 mg of prednisone, or greater, per day, for more
than three months
Primary hyperparathyroidism
To assess response to, or efficacy of, a PDA-approved osteoporosis drug therapy
Myocardial Viability
Medicare covers SPECT and FDG PET as a primary or initial diagnostic study for determining
myocardial viability prior to revascularization and PET following an inconclusive SPECT.
Computed Tomography (CT)

n

n Multiplanar scanning and/or reconstruction
Magnetic Resonance Imaging (MRI)

n

n Number of sequences
If extra views are performed in addition to the usual number for a given study, they should be
carefully noted in the documentation. The exam may qualify for additional reimbursement when
CPT modifier 22 (Unusual Procedural Services) is added to the CPT code.
3.24
2007 PMCCVolume 1
Even though the physician must indicate the medical necessity when ordering a radiological study,
the radiologist must also briefly indicate the reason in the report. The more complicated the study,
the more in-depth the statement should be.
When radiological studies are done for urgent, acute problems, the radiologist must convey results
verbally to the physician as soon as they are available. In these cases, the outcome of the study is
often crucial to the physicians diagnosis and treatment. These conversations must be documented
in the patient record.
Second ReadingsA requesting physician may interpret a radiological study after the radiologist
has provided an interpretation. A second interpretation usually is not billed because it is considered
part of the overall patient assessment. If a different interpretation is found (eg, different diagnosis)
a second reading may be reported and must be submitted with a written report to support the
secondary read.
Date of ServiceTo eliminate any confusion that may arise during an audit, make sure the date
located in the heading of the dictated report reflects the date of service rather than the date of
dictation. Dictation and transcription dates are best located in the footer of the report.
Additional StudiesBased on findings from a routine x-ray exam, a radiologist may feel further
studies are warranted, for example, a radiologist may elect to do a tomogram on a patient whose
chest x-ray revealed a mass. The documentation must indicate that the existence of the mass
establishes the medical necessity for further studies. In such a situation, the radiologist is usually
not required to check with the ordering provider before proceeding with additional studies, except
Medicare does require going back to the ordering physician.
lnvasive/Interventional Radiology ProceduresInvasive or interventional radiology procedures are
radiological studies accompanied by an invasive surgical procedure. Examples include venogram,
angiogram, transcatheter abscess drainage, and x-ray guided biopsies.
The invasive procedure and the radiological study are generally performed by the same physician,
but not always. Whether performed by one physician or two physicians, an interventional radiology procedure should be documented as thoroughly as a surgical procedure.
When two surgeons perform an invasive radiology procedure, each physician should reference the
others involvement in the report. In the case of a kidney biopsy, a nephrologist may handle the
invasive part, including placement of the needle and obtaining tissue samples. The radiologist may
be responsible for generating the x-rays, injecting the dye, and reading the film. Both physicians
are responsible for a complete report of their portions of the procedure with a reference to the other
physicians role.
The following format is suggested for documenting invasive radiology procedures:
n
n
n
n
n
n
Date and time of report

Title of operation or procedure
Clinical indication or reason for procedure
Monitoring (optional)
Sedation
Detailed account of procedure
o Procedure note must show performance of each procedure listed in the report
heading
3.25
n
n
n
n
n
For vascular procedures, include the access route(s), each nonselective and selective
vessel catheterized and any deviation from normal anatomy
Injections (including type and amount of contrast material)
Findings
Complications
Postprocedure patient status
Impression or short description of the findings
Problem AreasThe following are some common problems associated with documenting radiology procedures.
1. The report from the radiologist does not contain enough detail to warrant the CPT code
billed. This problem often results from a physician who does not want to sift through a lot of
information when reading radiology reports, but radiologists are supposed to document the
exam in enough detail to justify reimbursement.
2. The order from the requesting physician does not provide enough history to establish a
diagnosis. It is the ordering physicians responsibility to provide the radiologist with enough
information to justify medical necessity. This information is either in the form of a narrative
description or actual ICD-9-CM codes.
3. The transcription contains inaccuracies due to misheard or misunderstood words. Radiologists
must read transcriptions for accuracy before signing them. While this may be a cursory review,
it is important in ensuring the appropriate diagnosis and treatment.
Physicians should always verify any information in the report that seems questionable.
4. Lag time exists between an exam and when the results are received by the physician. Because
the patient is most likely following a course of treatment, any unexpected results could mean
a return visit for the patient and a change in the treatment. When opposite findings or
unexpected results occur, the radiologist should call the physician with the findings. Once
the written findings are received, the physician should check that they match the verbal findings communicated over the phone. Both the verbal and written communications should be
recorded and dated in the patients chart.
Pathology and Laboratory Services

National Coverage Decisions
The Balanced Budget Act of 1997 (BBA) mandated the use of a negotiated rulemaking committee
to develop national coverage and administrative policies for clinical diagnostic laboratory services
payable under Medicare Part B by January 1, 1999. Beneficiary information required to be
submitted with each claim or order for laboratory services must include the following:
n
The medical condition for which a laboratory test is reasonable and necessary
n The appropriate use of procedure codes in billing for a laboratory test, including the
unbundling of laboratory services
n The medical documentation that is required by a Medicare contractor at the time a claim
is submitted for a laboratory test
n Record keeping requirements in addition to any information required to be submitted
with a claim, including physicians obligations regarding these requirements
3.26
2007 PMCCVolume 1
Procedures for filing claims and for providing remittances by electronic media
n Limitations on frequency of coverage for the same services performed on the same
individual
In March 2000, a proposed rule published in the Federal Register set forth uniform national
coverage and administrative policies for clinical diagnostic laboratory services. The final rule,
published in the Federal Register on November 23, 2001, established the national coverage and
administrative policies for clinical diagnostic laboratory services payable under Medicare Part
B. It promotes Medicare program integrity and national uniformity, and simplifies administrative requirements for clinical diagnostic services. There are 23 national coverage determinations
included in this final rule. Those determinations are listed below:
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
n
Culture, Bacterial, Urine

Human Immunodeficiency Virus Testing (Prognosis including monitoring)
Human Immunodeficiency Virus Testing (Diagnosis)
Blood Counts
Partial Thromboplastin Time
Prothrombin Time
Serum Iron Studies
Collagen Crosslinks, Any Method
Blood Glucose Testing
Glycated Hemoglobin/Glycated Protein
Thyroid Testing
Lipids
Digoxin Therapeutic Drug Assay
Alphafetoprotein
Carcinoembryonic Antigen
Human Chorionic Gonadotropin
Tumor Antigen by Immunoassay CA125
Tumor Antigen by Immunoassay CA 15-3/CA 27.29
Tumor Antigen by Immunoassay CA 19-9
Prostate Specific Antigen
Gamma Glutamyl Transferase
Hepatitis Panel/Acute Hepatitis Panel
Fecal Occult Blood
3.27
General Documentation Requirements

Like radiology exams, pathology and laboratory services must be medically necessary. As
mentioned earlier in this lesson, it is important for the physician ordering the test to note in the
patients record how the findings were used in determining a diagnosis and selecting a treatment
plan. In the event of an audit, it will demonstrate that the tests were necessary. All tests performed
must be necessary and appropriate, and the results must be reviewed and actively used by the
physician.
The most commonly performed pathology and laboratory services require a physician to collect a
specimen for testing and send it to an outside lab. The lab conducts the ordered test and sends a
report back to the physician.
Since most tests are computerized, the results are generally reported by a number value on a
computer printout. It is not sufficient to merely copy that number value into the patients chart
or attach the computer printout to the patient record. Instead, the physician must note the type
of test, the methodology used, the normal range for the test, and then comment on whether the
finding is abnormal or normal in relation to that range. Laboratories vary widely in the methods
they use to analyze specimens. As a result, a normal range for a certain test at one lab may be an
abnormal range for the same test at another lab, while the physician who ordered the test may
know the methods used by a particular lab, another physician may not know, and misinterpret
the test reading.
When the lab report reveals an abnormal finding, the physician should circle and sign the abnormal
result to indicate it was seen. The physician must also make sure to address the abnormality in the
diagnosis and treatment plan.
Not all laboratory tests are handled by outside facilities. Routine tests, like urinalysis, are usually
handled by the clinic or practice. Documentation of these tests must include the date, the type of
test, and the result. Because these tests are conducted in-house, the physician bills for the service.
The provider needs to document medical necessity in the patients medical record as well as an
indication that he/she ordered the tests.
When the specimen is sent to an outside facility for testing, the lab performing the test should bill
the service. However, at times it may be appropriate for the physician to bill for the collection of
the specimen if the physicians staff provides the service. When tests are performed in an outside
laboratory, the name of the laboratory should be included in the report as well as in the patients
medical record.
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2007 PMCCVolume 1
Contents of a Lab Report

The lab report should contain the following elements:
n
n
n
n
n
n
n
n
Patient name and identification number

Name of laboratory
Name of physician or practitioner ordering the test
Date and time of the collected specimen, and date and time of receipt
Reason for an unsatisfactory specimen
Test or evaluation performed
Result
Date and time of report
Professional and Technical Components

Some pathology and laboratory procedures involve both a professional and a technical component,
such as invasive anatomical and surgical pathology services. These services require the physician
to complete the procedure and collect the specimen. The lab analyzes the specimen and gives the
result to the physician who interprets it. An example of this type of testing is gastric intubation,
which aids in the study of the stomachs content. The physician performs the intubation and
collects a sample. A laboratory technologist analyzes the sample and sends a report to the physician
who interprets the result.
The majority of lab tests have only a technical component. Technicians at outside laboratory facilities perform these tests, and the results are generally reported back to the physician on a computer
printout. This automated type of reporting does not require interpretation on the part of the
physician, so the physician cannot bill for it. The physicians evaluation of the significance of the
laboratory finding is part of the overall patient evaluation and management (E/M) service.
Some pathology services involve only an interpretation, and only the professional component can
be billed. An example of this type of service is an autopsy, which requires the physician to conduct
the procedure and interpret the findings. There is no technical component.
Other Issues
When a lab test is ordered, the physician should document any relevant circumstances surrounding
the specimens collection that could affect the test results. For instance, if the patient had recently
eaten, it could impact the results of a serum cholesterol test.
The procedure used to collect a specimen can also affect the results of a test. Documenting the site
from which the specimen was taken, as well as the technique used, can lend important information to the findings. For example, blood gas drawn from an arterial line by a blood gas technician
provides different results than blood gas drawn percutaneously by a medical student.
Finally, the date the specimen was collected and the date the actual test was performed should be
recorded, because some specimens change over time.
The physician or other person collecting the specimen should also note the following:
n
Dimension of specimen(s)
n Source of specimen(s) (where on body)
n Type of tissue(s)
n Color of specimen(s)
3.29
Infectious agent(s)
n Foreign body(ies)
n Drug(s) or antibiotic(s) used by patient
The number of specimens and the number of containers should be recorded on the pathology
report. If five specimens are received in one container, it is significantly different than if five specimens are received in five different containers.
3.30
2007 PMCCVolume 1

1. List the components of medical necessity.
2. What is the end result of a claim absent of any evidence of the performed test, procedure, or
service?
3. Give an example of a dangerous abbreviation, acronym, or symbol, according to the Joint

Commission on Accreditation of Healthcare Organizations (JCAHO), and provide the
preferred language.
4. The federal publication that publishes regulations concerning coding and reimbursement
issues is the______________________ .
5. Why include a diagnosis on a medical claim?
6. The statement signed but not read is adequate for a physician to have included on a transcribed note.
a. True
b. False
7. Under transmission standards of the Health Insurance Portability and Accountability Act
(HIPAA) of 1996, the patient record must be protected from unauthorized disclosure and
interception. How is this accomplished?
8. Name the four goals of an electronic health record.
3.31
9. How does the False Claims Act apply to medical claims?
10. What does the term covered entity refer to under regulations of the Health Insurance
Portability and Accountability Act (HIPAA) of 1996?
11. For each procedure that is performed, the keys to effective operative note documentation are:
a.
b.
c.
12. Explain the difference between blunt and sharp dissection.
13. Define preoperative diagnosis.
14. Name six of the elements that should be included in an operative note, whether a procedure
was performed in the office or in the operating suite.
3.32
2007 PMCCVolume 1
15. Give an example of an E/M service that is time-based.
16. Documentation of the extent of burns should include the extent of body surface burned. Name
the method most commonly used to report the percentage of total body surface burned.
17. Define the acronym SOAP, letter by letter.
18. What is documentation?
19. How do you calculate physician time spent with a patient in critical care when the same physician provides other services not included in critical care?
20. What is the purpose of an Advanced Beneficiary Notice (ABN)?
3.33
Addendum
Documentation Issues for Teaching Physicians
Teaching hospitals and facilities have distinctive issues relating to these types of facilities that have
recently become more visible. Receiving payment under Medicare Part B for residents services
with or without the presence of a teaching physician, and experimental and/or research projects
initiated by a physician in the teaching facility are examples. Coding may be affected by these
issues and will be discussed in detail in this section.
Graduate Medical Education

Graduate Medical Education (GME) is a residency program approved by the Accreditation
Council for Graduate Medical Education of the American Medical Association and other accrediting agencies for training physicians in specialties (eg, ENT, orthopedics, family practice).
1. Teaching hospitals are described as hospitals that take part in an approved GME residency
program in medicine, osteopathy, dentistry, and/or podiatry.
2. Teaching physicians include residents when caring for their patients.
3. Teaching settings are providers (eg, at hospitals, nursing facilities) that receive direct Medicare
GME payments for residents services.
These direct payments include residents salaries, fringe benefits and teaching physician compensation for services not payable on a fee schedule. These payments are made on a per resident basis
and are hospital specific. Medicare Part A payments are made for inpatient hospital stays through a
prospective payment system, better known as diagnosis related group (DRG) payments. Additional
payments are made to a teaching facility for higher indirect costs incurred with DRG payments.
These indirect costs include administrative and supervisory services by a physician unrelated to the
GME program or other approved educational activities.
Interns, residents, and fellows are considered equally with residents:
1. Interns are usually in their first year following graduation from medical school and are
completing a one year rotation in various departments of the teaching facility. The departments of the hospital rotation depend on their specialty.
2. Residents are considered physicians and, depending on the specialty, have two to five (possibly
more) years of training in that specialty (eg, internal medicine, orthopedics).
3. Fellows are physicians who are obtaining additional training in a subspecialty (eg, vascular
surgery/general surgery) after residency training. This training typically takes an additional one
to three years.
3.35
Teaching Physician Presence Ruling

Due to recent Medicare auditing of teaching hospitals, focus has been directed on how and/or
when teaching physicians may receive payment for services provided by residents under the direct
supervision of the teaching physicians to Medicare beneficiaries under Medicare Part B.
Coders Tip
Definitions (effective November 22, 2002):
ResidentThe term includes interns and fellows in GME programs recognized as approved
for purposes of direct GME payments made by the fiscal intermediary. Receiving a staff
or faculty appointment or participating in a fellowship does not by itself alter the status
of resident. Additionally, this status remains unaffected regardless of whether a hospital
includes the physician in its full-time equivalency count of residents.
DocumentationNotes recorded in the patients medical record by a resident and/or
teaching physician or others as outlined in specific situations regarding the service
furnished. Documentation may be dictated and typed, hand-written or computer-generated and typed, or handwritten. Documentation must be dated and include a legible
signature or identity. Pursuant to 42 CFR 415.172(b), documentation must identify at a
minimum the service furnished, the participation of the teaching physician in providing
the service and whether the teaching physician was physically present.
Physically PresentThe teaching physician is located in the same room (or partitioned or
curtained area, if the room is subdivided to accommodate multiple patients) as the patient
and performs a face-to-face service.
A clarified ruling, effective July 1, 1996, provides for an exception to the general physical presence requirement for low level visit services provided in certain primary care outpatient centers by
residents being trained in the specialties of general internal medicine, family practice, gerontology,
OB/GYN, and pediatrics. The teaching physician may substantiate any service billed to the
Medicare program by writing or dictating a summary note of the services performed personally or
directly observed. The teaching physicians note may be a summary note that confirms or revises
the history of present illness, the exam, and the medical decision making activities, combined with
the more detailed note of the resident. The rule also addresses the circumstances for when it is
appropriate to bill for the services of residents and clinical fellows in their own name. A resident
or fellow may bill for services they perform in their own name in only two situations:
1. When in a moonlighting situation; and
2. If providing service in a training program that has not been approved.
Key Portion for Patient Visits

The teaching physician must be present during the key portion of the patients visit. The key
portion determines the E/M level of service to be coded, for example, the resident usually takes the
history and may also perform a physical examination of the patient. The teaching physician must
then read the history and select key elements of the exam, verify them and document the elements.
The key elements required in the physical exam must be reviewed and documented; the teaching
physician must review any part that is essential in patient care. The participation and presence of
the teaching physician is required during the decision making part of the E/M visit, and the key
portion of the decision making process must also be documented.
3.36
2007 PMCCVolume 1
In the past, the attending physician has been a single physician who followed the patients care
during the entire hospital stay. The physician was required to initially see the patient within a
reasonable time after admission. It is recognized that, due to rotation of teaching physicians, it
is more feasible for the teaching physician (who is involved with the direction of residents at the
time of patient admission) or the resident to admit the patient instead of waiting for the attending
physician. The resident who admits the patient may take the patients history and physical. The
teaching physician may see the patient the day of admission or the next day, after reviewing the
residents note and bill an admission charge.
The level of a CPT evaluation and management code for which the teaching physician bills,
whether for inpatient or outpatient services, must reflect the extent and complexity of the visit as
if the teaching physician had personally furnished the service. An inexperienced first year intern in
the first rotation at a teaching hospital will usually take much more time than the teaching physician for the same service. A lower level E/M service should be billed in this instance. This ruling
also offers flexibility to the teaching physician regarding the actual hands-on care of the patient.
For example, experienced residents may conduct more of the physical exam than inexperienced
residents. The level of involvement when evaluating patients is left to the judgment of the teaching
physician.
The teaching physician must provide more than a signature or words such as seen or examined
in the medical record. Adequate documentation by the teaching physician is required to justify
the level of E/M service billed. However, the resident may document, In the presence of Dr. A to
verify the presence of the teaching physician during the patient visit. The teaching physician must
document that he also performed key portions of the E/M service and state personally seen and
examined by me and the key components are....
Following are three common scenarios for teaching physicians providing E/M services:
Scenario One
The teaching physician personally performs all the required elements of an E/M service without
a resident. In this scenario the resident may or may not have performed the E/M service
independently.
In the absence of a note by a resident, the teaching physician must document as he or she would
document an E/M service in a nonteaching setting.
Where a resident has written notes, the teaching physicians note may reference the residents note.
The teaching physician must document that he or she performed the critical or key portion(s)
of the service and that he or she was directly involved in the management of the patient. For
payment, the composite of the teaching physicians entry and the residents entry together must
support the medical necessity of the billed service and the level of the service billed by the teaching
physician.
Scenario Two
The resident performs the elements required for an E/M service in the presence of, or jointly with,
the teaching physician and the resident documents the service. In this case, the teaching physician
must document that he or she was present during the performance of the critical or key portion(s)
of the service and that he or she was directly involved in the management of the patient. The
teaching physicians note should reference the residents note. For payment, the composite of the
teaching physicians entry and the residents entry together must support the medical necessity and
the level of the service billed by the teaching physician.
3.37
Scenario Three
The resident performs some or all of the required elements of the service in the absence of the
teaching physician and documents his/her service. The teaching physician independently performs
the critical or key portion(s) of the service with or without the resident present and, as appropriate,
discusses the case with the resident. In this instance, the teaching physician must document that
he or she personally saw the patient, personally performed critical or key portions of the service,
and participated in the management of the patient. The teaching physicians note should reference
the residents note. For payment, the composite of the teaching physicians entry and the residents
entry together must support the medical necessity of the billed service and the level of the service
billed by the teaching physician.
Following are examples of minimally acceptable documentation for each of these scenarios:
Scenario One Rationale
Admitting Note: I performed a history and physical examination of the patient and discussed
his management with the resident. I reviewed the residents note and agree with the documented
findings and plan of care.
Follow-up Visit: Hospital Day #3. I saw and evaluated the patient. I agree with the findings and
the plan of care as documented in the residents note.
Follow-up Visit: Hospital Day #5. I saw and examined the patient. I agree with the residents note
except the heart murmur is louder, so I will obtain an echo cardiogram to evaluate.
Coders Tip
In this scenario, if there are no resident notes, the teaching physician must document as
he/she would document an E/M service in a nonteaching setting.
Scenario Two Rationale
Initial or Follow-up Visit: I was present with resident during the history and exam. I discussed the
case with the resident and agree with the findings and plan as documented in the residents note.
Follow-up Visit: I saw the patient with the resident and agree with the residents findings and plan.
Initial Visit: I saw and evaluated the patient. I reviewed the residents note and agree, except that
picture is more consistent with pericarditis than myocardial ischemia. Will begin NSAIDs.
Initial or Follow-up Visit: I saw and evaluated the patient. Discussed with resident and agree with
residents findings and plan as documented in the residents note.
Follow-up Visit: See residents note for details. I saw and evaluated the patient and agree with the
residents finding and plans as written.
Follow-up Visit: I saw and evaluated the patient. Agree with residents note but lower extremities
are weaker, now 3/5; MRI of L/S spine today.
Scenario Three Rationale
Following are examples of unacceptable documentation:
Agree with above, followed by legible countersignature or identity;
Rounded, reviewed, agree, followed by legible countersignature or identity;
Discussed with resident, agree, followed by legible countersignature or identity;
3.38
2007 PMCCVolume 1
Seen and agree, followed by legible countersignature or identity;

Patient seen and evaluated, followed by legible countersignature or identity; and
A legible countersignature or identity alone.
Such documentation is not acceptable, because the documentation does not make it possible to
determine whether the teaching physician was present, evaluated the patient, and/or had any
involvement with the plan of care.
Key Portion for Surgical Procedures

During critical periods of high risk or complex surgical procedures performed, the teaching physician should be present throughout the procedure to furnish services immediately, if necessary.
If a surgical procedure performed is not considered high risk or complex, the teaching physician
should be present during crucial portions of the procedure.
1. The crucial portion of a procedure will vary from procedure to procedure and will be determined by the teaching physician. The teaching physician is not required in the operating room
during low risk opening and closure of the surgical field, but must be available at all times
during the entire procedure.
2. The teaching physician must be documented in the operative report from beginning to end
by the teaching physician or the operating room staff. Documentation standards for hospitals
may require teaching physicians to personally record that they were present.
3. For endoscopic procedures, the teaching physician must be present throughout the whole
procedure.
The physical presence requirement is not met if two surgical procedures are taking place concurrently with the same teaching physician acting as the attending physician for both cases in different
operating rooms. The teaching physician may be involved in reviewing the patients records,
talking to the patients family and other patients, as well as preparing for the next surgery. These
services do not prevent the teaching physician from being immediately available, if needed, for the
procedure currently taking place.
It is acceptable for another teaching physician to attend a procedure while the original physician
begins a different procedure. However, payment will only be made to the original physician.
An agreement between the physicians should be made prior to the surgery to eliminate billing
confusion.
A teaching physician must be present during the insertion, entire viewing of any type of scope
procedure and removal (eg, endoscope, laparoscope). A discussion of the findings is not sufficient to fulfill the presence requirement. Documentation in the medical record must indicate the
teaching physicians presence during the entire scope procedure. Documenting the specific times
the teaching physician viewed the scope is not necessary.
Exclusions
In diagnostic services (eg, radiology, pathology) the teaching physician need not be present during
a test. Reviewing test results with a resident is adequate. The radiologist must review the film and
document the results even though the radiology resident has done so.
3.39
Psychiatry
For certain psychiatric services, the requirement for the presence of the teaching physician during
the service may be met by concurrent observation of the service through the use of a one-way
mirror or video equipment. Audio-only equipment does not satisfy to the physical presence
requirement. Further, the teaching physician supervising the resident must be a physician (ie,
the Medicare teaching physician) whose policy does not apply to psychologists who supervise
psychiatry residents in approved GME programs.
Anesthesia
Anesthesia residents also follow slightly different rules for physician presence. A teaching physician
may receive the full physician fee if involved in a single anesthesia procedure with an anesthesia
resident. The teaching physician must be present during all critical portions of the service and be
immediately available to furnish services during the entire service or procedure. The full fee will
not be paid, if the teaching physician performs services involving other patients when the anesthesia resident is furnishing services in a single case. The teaching physician is not required to visit
the patient preoperatively and postoperatively.
Primary Care Exception

An exception to the physical presence rule is made when low to midlevel office evaluation and
management codes (CPT codes 9920199203, 9921199213) are provided in a primary care
center. These codes are payable without the presence of a teaching physician. The following conditions must be met:
1. Services provided are in a center located in a hospital outpatient department or in a freestanding setting where the time spent by the resident in patient care is included in determining
intermediary payments (Medicare Part A) to the hospital.
2. Services are provided to patients who use the facility as their continuing source of health care.
Residents furnish the following services under direction of a teaching physician:
n
Acute or chronic care for ongoing conditions the patient has or is experiencing
n Coordination of care of the patient by the resident that may include other physicians and
providers
n Comprehensive care not limited by organ system, diagnosis, or gender
3. The residents should attempt to follow the same patients throughout their residency, developing the patient-physician relationship.
4. The resident should have completed more than six months in an approved residency specialty
program. An intern in general surgery does not fulfill this requirement, since they usually rotate
monthly in various surgical departments (eg, neurosurgery, vascular surgery). A family practice
physician may meet this requirement because of the immediacy of family practice medicine
during their first year internship.
5. The teaching physician may not direct more than four residents at one given time. The
following rules apply for the teaching physician: A) They should have no other responsibilities at that time and their priority is to be available when needed by the residents for direct
patient care; B) They assume responsibility for those patients seen by the residents and ensure
that services provided are appropriate; and C) They review the patients medical history,
physical examination, diagnosis, and records of tests and/or therapies with each resident after
the patients visit and documentation in the medical record must indicate participation of the
teaching physician in the review and direction of the patient services.
3.40
2007 PMCCVolume 1

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American Academy of Professional Coders

Two Volume Student Edition

American Academy of Professional Coders 

American Academy of Professional Coders

2007 American Academy of Professional Coders

American Academy of Professional Coders

American Academy of Professional Coders

Chart Auditing................................................................................................................... 7.1

Global Surgical Package..................................................................................................... 8.1

American Academy of Professional Coders

Toxic shock syndrome

Internal thrombosed hemorrhoids

Cyst of Bartholins gland

Drainage of scrotal wall abscess

Radiologic eye exam for detection of foreign body

Care kit for new tracheostomy

Thoracic rib belt

Ceftriaxone sodium, per 250 mg

American Academy of Professional Coders

American Academy of Professional Coders

Healthcare Common Procedure Coding System

History of WHO Documents at http://www.who.int/library/historical/access/who/index.en.

American Academy of Professional Coders

Medical Coding and Compliance

American Academy of Professional Coders

Medical Coding and Compliance

Basic Language of Coding

Medical Coding and Compliance

American Academy of Professional Coders

Medical Coding and Compliance

Medical Coding and Compliance

Other Coding Schemes

Regulatory and Accreditation Agencies

American Academy of Professional Coders

Medical Coding and Compliance

The Health Insurance Portability and Accountability Act (HIPAA)

Medical Coding and Compliance

Health care claims or equivalent encounter information

Current Procedural Terminology (CPT), published by the American Medical Association, is a

American Academy of Professional Coders

Medical Coding and Compliance

Medicare Prescription Drug, Improvement, and Modernization Act of 2003

Physician payment rates

Medical Coding and Compliance

The overview is available at http://www.ama-assn.org/ama/pub/category/12084.html.

The Clinical Laboratory Improvement Amendments (CLIA)

a. CMS database of bundled services

c. Assignment of financial responsibility

d. Centers for Medicare and Medicaid Services

f. Current Procedural Terminology

g. National Committee for Quality Assurance

9. ______ Subrogation of Benefits

i. Primary care provider

10. ______ NCQA

American Academy of Professional Coders

Medical Coding and Compliance

Ethics for the Medical Coder

Medical Coding and Compliance

American Academy of Professional Coders Code of Ethics

2. CMS publishes regulatory information in the ________________

American Academy of Professional Coders

Medical Coding and Compliance

American Academy of Professional Coders