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Chapter 1 Overview of Coding

Chapter 1 of '3-2-1 Code It!' provides an overview of coding, including key terms, career paths, professional associations, and coding systems. It emphasizes the importance of accurate coding based on clinical documentation and outlines various coding processes and ethical standards. The chapter also discusses educational requirements, employment opportunities, and the impact of technology on coding careers.

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Chapter 1 Overview of Coding

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tenille550

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You are on page 1/ 48

3-2-1 Code It!

,
2024, 12e
Chapter 1: Overview of
Coding

By the end of this chapter, you should be able to:

1.1 Define key terms related to the overview of coding.
1.2 Summarize the training, job responsibilities, and career path for a coder.
1.3 Identify professional associations available to coders and medical
assistants.
1.4 Summarize coding systems and processes.
1.5 Identify other classification systems and databases.
1.6 Explain how documentation serves as the basis for assigning codes.
1.7 Describe health data collection for the purpose of reporting hospital and
physician office data.
Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2
Chapter Outline

• Career as a Coder
• Professional Associations
• Coding Systems and Coding Processes
• Other Classification Systems, Databases, and Nomenclatures
• Documentation as the Basis for Coding
• Health Data Collection

• Each chapter contains an extensive list of key terms.

• Key terms are boldfaced and defined within each chapter.
• Create “flash cards” using 3×5 index cards:
• Handwrite key term on one side.
• Handwrite definition on the other side.
• Handwriting is an active learning process.
• Now you can take your “flash cards” and “study on the go.”

• Chapter content covers:

• Coding careers opportunities
• Joining professional associations
• Obtaining coding credentials
• Networking with other coding professionals
• Opportunities for career advancement
• Coding overview
• Health data collection

How do you believe clinical documentation improvement, the physician

query process, and the use of computer-assisted coding and encoder
software impact a coding career?

How do you believe clinical documentation improvement, the physician

query process, and the use of computer-assisted coding and encoder
software impact a coding career?
Clinical documentation improvement helps ensure accurate and thorough
patient record documentation and identifies discrepancies between
provider documentation and medical codes to be assigned. The physician
query process facilitates obtaining clarification from providers that impact
appropriate medical code assignment. Computer-assisted coding uses
software to automatically generate medical codes by analyzing clinical
documentation. Encoder software automates the medical coding process,
allowing coders to use a search function to locate and verify codes.

• Coder: individual who has acquired a working knowledge of medical

coding systems and conventions/guidelines, health care government
regulations, third-party payer requirements and ensures that all
diseases, injuries, reasons for an encounter, service, and procedure
are coded accurately for reimbursement, research, and statistical
purposes
• Coding systems
• CPT (procedures and services)
• HCPCS level II (procedures and services)
• ICD-10-CM (diseases, injuries, and reasons for an encounter)
• ICD-10-PCS (inpatient hospital procedures)
Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 8
Coding Education and Training

• College-based and noncredit programs

• Health sciences courses

• Coding and reimbursement courses

• Coding internship

• Health care facility

• Internship supervisor

• Provides on-the-job training

• American Health Information Management Association (AHIMA)

• Certified Coding Associate (CCA)
• Certified Coding Specialist (CCS)
• Certified Coding Specialist—Physician-based (CCS-P)
• AAPC
• Certified Professional Coder (CPC)
• Certified Inpatient Coder (CIC)
• Certified Outpatient Coder (COC)
• Certified Risk Adjustment Coder (CRC)
• Specialty coding certification credentials
Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 10
Employment Opportunities

• Health care settings (e.g., hospital)

• Consulting firms
• Government agencies
• Health insurance companies
• Other professions related to coding
• Health insurance specialist
• Claims examiner
• Medical assistant

What does the concept of single-path coding mean?

Is this a career path that you would be interested in pursuing? Why or

why not?

What does the concept of single-path coding mean?

Single-path coding combines professional and institutional coding to improve

productivity and ensure the submission of clean claims, leading to improved
reimbursement.

Is this a career path that you would be interested in pursuing? Why or why not?

Instead of being employed as a professional coder or an institutional coder (who are

typically employed at different health care settings), a single-path coder manages
both professional and institutional coding for the same patient. They access the
patient record to assign ICD-10-CM/PCS inpatient institutional codes and ICD-10-CM,
CPT, and HCPCS Level II outpatient and professional codes.

Career Professional Association

Coder • AAPC (previously called American Academy of
Professional Coders)
• American Health Information Management Association
(AHIMA)

Medical Assistant • American Association of Medical Assistants (AAMA)

• American Medical Technologists (AMT)

Discussion Website
Board
AHIMA Access AHIMA members can log in at www.ahima.org.

AAPC Go to www.aapc.com, and click on Resources, click on

Community Forum, and scroll down to Medical
Coding.

Which career related to medical coding appeals to you the most? Why?
Is there a career that you would never pursue? Why?

Which career related to medical coding appeals to you the most? Why?
Is there a career that you would never pursue? Why?
• A coder acquires a working knowledge of medical coding systems and
conventions/guidelines, health care government regulations, and third-party payer
requirements to ensure that all documented diagnoses, services, and procedures
are coded accurately for reimbursement, research, and statistical purposes.
• A health insurance specialist (or claims examiner) reviews health-related claims to
determine whether the costs are reasonable and medically necessary based on the
patient’s diagnosis reported for procedures performed and services provided.
• A medical assistant performs administrative and clinical tasks to keep the office and
clinic running smoothly.

Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 17
Coding Systems, Processes, and
References
• Coding systems
• ICD-10-CM, ICD-10-PCS, CPT, and HCPCS Level II
• Medical nomenclature
• SNOMED CT
• HIPAA code sets
• Large code set (e.g., CPT codes)
• Small code set (e.g., type of health care setting)
• Coding references
• AHA Coding Clinic for ICD-10-CM and ICD-10-PCS, AHA Coding Clinic for HCPCS,
and CPT Assistant

Concept Definition
Unbundling Reporting multiple codes to increase reimbursement when a single
combination code should be reported
Upcoding Reporting codes that are not supported by documentation in the
patient record for the purpose of increasing reimbursement
Overcoding Reporting codes for signs and symptoms in addition to the
established diagnosis code
Jamming Routinely assigning an unspecified ICD-10-CM disease code instead of
reviewing the coding manual to select the appropriate code
Downcoding Routinely assigning lower-level CPT codes for convenience instead of
reviewing patient record documentation and the coding manual to
determine the proper code to be reported

• International Classification of Diseases, 11th Revision (ICD-11)

• Developed by the World Health Organization (WHO)
• Released in 2018 to facilitate implementation process (e.g., translation into
languages other than English)
• Implementation of ICD-11 for member states in 2022
• Planned USA implementation date not yet announced
• Revised to record, report, and analyze health information

• Contains improved usability and more clinical detail; and requires less training time

• Classifies all clinical detail: compatible with EHR, links to other classifications and
terminologies (e.g., SNOMED-CT), incorporates multilingual support, and updates
scientific content
Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 20
Medical Coding Process

• Code of ethics
• Accurate coding
• Coding quality
• Avoiding assumption coding
• Professional, institutional, and single-path coding
• Physician query process
• Clinical documentation improvement
• Coding compliance programs

• Professional associations establish a code of ethics

• Help members understand how to differentiate between “right”
and “wrong” and apply that understanding to decision making for
coding
• AAPC publishes a code of ethics, while AHIMA publishes standards
of ethical coding
• Serve as guidelines for ethical coding conduct
• Demonstrate commitment to coding integrity

• Requires review of entire patient record before assigning codes for

diseases, injuries, reasons for an encounter, procedures, and services
• Retrospective coding: review of patient record to assign codes after
the patient is discharged from the health care facility
• Concurrent coding: review of patient record and use of encounter
forms and chargemasters to assign codes during an inpatient stay
or an outpatient encounter
• Encounter forms record data about office procedures and services provided.
• Chargemasters are computer-generated lists of procedures, services, and
supplies, and corresponding revenue codes and charges for each.

Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23
Professional, Institutional, and Single-
Path Coding
• Professional coding: It captures complexity and intensity of
procedures performed and services provided during outpatient or
physician office encounter.
• Institutional (or facility) coding: It captures intensity of services used
to provide inpatient care and severity of illness to classify how sick
inpatients are.
• Multi-hospital systems that provide physician office services have
implemented single-path coding, which combines professional and
institutional coding to improve productivity and ensure the submission
of clean claims, leading to improved reimbursement.
Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 24
Inpatient Hospital Coding Quality

• Coders are expected to review the entire record when assigning codes
to diagnoses and procedures/services documented on the inpatient
hospital face sheet and discharge summary.
• Thus, coders should review the face sheet, discharge summary, and
other documentation (e.g., progress notes, operative reports,
pathology reports, laboratory data) to assign the most specific codes
possible.

Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25
Assumption Coding and Physician
Query Process
• Assumption coding
• Assigning codes for diagnoses and procedures/services not
documented by physician
• Creates risk for fraud and abuse
• Can be avoided by implementing physician query process
• Physician query process
• Request physician clarification about documentation so accurate
codes are assigned
• EHR allows automated physician query process

• It helps ensure accurate and thorough patient record documentation

and identifies discrepancies between provider documentation and
codes to be assigned.
• Coders who have questions about documented diagnoses,
procedures, and services use a physician query process to request
clarification about documentation that impacts appropriate code
assignment.
• For physician query process, coders may coordinate with utilization
management employees who routinely meet with providers about the
medical necessity of continued patient stays.
Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 27
Coding Compliance Programs

• It ensures that assignment of codes to diagnoses, procedures, and

services follows established coding guidelines, such as those
published by the Centers for Medicare & Medicaid Services (CMS).
• Health care organizations write policies (guiding principles that
indicate “what to do”) and procedures (processes that indicate “how
to do it”) to assist in implementing the coding compliance stages of
detection, correction, prevention, verification, and comparison.
• An effective coding compliance program monitors coding processes
for completeness, reliability, validity, and timeliness.

Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 28
Coding Manuals, Encoders, and
Computer-Assisted Coding
• Publishers produce their own versions of ICD-10-CM, ICD-10-PCS, and
HCPCS Level II coding manuals. (The AMA publishes CPT.)
• Companies publish encoders, which automate the coding process by
using the search feature to locate and verify medical codes.
• Computer-assisted coding (CAC) uses software to automatically
generate medical codes by analyzing clinical documentation located
in EHR or EMR.
• Uses “natural language processing” technology to generate codes
that are reviewed and validated by coders for reporting on third-
party payer claims.

How will you avoid abusive and fraudulent medical coding practices?

Define fraud and abuse as they relate to medical coding.

List and define terms associated with medical coding fraud and abuse.

How will you avoid abusive and fraudulent medical coding practices?
Define fraud and abuse as they relate to medical coding.
List and define terms associated with medical coding fraud and abuse.

Incorporating the use of the above references and resources assists

coders in avoiding the following abusive and fraudulent (dishonest and
illegal) coding practices, depending on intent. (Abuse involves
mistakenly submitting incorrect codes, and fraud involves intentionally
submitting incorrect codes to increase reimbursement.) Terms
associated with medical coding fraud and abuse include unbundling,
upcoding, overcoding, jamming, and downcoding. (Refer back to slide 19 for
definitions.)
Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 33
Other Classification Systems,
Databases, and Nomenclatures
• Alternative Billing Codes (ABC codes)
• Clinical Care Classification (CCC) System
• Current Dental Terminology (CDT)
• Diagnostic and Statistical Manual of Mental Disorders (DSM)
• Health Insurance Prospective Payment System (HIPPS) Rate Codes
• International Classification of Diseases for Oncology, Third Edition (ICD-O-3)
• International Classification of Functioning, Disability and Health (ICF)
• Logical Observation Identifiers Names and Codes (LOINC®)
• National Drug Codes (NDC)
• RxNorm (contains clinical drug names, and links to drug vocabularies)
• Systematized Nomenclature of Medicine Clinical Terms (SNOMED CT)
• Unified Medical Language System (UMLS)
Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 34
Knowledge Check Activity 1.5

Which of the “other classification systems, databases, and

nomenclatures” would you use if employed in a cancer registry?

Which of the “other classification systems, databases, and

nomenclatures” is a clinical terminology that supports the development
of comprehensive high-quality clinical content in patient records?

Which of the “other classification systems, databases, and

nomenclatures” would you use if employed in a cancer registry?

International Classification of Diseases for Oncology, Third Edition

(ICD-O-3)

Which of the “other classification systems, databases, and

nomenclatures” is a clinical terminology that supports the development
of comprehensive high-quality clinical content in patient records?

Systematized Nomenclature of Medicine Clinical Terms (SNOMED CT)

Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 36
Documentation as the Basis for
Coding
• Patient record (or medical record): business records for patient
encounters (inpatient or outpatient) that document health care
services provided to patients
• Continuity of care: documenting patient care services so others who
treat patients have source of information on which to base additional
care and treatment
• Documentation: dictated and transcribed, keyboarded or handwritten,
and computer-generated notes and reports recorded in patient
records by health care professional

• Patient’s diagnosis must justify diagnostic and therapeutic procedures

or services provided.
• It requires providers to document services or supplies that are proper
and needed for the diagnosis or treatment of a condition; provided for
diagnosis, direct care, and treatment of a medical condition;
consistent with standards of good medical practice in local area; and
not mainly for convenience of the physician or health care facility.
• “If it wasn’t documented, it wasn’t done.”

• Manual record (paper-based)

• Source-oriented record (SOR)
• Problem-oriented record (POR)
• Integrated record
• Automated record (computer-based)
• Electronic health record (EHR)
• Electronic medical record (EMR)
• Document imaging (scanned paper-based reports)
• Hybrid record (combined paper-based and computer-based)

How do you think documentation serves as the basis for coding

diagnoses, procedures, and services?

How do you think documentation serves as the basis for coding

diagnoses, procedures, and services?
A patient record is the business record for a patient encounter that
documents health care services provided to a patient. It stores patient
demographic data and documentation that supports diagnoses and
justifies treatment provided. It also contains the results of treatment
provided.
Documentation in the patient record serves as the basis for coding
diagnosis, procedures, and services because it must support codes
reported on claims for third-party payer reimbursement processing.
Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 41
Health Data Collection

• Purpose: administrative planning, submitting statistics to state and federal

government agencies, and reporting health claims data to third-party payers
• Reporting hospital data
• Use of automated case abstracting software
• Includes data submitted on CMS-1500 and UB-04 claims
• Results in generation of reports (e.g., statistical analysis)
• Reporting physician office data
• Medical practice management software (e.g., CMS-1500 claims
completion)
• Generating reports (e.g., accounts receivable aging)
Michelle A. Green, 3-2-1 Code It!, 2024, Twelfth Edition. © 2025 Cengage. All Rights Reserved. May not be
scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 42
Sample Data Entry Screen for
Automated Case Abstracting Software

What do you think is the most important reason for managing health
data collection at a health care facility?

What do you think is the most important reason for managing health data collection
at a health care facility?
Health data collection is performed by health care facilities and providers for the purpose of
administrative planning, submitting statistics to state and federal government agencies, and
reporting health claims data to third-party payers.
• Administrative planning requires health data analysis to determine employee staffing
levels, services offered, and more.
• Submitting data and statistics to state and federal government agencies is mandated and
includes cancer registry data, reportable events, reportable diseases, morbidity data, and
more.
• Reporting health claims data to third-party payers uses data collected from patient
records and assigned medical codes, which helps ensure the financial viability of the
health care facility or medical practice.

How will you apply your academic training to the job responsibilities
and career path you will select, whether as a coder or another position?

Now that the lesson has ended, you should have learned how to:
• Define key terms related to the overview of coding.
• Summarize the training, job responsibilities, and career path for a coder.
• Identify professional associations available to coders and medical assistants.
• Summarize coding systems and processes.
• Identify other classification systems and databases.
• Explain how documentation serves as the basis for assigning codes.
• Describe health data collection for the purpose of reporting hospital and
physician office data.

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Chapter 1 Overview of Coding

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Chapter 1 Overview of Coding

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3-2-1 Code It!

By the end of this chapter, you should be able to:

• Each chapter contains an extensive list of key terms.

• Chapter content covers:

How do you believe clinical documentation improvement, the physician

How do you believe clinical documentation improvement, the physician

• Coder: individual who has acquired a working knowledge of medical

• College-based and noncredit programs

• Health sciences courses

• Coding and reimbursement courses

• Health care facility

• Provides on-the-job training

• American Health Information Management Association (AHIMA)

• Health care settings (e.g., hospital)

What does the concept of single-path coding mean?

Is this a career path that you would be interested in pursuing? Why or

What does the concept of single-path coding mean?

Single-path coding combines professional and institutional coding to improve

Instead of being employed as a professional coder or an institutional coder (who are

Career Professional Association

Medical Assistant • American Association of Medical Assistants (AAMA)

AAPC Go to www.aapc.com, and click on Resources, click on

• International Classification of Diseases, 11th Revision (ICD-11)

• Professional associations establish a code of ethics

• Requires review of entire patient record before assigning codes for

• It helps ensure accurate and thorough patient record documentation

• It ensures that assignment of codes to diagnoses, procedures, and

Define fraud and abuse as they relate to medical coding.

Incorporating the use of the above references and resources assists

Which of the “other classification systems, databases, and

Which of the “other classification systems, databases, and

Which of the “other classification systems, databases, and

International Classification of Diseases for Oncology, Third Edition

Which of the “other classification systems, databases, and

Systematized Nomenclature of Medicine Clinical Terms (SNOMED CT)

• Patient’s diagnosis must justify diagnostic and therapeutic procedures

• Manual record (paper-based)

How do you think documentation serves as the basis for coding

How do you think documentation serves as the basis for coding

• Purpose: administrative planning, submitting statistics to state and federal

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