Practice Management Improvement Strategies

Practice Management Improvement Strategies

December 29, 2017
5 min read

What is in that alphabet soup? Deciphering coding acronyms to support reimbursement

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The physician’s role in the revenue cycle is important for optimizing charge capture in independent and employment settings. Understanding key acronyms related to code sets and reimbursement guidelines is important to an organization’s bottom line and future physician compensation.

This article explains five coding acronyms that physicians must understand, how they differ and why each is important.

1. CPT – Current Procedural Terminology

Sarah Wiskerchen
Sarah Wiskerchen

CPT is a code set used in health care billing to describe both professional and diagnostic services. CPT codes are typically the foundation of insurance company reimbursement for physician services, and both private practices and hospitals are reimbursed at either government-assigned allowable rates or payer-contracted rates. Thus, correct CPT reporting is essential for revenue optimization. The frequency of CPT reporting may impact physician compensation, as many employed physicians are credited for work relative value units (RVUs) that are linked to the CPT codes billed.

CPT was first developed by the AMA in 1966 and adopted by the Health Care Financing Administration, which is now called the CMS, as level I of the Healthcare Common Procedure Coding System (HCPCS). Within CPT, services are organized by type (evaluation and management, surgery, laboratory, radiology and medicine), and within the surgery section, by organ system and body area. CPT is not used to report facility charges.

Evaluation and management (E/M) codes are a subset of CPT and are used to report the professional visits that are conducted in office and hospital settings. E/M services are an area of high scrutiny by CMS and other payers. Many electronic health record systems rely on the surgeon to select the E/M service performed in the office at the end of the encounter, even in employed practices. If hospital staff audit documentation prior to claims filing, seek feedback on whether the final E/M codes assigned are matching those you select and review any areas where changes are deemed necessary.

Most of the surgical codes used in orthopedics are found in the musculoskeletal, 2XXXX range of CPT. Integumentary codes fall in the 1XXXX range, and nervous system codes fall in the 6XXXX range. Keep in mind, the “surgery” section in CPT includes major procedures, such as total knee arthroplasty, and minor procedures, such as injection and aspiration of a joint. Hospital organizations may employ surgical coders who abstract surgical services from operative notes or may require that surgeons perform the initial coding, which is later reviewed by staff. In either case, take time to ensure you agree with the final codes being assigned.


2. GSD – Complete Global Service Data for Orthopaedic Surgery

The American Academy of Orthopaedic Surgeons developed and maintains a supplemental set of coding guidelines for its members. Called the Complete Global Service Data for Orthopaedic Surgery, the guidelines are edited by the AAOS Coding Coverage & Reimbursement Committee and provide detail regarding procedures that are included or excluded in every orthopedic CPT code.

The Global Service Data guidelines are an extension of CPT because these include clarifying details that may not be evident in the standard CPT descriptions, but the details were applied when the CPT codes were developed. GSD guidelines are available in print and electronic formats from the AAOS, but are not reflected in other commercial coding software or EHR systems.

3. NCCI – National Correct Coding Initiative

In 1996, CMS developed a reimbursement editing policy called the National Correct Coding Initiative. The objective of the NCCI is to prevent inappropriate unbundling of services and overpayment.

The first component of the policy is called procedure-to-procedure (PTP) edits. These edits are placed on specific code combinations and updated quarterly. The underlying principle is that the second code defines a subset of the work of the first code. NCCI uses the terms “column 1” and “column 2” to signify the primary and secondary codes. Modifier use may explain why reporting of a second code is supported, and modifier 59 is most commonly used to identify the second code as a distinct service. It is not appropriate to simply add modifier 59 to a secondary code to bypass an edit; the claim must meet coding criteria for separate reporting. In addition to PTP edits, NCCI includes a set of narrative guidelines, which are updated annually. The narrative guidelines overlay PTP edits and apply to multiple code combinations.

Although these were developed for Medicare claims, some hospital organizations utilize the NCCI PTP edits for all payers to simplify coding and appeals. It is important that employed orthopedic surgeons understand when this is the case, because in several areas (eg, shoulder, spine, arthroscopic debridement, fracture management) the NCCI guidelines are more restrictive than the CPT definitions or AAOS global service guidelines, which results in services not being billed and paid separately. If an employed surgeon is compensated based on productivity, applying NCCI to all payers could result in RVU credit reductions.

4. ICD-10-CM – International Classification of Diseases, 10th Revision, Clinical Modification

While CPT describes what physicians do, ICD-10-CM describes why they do it. CMS and most insurance payers adopted ICD-10-CM as the primary diagnosis code set for professional services in October 2015.


The number of codes in ICD-10-CM grew exponentially from its predecessor system, ICD-9-CM, due to the incorporation of specific characters to reflect anatomic laterality, and in orthopedics, to reflect greater anatomic specificity. The codes also grew in length from three to five characters to three to seven characters and in some cases, these reflect a seventh position alpha character that is used to describe the treatment and/or healing status of injuries. Lack of specificity in ICD-10-CM can result in claim denials when medical necessity criteria are not met. At a minimum, such denials slow down payment and, at worst, result in no payment.

A different version of ICD-10, called ICD-10-PCS (Procedure Coding System) is used for inpatient billing; it similarly requires significant documentation detail to support appropriate reporting. Failing to include essential data in hospital notes may result in queries from coding staff because the detail directly impacts how the hospital is paid.

5. HCPCS – Healthcare Common Procedure Coding System, Level II

Commonly called HCPCS codes and pronounced “hics pics,” the level II codes are used to describe supplies and drugs that are used in health care settings. In orthopedics, these most commonly include injectable drugs used in the office, cast supplies, orthotics and durable medical equipment (DME) items, such as canes, crutches and walkers.

Although level I codes are fully numeric, level II codes use an alpha-numeric structure; drugs are identifiable by the leading letter J, cast supplies by the letters A or Q, orthotics by the letter L, and DME items by the letters E or K. Although supplies such as dressing and suture material are included in their associated surgical services, most of the supplies reported using HCPCS level II are billable by the entity that purchases these. If supply costs like these are allocated to your practice cost center, it is essential that these also be billed through the practice. Verify how supply items are captured in your office so potential revenue is not lost.

Understanding these coding acronyms and how each is used is a critical step toward optimizing reimbursement. Use these explanations as a guide for physicians, as well as a training tool for staff who are new to physician billing and coding.

Disclosure: Wiskerchen reports she is a consultant with KarenZupko & Associates Inc., which develops and delivers CPT Coding and Practice Management workshops presented by the AAOS in conjunction with KarenZupko & Associates Inc.