Medical coding systems are standardized code sets and classification systems that translate clinical encounters into alphanumeric codes. ICD-10-CM and ICD-10-PCS capture diagnoses and inpatient procedures, CPT describes services, and HCPCS Level II covers supplies and transport — together they document, analyze, and bill medical services consistently. 

For healthcare providers, medical coding sits at the center of medical billing and reimbursement. It’s also complex. As you set up workflows, it’s normal to ask, “What are ICD-10 codes?” or “How do I choose the right code for this visit?” Clear, consistent coding helps reduce claim denials, shortens payment cycles with payers, and ultimately supports better patient care.

This guide explains the major medical coding systems used across the healthcare industry. You’ll see how ICD-10-CM and ICD-10-PCS record diagnoses and inpatient procedures, how CPT details services, and how HCPCS Level II covers supplies and equipment. 

We will provide practical examples, point to trustworthy sources, and show how a firm grasp of these code sets improves clinical documentation and daily operations.

Understanding the main code sets helps you choose the right classification systems for each encounter and ensure accurate billing. Here’s how the core systems work together across healthcare settings.

Together, these systems create a complete record for clinicians, coders, and payers, reducing ambiguity and supporting accurate reimbursement.

The International Classification of Diseases began its tenth revision in 1983 to reflect advances in medicine and data needs. The United States adopted ICD-10 for mortality reporting in 1999, then completed the nationwide transition to ICD-10 codes for diagnosis and inpatient procedures on October 1, 2015. The World Health Organization owns the core ICD standard, while US health agencies adapt and maintain it for care and billing.

In the US, the NCHS/CDC oversees the clinical modification of ICD-10 for diagnoses. See the CDC’s page on ICD-10-CM for current materials and guidance. The Centers for Medicare & Medicaid Services manage ICD-10-PCS for inpatient procedures, including specification files and update schedules.

CMS publishes procedure updates and technical files on its site. For continuity, we will reference the same CMS destination used in your original draft.

Update cadence matters in daily coding. ICD-10-CM typically updates annually for the fiscal year that starts on October 1. ICD-10-PCS updates occur on a biannual cycle aligned with inpatient payment and reporting needs. Each cycle may introduce new codes, deletions, and clarifications through the ICD-10 Coordination and Maintenance Committee, with public materials and meeting notes made available for review.

The ICD-11, released by WHO, is gaining traction globally. The US has not set an implementation date, so practices should continue to follow ICD-10-CM and ICD-10-PCS. For historical update lists, WHO maintains an archive of official ICD-10 updates on its site. See the WHO ICD-10 updates page for context.

The ICD-10-CM clinical modification uses alphanumeric codes that are 3 to 7 characters. The first character is a letter. Characters 2 and 3 are numbers. Characters 4 through 7 add clinical detail. A placeholder “X” fills unused positions when needed. 

Codes capture laterality, episode of care, severity, and complications, allowing clinicians to select appropriate codes and correct codes with less ambiguity.

The scope is broad. Chapters span A00 — Z99 for diseases, signs, and external causes, with U00 — U85 reserved for special purposes. You can browse the official ICD-10-CM browser on the CDC website for current lists, guidelines, and addenda, and check the CDC’s maintenance page for timing and technical notes from ICD-10-CM resources.

Structure supports the maintenance of clean patient records and the exchange of reliable health information in daily work. Accurate selection drives problem lists, orders, and referrals in the outpatient setting, helping to align documentation with payer policies. 

Clear coding improves charge capture and reduces audit risk by matching notes to codes and official coding guidelines. It also enables quality reporting and timely follow-up because conditions are recorded consistently across encounters.

Tie coding to your clinical workflow inside the EHR. Templates, favorites, and decision support can surface likely codes while you chart. A system like Tebra’s EHR software lets teams search the catalog, apply edits, and keep files current, ensuring workflows remain efficient from charting to claims. 

When rules change, updates automatically reflect in the picker. That reduces rework, shortens denials, and supports internal audits before the claim leaves your practice.

Healthcare providers use ICD-10-CM to document conditions in patient records and support orders, referrals, and follow-up.

Here is who relies on ICD-10-CM across care and billing workflows:

ICD-10-CM codes are used by providers, coders, hospitals, insurers, public health agencies, and researchers to document conditions, support billing, monitor outcomes, and improve patient care.

With EHR workflows embedded, consistent use of ICD-10-PCS enhances accuracy across both outpatient and inpatient settings, aligning with official coding guidelines.

ICD-10-PCS is the hospital procedure coding system used for inpatient stays. It specifies how a procedure was performed, including approach, device, and body part, and it drives grouping and payment logic. CMS posts the official specifications and yearly files on its ICD-10-PCS updates page.

ICD-10-CM captures diagnoses across all settings. It records conditions, symptoms, and reasons for visits, which establish medical necessity for diagnostic services and treatment plans. The CDC maintains the current code lists and guidelines in its ICD-10-CM resources.

When used together, the CM explains why the patient needed care, and the PCS explains what the hospital did. The pairing supports accurate DRG assignment, tighter documentation, and fewer edits during the billing process.

The transition from ICD-9 to ICD-10 codes occurred because the older system had reached its capacity and could no longer describe modern medicine with sufficient specificity. Health systems require clearer diagnoses, laterality, and better data for quality and payment.

The change is documented in the NCHS ICD resources and outlined in the ICD-10-CM FAQ from the CDC, with historical context in this ICD-9 overview from NCBI.

The result is cleaner charts, fewer mismatches at adjudication, and a coding language that better reflects contemporary care.

Social determinants of health appear in ICD-10-CM as Z codes, which provide context about nonclinical health conditions that influence patient care. These entries help clinicians document factors that shape outcomes and enable planners to design public health programs. 

Z codes account for less than 1% of the roughly 70,000 diagnosis codes, yet they support practical initiatives in analytics and care coordination. You can review the official structure and guidelines in the CDC’s ICD-10-CM resources and the ICD-10-CM browser.

Common SDOH Z code categories:

Used consistently, these codes enrich patient care plans, inform referrals, and support population reporting. For current lists and notes, see the CDC’s ICD-10-CM resources and the live ICD-10-CM browser.

Current Procedural Terminology (CPT) is the Level I portion of the Healthcare Common Procedure Coding System. Maintained by the AMA, CPT codes describe clinician-performed services and diagnostic services across outpatient care, including radiology, pathology, surgery, and medicine. CPT has 3 categories that work together:

The AMA publishes the code set and periodic updates. These PLA (proprietary laboratory analyses) additions are issued quarterly within the CPT ecosystem. You can review the official structure in the AMA’s CPT code sets.

Accurate use often depends on modifiers. These two-character appendices explain circumstances that change a service without altering the base code, such as bilateral procedures, discontinued services, or professional versus technical components in radiology. Clean modifier use helps reflect clinical reality, supports medical necessity, and reduces rework in claims.

HCPCS codes Level II, maintained by CMS, complement CPT by representing supplies, drugs, ambulance transport, and equipment not captured in CPT — think durable medical equipment, prosthetics, orthotics, and certain drugs and biologics. Level II codes are alphanumeric and updated on a set annual cycle. 

The CMS posts current files, ground rules, and application pathways on its HCPCS Level II pages.

A note on naming: HCPCS historically referenced “Level III” local codes, which some payers and state agencies use. CMS discontinued those local codes after national standardization efforts, so in practice, HCPCS now functions with Level I (CPT) and Level II only.

Used together, CPT and HCPCS Level II provide clinicians and coders with a comprehensive vocabulary for services, as well as supplies, ensuring clear documentation and accurate claims across various settings.

Hospital reimbursement in the US relies on diagnostic-related group assignment. Medicare’s inpatient prospective payment system pays inpatient claims and groups encounters by diagnosis and resource use. 

Accurate diagnoses from ICD-10-CM and procedures from ICD-10-PCS flow into the grouper, so documentation quality directly affects payment and audit exposure during the billing process.

The Centers for Medicare & Medicaid Services administers Medicare, but regional Medicare Administrative Contractors handle day-to-day operations. MACs enroll providers, process claims, educate practices, and publish local coverage guidance that influences reimbursement decisions. You can confirm policies and coding requirements for specific services in CMS’s Medicare Coverage Database.

Private payers and insurance companies often follow similar logic, using diagnosis and procedure data to evaluate medical necessity and price claims. When codes, notes, and orders tell the same clinical story, adjudication is faster and denials drop. 

The practical takeaway is simple. Use precise diagnosis codes to explain why the patient required care, pair them with the correct inpatient procedures upon admission, and keep supporting documentation tight so grouping and pricing are accurate the first time.

Use this quick workflow to select appropriate codes and correct codes, then reflect them in your EHR.

For inpatient procedures, the Centers for Medicare & Medicaid Services accepts proposals for new codes and deletions through MEARIS. Use the public MEARIS portal to submit background materials and track status for ICD-10-PCS requests, then follow CMS’s published process for requesting new or revised ICD-10-PCS procedure codes.

Diagnoses follow a separate path. For ICD-10-CM, submit proposals to NCHS/CDC using the templates on the CDC’s ICD-10-CM maintenance page. Include clinical rationale, proposed titles, and where the change belongs in the hierarchy.

Both agencies review proposals at the public ICD-10 Coordination and Maintenance meetings. Sessions are streamed as a webinar, and meeting materials outline decisions and next steps. 

When adopted, updates are posted in the annual addenda and typically take effect on October 1. Plan your internal timelines to test initiatives that depend on new or revised codes in your EHR and billing tools before they go live.

Choosing proper codes for everyday visits and accurately coding procedures helps medical coders prevent claim denials and expedite payment. Here are the examples from the original article, retained and grouped by setting. Use these as quick references when documenting diagnostic services and routine care.

Most ICD-10 codes describe common medical conditions and procedures. However, some codes capture unusual or rare situations:

In 2024, CMS introduced 526 new billing codes. The new codes include the following:

A quick side-by-side helps teams see how the major classification systems and code sets fit together for clinicians, providers, and payers. Use this as a reference when selecting codes for documentation and reimbursement.

Navigating ICD-10 and related code sets doesn’t have to be daunting. With the right tools, healthcare providers and billers can improve accuracy, maintain compliance, and minimize denials while protecting margins and patient trust. Strong documentation leads to clean claims, better data, and smoother workflows from charting to follow-up.

Tebra’s EHR software supports everyday coding with integrated lookups, structured orders, and eRx/ePrescribing that connects diagnoses to medications and services. Billing features enable teams to post charges and reconcile payments, while digital communications keep patients informed without requiring additional steps.

For private practices, that means fewer hand-offs and fewer surprises. You focus on care while the system helps streamline routine tasks, keeps information in one place, and aligns coding with payer rules. Schedule a free, personalized demo today and see how Tebra can improve your workflow.