The complete guide to medical coding systems: All about ICD-10 and other codes you should know

As a healthcare provider, you know how critical medical coding is to your business. It acts as the backbone of your billing and reimbursement process. Yet, it’s also a complicated process. As you’re setting up your processes, you might have questions like, “What are ICD-10 codes?” or “How do I use the right ICD-10 code?” You’re not alone.

When a simple coding error could cost you thousands of dollars or a returning patient, there’s a lot on the line. A survey by KFF found that 43% of United States adults have received a medical or dental bill with an error. Two-thirds of these respondents said it involved being billed for an issue that their insurance provider should have covered.

It’s unsurprising, to say the least. The way the system is set up, you have to wade through thousands of codes from various systems, making it a time-consuming, complex, and overwhelming process for providers.

To address these challenges, you need to clearly understand the coding system and its applications for your practice. In this guide, we’ll provide an in-depth look into coding systems such as:

We’ll dive into the specifics of each system so that you have a solid foundation in each — and are better equipped to navigate it.

The International Classification of Diseases, 10th revision (ICD-10) coding system has 3 purposes:

This system is much more detailed than its predecessor, the ICD-9, allowing providers to document patient conditions more accurately.

It also provides better datasets for research and public health tracking projects, allowing healthcare organizations to track disease patterns and subsequent outcomes. Ultimately, it improves patient care and resource allocation in every region.

The development of ICD-10 began in 1983 to reflect new discoveries and therapies. ICD-9 CM only had ~13,000 codes, whereas ICD-10 CM has ~70,000 codes with scope for expansion.

Here’s what the official timeline looks like:

The World Health Organization (WHO) owns and publishes ICD-10 codes. However, the National Center for Health Statistics (NCHS) modified and implemented its usage in the United States.

Currently, the Centers for Disease Control and Prevention (CDC) and the Centers for Medicare and Medicaid Services (CMS) maintain the ICD-CM codes.

Since 1996, WHO has released an update every year. The WHO and NHCS approve them during an October meeting. This annual update is meant to reflect any advances in medical knowledge, changes in disease patterns, and new technologies. This way healthcare and insurance providers can input codes that account for the nuances in the industry. 

Every year, the WHO releases the updated version of these codes for the upcoming fiscal year by September 30. So, it’s essential that your billing vendor continuously updates its system to reflect these changes. These changes are then implemented and are effective for the fiscal year starting October 1 through September 30.

For instance, for the fiscal year 2024, 526 ICD-10 codes were introduced and were effective from October 1, 2023. Here are a few examples of the new codes:

While the WHO maintains the updated list of overall ICD-10 codes. The NCHS maintains the ICD-10 CM codes (which are updated annually in July). The CMS maintains the ICD-10 PCS codes (which are updated twice a year, in April and October). For each of these code sets, the changes go through the ICD-10-CM/PCS Coordination and Maintenance Committee.

You can find the update code sets on 3 different websites:

For instance, CMS published a new update to ICD-10 PCS codes in April 2024 where it's implementing 41 new codes. Some of these codes fall under specialties such as obstetrics, radiation, and surgical procedures. If you want to make sure you have the right codes, consult any of these websites before billing your patients.

ICD-10 codes are used by many practitioners such as healthcare providers, insurance companies, and governmental bodies. Let’s look at how each of these practitioners use it — and how the codes play a role in streamlining the medical system.

In a healthcare setting, physicians use ICD-10 codes for the following purposes:

Physicians don’t just communicate with other physicians. They need a way to accurately relay information about a patient’s care to insurance companies. ICD-10 lets you use specific codes that go into granular detail, which helps insurance companies decide whether they should reimburse payment and how much.

The ICD-10 codes offer a standardized method for documenting patient diagnoses, symptoms, and reasons for check-ups. They aren’t limited to in-patient or outpatient procedures, as there are specific codes for both.

You can use codes instead of relying on handwritten request forms for referrals or diagnostic tests. Codes eliminate ambiguity and give specialists and diagnosticians a shared language to determine the reason for the referral or order.

This means that wherever your patients go, they have an accurate patient record in a digital format accessible in multiple settings — a hospital, clinic, or private practice. Plus, the codes offer a concise way to record a patient’s health status, treatment plan, and progress report over time.

Physicians also use ICD-10 codes for quality reporting and performance measurement purposes. The Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) oversee its usage.

By accurately coding patient diagnoses and procedures, physicians can:

ICD-10 is a standardized coding system to code diagnoses, symptoms, and procedures in healthcare settings. The goal is to standardize reporting in healthcare, which improves data quality and facilitates better billing procedures, disease management, and research.

For example, say a patient comes in for stomach pain but a biller accidentally enters a CPT code for an X-ray, Since the CPT code doesn’t match the necessary ICD-10 code, it may look like a false claim to the insurance provider — resulting in a rejected claim for a practice.

Accurate ICD-10 codes are not only important for reflecting the services provided to patients, but also crucial for practice revenue.

ICD-10-CM stands for International Classification of Diseases, 10th revision, Clinical Modification. It was developed by the CDC and CMS, and is used to code diagnoses and symptoms in healthcare settings. It allows healthcare providers to document and report patient diagnoses so that insurance providers and other medical bodies can use the information in a standardized format.

There are 2 types of ICD-10 codes:

Together, they form a comprehensive system to document complex conditions and treatments. This system enables hospitals and patients to get reimbursed by insurance agencies without issues like ambiguity or errors.

The ICD-10-CM are usually used in a healthcare setting, but many other professionals use them, too. Here’s a list of professionals and institutions that use them regularly:

The ICD-10-CM code structure is alphanumeric and consists of 3–7 characters. The first character is always a letter, while the second and third can be letters or numbers.

Characters 4–7 are always numbers. In some cases, a placeholder character “X” is used to allow for future expansion or to fill in empty spaces in a code.

The CDC maintains the ICD-10-CM system, which has specific codes for laterality, severity, and other clinical details. They release updates in April and October every year.

Compared to the ICD-9-CM system, the current version allows you to record patient conditions with more accuracy and precision. Instead of focusing on procedures providers have performed, it’s primarily used to report diagnoses and reasons for patient encounters and intake.

The codes are organized into 21 chapters based on body systems or condition categories. For example:

The codes don’t directly impact reimbursement amounts but impact DRG assignment and the reimbursement process.

There are several differentiators between the old ICD system and the current one. Here’s how they differ from each other:

ICD-9-CM codes were 3–5 characters in length, with the first character being either numeric or alphabetical (E or V) and characters 2–5 being numeric. The decimal appears after the first 3 characters.

But ICD-10-CM codes are 3–7 characters in length, with the first character always being alphabetical and characters 2–7 being alphabetical or numeric. The decimal placement remains the same.

Because ICD-9-CM codes are much shorter in length, they lack specificity. They also lack laterality (left vs. right) and have a reduced capacity to capture detailed clinical information.

On the other hand, ICD-10-CM codes are long, allowing them to capture more information within a single code structure. They also incorporate laterality, which helps providers create data-rich patient records.

ICD-9-CM has ~13,000 codes and doesn’t cover health conditions identified since the 1980s.

ICD-10-CM has ~68,000 codes, which include not only newer terminologies and treatments but also incorporate codes for ambulatory and managed care encounters. The coverage is much broader in this case, supporting the nuanced needs of the healthcare industry.

ICD-9-CM has 17 chapters and includes numeric categories (001–999) for diseases and injuries. It also offers supplementary classifications (E and V codes) for external injury causes and health factors.

ICD-10-CM has 21 chapters, with alphanumeric categories (A00–Z99) for diseases and injuries. It has chapters on pregnancy, certain conditions originating in the perinatal period, and external causes of morbidity.

As a provider, you know that many diseases stem from a patient’s social and economic condition and connect to a lifestyle issue, eating habits, and social status in society.

Social determinants of health (SDOH) are the conditions in which people are born, grow, live, work, and age, and they help determine health outcomes and health inequities. SDOH data is intrinsically linked with ICD-10 code usage.

Healthcare providers, policymakers, and researchers recognize the need to address these factors and use them to identify at-risk populations. For this reason, ICD-10 codes include SDOH-specific codes to provide additional context.

A preprint published in 2021 found that when a Department of Veterans Affairs Medical Center (VAMC) used SDOH codes, acute care utilization among veterans improved. This shows the value of SDOH-specific codes and why more institutions should adopt them.

Most of these codes are in the “Z” chapter of ICD-10-CM. This chapter covers the “Factors influencing health status and contact with health services.” Some examples of SDOH-related ICD-10-CM categories include:

This information helps guide treatment decisions, referrals to social services, and population health management strategies.

It’s important to note that despite its positive impact on health outcomes and evidence-based interventions, SDOH only accounts for less than 1% of ~70,000 codes. This indicates a need to expand the scope of SDOH codes to fully capture the complex nature of issues exacerbated by social determinants.

Apart from physicians, several other practitioners and institutions use ICD-10 codes. They are:

These ICD-10 CM codes used in clinical settings contain alphanumeric characters and consist of 3–7 characters each.

The first character is always a letter, and the next 2 are numbers. The subsequent characters can be a string of letters or a number that appear after a period.

Each character provides information about the diagnosis or procedure the provider used to treat the patient. The basic structure of an ICD-10 code is as follows:

Sometimes, a placeholder character “X” allows for future expansion or fills empty spaces in a code.

Since physicians typically use ICD-10 CM codes, we’ve explained the structure for the same below.

ICD-10 CM codes contain multiple chapters, with each representing an anatomical area or condition.

Here’s a list of these chapters and their corresponding anatomical systems:

The category designation serves as the base code. You can add characters to this code to represent relevant clinical details.

For example, if you want to find the code for type 2 diabetes mellitus (E11), here’s how it’s structured:

You can add characters to provide more specific information about the diabetes:

Healthcare and government institutions worldwide use standardized code sets and classifications for purposes like research, billing, or diagnosis. They’re fundamental in helping medical providers translate patient data into universal billing and reimbursement codes.

Providers use 4 major systems:

You’ll use these systems in some capacity as part of your in-patient coding system. First, you have to go through the patient’s record, such as:

Once you do, you’ll use that information to apply the necessary codes using the ICD-10 coding system. The goal is to generate a DRG group for the patient to eventually get reimbursed.

The Healthcare Common Procedure Coding System (HCPCS) is another standardized coding system for reporting healthcare services, procedures, and equipment provided to patients.

Healthcare providers, insurers, and government programs like Medicare and Medicaid follow the HCPCS system to ensure consistency in coding and reimbursement. It’s divided into 2 levels: level 1 and level 2.

Level 1 HCPCS codes, or current procedural terminology (CPT) codes, are 5-digit numeric codes that describe medical, surgical, and diagnostic services.

The American Medical Association (AMA) developed these codes and updates them as needed. However, the book is published annually. In addition, certain codes like proprietary laboratory analyses (PLA) codes are updated quarterly. Level 1 HCPCS codes are divided into 3 categories:

The level 2 HCPCS codes, also known as “HCPCS codes” or “national codes,” are alphanumeric codes that begin with a letter followed by 4 numbers.

These codes identify products, supplies, and services that aren’t included in the level 1 HCPCS set. Here are a few examples:

CMS created the level 2 HCPCS codes and continues to update them annually.

The Medicare Electronic Application Request Information System (MEARIS) has replaced paper-based systems. You can use it to submit HCPCS level 2 applications to CMS for Medicare coding and payment-related applications.

In a typical healthcare encounter, you’ll apply ICD-10 CM codes to document the patient’s diagnosis or the reason for the visit. However, you’ll use CPT and HCPCS level 2 codes to describe the specific procedures, services, and items provided during the encounter.

This combination creates a comprehensive picture of the patient’s medical condition and the care they received.

For example, if a patient visits a physician’s practice with type 2 diabetes mellitus, this is what the code would look like:

Payers use these codes to determine the appropriate reimbursement based on the services and items rendered.

Medicare is a federal health insurance program in the United States. It only covers individuals who are 65 or older, who are younger but with disabilities, or who have end-stage renal disease (ESRD). It’s managed by CMS but also includes private insurance companies known as Medicare administrative contractors (MACs). These contractors process and pay Medicare claims, enroll healthcare providers, and educate them about billing requirements.

MACs are usually responsible for certain jurisdictions only but they do handle hospital insurance (part A) and medical insurance (part B) payments. Some of their responsibilities include the following:

Medicare Experience and Reporting Information System (MEARIS) is a web-based application developed by CMS to collect and manage data related to the Medicare program. MACs use the system to offer reports on metrics such as workload, financial data, performance, and enrollment data. CMS uses MEARIS to identify issues in the program and make informed decisions on improving it.

As stated above, current procedural terminology codes — also known as CPT codes — are HCPCS level 1 codes. They are a coding system developed and maintained by the AMA and are used to describe medical, surgical, and diagnostic services provided by healthcare professionals. 

In the US, they’re used for billing outpatient services so that insurance providers know for what the patient was billed.

There are 3 categories of CPT codes, as follows:

The main difference between CPT and ICD-10 CM codes is that the former focus on medical, surgical, and diagnostic services, while the latter focus on diagnosis, symptoms, and procedures.

When you submit an outpatient claims for reimbursement, use a combination of ICD-10 codes to describe the patient’s diagnosis and CPT codes to describe the services and procedures performed. For inpatient claims, use a combination of ICD-10 CM and ICD-10 PCS codes.

Physicians use ICD-10 CM codes in their practice according to the nature of these codes. Before we explore how you can use ICD-10 CM codes in your practice, let’s review common challenges you can expect with medical coding processes:

We recommend using an electronic health record (EHR) that captures all the patient data and lets you map it to the right code.

Tebra recognizes how difficult it can be to set up your own billing systems internally, even with the right tools. For this reason, we can help you find a billing partner for your practice — one with demonstrated experience in the field.

Whether you’re from the public or private sector, you can request code modifications to be added to the system. You can submit these requests via CMS’s official portal called MEARIS for ICD-10-PCS modifications. You need to include the relevant background paper using the Section-508 PowerPoint compliant file and PDF slide deck — which can be found on CMS’s official website.

As for ICD-10-CM modifications, you can submit requests via CDC’s official website where you can find the proposal and summary templates. You need to mention why you’re requesting a change and its clinical relevance, along with the suggested change within the classification structure.

In Tebra’s EHR system, the codes are updated when the governing body introduces a new update. For instance, CPT codes are updated annually but ICD-10-CM codes are updated every quarter.

Most EHR systems and medical coding software have built-in ICD-10 code lookup functionality. For example, Tebra’s EHR lets you search for codes within the tool, and if you need to convert ICD-9 codes to ICD-10 codes, you can just use the ICD-10 Diagnosis Crosswalk tool.

Plus, it has several other features that let you streamline your billing process with ease. For instance, Tebra provides templates that guide providers in capturing specific, accurate details necessary for ICD-10 coding. You can export and print clinical records to provide physical copies for claims and audit processes.

In addition, you can use integrated coding tools such as coding crosswalks and dual coding tools to select the right ICD-10 codes for your specialty and procedure. This reduces the likelihood of errors during the transition and ongoing use. You also have the option to use digital superbills that capture frequently used codes and make them available to you — reducing time spent on the billing process.

Here are a few sources to help you find the right ICD-10 codes:

You can find ICD-10-CM codes on the CDC’s official website. The codes are available through the ICD-10-CM browser tool.

CMS has its own search tool, the Medical Coverage Database (MCD) Search, which shows data on the codes and whether Medicare covers specific conditions.

The following websites provide the most current version of the ICD-10 code sets, coding guidelines, resources, and updates.

ICD10Data.com is a free online tool that lets you search for codes by:

You can also convert old codes to the recent ICD-10 list and use it for diagnosis or billing purposes.

This website provides access to the international version of the ICD-10. Last updated in 2019, this version serves as the basis for country-specific adaptations like ICD-10-CM. You can search the database using disease or condition descriptors — for example, “cancer.”

Here’s a step-by-step process to finding the right ICD-10 codes:

Navigating the complexities of ICD-10 codes doesn’t have to be daunting. With the right tools at your fingertips, you can ensure accuracy, enhance patient care quality, and streamline operations — all while staying compliant and maximizing reimbursement.

Discover how Tebra’s EHR system is designed specifically for healthcare professionals like you.

Embrace the ease of managing ICD-10 codes with technology that understands the nuances of your work and supports your mission to deliver superior care.

There are ~68,000 ICD-10-CM codes and ~87,000 ICD-10-PCS codes as of April 2024. The former is separated by 21 chapters and the latter is separated by 17 sections.

Physicians use some codes regularly. Here are some of them, organized by specialty:

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

You can find the rest here.

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

ICD-10 codes have a maximum character count of 7 characters. In some cases, the code description can go up to 400 characters.