Compliance with Medicare coding and billing regulations and guidance is necessary for all Medicare-certified providers, and doing so is often complex and detailed. Providers must maintain a comprehensive understanding of all applicable payment systems, such as the IPPS (Inpatient Prospective Payment System) and OPPS (Outpatient Prospective Payment System). Providers must also understand the nuances within the numerous fee schedules applied by Medicare, such as the MPFS (Medicare Physician Fee Schedule) and CLFS (Clinical Lab Fee Schedule).
At the heart of each of these systems and fee schedules, providers must understand and utilize coding mechanisms. In most outpatient settings, providers must utilize the Healthcare Common Procedure Coding System (HCPCS, often pronounced by its acronym as “hick picks”). HCPCS is a set of health care procedure codes representing various items and services, and is based on the American Medical Association’s Current Procedural Terminology (CPT Codes).
In most inpatient settings, providers must utilize Diagnosis-Related Groups (DRGs). A DRG is a statistical system of classifying any inpatient stay into groups for the purposes of payment. The DRG classification system divides possible diagnoses into more than 20 major body systems and subdivides them into almost 500 groups for the purpose of Medicare reimbursement. [Similarly, Case Mix Groups (CMGs) are employed in inpatient rehabilitation hospitals or distinct units, while Resource Utilization Groups (RUG-III) are employed in Skilled Nursing Facilities.] In both in and outpatient settings, providers must employ diagnostic coding. Diagnostic coding is the translation of written descriptions of diseases, illnesses and injuries into codes from a particular classification.