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Understanding Medical Codes and Coding Classification Systems

By DeVry University

April 22, 2022
5 min read

There are currently five major medical coding classification systems that are used to identify and manage medical codes — ICD-11, ICD-10-CM, ICD-10-PCS, CPT and HCPCS Level II. If you’re interested in becoming a medical billing and coding professional, it’s important to learn more about each system.

In this article, we'll start by explaining a little bit about each classification system in medical coding, their differences and some of their specific use cases and advantages in the following sections:

What is a Medical Coding Classification System?

Medical coding classification systems are groups of codes that correspond to individual procedures and diagnoses. They are used to accurately track information about diseases and health conditions in patient records and play a role in the medical billing process.

Medical coding classification systems aren’t used only by hospitals and care facilities. Government health programs such as Medicare and private insurers also use them for a variety of purposes, including statistical analysis of diseases and procedures, claims and reimbursement, tracking outbreaks and with decision support systems.

Overview of the Five Medical Coding Classification Systems

Under the larger umbrella of medical coding classification systems, there are different categories that are used for specific purposes. For instance, diagnosis codes are used by care providers to classify diseases and symptoms, while procedural codes are used to identify surgical or medical procedures. Identifying the category that a medical coding system falls under can help you better understand its purpose and function.

The following list provides a brief overview of some classification systems used in the medical billing and coding field.


ICD-11 is the latest revision of the International Classification of Diseases (ICD) and is intended to replace ICD-10 as the new global standard for diagnostic codes. ICD-11 went into use in January 2022 and is used to meticulously classify everything from diseases to various symptoms. It also recodifies the classification area of some diseases, expands the definitions for sexual health and includes new entries for immune system and sleep-wake disorders, among other new diagnoses.


The ICD-10-CM is the clinical modification (CM) of the previous version of the ICD, ICD-10. This version of the ICD is designed to be used in a clinical setting and contains a modifier to achieve level of detail that meets reporting needs within the United States. ICD-10-CM also differs from the standard ICD-10 codes in granularity. The medical codes in ICD-10-CM are more detailed and are especially useful for clinical, outpatient applications because they allow for clarification about the severity of a disease or condition.


The ICD-10-PCS is the procedural-focused version of the ICD, ICD-10. Unlike the ICD-10-CM, which is meant for more detailed classification of diseases and conditions, the ICD-10-PCS contains more detailed medical codes for procedures and equipment and is used for inpatient settings.


CPT stands for Current Procedural Terminology and is used to report diagnostic, surgical and medical procedures to relevant parties. CPT is a procedural medical coding classification system, meaning that it identifies the procedures that doctors and other care providers perform to help their patients. Its primary purpose is to communicate these procedures in a standardized way for administrative and analytical uses.


The Healthcare Common Procedure Coding System Level II, or HCPCS, is based on CPT. HCPCS codes are used to delineate non-physician services that are not included in the CPT jurisdiction, such as ambulances, drugs and prosthetics.

How to Decipher Medical Codes for Billing

Typically, you'll find both ICD codes and CPT codes in a medical bill. The ICD codes denote your diagnosis and are used on hospital records, medical charts, visit summaries, bills and other patient paperwork to ensure the proper delivery of medical care. Meanwhile, the CPT codes correspond to the medical treatments you received during a visit.

How are ICD codes used?

According to the World Health Organization, the goal of ICD implementation is to generate comparable health data at the international level. A few quick facts about ICD-11 and how the system is used include:

  • ICD-11 is the international standard for the systematic recording, reporting, analysis, interpretation and comparison of mortality and morbidity information.

  • ICD codes can have enormous financial implications, as they are used to determine the allocation of resources, such as funding for health initiatives.

  • 70% of the world’s health expenditures use ICD coding for reimbursement and resource allocation.

  • 110 countries that collectively account for 60% of the world’s population use ICD cause-of-death data for systematic health planning and monitoring.

  • ICD-11 is fully electronic, having been upgraded for the digital age, and provides access to 17,000 diagnostic categories with more than 100,000 medical diagnostic index terms.

Elements of ICD Codes

The ICD-10 medical codes consist of a letter, then two digits to the left of the decimal point and one digit to the right. The letters categorize diseases based on specific conditions or organ systems. For example, A refers to infectious and parasitic diseases, C denotes cancer, E covers endocrine, nutritional or metabolic conditions and K stands for the digestive system. So E10.9 refers to type 1 diabetes and K21.9 is for gastroesophageal reflux disease (GERD).

With the release of ICD-11, medical codes will be updated with the addition of one number preceding the letter and one at the end. For instance, X98.6 in ICD-10 will be changed to 0X98.60 in ICD-11. The letters I and O will no longer be used in order to avoid confusion with the numbers 1 and 0.

When you leave a medical appointment or receive a medical bill, you'll get a summary of the visit that includes various codes. You can also find these codes in the explanation of benefits (EOB) from your insurance provider, Medicare or other payers.

The ICD codes appear in the "diagnosis" or "Dx" section of a medical bill. To find out what an ICD medical code stands for, you can go to the Centers for Disease Control and Prevention (CDC)'s ICD-10 searchable database, select the current ICD-10 code set and enter the code in the search box.

Types of CPT Codes

The American Medical Association (AMA) has organized CPT codes in a logical manner, in 3 classifications:

  • CPT Category I: This is the largest code category, as it includes those typically used by providers to document services and procedures.

  • CPT Category II: Codes in this category are used for management of providers’ performance and to track patients’ health information, and are not linked to reimbursement.

  • CPT Category III: These are temporary codes used to report services and procedures that are considered to be experimental or emerging.

There are 6 main sections of Category I medical codes. They are arranged in numerical order and typically denoted by 5 numeric characters:

99202-99499:                  Evaluation & Management

00100-01999:                  Anesthesia

10021-69990:                  Surgery

70010-79999:                  Radiology Procedures

80047-89398:                  Pathology & Laboratory Procedures

90281-99607:                  Medicine Services & Procedures

Category II medical codes consist of 4 numbers and the letter F, and are tracking and performance codes that can be used by health providers in addition to Category I codes. They document therapeutic, preventative or other interventions, follow-up care, patient history and other aspects of a patient’s care. An example of how a Category II code is used would be to track specific health information about their patients, such as their use of tobacco.

Category III medical codes representing new technologies, services and procedures consist of 4 numbers and the letter T. These new procedures can remain as a Category III designation for up to 5 years. Once proven effective, which may involve FDA approval, they are reassigned Category I codes. If providers do not use them, Category III codes can be eliminated.

The AMA releases new or revised Category III codes semiannually, and Category III deletions annually.

To see what service or procedure a CPT represents, visit the AMA's website. From there, you'll accept an end-user agreement and create an account. Then, you can enter the 5-digit CPT code to perform a search. You can also enter the name of a treatment or procedure to look up the corresponding CPT code, but you may have to sort through multiple results.

You'll also see that each CPT code is associated with a monetary value. It represents the national average that Medicare pays a provider for the service rendered. Different geographic regions are assigned a relative value amount (RVU), a percentage of the average payment. You can calculate the amount paid in your location by multiplying the average amount by the RVU.

Keep in mind that these values are for Medicare payment. The amount your healthcare provider gets paid may be different if you have private insurance. It could be more or less than the amount listed based on their negotiation with the payer.

Learn About Medical Codes and Coding Classification Systems at DeVry

We can help you take the first step toward a career as a medical coder. Our Medical Billing and Coding Undergraduate Certificate program teaches you how to utilize different medical coding classification systems, explores insurance and reimbursement processes and helps you gain hands-on experience in a virtual lab setting. Study 100% online and earn your certificate on your schedule. Classes start every 8 weeks.

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