Understanding Medical Coding and the Health Care Payment System

Understanding Medical Coding and the Health Care Payment System

Norman A. Cohen MD


When we give anesthesia, one of our most important jobs is to communicate effectively with our patient, surgeon, operating room (OR) staff, and postanesthesia care unit (PACU) nurse. To get paid for our work, we also have to communicate effectively with another audience—the payer. This process of formally communicating our work to those who will pay us is known as medical coding.

Diagnostic and procedure codes are the lingua franca, the descriptive taxonomy, that allows us to classify both the diagnoses justifying our work as well as the procedures that describe the work performed. A payment system associates a value with each covered procedure. Covered procedures are medical services for which insurers have agreed to provide compensation. The payment-system value may list an arbitrary dollar amount or a relative value unit (RVU) for each covered service. A relative value system defines a value relationship among all procedures on the payer’s fee schedule. Payers convert an RVU into a payment amount by multiplying the RVU by a conversion factor, which defines the monetary value of each RVU. The list of payment amounts or RVUs for all covered services is known as a fee schedule.

In the following chapters, we will discuss the basics of coding for all sorts of medical services commonly performed by anesthesiologists, including the anesthetic service, line placements, pain management, critical care, and evaluation and management. We will also learn about the resources available to code correctly, the elements of the Medicare payment system, and a brief overview of Medicaid and third-party insurance payment systems.

We will spend a fair bit of time examining specific payment rules and policies of the Medicare system. Medicare is a dominant player in the health care system. Because Medicare’s system for developing payment policies is open to public scrutiny and comment, Medicare’s influence on other payers is significant, making understanding of these rules quite important. As the old saying goes, “He who has the gold makes the rules.”

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Jul 1, 2016 | Posted by in ANESTHESIA | Comments Off on Understanding Medical Coding and the Health Care Payment System
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