Medical Coding: A Boon to the Healthcare Industry

Medical Coding: A Boon to the Healthcare Industry

Author: Manali Dixit, Kawita Kanoje, Jai Dandekar


Imagine yourself reading long and difficult names of various medical conditions, procedures, diseases, diagnostics, etc. and creating a note or summary over it that would help the insurance companies to plan schemes accordingly! Sounds boring, right, but this is where the Medical Coding and the Medical Coder in the picture. The medical coder mainly translates these long terms into short alpha-numeric codes that are easier as well as fast to understand and thus aid in making faster reports required. Medical Coding is a process of translating data from the patient’s report into a universally acceptable code required by the insurance companies. Medical codes are a combination of alphabets and numerical arranged in a specific manner. Medical Coders are the specialists in these coding systems. There are various coding systems for medical term coding and their identification, like ICD coding system, CPT coding system, MEdDRA, WHO-DD, HCPCS, etc. It is the medical coder’s/ Clinical coder’s responsibility to get accurate codes every time.

Every coding system mentioned above has its own importance and speciality in terms and its codes. This article focuses on details of technology/systems involved in medical coding. Let us now go deep into the various coding systems used.

Coding Systems Overview

  1. The ICD Coding:

ICD stands for International Classification of Diseases. The classification system is maintained by the World Health Organization (WHO). ICD was originally devised as a healthcare classification system which provides diagnostic codes for classifying diseases, and nuanced or detailed classification of the wide range of signs, symptoms, abnormal findings, social circumstances and external causes of diseases and injuries. The ICD code consists of 7 characters, including combinations of alphabets and numerical.

Image Source: Link

As shown in the image, the first three characters depict the main category; the next four characters show the sub-category and the final seventh character is the extension. From all these characters, the first character which is included in the category is an alphabet except U. The second character is strictly numerical. The rest all characters can be alphabets or numeric.

Image source: Link

The above image shows one of the examples of ICD code along with its structure in detail.

There are lots of improved versions of ICD till now, namely, ICD-8, ICD-9, ICD-10, etc.

But, the latest version of ICD is ICD-11. This version came into existence in 2022. The eleventh version of ICD contains around 17,000 unique codes and more than 1,20,000 codable terms. This version of ICD is now completely digital.

2. CPT Coding System:

CPT is an abbreviation of Current Procedural Terminology. It is a uniform language to code various medical services, procedures, terminologies. This code was developed by the American Medical Association (AMA).

The code describes medical, surgical, and diagnostic services that can be used by medical professionals, patients, accreditation organizations, and payers for administrative, financial, or analytical purposes. CPT Codes are generally 5-digit numerical codes. The codes are divided into six sections: Evaluation and Management, Anaesthesia, Surgery, Radiology, Pathology and Laboratory, and Medicines. The code structure of CPT codes is classified into three categories: Category I, Category II and Category III. All the three categories are used according to the requirements.

Image source: Link

For e.g., 27130 is a code for Total Hip Replacement

45378 is a code for Colonoscopy

49320 is code for Laparoscopy, etc.

The latest version of CPT codes was released in October 2021. Also, AMA has released a CPT code set update for 2023 which consists of 393 editorial changes, 225 new codes, 75 deleted codes and 93 revised codes.

3. MEdDRA:

It is the Medical Dictionary for Regulatory Activities. MedDRA is a clinically-validated international medical terminology used by regulatory authorities and the regulated biopharmaceutical industry. The terminology is used throughout the entire regulatory process, from premarketing to post-marketing, and for data entry, retrieval, evaluation, and presentation.


4. WHO-DD:

WHO Drug Global is the international reference for medicinal product information. With its unique drug code hierarchy and extensive coverage, it provides a consistent drug dictionary with exact terminology when coding concomitant medications.

The dictionary is used to identify drug names and evaluate medicinal product information, including active ingredients and products’ anatomical and therapeutic classifications, from nearly 150 countries.

5.    HCPCS:

HCPCS stands for Healthcare Common Procedure Coding System. HCPCS is a collection of standardized codes that represent medical procedures, supplies, products, and services. The codes are used to facilitate the processing of health insurance claims by Medicare and other insurers.

HCPCS is divided into two subsystems, Level I and Level II. Level I is comprised of Current Procedural Terminology® codes (HCPT). HCPT codes consist of five numeric digits. For example, 90716 is used to denote the administration of Varicella or Chickenpox vaccine.

Level II HCPCS codes identify products, supplies, and services not included in CPT. Level II codes consist of a letter followed by four numeric digits. Current Dental Terminology codes are included in the Level II codes as HCDT. For example, R0070 code denotes the transportation of portable X-ray equipment to homes or nursing homes.

Patent Overview

These are the five main systems used in medical coding. The medical coding system is combined with advanced technologies such as artificial intelligence, machine learning, natural language processing, etc. for better use of codes, which is considered as a boon for the healthcare industry. Let us have a look at this emerging and developing field and patenting trend in this field.

The patent no. US6915254B1 explains the computer Natural Language Processing (NLP) to automatically assign medical codes to diagnoses and procedures performed by physicians for the billing purpose. These codes include standard ICD and CPT codes. By this method, medical billing industry can become modernized by reducing the need for human intervention, improving consistency of coding, increasing throughput, and decreasing reimbursement time. This invention takes advantage of the latest computing technology to accept from input physician notes. The input origins may be a word processor, optical character recognizer (OCR) or automated speech recognition (ASR).

US20140249860A1, is an interesting patent related to the apparatus and method, using voice recognition technology for medical coding purposes, basically it translates human speech into medical diagnostic codes. This invention comprises of a software application that has ability to integrate into most hospital’s billing system and EMR (Electronic Medical Records) claiming databases. Also, it is consisting of three components- a client program, an API server, and a speech-to-text service (STT).

The application can be used on a variety of platforms, and with virtually any computing device with a microphone including: Desktop computers (both Macs and PCs), mobile phones, hand-held devices, tablet computers, etc.

The patent US20150379241A1 provides information about the automatic medical coding system, receives messages containing diagnosis or procedure information and maps that information to one or more medical codes. The automatic medical coding system may optionally include databases, such as a medical terminology database, linking terminology appearing in a medical coding system with synonyms, lay terminology, abbreviations, and/or acronyms and a spelling dictionary.

US11101024B2 talks about the Clinical Documentation Improvement (CDI) system for resolution by a clinician, and notification of the clarification request may be transmitted to a medical coding system.  Currently, many healthcare institutions are transitioning from paper documentation to electronic medical record systems. Electronic medical records can also be shared, accessed, and updated by multiple different personnel from local and remote locations through suitable user interfaces and network connections, eliminating the need to retrieve and deliver paper files from a crowded file room.

US20180361238A1 is an interesting patent that discloses the systems that provide confirmation of accuracy of determining medical codes for medical records. This system is called the Delphi method.

CN112131868A, a Chinese patent explains the technical field of biological medicine, to a clinical trial medicine coding method.

Market overview

The medical coding market could be divided into

1.     Classification system (international classification of diseases and healthcare common procedure code system),

2.     End-Users

3.     Geography

Companies like 3M, Dolbey, Maxim Healthcare Services, MRA Health Information Services, Oracle, etc. in USA, Aviacode Inc. in India are involved in medical coding. Recent updates are discussed here,

Collective Thinking

Collective thinking is a French company that has developed Intelligence for Health™, a medical coding assistance software, with the help of physicians and medical coders to meet their operational challenges. This company is specialized in Artificial Intelligence and Natural Language Processing applied to medical data analysis.  The tool is designed for the medical coding department and helps to centralize and analyze all your hospital data (CRH, CRO, biology, nursing transmissions, etc.)

This software has following functionalities-

1)    Centralization – Centralize and analyze all the hospital data (CRH, CRO, biology, nursing transmissions, etc.)

2)    Automation – Possibility to automate the coding of shorter stays.

3)    Primary coding – Proposals for coding by Artificial Intelligence for the most complex stays.

4)    Revaluation – Fair valuation of stays through enhanced quality control.

5)    Security – All your data remains within your information system, without being transferred outside it.

Context 4 Healthcare

Context 4 Healthcare, Inc. has developed CodeLink, an advanced online medical coding software that generates CPT and ICD code data to execute the claim submission and minimize denials. It provides precise code and claim information including, CPT, HCPCS, ICD-10-CM codes. This software specifically addresses utilization, validation, modifier usage, and the National Correct Coding Initiative (NCCI) edits for unbounding and potential upcoding occurrences. NCCI promotes national correct coding methodologies and reduces improper coding.


Recent news related to mergers, collaborations and acquisitions in medical coding market are discussed in this article. In May 2023, CodaMetrix launched AI based Medical Coding with Henry Ford Health (Link). Healthcare AI Company Iodine Software has teamed with TruCode to improve hospitals’ clinical documentation. This combined technology helps to support accurate capture of documentation and code assignment, resulting in appropriate claim reimbursement, accurate reporting of patient outcomes and reduced claims denials, according to the companies. (Link)

In October 2022, WELL Health Technologies Corp., a Canadian organization, entered into an agreement to acquire Cloud Practice Inc. and three clinics from CloudMD Software & Services Inc.


To conclude, medical coding is the conversion of procedures, healthcare diagnoses, medical services, and equipment into medical alphanumeric codes. Various advancements like artificial intelligence, machine learning and natural language processing have been used in this field to avoid errors. Yet many patents give novel, efficient and effective methods of medical coding. Incorporating automated technology helps to remove manual coding errors. Future research could be in the area of computer assisted coding and variability in coding productivity among medical coders. 3M, Dolbey, Maxim Healthcare Services, Aviacode Inc. are the top companies working in this field.

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