In the United States, most medical treatments are paid for by insurance companies. Healthcare is very expensive so without insurance most people would not be able to afford to visit a doctor or hospital for treatment. But how does the system work? And what do medical billing codes have to do with getting treatment? 

What are Medical Billing Codes? 

Every aspect of a patient’s medical visit will have a specific code, says the people at This includes diagnosis codes, HCPCS codes, and CPT codes. Diagnosis codes are part of the ICD (International Classification of Diseases) codes and they, as you might imagine, are used to describe the cause of an illness or disease. CPT (Current Procedure Terminology) codes are assigned to the treatments or procedures that were used during the treatment while HCPCS (Healthcare Common Procedure Coding System) codes are used to bill for anything else that was used and not covered under the CPT coding system (such as medications, ambulance services, or medical equipment). 

How Does the Coding System Work?

Insurance companies rely on the work of medical coders and billers who typically work within healthcare settings. Many medical facilities have in-house coders and billers who take care of translating every part of a patient’s visit into coding and who then bill the insurance company. 

It begins when a patient visits a doctor or emergency room. In the case of a visit, the initial consultation will begin the process. The doctor will record the patient’s symptoms and the diagnosis on the patient file. The file will also include things like laboratory tests that were performed as well as any treatments recommended or referrals to a specialist. Any equipment that was used as well as any medications will also be recorded. 

The same procedure applies in an emergency room. Every detail of the patient’s time there must be recorded on the file and then this file is passed to the medical coder when the time comes to bill the insurance company. 

It is the coder’s job to apply the relevant coding to the file for billing. The coder must have an understanding of medical terminology to be able to find the correct code for each part of the file. The codes can be found in reference books that are published annually or in online databases that contain all up-to-date information on coding. 

Medical coders must make sure to use the correct codes or it could delay a claim or result in it being part-paid or not paid at all. Every year, there are some changes to the coding system with new codes added to account for more specific diagnoses and treatments. It is important that coders are aware of the changes and are using the correct codes. 

What do Insurance Companies Do with Medical Bills? 

An invoice known as a ‘superbill’ is created by the medical biller. This is an itemized form that will be used to create the insurance claim. It contains information about the healthcare provider, the patient, and details of the visit and treatment. These superbills are sent to the payer (such as insurance companies, Medicare, or Medicaid). Depending on the payer, the claim may need to be sent electronically. 

The claim for payment may need to be sent to a clearing house first, where they are ‘scrubbed’. This process ensures that accurate coding is present on the claim. Some insurance companies take care of scrubbing claims themselves. 

Adjudication by the payer involves assessment of the claim to determine how much will be paid. Once this is done, the claim will either be paid, sent back for correction, or denied.