Learn About Insurance Codes to Avoid Billing Errors

Insurance codes are used by your health plan to make decisions about your prior authorization requests and claims, and to determine how much to pay your healthcare providers. Typically, you will see these codes on your Explanation of Benefits and medical bills.

It's important to understand these codes so you confirm that no mistakes were made in the billing process. This can potentially save you money, depending on your health coverage.

Explanation of Benefits

An Explanation of Benefits (EOB) is a form or document that may be sent to you by your insurance company several days or weeks after you had a healthcare service that was paid by the insurance company.

Your EOB is a window into your medical billing history. Review it carefully to make sure you actually received the service being billed, the amount your healthcare provider received and your share are correct, and that your diagnosis and procedure are correctly listed and coded.

(Note that if you have Original Medicare, you'll receive a Medicare Summary Notice instead of an EOB. Medicare Summary Notices are sent every four months, assuming you received any covered care during the previous four months. You'll still receive EOBs from your Medicare Part D plan and your Medigap plan, if you have them.)

Importance of Insurance Codes

EOBs, insurance claim forms, and medical bills from your healthcare provider or hospital can be difficult to understand because of the use of codes to describe the services performed and your diagnosis. These codes are sometimes used instead of plain English, although most health plans use both codes and written descriptions of the services included on EOBs, so you'll likely see both. Either way, it's useful for you to learn about these codes, especially if you have one or more chronic health problems.

For example, millions of Americans have type 2 diabetes along with high blood pressure and high cholesterol. This group of people is likely to have more health services than a person who has none of these conditions, and will therefore need to review more EOBs and medical bills.

Coding Systems

Health plans, medical billing companies, and healthcare providers use three different coding systems. These codes were developed to make sure that there is a consistent and reliable way for health insurance companies to process claims from healthcare providers and pay for health services.

Current Procedural Terminology

Current Procedural Terminology (CPT) codes are used by healthcare providers to describe the services they provide. Your healthcare provider will not be paid by your health plan unless a CPT code is listed on the claim form.

CPT codes are developed and updated by the American Medical Association (AMA). The AMA issues an annual update to the CPT codes. For 2024, the update includes 230 new codes, 49 deleted codes, and 70 revised codes.  For 2025, there were a total of 420 updates to the CPT codes, including 270 new codes, 112 deleted codes, and 38 revised codes. 

However, the AMA does not provide open access to the CPT codes. Medical billers who use the codes must purchase coding books or online access to the codes from the AMA.

The AMA site allows you to search for a code or the name of a procedure. However, the organization limits you to no more than five searches per day (you have to create an account and sign in to be able to use the search feature).

Also, your healthcare provider may have a sheet (called an encounter form or "superbill") that lists the most common CPT and diagnosis codes used in their office. Your healthcare provider's office may share this form with you.

Some examples of CPT codes are as follows:

• 99202 through 99205: Office or other outpatient visits for the evaluation and management of a new patient, with the CPT code differing depending on how long the provider spends with the patient. (Longer visits can be billed at higher rates, which is why there are different CPT codes depending on the length of the visit.)
• 93000: Electrocardiogram with at least 12 leads
• 36415: Collection of venous blood by venipuncture (drawing blood)
• 98975 through 98981: Therapeutic remote monitoring (new as of 2022)
• 90380, 90381, 90683, 90679, and 90678: Related to the new RSV vaccinations (new for 2024)
• 0902T and 0932T: Related to AI augmentative data analysis in electrocardiograms (new for 2025)

Healthcare Common Procedure Coding System

The Healthcare Common Procedure Coding System (HCPCS) is the coding system used by Medicare. Level I HCPCS codes are the same as the CPT codes from the American Medical Association.

Medicare also maintains a set of codes known as HCPCS Level II. These codes are used to identify products, supplies, and services that aren't covered under CPT codes, including ambulance services and durable medical equipment (wheelchairs, crutches, hospital beds, etc.), prosthetics, orthotics, and supplies that are used outside your healthcare provider's office.

Some examples of Level II HCPCS codes are as follows:

• L4386: Walking splint
• E0605: Vaporizer
• E0455: Oxygen tent

The Centers for Medicare and Medicaid Services maintains a website where updated HCPCS code information is available to the public.

International Classification of Diseases

The third system of coding is the International Classification of Diseases, or ICD codes. These codes, developed by the World Health Organization (WHO), identify your health condition, or diagnosis.

ICD codes are often used in combination with the CPT codes to make sure that your health condition and the services you received match. For example, if your diagnosis is bronchitis and your healthcare provider ordered an ankle X-ray, it is likely that the X-ray will not be paid for because it is not related to bronchitis. However, a chest X-ray is appropriate and would be reimbursed.

The current version is the 11th revision, or ICD-11, which took effect as of 2022. ICD-11 replaced ICD-10, which had been used in the U.S. since 2015. (The U.S. transitioned from ICD-9 to ICD-10 codes in 2015, but the rest of the world's modern healthcare systems had implemented ICD-10 many years earlier.)

These are some examples of ICD-11 codes :

• 4A44.A1: Granulomatosis with polyangiitis
• 6A70.1: Single episode depressive disorder, moderate, without psychotic symptoms
• ND14.7Z: Sprained or strained ankle

A complete list of diagnostic codes (known as ICD-11) can be found on the WHO website, making it fairly straightforward to search for various codes.

CPT codes continue to be used in conjunction with ICD-10 codes (they both show up on medical claims), because CPT codes are for billing, whereas ICD-10 codes are for documenting diagnoses.

Coding Errors

Using the three coding systems can be burdensome to a practicing healthcare provider and busy hospital staff and it is easy to understand why coding mistakes happen. Because your health plan uses the codes to make decisions about how much to pay your healthcare provider and other healthcare providers, mistakes can cost you money.

A wrong code can label you with a health-related condition that you do not have, result in an incorrect reimbursement amount for your healthcare provider, and potentially increase your out-of-pocket expenses. In addition, your health plan may deny your claim and not pay anything.

It's possible for your healthcare provider, the emergency room, or the hospital to miscode the services you received, either coding the wrong diagnosis or the wrong procedures. Even simple typographical errors can have significant consequences.

Examples of Coding Errors

Doug M. fell while jogging. Because of pain in his ankle, he went to his local emergency room. After having an X-ray of his ankle, the ER physician diagnosed a sprained ankle and sent Doug home to rest.

Several weeks later Doug got a bill from the hospital for more than $500 for the ankle X-ray. When his EOB arrived, he noticed that his health plan had denied the X-ray claim.

Doug called his health plan. It took a while to correct an error made by the billing clerk in the emergency room. She accidentally input the wrong ICD-11 code, changing ND14.7Z (sprained ankle) to NC54.7Z (sprained thumb).

Doug's health plan denied the claim because an X-ray of the ankle is not a test that is performed when someone has a hand injury. But once the error was resolved, the claim was reprocessed and the ankle x-ray was covered by Doug's plan. (Remember that "covered" doesn't necessarily mean "paid for." Doug would still have to pay any applicable deductible, copay, or coinsurance).

As another example, non-grandfathered commercial health plans are required to cover the full cost of preventive colonoscopies, including the removal and biopsy of any polyps that are found. However, if the pathology clinic codes the polyp biopsy as diagnostic rather than preventive, the health plan might refuse to pay for it. If you receive a bill after a preventive colonoscopy, double-check to make sure all aspects of it were coded as preventive, and ask the provider to resend the bill to your health plan.

(Note that preventive colonoscopies are done no more frequently than every 10 years, starting at age 45, and are not done to address any symptoms. If the colonoscopy is performed more frequently than that — perhaps because a polyp was previously found and your doctor told you to come back in five years or is in response to symptoms — it is not considered preventive. In that case, the patient will have to pay their deductible, copays, and/or coinsurance.)

Summary

For every medical procedure, there's an associated code. The CPT (Current Procedural Terminology) codes are developed and maintained by the American Medical Association. The HCPCS (Healthcare Common Procedure Coding System) is used by Medicare (and overlaps with CPT codes, for services that have CPT codes). And ICD-11 (International Classification of Diseases, 11th revision) is maintained by the World Health Organization.

There are several steps in the process of filling out and submitting a medical claim. Along the way, the humans and computers involved in the process can make mistakes. If your claim has been denied, don't be shy about calling both your healthcare provider's office and your health plan, and asking them to clarify anything that you don't understand about your medical records and billing statements.