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Introduction to Medical Codes

Created: October 8, 2015 Last Modified: October 29, 2015

Many patients are not be aware what medical codes are or why they are used. Patients may only see their codes when they get their bill. However, these codes are an essential piece of the U.S. Healthcare system. Medical codes and the men and women who turn doctors' notes into a list of cryptic medical codes are the oil that keeps the U.S. Healthcare System running. Without proper medical coding documentation, it is impossible to process medical bills and to preform lifesaving statistical analysis of diagnosis trends.

ICD-9, ICD-10, DRG, HCPCS ... What Does It All Mean?

The barrier to entry into the field of medical codes is high for several reasons. The complicated and convoluted medical system in the United States can seem impossible to wrap your head around. Medical Coding is full of strange and inconsistent acronyms. We will do our best to break them all down for you.


The International Classification of Diseases is a system of medical coding created by the World Health Organization (WHO). ICD has been adapted by the Center of Medicare & Medicaid Services (CMS) for use in the United States. ICD is used for inpatient hospital visits only.


The 9th version of ICD. ICD-9 was used in the U.S. from 1979 until October 1, 2015. ICD-9 was replaced by ICD-10.

ICD-9-CM or Volume 1

ICD-9 Clinical Modification is the same thing as ICD-9 Volume 1. These codes were used to capture medical diagnosis information. There are just over 17,000 ICD-9-CM codes. Browse ICD-9-CM or Volume 1.

ICD-9 Volume 2

Vol 2 is the ICD-9-CM Index. The index lists all codes in alphabetic order by keyword in the code description. Before computer search, the index made finding codes much easier.

ICD-9-PCS or Volume 3

ICD-9 Procedure codes is the same thing is ICD-9 Volume 3. These codes were used to represent which medical procedures performed. There are 4,500 ICD-9-PCS codes.


The 10th version of ICD. The U.S. officially switched all medical billing processing from ICD-9 to ICD-10 on October 1, 2015. ICD-10 contains many more codes than ICD-9. ICD-10 will increase the accuracy of medical billing and medical diagnosis statistics but will require doctors and physicians to painstakingly document an extremely high level of detail. Like ICD-9, ICD-10 is only used for inpatient services.


ICD-10 Clinical Modification is the replacement for ICD-9 Volume 1. ICD-10-CM codes capture medical diagnosis and external cause information. External Cause information was never before captured in ICD. There are nearly 70,000 ICD-10-CM codes -- 4 times more codes than in ICD-9-CM. For a patient to be admitted into the hospital, they must be assigned at least one ICD-10-CM (diagnosis) code. Browse ICD-10-CM Codes.


ICD-10 Procedure codes are the replacement for ICD-9 Volume 3. ICD-10-PCS codes capture medical procedures performed. There are just over 70,000 ICD-10-PCS codes. Browse ICD-10-PCS Codes.

ICD-10 Indexes

There are 5 different indexes in ICD-10 (opposed to one index in ICD-9). The indexes are:

  • ICD-10 Alphabetic Index

    List all ICD-10-CM codes alphabetically by keyword in the code description. Browse ICD-10-CM Alphabetic Index.

  • ICD-10 External Cause Index

    The ICD-10 External Cause index list just the codes that capture information about the surrounding situation. External Cause includes location of an injury (For example: "Fall on board Water Craft"- V93.3) and how the injury occurred (for example: "Bitten by alligator" - W58.01). External Cause codes are found in ICD-10-CM Chapter 20. Browse ICD-10 External Cause Index.

  • ICD-10-CM Neoplasm Index

    The Neoplasm Index lists all types of tumors alphabetically by keyword in the code description. You can search by where the tumor is located then select the appropriate code based on what type of tumor it is (i.e. Malignant, Benign, In Situ, etc). All Neoplasm codes are found in ICD-10-CM Chapter 2. Browse the ICD-10-CM Neoplasm Index.

  • ICD-10-CM Drug Index

    ICD-10-CM Drugs Index helps medical coders find the correct ICD-10-CM code by listing codes in alphabetic order by the drug that caused an illness. Once you find the correct drug, you can choose the correct code based on whether the incident was poisoning, accidental, self-harm, under-dosing, etc. Browse the ICD-10-CM Drugs Index.

  • ICD-10-PCS Index

    ICD-10-PCS Index allows you to lookup Procedure codes based on keyword in the code description.

DRG Codes

Diagnosis Related Groups (DRG) are used to represent the "products" a hospital offers (for example: "appendectomy"). There are few different sets of DRG codes. The mostly widely used is MS-DRG and is used by the Center for Medicare and Medicaid Services (CMS) for billing purposes. There are only 500 DRG codes. All 70,000+ ICD-10 codes can be mapped to a MS-DRG that is used for billing.


Healthcare Common Procedure Coding System (HCPCS) (pronounced "hick-picks") was created by the Health Care Financing Administration (HCFA) which later become the Center for Medicare and Medicaid Services (CMS). HCPCS is used for outpatient cases. CMS is considering phasing out HCPCS. There are 3 levels within HCPCS:

  • HCPCS Level 1

    Consists of the American Medical Association's Current Procedural Terminology (CPT) and is numeric (as opposed to alphabetic like the index).

  • HCPCS Level 2

    Level 2 consists of non-physician services such as ambulatory care and durable medical goods such as prosthetics.

  • HCPCS Level 3

    Level 3 consisted of state-level medical coding codesets. The HIPAA Act of 1996 required a nationwide standard for medical coding. As a result, level 3 was discontinued on December 31, 2003.


Current Procedural Terminology (CPT) is an outpatient medical coding codeset that is copy-written by the American Medical Association. Despite CPT's widespread use, you have to pay high licensing fees to use the CPT codeset. As a result, we are unable to make the CPT codeset searchable on this site.

Who Uses Medical Codes?

Medical codes are used around the world for statistical and billing purposes. The World Health Organization originally created the most widely used codeset, ICD. The Center for Medicare and Medicaid Services (CMS) adapted the original ICD codeset for use in the United States.

In the U.S., ICD is used for inpatient hospital stays and CPT (a subset of HCPCS) is used for outpatient doctor visits.

Who Decides Which Codes are Used?

The Center for Medicare and Medicaid Services (CMS) mandates the use of ICD-10 for all inpatient hospital visits. The ICD-10 codeset maps to MS-DRGs that are used by CMS for billing purposes for patients with Medicare or Medicaid. Private insurers are free to use different DRG codesets and they do. But many use MS-DRG for all billing purposes.

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Source: http://icd.codes/articles/medical-codes-intro