Decoding Medical Billing: Understanding the Differences Between ICD-10-CM, CPT, and HCPCS Codes

08 August,2025

Medical Billing follows a highly standardised system, which is marked with codes. These codes help healthcare providers communicate medical information to payers, such as insurance companies and government programs. There are three essential codes that are used in the billing process, which are ICD-10-CM, CPT, and HCPCS. 

Each of these three has a very specific function in capturing the details of patient diagnoses, procedures, and services. Understanding the coding systems is critical. It helps in claims processing, reimbursements, compliance with regulations, and clear medical documentation. The codes are beneficial for a healthcare provider, medical coder, student, and billing professional. Knowing where these codes differ and how they work together is essential for accuracy and efficiency in healthcare administration. 

Looking for the best doctor ?

Fill up the form and get assured assitance within 24 hrs!

Name *

Email *

Select Your Country

Phone Code

Mobile Number *

Is the above number on WhatsApp? *

Yes

No

Phone Code

Whatsapp Number *

Query

What Is ICD-10-CM?

ICD-10-CM stands for the International Classification of Diseases, 10th Revision, Clinical Modification. This code set is developed and maintained by the Centers for Disease Control and Prevention (CDC) and is based on the World Health Organization’s ICD-10.

ICD-10-CM codes are used to classify and document diagnoses and reasons for medical services. For example, a patient diagnosed with Type 2 Diabetes would be assigned an ICD-10-CM code like E11.9 ("Type 2 diabetes mellitus without complications").

Key Features:

• Codes are alphanumeric and contain 3–7 characters
• The first character is always a letter, followed by numbers and/or additional letters
• They represent conditions, symptoms, or diseases, not procedures
• ICD-10-CM is used by all healthcare settings in the U.S., including inpatient, outpatient, and physician offices

Example ICD-10-CM Codes:

• I10 – Essential (primary) hypertension
• M54.5 – Low back pain
• J45.909 – Unspecified asthma, uncomplicated

These codes provide diagnostic context and justify the need for services or procedures. Insurance companies use ICD-10-CM codes to determine medical necessity for treatments.

Speak with a Medical Coordinator

Get help choosing the best doctor and hospital for your care.

Send Enquiry WhatsApp Us

What Is CPT?

CPT, or Current Procedural Terminology, is a code set maintained by the American Medical Association (AMA). CPT codes describe medical, surgical, and diagnostic procedures and services provided by healthcare professionals.

Unlike ICD-10-CM, which explains why a service was needed, CPT codes explain what was done. For example, an office visit for evaluation and management may be coded as 99213, while the removal of a mole may be coded as 11400.

Key Features:

• Consists of five-digit numeric codes
• Used primarily for outpatient services and physician billing
• Divided into three categories:
  • Category I – Standard procedures and services
  • Category II – Performance measurement tracking (optional)
  • Category III – Emerging technologies and procedures

Example CPT Codes:

• 99213 – Established patient office visit, 15–29 minutes
• 93000 – Electrocardiogram (ECG) with interpretation and report
• 12001 – Simple repair of superficial wounds

CPT codes are submitted on claims forms to insurers to request payment for services rendered. They are a central part of revenue cycle management in physician practices and outpatient settings.

What Is HCPCS?

HCPCS, or Healthcare Common Procedure Coding System, is a set of codes developed by the Centers for Medicare & Medicaid Services (CMS). It was created to supplement CPT codes, particularly for services not covered by CPT, such as ambulance rides, durable medical equipment (DME), and certain medications.

HCPCS is divided into two levels:

• Level I: These are the standard CPT codes (as discussed above).
• Level II: These codes begin with a letter (A–V) followed by four digits and are used to bill non-physician services, supplies, and equipment.

Key Features:

• Level II HCPCS codes are often required for Medicare, Medicaid, and some private insurers
• Cover items and services not included in CPT, like wheelchairs, prosthetics, and chemotherapy drugs

Example HCPCS Level II Codes:

• A0428 – Ambulance service, basic life support
• E0110 – Crutches, underarm, wood or aluminium
• J3490 – Unclassified drugs

These codes are crucial for billing non-physician services and are updated annually by CMS.

Speak with a Medical Coordinator

Get help choosing the best doctor and hospital for your care.

Send Enquiry WhatsApp Us

Summary of Key Differences

Here’s a clear comparison of ICD-10-CM, CPT, and HCPCS codes to help distinguish their specific roles in medical billing and documentation:

Why Accurate Coding Matters?

Accurate and appropriate use of ICD-10-CM, CPT, and HCPCS codes ensures:

• Timely reimbursement for providers
• Compliance with federal regulations and payer guidelines
• Correct documentation of services and conditions
• Data consistency for research, audits, and public health reporting

Mistakes in coding, such as mismatching diagnoses with procedures, can lead to claim denials, revenue loss, audits, or even penalties under programs like Medicare.

Speak with a Medical Coordinator

Get help choosing the best doctor and hospital for your care.

Send Enquiry WhatsApp Us

How Do the Codes Work Together?

In medical billing, a single patient encounter often involves multiple types of codes. Each code set, ICD-10-CM, CPT, and HCPCS, serves a distinct but interconnected purpose. Together, they create a comprehensive record that explains why the patient was seen, what was done, and what resources were used.

Example of an Integrated Claim

Let’s say a patient visits an orthopedic clinic with complaints of persistent lower back pain:

• ICD-10-CM Code:
  • The provider documents the diagnosis as M54.5 – Low back pain.
  • This code establishes the medical necessity for the services rendered.
• CPT Code:
  • The provider orders and performs a lumbar spine X-ray, which is coded as 72100.
  • This code describes the specific service performed during the visit.
• HCPCS Code:
  • The patient is also issued a lumbar support brace that is not included in the CPT code set—the appropriate HCPCS code, such as L0625. A flexible lumbar orthosis is added to document the supply provided.
  • This ensures the equipment or supply is accounted for and billed correctly.

By submitting all three types of codes together, the claim communicates:

• The patient’s condition
• The procedures and diagnostic services performed
• Any supplies, devices, or services provided beyond the standard procedural scope

Why Keeping Up With Coding Changes Matters?

Medical billing code systems like ICD-10-CM, CPT, and HCPCS are not static. These codes evolve every year. The graph below shows how the number of new or revised codes has increased steadily from 2010 to 2025. This highlights the growing complexity and importance of staying updated to avoid errors, claim rejections, or compliance issues.

As these updates accelerate, healthcare professionals, coders, and billing staff must stay informed to ensure accurate documentation and reimbursement.

Takeaway

We can easily conclude that ICD-10-CM, CPT, and HPCS codes are the foundation of medical billing. Each code serves a distinct role. ICD-10-CM captures the diagnosis, while CPT defines the procedures or services provided, and HCPCS addresses equipment, supplies, and services outside the scope of CPT.

Healthcare providers and insurance companies need these codes primarily. Understanding these codes' function and their purpose, and how they are related to one another, is crucial for effective documentation, coding, billing, and compliance. Correct coding and understanding practices can help avoid claim rejections, ensuring accurate payments and maintaining regulatory integrity in patient care.