What is basic medical code terminology?

In this article you’ll learn about the history of CPT codes and when they are updated; what code sets you may not be familiar with and when they are updated; and fun tidbits along the way.


Current Procedural Terminology (CPT) first appeared in 1966, when the American Medical Association (AMA) first published standardized codes and terms as a means to code procedures for medical records, insurance claims and statistical purposes, according to Peggy Dotson in Advances in Wound Care.

In the following few years, the AMA added terms and classification codes for diagnostic and therapeutic procedures in surgery, medicine and the specialties. To keep up with the ever-changing medical environment, the AMA published its fourth edition of CPT in 1977 and even produced a periodic updating system for keeping information up-to-date. The AMA still updates the CPT today.

By 1983, CPT became part of the Healthcare Common Procedure Coding System (HCPCS), a code set used by the Centers for Medicare and Medicaid Services (CMS). HCPCS is divided into two levels: the first level is comprised of CPT codes that are commonly used by medical providers in the United States and the second is comprised of codes that are used by manufacturers to identify products, supplies and services that are not part of the CPT code system. 

CPT codes are identified by one of three categories.

Category I CPT codes are identified by a 5-digit numeric code. They describe medical procedures or services rendered by a health care provider. Category I CPT codes are updated annually.

Category II CPT codes are identified by numeric alpha codes. They describe quality of care data. Category II CPT codes are updated three times a year in March, July and November by the CPT Editorial Panel.

Category III CPT codes are issued in a numeric alpha format. They are temporary tracking codes for new and emerging technologies. Category III CPT codes are released twice a year in January and July with a 6-month activation delay to allow for healthcare implementation. 

The CPT Editorial Panel meets consistently to discuss changes to CPT codes to better align with current billing needs. 

Did you know?

The Kennedy-Kassebaum Act, or the Health Insurance Portability and Accountability Act of 1996 (HIPAA) required the Department of Health and Human Services to establish standards for electronic transaction of health information, including code sets. HIPAA was created to protect information, but it also made it easier to share information. Since all HIPAA-covered entities use the same code sets and nationally recognized identifiers, HIPAA actually made it easier to transfer of electronic health information between healthcare providers, health plans, and other entities.


International Classification of Diseases (ICD) is published by the World Health Organization (WHO) ICD is the international standard for reporting diseases and health conditions. It counts statistics such as injuries, symptoms, deaths, etc. 

The ICD has been translated into 43 languages and most countries (117) use the system to report mortality data, a primary indicator of health status.

ICD codes have changed over time, so the number after ICD has changed, too. The ICD-9 code set was introduced in the 1970s and the ICD-10 code set replaced it in 2015. 

In the United States, ICD codes are managed by the CMS and the National Center for Health Statistics (NCHS). 

The ICD codes are updated every year. ICD-10-CM (CM stands for Clinical Modification) is the 2020 version of ICD-10 codes and the ICD-11 was approved in 2019 to go into effect in 2022. 


The International Classification of Functioning, Disability and Health (ICF) is the WHO's framework for health and disability.

The ICF classifies "what a person with a health condition can do in a standard environment (their level of capacity), as well as what they actually do in their usual environment (their level of performance)," according to the WHO.

The first version of ICF was published by the WHO for trial purposes in 1980 which was a radical shift from emphasizing people's disabilities to focusing on their level of health.

Users are encouraged to use the ICD-10 and ICF together to create a more meaningful picture of the health of individuals and populations.

DRG Codes

The diagnostic-related group (DRG) categorizes different medical codes. For instance, hospital services are categorized based on a diagnosis, type of treatment, etc. for billing purposes. The hospital is then paid a fixed rate for inpatient services corresponding to the DRG assigned to a given patient. This way of categorizing care assumes that patients that fit into the same profile will need approximately the same care and services. Currently there are over 500 DRGs and they are updated annually. 


The National Drug Code (NDC) is a numeric identifier given to nonprescription (OTC) and prescription medications. The NDC is a 10-digit code divided into three segments. 

The first identifies the product labeler (manufacturer, repackager, etc.).
The second identifies the product itself (drug-specific strength, dosage form and formulation).
The third identifies the package size and type.

**Just because the number is assigned does not mean that the drug has actually been approved by the FDA. Please consult the NDC Directory for continuous updates.

CDT Codes

Code on Dental Procedures and Nomenclature (CDT) codes is a set of procedural codes for oral health and related services.


Diagnostic and Statistical Manual of Mental Disorders (DSM-IV-TR) codes are used to diagnose psychiatric illnesses. The American Psychiatric Association publishes and maintains these codes. These codes do change over time, though not yearly like many other code sets. 

What now?

As you can see, we’ve only just tapped the tip of the iceberg when it comes to billing codes. There are so many codes and code changes throughout the year and so many things to think about. 

With Rivet’s reimbursement software, you’ll see everything that’s happening with your payer contracts, fee schedules, denials and underpayments. Easily work denials by RARC or CARC and apply what you learn to avoid future denials. Plus, check eligibility and provide accurate, up-front patient cost estimates. You can even collect on those estimates!

For more information about the Rivet's modern product suite, schedule a Rivet demo.

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