Instructor Manual: Green, 3-2-1 Code It!, 14e, 2026, 9798214481968; Chapter 1: Overview of Coding
Instructor Manual
Green, 3-2-1 Code It!, 14e, 2026, 9798214481968;
Chapter 1: Overview of Coding
TABLE OF CONTENTS
Purpose and Perspective of the Chapter......................................................................2
Learning Objectives.......................................................................................................2
Key Terms.....................................................................................................................2
What’s New in This Chapter........................................................................................6
Chapter Outline.............................................................................................................7
Additional Resources....................................................................................................8
Internet Resources......................................................................................................................................8
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 1
accessible website, in whole or in part.
, Instructor Manual: Green, 3-2-1 Code It!, 14e, 2026, 9798214481968; Chapter 1: Overview of Coding
PURPOSE AND PERSPECTIVE OF THE CHAPTER
This chapter focuses on coding career opportunities in health care, the importance of joining professional
associations and obtaining coding credentials, the impact of networking with other coding professionals,
and the development of opportunities for career advancement. A coding overview provides students with
an introduction to coding concepts, including the role the patient record documentation plays in accurate
coding. The chapter also introduces other classification systems and databases that support data
organization and retrieval in health information management, as well as methods of health data collection
used to report hospital and physician office data for administrative, clinical, and research purposes.
LEARNING OBJECTIVES
The following objectives are addressed in this chapter:
LO 1.1 Summarize the training, job responsibilities, and career path for a coder.
LO 1.2 Identify professional associations available to coders and medical assistants.
LO 1.3 Summarize coding systems and processes.
LO 1.4 Identify other classification systems and databases.
LO 1.5 Explain how documentation serves as the basis for assigning codes.
LO 1.6 Describe health data collection for the purpose of reporting hospital and physician office data.
[return to top]
KEY TERMS
assumption coding: inappropriate assignment of codes based on the presumption, from a review of
clinical evidence in the patient’s record, that the patient has certain diagnoses or received certain
procedures/services, even though the provider did not specifically document those diagnoses or
procedures/services.
Centers for Medicare & Medicaid Services (CMS): administrative agency in the federal
Department of Health & Human Services.
classification system: see coding system.
clinical documentation improvement (CDI): helps ensure accurate and thorough patient record
documentation and identifies discrepancies between provider documentation and codes to be assigned.
clinical documentation integrity (CDI): see clinical documentation improvement.
CMS-1450: see UB-04.
CMS-1500: standard claim submitted by physicians’ offices to third-party payers.
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 2
accessible website, in whole or in part.
, Instructor Manual: Green, 3-2-1 Code It!, 14e, 2026, 9798214481968; Chapter 1: Overview of Coding
code: numerical and alphanumerical characters that are reported to health plans for health care
reimbursement and to external agencies (e.g., state departments of health) for data collection, in addition
to being reported internally (e.g., acute care hospital) for education and research.
coder: acquires a working knowledge of coding systems (e.g., CPT, HCPCS Level II, ICD-10-CM, and
ICD-10-PCS), coding principles and rules, government regulations, and third-party payer requirements to
ensure that all diagnoses (conditions), services (e.g., office visit), and procedures (e.g., surgery and x-ray)
documented in patient records are coded accurately for reimbursement, research, and statistical purposes.
coding: assignment of codes to diagnoses, services, and procedures based on patient record
documentation.
coding system: organizes a medical nomenclature according to similar conditions, diseases,
procedures, and services; it contains codes for each.
computer-assisted coding (CAC): uses computer software to analyze the electronic health record or
electronic medical record (EMR) to generate codes for documented terms and phrases; uses “natural
language processing” theories to generate codes that are reviewed and validated by coders for reporting
on third-party payer claims.
concurrent coding: review of records and/or use of encounter forms and chargemasters to assign
codes during an inpatient stay or an outpatient encounter; typically performed for outpatient encounters
because encounter forms and chargemasters are completed in “real time” by health care providers as part
of the charge-capture process.
Current Procedural Terminology (CPT): coding system used by physicians and outpatient
health care settings to assign CPT codes for reporting procedures and services on health insurance claims;
considered Level I of the Healthcare Common Procedure Coding System (HCPCS); published and
updated by the American Medical Association (AMA) to classify procedures and services; listing of
descriptive terms and identifying codes for reporting medical services and procedures; provides a uniform
language that describes medical, surgical, and diagnostic services to facilitate communication among
providers, patients, and third-party payers.
Diagnostic and Statistical Manual (DSM) of Mental Disorders: manual published by
the American Psychiatric Association that contains diagnostic assessment criteria used as tools to identify
psychiatric disorder and codes, provides a mechanism for communicating and recording diagnostic
information, and is used in the areas of research and statistics.
downcoding: routinely assigning lower-level CPT codes as a convenience instead of reviewing patient
record documentation and the coding manual to determine the proper code to be reported.
encoder: software that automates the coding process; software search features facilitate the location and
verification of diagnosis and procedure codes.
encoding: process of standardizing data by assigning numeric values (codes or numbers) to text or other
information.
evidence-based coding: clicking on codes that CAC software generates to review electronic health
record documentation (evidence) used to generate the code; when it is determined that documentation
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 3
accessible website, in whole or in part.
, Instructor Manual: Green, 3-2-1 Code It!, 14e, 2026, 9798214481968; Chapter 1: Overview of Coding
supports the CAC-generated code, the coding auditor clicks to accept the code; when documentation does
not support the CAC-generated code, the coding auditor replaces it with an accurate code.
evidence-verification coding: see evidence-based coding.
HCPCS Level II: coding system managed by the Centers for Medicare & Medicaid Services (CMS)
that classifies medical equipment, injectable drugs, transportation services, and other services not
classified in the CPT.
HCPCS national codes: see HCPCS Level II.
Healthcare Common Procedure Coding System (HCPCS): includes Level I codes (CPT) and
Level II codes (HCPCS Level II national codes).
Health Insurance Portability and Accountability Act of 1996 (HIPAA): federal
legislation that amended the Internal Revenue Code of 1986 to improve portability and continuity of
health insurance coverage in the group and individual markets, combat waste/fraud/abuse in health
insurance and health care delivery, promote the use of medical savings accounts, improve access to long-
term care services and coverage, simplify the administration of health insurance by creating unique
identifiers for providers/health plans/employers, create standards for electronic health information
transactions, and create privacy/security standards for health information.
institutional coding: captures severity of illness (ICD-10-CM) and intensity of services (ICD-10-
PCS), both of which are used to justify an inpatient facility admission.
International Classification of Diseases for Oncology, Third Edition (ICD-O-3):
implemented in 2001 to classify a tumor according to primary site (topography) and morphology
(histology, behavior, and aggression of tumor).
International Classification of Diseases, 11th Revision (ICD-11): developed by the
World Health Organization (WHO) and released in 2018 for a planned implementation by member states
on January 1, 2022, ICD-11 was revised for the purpose of recording, reporting, and analyzing health
information; ICD-11 contains improved usability, which means it contains more clinical detail and
requires less training time, classification of all clinical detail, eHealth readiness for the electronic health
record, linkage to other classifications and terminologies (e.g., SNOMED-CT), multilingual support, and
updated scientific content.
International Classification of Diseases, Tenth Revision, Clinical Modification
(ICD-10-CM): developed by the Centers for Medicare & Medicaid Services (CMS) to classify all
diseases and injuries.
International Classification of Diseases, Tenth Revision, Procedure Coding
System (ICD-10-PCS): developed by the National Center for Health Statistics (NCHS) to classify
inpatient procedures and services.
International Classification of Functioning, Disability and Health (ICF):
classifies health and health-related domains that describe body functions and structures, activities,
participation, and environmental factors; used to measure health and disability at individual and
population levels.
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 4
accessible website, in whole or in part.
Instructor Manual
Green, 3-2-1 Code It!, 14e, 2026, 9798214481968;
Chapter 1: Overview of Coding
TABLE OF CONTENTS
Purpose and Perspective of the Chapter......................................................................2
Learning Objectives.......................................................................................................2
Key Terms.....................................................................................................................2
What’s New in This Chapter........................................................................................6
Chapter Outline.............................................................................................................7
Additional Resources....................................................................................................8
Internet Resources......................................................................................................................................8
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 1
accessible website, in whole or in part.
, Instructor Manual: Green, 3-2-1 Code It!, 14e, 2026, 9798214481968; Chapter 1: Overview of Coding
PURPOSE AND PERSPECTIVE OF THE CHAPTER
This chapter focuses on coding career opportunities in health care, the importance of joining professional
associations and obtaining coding credentials, the impact of networking with other coding professionals,
and the development of opportunities for career advancement. A coding overview provides students with
an introduction to coding concepts, including the role the patient record documentation plays in accurate
coding. The chapter also introduces other classification systems and databases that support data
organization and retrieval in health information management, as well as methods of health data collection
used to report hospital and physician office data for administrative, clinical, and research purposes.
LEARNING OBJECTIVES
The following objectives are addressed in this chapter:
LO 1.1 Summarize the training, job responsibilities, and career path for a coder.
LO 1.2 Identify professional associations available to coders and medical assistants.
LO 1.3 Summarize coding systems and processes.
LO 1.4 Identify other classification systems and databases.
LO 1.5 Explain how documentation serves as the basis for assigning codes.
LO 1.6 Describe health data collection for the purpose of reporting hospital and physician office data.
[return to top]
KEY TERMS
assumption coding: inappropriate assignment of codes based on the presumption, from a review of
clinical evidence in the patient’s record, that the patient has certain diagnoses or received certain
procedures/services, even though the provider did not specifically document those diagnoses or
procedures/services.
Centers for Medicare & Medicaid Services (CMS): administrative agency in the federal
Department of Health & Human Services.
classification system: see coding system.
clinical documentation improvement (CDI): helps ensure accurate and thorough patient record
documentation and identifies discrepancies between provider documentation and codes to be assigned.
clinical documentation integrity (CDI): see clinical documentation improvement.
CMS-1450: see UB-04.
CMS-1500: standard claim submitted by physicians’ offices to third-party payers.
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 2
accessible website, in whole or in part.
, Instructor Manual: Green, 3-2-1 Code It!, 14e, 2026, 9798214481968; Chapter 1: Overview of Coding
code: numerical and alphanumerical characters that are reported to health plans for health care
reimbursement and to external agencies (e.g., state departments of health) for data collection, in addition
to being reported internally (e.g., acute care hospital) for education and research.
coder: acquires a working knowledge of coding systems (e.g., CPT, HCPCS Level II, ICD-10-CM, and
ICD-10-PCS), coding principles and rules, government regulations, and third-party payer requirements to
ensure that all diagnoses (conditions), services (e.g., office visit), and procedures (e.g., surgery and x-ray)
documented in patient records are coded accurately for reimbursement, research, and statistical purposes.
coding: assignment of codes to diagnoses, services, and procedures based on patient record
documentation.
coding system: organizes a medical nomenclature according to similar conditions, diseases,
procedures, and services; it contains codes for each.
computer-assisted coding (CAC): uses computer software to analyze the electronic health record or
electronic medical record (EMR) to generate codes for documented terms and phrases; uses “natural
language processing” theories to generate codes that are reviewed and validated by coders for reporting
on third-party payer claims.
concurrent coding: review of records and/or use of encounter forms and chargemasters to assign
codes during an inpatient stay or an outpatient encounter; typically performed for outpatient encounters
because encounter forms and chargemasters are completed in “real time” by health care providers as part
of the charge-capture process.
Current Procedural Terminology (CPT): coding system used by physicians and outpatient
health care settings to assign CPT codes for reporting procedures and services on health insurance claims;
considered Level I of the Healthcare Common Procedure Coding System (HCPCS); published and
updated by the American Medical Association (AMA) to classify procedures and services; listing of
descriptive terms and identifying codes for reporting medical services and procedures; provides a uniform
language that describes medical, surgical, and diagnostic services to facilitate communication among
providers, patients, and third-party payers.
Diagnostic and Statistical Manual (DSM) of Mental Disorders: manual published by
the American Psychiatric Association that contains diagnostic assessment criteria used as tools to identify
psychiatric disorder and codes, provides a mechanism for communicating and recording diagnostic
information, and is used in the areas of research and statistics.
downcoding: routinely assigning lower-level CPT codes as a convenience instead of reviewing patient
record documentation and the coding manual to determine the proper code to be reported.
encoder: software that automates the coding process; software search features facilitate the location and
verification of diagnosis and procedure codes.
encoding: process of standardizing data by assigning numeric values (codes or numbers) to text or other
information.
evidence-based coding: clicking on codes that CAC software generates to review electronic health
record documentation (evidence) used to generate the code; when it is determined that documentation
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 3
accessible website, in whole or in part.
, Instructor Manual: Green, 3-2-1 Code It!, 14e, 2026, 9798214481968; Chapter 1: Overview of Coding
supports the CAC-generated code, the coding auditor clicks to accept the code; when documentation does
not support the CAC-generated code, the coding auditor replaces it with an accurate code.
evidence-verification coding: see evidence-based coding.
HCPCS Level II: coding system managed by the Centers for Medicare & Medicaid Services (CMS)
that classifies medical equipment, injectable drugs, transportation services, and other services not
classified in the CPT.
HCPCS national codes: see HCPCS Level II.
Healthcare Common Procedure Coding System (HCPCS): includes Level I codes (CPT) and
Level II codes (HCPCS Level II national codes).
Health Insurance Portability and Accountability Act of 1996 (HIPAA): federal
legislation that amended the Internal Revenue Code of 1986 to improve portability and continuity of
health insurance coverage in the group and individual markets, combat waste/fraud/abuse in health
insurance and health care delivery, promote the use of medical savings accounts, improve access to long-
term care services and coverage, simplify the administration of health insurance by creating unique
identifiers for providers/health plans/employers, create standards for electronic health information
transactions, and create privacy/security standards for health information.
institutional coding: captures severity of illness (ICD-10-CM) and intensity of services (ICD-10-
PCS), both of which are used to justify an inpatient facility admission.
International Classification of Diseases for Oncology, Third Edition (ICD-O-3):
implemented in 2001 to classify a tumor according to primary site (topography) and morphology
(histology, behavior, and aggression of tumor).
International Classification of Diseases, 11th Revision (ICD-11): developed by the
World Health Organization (WHO) and released in 2018 for a planned implementation by member states
on January 1, 2022, ICD-11 was revised for the purpose of recording, reporting, and analyzing health
information; ICD-11 contains improved usability, which means it contains more clinical detail and
requires less training time, classification of all clinical detail, eHealth readiness for the electronic health
record, linkage to other classifications and terminologies (e.g., SNOMED-CT), multilingual support, and
updated scientific content.
International Classification of Diseases, Tenth Revision, Clinical Modification
(ICD-10-CM): developed by the Centers for Medicare & Medicaid Services (CMS) to classify all
diseases and injuries.
International Classification of Diseases, Tenth Revision, Procedure Coding
System (ICD-10-PCS): developed by the National Center for Health Statistics (NCHS) to classify
inpatient procedures and services.
International Classification of Functioning, Disability and Health (ICF):
classifies health and health-related domains that describe body functions and structures, activities,
participation, and environmental factors; used to measure health and disability at individual and
population levels.
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 4
accessible website, in whole or in part.
