Medical coding is the backbone of accurate healthcare billing and proper documentation. But with so many coding systems—ICD, CPT, HCPCS, DRG, and more—many providers, students, and billers often ask: “What are the different types of medical codes, and what do they actually mean?”
This guide breaks down the major medical coding systems used across the healthcare industry, why they matter, and how each one plays a unique role in patient care and reimbursement.
What Is Medical Coding?
Medical coding is the process of translating healthcare diagnoses, procedures, treatments, and services into standardized alphanumeric codes.
These codes are essential for:
- Insurance reimbursement
- Patient record accuracy
- Quality reporting
- Public health statistics
- Medical billing compliance
Different types of codes serve different purposes, which is why coders must understand each system well.
What Are the Main Types of Medical Codes Used in Healthcare?
Below are the five major categories of medical codes, along with their purpose and where they are used.
1. What Are ICD Codes?
ICD (International Classification of Diseases) codes are used to describe patient diagnoses and medical conditions.
What ICD Codes Do:
- Identify diseases and symptoms
- Support medical necessity
- Assist in tracking population health
- Guide reimbursement for services
Current Version:
- ICD-10-CM (Clinical Modification) for diagnoses
- ICD-10-PCS (Procedure Coding System) for inpatient hospital procedures
Example:
- E11.9 – Type 2 diabetes mellitus without complications
- R51.9 – Headache, unspecified
2. What Are CPT Codes?
CPT (Current Procedural Terminology) codes describe medical procedures and services performed by healthcare providers.
What CPT Codes Do:
- Capture services like exams, surgeries, tests
- Determine provider reimbursement
- Standardize documentation across clinics and hospitals
Three Categories of CPT Codes:
- Category I: Common procedures (e.g., office visits, imaging, surgeries)
- Category II: Performance measurement codes
- Category III: Emerging technologies and experimental procedures
Example:
3. What Is HCPCS and Why Is It Important?
HCPCS (Healthcare Common Procedure Coding System) supplements CPT codes and is widely used for Medicare, Medicaid, and durable medical equipment.
Two Levels of HCPCS:
- Level I: CPT codes
- Level II: Supplies, ambulance services, prosthetics, and medical equipment
Examples of HCPCS Level II Codes:
- A0425 – Ground mileage for ambulance
- J1100 – Injectable dexamethasone
4. What Are DRG Codes?
DRG (Diagnosis-Related Groups) codes classify hospital inpatient stays for Medicare and insurance reimbursement.
Why DRGs Matter:
- Determine how hospitals get paid for inpatient care
- Group similar clinical conditions with similar resource use
- Help control healthcare spending
Example:
-
DRG 470 – Major joint replacement or reattachment
5. What About CDT Codes?
CDT (Current Dental Terminology) codes are specifically used for dental procedures and oral health services.
Examples:
- D0120 – Periodic oral evaluation
- D1110 – Adult prophylaxis (cleaning)
These codes are required for dental claims and accurate documentation.
Are There Other Specialized Medical Codes?
Yes—depending on the setting, additional systems may be used:
Revenue Codes
Used in hospital billing to identify service departments (e.g., radiology, lab).
NDC Codes (National Drug Codes)
Identify prescription medications for pharmacy billing.
LOINC Codes
Standardize lab tests and clinical observations.
SNOMED CT
A clinical terminology used for detailed medical documentation in EHR systems.
Why Do Different Medical Codes Matter in Billing and Compliance?
Each coding system plays a unique role in:
- Accurate reimbursement
- Preventing denials
- Ensuring proper medical documentation
- Meeting insurance and federal guidelines
- Improving patient care quality
Incorrect coding can lead to claim rejections, audits, compliance issues, and financial losses for healthcare organizations.
Final Thoughts
Medical codes—ICD, CPT, HCPCS, DRG, CDT, and others—are essential for capturing diagnoses, procedures, equipment, medications, and hospital services. Understanding the distinctions between these codes helps ensure correct billing, fewer denials, and improved healthcare documentation.