Decoding Insurance Coding

A basic understanding of how insurance coding works might ease your mind as you prepare for the financial impact of undergoing treatment.

Where do you begin to understand a topic as vast as insurance coding? There are entire books dedicated to this topic. Collegiate courses spread over weeks to teach of its depth. It could almost become a language in and of itself… the language of reimbursement. Yet, many of us interact with it frequently and don’t speak the language. So, how are we to understand what in the world is going on when we’re personally faced with it?

By having a simple starting point. A mustard seed of understanding. So here it goes…

The basis of this language is essentially answering two questions: why is a medical service being provided and what medical service is being provided?

Within this language, focused on answering the why and what is being provided, coding systems exist. These are generally common across both payers and providers... meaning they speak the same language.

The most common types of coding used in medical procedures are Diagnosis (International Classification of Diseases, 10th Edition – Clinical Modifications (ICD-10-CM)), Procedure (International Classification of Diseases, 10th Edition – Procedural Coding System (ICD-10-PCS)), Current Procedural Terminology (CPT®), and Healthcare Common Procedure Coding System (HCPCS).  

Here’s an example of how this might look for someone preparing for a knee replacement.







(HCPCS Level I)


(Level II)


Indicates why a patient is receiving procedure

Indicates what procedure is being provided

Further indicates which procedures/services are provided

Identifies products, supplies, and services not included in other codes

Reported by

All providers

Hospitals for inpatient services

Physicians, facilities for outpatient services

Facilities for outpatient services


M16.11 (M16 identifies osteoarthritis, .11 identifies unilateral primary osteoarthritis, right hip; another example is M16.5 where we see the M16 indicating osteoarthritis, but then the .5 indicates that it’s unilateral post-traumatic osteoarthritis of the hip)

0SR90J9 (Replacement of right hip joint with synthetic substitute, cemented, open approach)


27130 (Arthroplasty, acetabular and proximal femoral prosthetic replacement (total hip arthroplasty), with or without autograft or allograft)

C1776 (Joint device-implantable)

For every procedure, a combination of coding will be used. This will determine your ultimate cost. Some codes are assigned by your surgeon, others are assigned by the hospital.  

When your hospital gives you a cost estimate prior to surgery, they are basing the information on the standard expectation for that procedure. For example, a standard, inpatient total knee replacement might be assigned to the Medicare Severity-Diagnosis Related Group (MS-DRG) 470. This indicates it was a standard procedure without complications. If there is an unexpected complication during surgery, it might change the assigned MS-DRG to 469 instead of 470.  Changes in the service(s) performed, such as switching from a partial to a total hip replacement, also changes the codes that will be assigned to the case. These are examples where differences between our estimated cost and the bill we actually receive can occur.

If you’re concerned about how coding will affect your total cost, talk to your doctor or insurance provider. They will be able to tell you the standard codes, as well as the codes that may change. They should also be able to advise you on the associated costs with those codes. That way, even before surgery, you can have a better understanding of what could happen during surgery and how that would change your out-of-pocket costs.

Insurance and Joint Replacement - Your Guide to Getting Started

Zimmer Biomet is not a healthcare provider and does not offer advice or provide recommendations on healthcare insurance coverage. All questions related to your specific procedure and coverage must be directed to your healthcare provider and insurance company.

CPT® is a registered trademark of the American Medical Association.

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