Last updated October 18, 2026

What Is The Process Of Medical Coding

By By Janine Mothershed

A Step-by-Step Guide for New and Experienced Coders

Medical coding is the backbone of healthcare reimbursement. Specifically, it transforms the clinical story of a patient’s encounter into standardized, billable codes used for payment, reporting, data analytics, and quality tracking. But what is the process of medical coding from start to finish?

Whether you’re new to the field or strengthening your existing skills, understanding the full workflow helps you code more accurately, efficiently, and confidently. Therefore, below is a clear breakdown of the end-to-end medical coding process that happens in every healthcare setting—from clinics and hospitals to telehealth and specialty practices.

Reviewing Clinical Documentation

The first and most critical step is reviewing the provider’s documentation. During this step, coders analyze the entire medical record for the encounter, which may include:

History and physical (H&P)
Office or progress notes
Operative reports
Diagnostic test results
Imaging interpretations
Discharge summaries
Telehealth documentation
Emergency department notes

In short, a coder’s role is to understand what the provider documented, why the provider performed each service, and which conditions the provider evaluated, monitored, or treated. As a result, clear, complete documentation drives correct code selection.

Identifying the Diagnoses

Once coders review the documentation, they then assign ICD-10-CM codes to represent:

The primary reason for the encounter
Secondary diagnoses
Chronic conditions when they affect care
Complications
Status codes (e.g., long-term medication use, presence of devices)
External cause codes when required

Coders must follow ICD-10-CM Official Guidelines each step of the way—including late effects, “use additional code” notes, combination codes, and Excludes 1/2 rules. ICD-10 Steps To Code

Identifying the Procedures and Services

Then coders determine which procedures, services, or supplies to code. This step also includes:

Office visits (E/M services)
Surgical procedures
Diagnostic tests
Lab work
Radiology services
Therapies (including PT, OT, SLP)
Infusions/injections
Preventive services
Telehealth services
Supplies and durable equipment (HCPCS Level II)

After that, coders assign CPT and HCPCS codes that represent what the provider did. CPT Steps To Code

Applying Modifiers (When Appropriate)

Modifiers add essential detail that affects reimbursement. Therefore, coders determine whether the claim needs modifiers to clarify:

Laterality (RT/LT)
Multiple procedures
Repeat procedures
Reduced or discontinued services
Professional vs technical component
Assistant surgeon involvement
Telehealth modality
Therapy assistant involvement (CQ/CO)
Critical care bundling requirements
Global surgical package scenarios

Overall, correct modifier use helps prevent denials and ensures accurate payment. CPT Medical Modifiers

Ensuring Code Compliance and Following Payer Rules

Medical coding is not “one size fits all.” Therefore, coders must verify:

NCCI (National Correct Coding Initiative) edits
MUE (Medically Unlikely Edits)
Payer-specific billing rules (including Medicare, Medicaid, and commercial payers)
LCDs/NCDs for medical necessity
Bundling and unbundling guidelines
Global surgical package requirements
Telehealth coverage
Diagnosis-to-procedure linkage for medical necessity

Above all, compliance is key to reducing denials and protecting the organization from audits. Medical Coding Compliance

Linking Diagnoses to Procedures

The coder then links ICD-10-CM codes to the appropriate CPT/HCPCS codes to show why the provider performed each service.

As a result, accurate linkage supports:

Medical necessity
Clean claims
Accurate reimbursement
Payer compliance

Incorrect linkage is one of the most common denial triggers—so coders must get this right.

Abstracting Required Data Elements

Coders also extract additional data needed for billing and reporting, which may include:

Date of service
Place of service
Provider NPI
Units
Time-based coding elements
Start/stop times, especially for infusions or E/M prolonged services
Surgical approach and technique
Device details when coding ICD-10-PCS
Anesthesia type and ASA status

In fact, this is where coding meets revenue cycle management. Abstracting from the EHR & Medical Coding OP Reports

Querying the Provider When Documentation Is Insufficient

If documentation is missing, conflicting, unclear, or incomplete, coders must send a provider query. Querying supports accuracy and compliance—not changing documentation, but clarifying it.

For example, common reasons for queries include:

Missing diagnoses
Laterality not documented
Underdocumented E/M levels
Conflicting data (e.g., acute vs chronic)
Missing surgical details
Clarification of complications or POA status

Coders only code what the provider documented, rather than what they assume. Medical Coding How to Query

Finalizing Codes and Preparing the Claim

Once codes are correct and complete, coders finalize them for billing. Then the coded encounter becomes a claim, and it goes to the payer for processing and payment.

As a result, accurate coding helps ensure:

Clean claims
Fewer denials
Faster reimbursement
Reduced audit risk
Correct patient billing

In other words, this is where coding directly impacts the bottom line.

Following Up on Denials or Audits

Coders may also participate in:

Denial management
Appeals
Audit responses
Education of clinical staff
Updating internal coding guidelines

Finally, this step closes the loop and supports continuous improvement. Medical Coding and Billing Denials & Medical Coding Audits

Why Understanding the Coding Process Matters

Overall, mastering the coding workflow helps coders:

Code with confidence
Avoid denials
Understand payer expectations
Strengthen critical-thinking skills
Communicate better with providers
Improve productivity
Protect their organization from compliance risk

Whether you’re a new coder or advancing your career, understanding the process from start to finish is essential.

So let Coding Clarified “clarify” Coding for you!

Coding Clarified can train you for the CPC because we are an AAPC-approved education provider. In addition, you may even qualify for a scholarship/grant!

The Medical Coding course also includes the following:

Access to the online medical coding course using the AAPC-approved curriculum

CPT, ICD10, HCPC, Workbook & Textbook (E-books + physical books)

1:1 time with instructor Janine whenever needed

Access to the Coding Clarified Collaboration

Full support and Q&A with the instructor

Instructor Janine’s audio/video files for each chapter to implement notes into your manuals

AAPC Membership

2 CPC Exam Vouchers

3 Free 50-Question bundle Practice Exams

CPC online review course

Official AAPC study guide