In medical billing, revenue codes are four-digit standardized numeric codes that provide information about the services, procedures, and products rendered to a patient at a healthcare facility. These codes are added to the hospital bill—UB-04 claim form, also known as the CMS-1450 form—to provide more details about the product or procedure, such as its type and location, helping the insurance payer determine the final reimbursement amount.
However, applying the correct revenue codes is not an easy feat. Like the Current Procedural Terminology (CPT) codes, there are hundreds of revenue codes, and each code must appropriately match the procedural code entered on the claim.
Simply put, medical billing revenue codes are an essential part of the claims and help healthcare providers keep things organized. Using the correct revenue code on the claim allows the insurance payer to understand the services or products that were rendered, which part of the hospital they came from, and how much they cost and why.
What are Revenue Codes Used for?
We have established that the primary purpose of medical billing revenue codes is to finalize the rendered service’s reimbursement amount with proper justification. But let’s break it down further to highlight the importance of revenue codes in medical billing and get a sense of how their absence could affect the healthcare provider’s payment collection and overall revenue stream.
Service Categorization
Revenue codes in medical billing are used to group services and products in one category, which could be location-based or type-based. For example, all the services rendered in a private (one-bed) room during an inpatient stay will include the revenue code 011X (code 0110 to 0119, depending on the place of service).
So, a patient who received care at an inpatient psychiatric ward in a private room with just one bed will have the medical billing revenue code 0114 on his claim form. Similarly, intensive care unit (ICU) services are classified under the revenue code range 020X (codes 0200 to 0209), and so on.
Billing and Reimbursement
Revenue codes in medical billing streamline communication between healthcare providers and insurance payers by ensuring smooth billing and accurate reimbursement. Healthcare providers can bill insurance payers by entering charges based on the complexity and quality of care rendered to the patient. On the other hand, insurance payers understand the reasoning behind the billed amount, can decide if the service was medically necessary, and determine its appropriate compensation.
For example, when the healthcare provider uses the medical billing revenue code 0361 for minor surgery, such as hernia surgery, the insurance payer understands that the minimally invasive procedure was performed in an operating room rather than an ambulatory surgical center (ASC).
Cost Reporting
Another noteworthy purpose of maintaining and implementing medical billing revenue codes is cost reporting. Healthcare organizations need a thorough assessment of their expenses, with a breakdown of the costs incurred at each medical department or unit, for their survival and financial stability. They can charge the insurance payers the correct amount for reimbursement only when they are aware of the costs of each service, equipment, and medical supply.
Hence, revenue codes in medical billing help healthcare providers determine the financial performance of their practice.
Regulatory Compliance
The National Uniform Billing Committee (NUBC), which was formed by the American Hospital Association (AHA) in 1975, maintains the medical billing revenue codes and oversees the revenue codes and forms that the private/public hospitals and critical access hospitals (CAHs) use to file reimbursement claims.
In its Medicare Hospital Manual, the Centers for Medicare and Medicaid Services (CMS) mandates reporting revenue codes with the charges for covered services “furnished under a partial hospitalization program”. Therefore, reporting the correct medical billing revenue codes is an essential reimbursement requirement for hospitals and CAHs and ensures compliance with Medicare and AHA regulations.
Revenue Code – Examples
Let’s discuss some specific scenarios to understand the proper application of revenue codes in medical billing.
Billing Heart Transplant at Coronary Care Unit
Imagine that a 45-year-old man with a failing heart undergoes heart transplant surgery at a coronary care unit (CCU). The patient’s heart is removed and replaced with a healthier heart of a deceased donor. An experienced cardiac surgeon performs the complicated surgery, which lasts around 6 hours. After the surgery and the immediate post-surgery care, the surgeon will bill his services with the CPT code 33945, whereas the hospital will use the medical billing revenue code 0213 to bill the equipment, supplies, and operating room used for the heart transplant at a CCU.
Billing Rented Hospital Bed for Home Use
Think of an elderly patient who is receiving ongoing medical care from a home health agency in the comfort of his home. The patient’s family rents an electric hospital bed from a nearby community hospital’s durable medical equipment (DME) supplier to improve the patient’s posture while feeding, grooming, resting, and sleeping. In this case, the hospital will use the medical billing revenue code 0291 on the UB-04 claim form to indicate that a DME (other than renal) was rented from their facility. This will help the insurance payer understand the billed amount and reimburse the rental price of an electric hospital bed.
Billing a Urine Test Performed at the Urology Laboratory
A middle-aged woman with a family history of diabetes is prescribed a urine test at the hospital’s outpatient urology laboratory. The woman hands over a sample of her urine to the nurse in attendance, who labels it and gives it to the technician for urinalysis. The woman is told to collect the lab report after 24 hours.
The technician who performs the urinalysis will bill the service with CPT code 81003, while the urology lab will use the medical billing revenue code 0307 on the UB-04 claim form to explain to the payer that the urine test was performed at an outpatient urology laboratory.
Billing General Anesthesia for a Knee Replacement Surgery
Consider an athlete with a severely damaged knee who undergoes a total knee replacement (TKR) surgery to improve his mobility and return to normal life. Before the planned surgery, the healthcare provider administers general anesthesia to render the patient unconscious and limit his movement during the complex surgery. The anesthesia specialist will bill his service with the CPT code 01402, while the hospital will report the medical billing revenue code 0370 on the CMS-1450 claim form to explain that general anesthesia was administered to the patient before the knee replacement surgery.
Revenue Code vs CPT Code – Understanding the Difference
Revenue codes and CPT codes are essential elements of hospital medical billing. Hospitals and relevant facilities must report both these codes on their UB-04 claim form for accurate and timely reimbursement collection. While both are standardized codes that enable and simplify the medical billing process, at a micro level, revenue codes and CPT codes are distinct, serving their unique purposes.
Refer to the table below to understand the key differences between CPT codes and revenue codes in medical billing.
| Revenue Code | CPT Code | |
|---|---|---|
| Maintained By | The American Hospital Association (AHA) | The American Medical Association (AMA) |
| Number of Digits | Five | Four |
| Approximate Count | Over 11,000 | Over 700 |
| Revision Details | Updated annually | Updated based on need |
| Purpose | Financial – Facilitate the billing and reimbursement process | Informational – Describe the rendered medical care |
| Level of Detail | Indicate the service’s broad category or classification | Explain the procedure/service in detail |
The Takeaway
In the world of medical insurance billing, healthcare providers and insurance payers communicate in a code language to keep things concise and standardized. Instead of going back and forth over the details of the medical care that was rendered to the patient, they use codes for clear, effective, and streamlined communication.
Medical billing revenue codes are a part of this coded communication. Reporting revenue codes on medical claims filed in institutional settings (hospitals, CAHs, facilities, and centers) ensures accurate billing and reimbursement, cost reporting, regulatory compliance, and service categorization.
If you need assistance reporting the correct revenue codes on your UB-04 claim forms, browse MediBillMD’s hospital billing services. The full stack includes revenue coding by certified professional coders (CPCs), increasing your chances of clean claim submission.
