Claims data guide
Every day, millions of Americans receive healthcare—from routine check-ups to life-saving surgeries. Behind each interaction lies a hidden language that connects patients, providers, and payers: healthcare claims data.
This guide takes you on a journey through the world of healthcare claims—from a patient's first symptom to the final payment. You'll discover how three types of claims work together to create a comprehensive picture of American healthcare, and learn to unlock the insights hidden within this rich data source.
Follow a patient from their first symptom through diagnosis, treatment, and recovery—and see how each step creates data.
Discover how hospital visits, doctor appointments, and pharmacy trips each tell a different part of the healthcare story.
Learn the universal language of healthcare—the codes that transform complex medical concepts into structured data.
#Meet Sarah
Sarah is a 45-year-old teacher who doesn't think much about healthcare data. But when she schedules her annual wellness exam,
she sets in motion a remarkable chain of events that will create a lasting digital record of her health journey.
I just want to make sure I'm healthy. I have no idea that my simple doctor visit will generate over 50 data points that will help improve healthcare for millions of people.
Every year, 330 million Americans like Sarah receive healthcare. Behind each interaction—from a routine check-up to emergency surgery—lies a sophisticated data ecosystem that captures, processes, and transforms medical encounters into structured information. This is the world of healthcare claims data.
#From Symptom to Data
Let's follow Sarah's story and see how each step of her healthcare experience creates valuable data that extends far beyond her individual care.
The Visit
Sarah arrives at Dr. Martinez's office. During her 45-minute appointment, she receives a comprehensive physical exam,
discusses her health goals, and gets routine lab work ordered. Each service is documented with precision.
CPT Code:
99395 - Annual physical
ICD-10:
Z00.00 - Wellness exam
Place:
11 - Office visit
The Claim
Dr. Martinez's billing team submits a digital claim to Sarah's insurance company. This claim contains
over 30 data fields describing every aspect of her visit—from the medical codes to the exact time spent.
Submitted Amount:
$350
Provider NPI:
1234567890
The Processing
Sarah's insurance company's automated systems verify her coverage, check the medical necessity,
and determine payment amounts. The claim moves through multiple validation steps in milliseconds.
Coverage:✓ Verified
Network:✓ In-network
Deductible:$50 applied
Payment:$300 approved
The Impact
Sarah's claim data joins millions of others, creating insights that improve healthcare for everyone.
Her data helps identify health trends, measure quality, and coordinate care across the system.
Data Applications:
Population health • Quality measures • Care coordination
The Bigger Picture: Sarah's simple wellness visit has created a rich dataset that extends far beyond her individual care. Her claim data will help researchers understand population health trends, enable quality measurement programs, and support care coordination efforts that benefit millions of patients.
#The Three-Party System
Patient
The person receiving care, also called member or beneficiary
Provider
Healthcare professional or organization delivering care
Payer
Insurance company or entity responsible for processing claims
Healthcare claims exist within a three-party system that defines how care is delivered and paid for in the United States:
The Patient (Member/Beneficiary): Sarah represents the patient or member—the person receiving care. In claims data, patients are also referred to as beneficiaries (especially in government programs like Medicare) or members (in commercial insurance contexts). The patient typically has financial responsibility for some portion of the care through deductibles, copayments, or coinsurance.
The Provider: Dr. Martinez and his practice represent the provider—the healthcare professional or organization delivering the care. Providers can be individual practitioners (physicians, nurse practitioners, therapists) or organizations (hospitals, clinics, pharmacies). In claims data, providers are identified by National Provider Identifiers (NPIs) and other credentialing information.
The Payer: Sarah's insurance company represents the payer—the entity responsible for processing and paying claims. Payers include commercial insurance companies, government programs (Medicare, Medicaid), and self-insured employer plans. The payer's role is to determine coverage, calculate payments, and manage the financial aspects of care.
#Three Claim Types
Institutional
Hospitals & Facilities
Examples:
Surgery, ER visits, imaging
Key Codes:
DRG, Revenue, ICD-10-PCS
60%
of healthcare spending
Professional
Doctors & Specialists
Examples:
Office visits, consultations
Key Codes:
CPT, E&M, Place of Service
20%
of healthcare spending
Pharmacy
Medications & Drugs
Examples:
Prescriptions, compounds
Key Codes:
NDC, Days Supply, DAW
20%
of healthcare spending
Together, these three claim types create a complete picture of American healthcare—
from Maria's heart surgery to James's annual checkup to Linda's diabetes medication.
Healthcare claims are organized into three distinct categories, each designed to capture different aspects of patient care. Understanding these categories is essential for working with claims data effectively, as each type has unique data elements, coding requirements, and business rules.
#Maria's Hospital Story
Institutional claims represent the most complex and data-rich type of healthcare claim. They document services provided in healthcare facilities such as hospitals, skilled nursing facilities, rehabilitation centers, and outpatient clinics. These claims capture not just individual services, but the entire episode of care within a facility setting.
Consider Maria, a 67-year-old retired teacher who experiences chest pain and shortness of breath. Her journey through the healthcare system illustrates the complexity of institutional claims:
Emergency Department Arrival
Maria arrives at Metro General Hospital's emergency department at 2:30 AM. The emergency physician performs an initial assessment,
orders blood work, an electrocardiogram, and a chest X-ray. The working diagnosis is possible myocardial infarction.
Revenue Code:
0450 - Emergency room
ICD-10-CM:
I21.9 - Acute MI, unspecified
Admission Decision
Based on the test results and clinical presentation, the emergency physician decides to admit Maria to the hospital
for further evaluation and treatment. This decision triggers the creation of an inpatient institutional claim.
Revenue Code:
0200 - Intensive care unit
Claim Type:
Inpatient institutional
Procedure and Treatment
Maria undergoes a percutaneous coronary intervention (PCI) with stent placement to open the blocked artery.
She remains in the hospital for three days for monitoring and recovery.
ICD-10-PCS:
02703ZZ - PCI with stent
Revenue Code:
0481 - Cardiac cath lab
Discharge Planning
Before discharge, Maria meets with a cardiac rehabilitation specialist, receives education about heart-healthy
lifestyle changes, and is prescribed medications to prevent future cardiac events.
DRG Code:
280 - Acute MI with MCC
Length of Stay:
3 days
This entire episode—from emergency department arrival to discharge—is captured in a single institutional claim that includes:
Inpatient Institutional Claim Summary
Maria's Complete Hospital Episode
Claim Type
Inpatient Institutional
Principal Diagnosis:
I21.9
Acute MI, unspecified
Principal Procedure:
02703ZZ
PCI with stent
Secondary Diagnoses
I25.10Atherosclerotic heart disease
E11.9Type 2 diabetes mellitus
I10Essential hypertension
Revenue Codes
0450Emergency room
0200Intensive care unit
0481Cardiac catheterization lab
#James' Primary Care Story
Professional claims document services provided by healthcare professionals in their professional capacity. These claims cover everything from routine office visits to complex surgical procedures, representing the backbone of outpatient healthcare delivery.
Let's follow James, a 52-year-old accountant, through his annual physical exam to understand professional claims:
The Appointment
James schedules his annual physical with Dr. Emily Chen, his primary care physician.
The appointment is set for 9:00 AM at Dr. Chen's office.
Place of Service:
11 - Office
Provider:
Dr. Chen (NPI: 1234567890)
The Examination
During the 45-minute visit, Dr. Chen reviews James's medical history, performs a comprehensive physical examination,
discusses preventive care recommendations, and orders routine laboratory tests.
Services:
Physical exam, labs, vaccine
Duration:
45 minutes
The Diagnosis and Plan
Dr. Chen documents the encounter with a diagnosis of "encounter for general adult medical examination without abnormal findings"
and creates a care plan for James's ongoing health maintenance.
ICD-10-CM:
Z00.00 - Wellness exam
CPT Code:
99396 - Annual physical
Care Plan
Dr. Chen provides James with follow-up instructions, schedules his next annual visit,
and ensures he receives his lab results within the week.
This visit generates a professional claim with:
Professional Claim Summary
James's Annual Physical Exam
CPT Code:
99396
Annual physical exam
ICD-10-CM:
Z00.00
Wellness exam
Place of Service:
11
Office
Provider Information
Provider:Dr. Emily Chen
NPI:1234567890
Specialty:Family Medicine
Service Details
Service Type:Preventive Medicine
Duration:45 minutes
Patient Type:Established patient
#Linda's Medication Story
Pharmacy claims represent a unique category that documents prescription medication dispensing and pharmaceutical services. These claims provide crucial information about medication usage, adherence, and outcomes.
Follow Linda, a 45-year-old teacher with Type 2 diabetes, as she fills her monthly prescription:
The Prescription
Dr. Martinez prescribes metformin 1000mg twice daily for Linda's diabetes management.
The prescription is sent electronically to Linda's preferred pharmacy.
Medication:
Metformin 1000mg BID
Prescriber:
Dr. Martinez (NPI: 9876543210)
Pharmacy Processing
The pharmacist at Community Pharmacy receives the electronic prescription, verifies Linda's insurance coverage,
and checks for drug interactions with her other medications.
NDC Code:
0777-3105-02
Pharmacy:
Community Pharmacy (NPI: 1122334455)
Insurance Verification
The pharmacy's system communicates with Linda's insurance company in real-time to verify coverage
and determine Linda's copayment responsibility.
Coverage:
✓ Verified
Copayment:
$15.00
Dispensing
The pharmacist dispenses a 30-day supply of metformin (60 tablets) and provides counseling
about proper administration and potential side effects.
Quantity:
60 tablets
Days Supply:
30 days
This transaction generates a pharmacy claim that captures all the essential information about Linda's prescription, including the specific medication dispensed, quantities, and both the prescriber and pharmacy involved:
Pharmacy Claim Summary
Linda's Metformin Prescription
NDC Code:
0777-3105-02
Metformin 1000mg
Prescriber Information
Prescriber:Dr. Martinez
NPI:9876543210
DEA:BM1234567
Pharmacy Information
Pharmacy:Community Pharmacy
NPI:1122334455
NCPDP:0123456
#The Language of Healthcare
Medical coding systems serve as healthcare's universal language, much like how standardized currency enables global commerce. Without these systems, a diagnosis of "heart attack" documented by a physician in Texas might be interpreted differently by an insurance company in New York or a researcher in California. Medical codes eliminate this ambiguity by providing precise, standardized definitions.
Consider the seemingly simple concept of a "heart attack." In medical coding, this condition is represented by specific ICD-10-CM codes that capture important clinical distinctions:
Heart Attack → Four Different Codes
Same condition, different clinical specificity
I21.01
ST elevation MI
Left main coronary artery
I21.02
ST elevation MI
Left anterior descending
I21.09
ST elevation MI
Other coronary artery
I21.4
Non-ST elevation MI
Different heart attack type
Clinical Impact: Each code represents different treatment approaches, prognoses, and outcomes
Each code represents a different type of heart attack with distinct clinical implications, treatment approaches, and prognoses. This level of specificity enables precise communication about patient conditions and supports appropriate clinical decision-making.
#Diagnosis Codes
Diagnosis Codes in Action
From symptoms to precise medical conditions
Patient reports chest pain, shortness of breath, fatigue
Tests, imaging, clinical assessment reveal specific condition
Precise diagnosis code captures the specific medical condition
Diagnosis codes describe the medical conditions, symptoms, and reasons for healthcare encounters. These codes are essential for communicating patient conditions, supporting clinical decision-making, and enabling population health analysis.
#ICD-10-CM
The International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) is the current standard for diagnosis coding in the United States. Implemented in 2015, ICD-10-CM contains over 70,000 codes that provide unprecedented specificity in describing patient conditions.
Structure and Organization: ICD-10-CM codes follow a structured format that provides increasing specificity:
ICD-10-CM Code Structure
From general to highly specific
Category
General disease or condition
Subcategory
Additional specificity
S72.011 = Displaced fracture of head of right femur
Extension
Episode of care details
S72.011A = Initial encounter for closed fracture
Clinical Value: This structure enables both broad population analysis and detailed clinical documentation
This hierarchical structure enables both broad population analysis and detailed clinical documentation.
#Real World Diagnosis Codes
Diabetes Management: Diabetes coding illustrates the importance of specificity in healthcare:
Diabetes Progression Through Codes
Same disease, different stages and complications
E11.9
Type 2 diabetes without complications
Early stage
E11.40
Type 2 diabetes with diabetic neuropathy
Nerve damage
E11.51
Type 2 diabetes with peripheral angiopathy
Blood vessel complications
E11.65
Type 2 diabetes with hyperglycemia
High blood sugar
Disease Tracking: Different codes on different claims create a detailed picture of disease progression over time
A patient with Type 2 diabetes may have different codes on different claims based on their current condition and complications, providing a detailed picture of disease progression over time.
Mental Health Documentation: Mental health conditions demonstrate the complexity of modern diagnosis coding:
- F32.9: Major depressive disorder, single episode, unspecified
- F33.1: Major depressive disorder, recurrent, moderate
- F41.1: Generalized anxiety disorder
- F43.10: Post-traumatic stress disorder, unspecified
Injury and External Cause Coding: Injury coding requires both the injury itself and external cause information:
- S06.2X0A: Diffuse traumatic brain injury without loss of consciousness, initial encounter
- V43.52XA: Car driver injured in collision with car in traffic accident, initial encounter
- Y92.411: Sidewalk as the place of occurrence of the external cause
This dual coding approach supports both clinical care and public health surveillance.
#Procedure Codes
Procedure Coding Ecosystem
Multiple systems for different settings and types of care
CPT
Professional services
10,000+ codes
ICD-10-PCS
Inpatient procedures
72,000+ codes
HCPCS
Supplies & equipment
5,000+ codes
Revenue
Facility services
1,000+ codes
Comprehensive Coverage: Different coding systems work together to document all aspects of healthcare delivery
Procedure codes document the medical services, treatments, and interventions provided to patients. These codes are essential for clinical documentation, billing, and quality measurement.
#Current Procedural Terminology
Current Procedural Terminology (CPT) codes, maintained by the American Medical Association, represent the most widely used procedure coding system in the United States. CPT codes describe medical services and procedures performed by healthcare providers.
CPT Structure: CPT codes are five-digit numeric codes organized into categories:
CPT Code Categories
Organized by service type and range
Category I Codes(00100-99499)
Surgical procedures by body system
Imaging and radiation therapy
Lab & Pathology(80000-89999) Laboratory tests and pathology
Non-surgical medical services
Optional performance measurement codes for quality reporting
Category III(0001T-9999T)
Temporary codes for emerging technologies and procedures
Systematic Organization: CPT codes are logically organized to make finding and using the correct code more efficient
#Real World Procedure Codes
Evaluation and Management (E&M) Services: These codes describe provider-patient interactions:
E&M Complexity Levels
Provider-patient interactions by complexity
99213
Office visit - Low complexity
Established patient
Expanded problem focused history, expanded problem focused examination, low complexity medical decision making
99214
Office visit - Moderate complexity
Established patient
Detailed history, detailed examination, moderate complexity medical decision making
99215
Office visit - High complexity
Established patient
Comprehensive history, comprehensive examination, high complexity medical decision making
Complexity Factors: History taken, examination performed, and complexity of medical decision-making
The complexity level depends on factors including the history taken, examination performed, and complexity of medical decision-making.
Surgical Procedures: Surgical CPT codes provide detailed descriptions of procedures:
- 27447: Arthroplasty, knee, condyle and plateau; medial AND lateral compartments with or without patella resurfacing (total knee arthroplasty)
- 66984: Extracapsular cataract removal with insertion of intraocular lens prosthesis
- 43239: Esophagogastroduodenoscopy, flexible, transoral; with biopsy, single or multiple
These codes enable precise documentation of surgical interventions and appropriate reimbursement.
Preventive Services: Preventive care codes support population health initiatives:
- 99395: Periodic comprehensive preventive medicine reevaluation and management of an individual including an age and gender appropriate history, examination, counseling/anticipatory guidance/risk factor reduction interventions, and the ordering of laboratory/diagnostic procedures, established patient; 40-64 years
- G0121: Colorectal cancer screening; colonoscopy on individual not meeting criteria for high risk
- 90471: Immunization administration (includes percutaneous, intradermal, subcutaneous, or intramuscular injections); 1 vaccine
#HCPCS Level II: Extending CPT
Healthcare Common Procedure Coding System (HCPCS) Level II codes extend CPT to include services, supplies, and equipment not covered by CPT:
Durable Medical Equipment:
- E0781: Ambulatory infusion pump, single or multiple channels, electric or battery operated, with administrative equipment
- K0001: Standard wheelchair
Drugs and Biologicals:
- J0135: Injection, adalimumab, 20 mg
- J1100: Injection, dexamethasone sodium phosphate, 1 mg
Transportation Services:
- A0425: Ground mileage, per statute mile
- A0426: Ambulance service, advanced life support, non-emergency transport, level 1 (ALS 1)
#Medication Codes
The National Drug Code (NDC) system provides unique identification for drug products in the United States. Established by the FDA in 1972, NDC codes are essential for pharmacy claims and medication management, serving as the universal language for drug identification across the entire healthcare ecosystem.
Every prescription medication, over-the-counter drug, and medical device regulated by the FDA receives a unique NDC code. This system enables precise tracking from manufacturer to patient, supporting critical functions like drug recalls, adverse event reporting, and medication reconciliation. For healthcare claims, NDC codes ensure accurate billing, prevent medication errors, and facilitate comprehensive medication histories that span multiple healthcare providers and pharmacy systems.
#NDC Structure
NDC Code Structure
5-4-2 digit format: LABELER-PRODUCT-PACKAGE
00781-5094-01
Metformin hydrochloride 500mg tablets, 100-count bottle
00781
Labeler Code
Identifies manufacturer or distributor
5094
Product Code
Strength, dosage form, formulation
01
Package Code
Package size and type
Universal Format: Every medication has a unique NDC code following this standardized structure
NDC codes use an 11-digit format with three segments: 5-4-2 structure (LABELER-PRODUCT-PACKAGE)
#Real-World NDC Examples
Generic Medications:
- 00781-5094-01: Metformin hydrochloride 500mg tablets, 100-count bottle
- 00093-0058-01: Lisinopril 10mg tablets, 100-count bottle
Brand Medications:
- 00074-4336-30: Humira (adalimumab) injection, 40 mg/0.8 mL prefilled pen
- 00088-1933-07: Lipitor (atorvastatin) 20mg tablets, 90-count bottle
Compound Medications: When pharmacies create custom compound medications, they may use special NDC codes or compound identifiers to document the specific formulation.
#Next Steps
Now that you understand the fundamental structure of healthcare claims data—from patient journeys through the three claim types to the universal language of medical coding—you're ready to dive deeper into specific aspects of claims data analysis.
#Continue Your Journey