Documentation

Documentation is a critical element in the coding and billing process because the medical record contains information regarding patient care services and the medical reason for services provided. The written descriptions of services, procedures, items, and patient conditions are translated into procedure or diagnosis codes. Coders commonly refer to medical record documentation as source documents. Hospital source documents found in the medical record include the admission summary, history and physical, physician’s orders, progress notes, ancillary department reports, medication records, and the discharge summary. Other source documents may be an encounter form, a requisition, or Emergency Department (ED) records. Documentation supports the charges submitted. Remember the Golden Rule in coding: “IF IT IS NOT DOCUMENTED, DO NOT CODE IT.”

Claim Form Submission

Claim forms are prepared for submission of charges to third-party payers. Procedure and diagnosis codes are reported on the claim form to describe the services rendered and the patient’s condition, which explains the medical necessity for services. Hospitals use claim forms to submit charges to payers for reimbursement. Most hospital services are submitted on the CMS-1450 (UB-04) claim form. Hospitals may submit charges for physician and outpatient professional services for primary care or clinic visits on a CMS-1500. In accordance with HIPAA provisions, effective October 1, 2014, the Healthcare Common Procedure Coding System (HCPCS) and the International Classification of Diseases, 10th Revision, Procedure Coding System (PCS) will be reported in the appropriate fields on the claim form to describe services and items provided. International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) diagnosis codes will be reported in the appropriate fields on the claim form to describe the medical reason for services provided.

Payer Processing

Third-party payer claim processing includes a detailed review of claim form data to identify issues with the claim. Payment determination is performed after the claim is reviewed and an explanation of the determination is sent to the provider. The claim may be paid, denied, or the claim may be placed in “pending” status until additional information is obtained. It is essential for hospital billing and coding professionals to understand phases of payer processing and payer edits to ensure accurate coding and billing of hospital services. Figure 9-2 illustrates phases of third-party payer claim processing.

Payer Edits

Data submitted on the claim is reviewed against the payer’s files to confirm eligibility and determine coverage. The payer’s review also includes comparing claim data to various computer edits. Payer edits involve a computer process designed to check claim data against the payer’s data file and to check the codes submitted to identify problems related to services billed. Coding errors or issues involving medical necessity can be identified through this process. The codes submitted on the claim form are also reviewed and compared with other clinical and demographic data to ensure the services billed are appropriate based on the patient’s condition. Payer edits vary by payer. For example, the Medicare Outpatient Code Editor (OCE) checks data on outpatient claims. The Medicare Code Editor (MCE) is used to check data on inpatient claims. The National Correct Coding Initiative (NCCI) and Medically Unlikely Edits (MUE) are generally incorporated into payer edits.

Outpatient Code Editor (OCE)

The Medicare Outpatient Code Editor (OCE) is a computerized program designed to check outpatient claim data to identify problems related to services billed, such as coding errors or issues involving medical necessity. OCE incorporates the National Correct Coding Initiative (NCCI) and other Medicare edits. All outpatient claims are processed through the OCE as required by the Centers for Medicare and Medicaid Services (CMS). The OCE includes edits related to HCPCS Level I and Level II Codes. The OCE contains edits used to identify coding, coverage, clinical, and other claim issues as illustrated in Figure 9-3.

Medicare Code Editor (MCE)

The Medicare Code Editor (MCE) is a computerized program that incorporates various Medicare edits designed to check inpatient claim data to identify problems related to services billed, such as coding errors or issues involving medical necessity. All inpatient claims are processed through the MCE as required by the Centers for Medicare and Medicaid Services (CMS). The MCE includes inpatient coding edits, coverage edits, and clinical edits. National Correct Coding Initiative (NCCI) and Medically Unlikely Edits (MUE) are also incorporated into the MCE. Examples of edits included in the MCE are illustrated in Figure 9-3.

National Correct Coding Initiative (NCCI)

The National Correct Coding Initiative (NCCI) was developed by the Centers for Medicare and Medicaid Services (CMS) to establish correct coding practices nationwide that would help to eliminate improper coding. NCCI edits outline correct coding methodologies based on CPT coding conventions and guidelines, and national and local policies and edits. The NCCI, also referred to as the Correct Coding Initiative (CCI), was implemented as a result of HIPAA legislation in 1996. NCCI was designed to:

…ensure that uniform payment policies and procedures were followed by all carriers. The goal of the Correct Coding Initiative was to develop correct coding methodologies based on the coding conventions in the American Medical Association’s Physicians’ Current Procedural Terminology (CPT) book, national and local policies and edits, coding guidelines developed by national societies, analysis of standard medical and surgical practices, and review of current coding practices.

The National Correct Coding Initiative (NCCI) includes edits that provide explanation of coding situations that may be inappropriate and they are built into many billing software programs. NCCI edits are published quarterly and applied based on the date of service. They can be obtained in manual format or they can be incorporated into some billing programs to ensure appropriate usage of codes and guidelines. Examples of NCCI edits are outlined in Figure 9-4.

Medically Unlikely Edits (MUE)

Medically Unlikely Edits (MUE) were developed by CMS and implemented in 2007 to identify maximum units of service that can be reported for a particular HCPCS Level I CPT or Level II Medicare National code on the same date of service, by the same provider, for the same patient. Medically Unlikely Edits (MUE) were not made public initially. However, CMS later announced that the majority of existing MUE would be made public. CMS publishes MUE on the Medicare Web site at http://www.cms.hhs.gov/NationalCorrectCodInitEd/08_MUE.asp#TopOfPage. Medicare further states that due to concerns regarding fraud and abuse, MUE with values of 4 or more will not be made public. Examples of MUE are illustrated in Figure 9-4.

BOX 9-3   CONCEPT REVIEW
Payer Edits

• Outpatient Code Editor (OCE)

• Medicare Code Editor (MCE)

• National Correct Coding Initiative (NCCI) also called Correct Coding Initiative (CCI)

• Medically Unlikely Edits (MUE)

Payment Determination

When a claim satisfies all payer edits, payment determination is performed. Payment determination may result in payment of the claim, denial of all or part of the claim, or the payer may place the claim in a “pending status” pending additional information. A remittance advice (RA) is prepared by the payer, and forwarded to the hospital to explain how the claim was processed. Procedure and diagnosis codes submitted have a direct impact on reimbursement. The amount of reimbursement for outpatient services, procedures, and items is determined by the procedure code submitted. For example, hospital services provided to a Medicare patient are reimbursed under the Outpatient Prospective Payment System (OPPS). The OPPS method of reimbursement is Ambulatory Payment Classifications (APC), which assigns a payment amount based on the procedure code(s) submitted. Professional services provided to Medicare patients are reimbursed in accordance with the Medicare fee schedule that is based on the Resource-Based Relative Value Scale (RBRVS), which also assigns payment based on a relative weight values given to each procedure code. Services provided to Medicare patients on an inpatient basis are reimbursed under the Inpatient Prospective Payment System (IPPS), Medicare Severity-Diagnosis Related Groups (MS-DRG). The MS-DRG reimbursement method assigns payment amounts based on the diagnosis code(s) submitted in addition to the procedures and other clinical factors, such as the age of the patient and discharge status. Prospective Payment Systems (PPS) will be discussed further in the Prospective Payment Systems (PPS) chapter.

Submission of procedure or diagnosis codes that are incorrect will result in incorrect reimbursement, as illustrated in Figure 9-5. The APC payment rate for the injection procedure code 61055, is $522.67. The APC payment rate for the CT scan, without contrast followed by with contrast, procedure code 72127 is $334.09. The total reimbursement for this case is $856.76. If the claim was submitted with procedure code 72125, CT scan without contrast, the APC payment rate is $192.06, and the total reimbursement would be drastically reduced to $714.73.

It is critical to understand the significance of coding. Coding describes what was done and why. Accurately describing information in the patient’s medical record, through the use of codes, is essential to securing the appropriate reimbursement. The submission of inaccurate information that is not supported in the patient’s medical record can cause delayed or reduced reimbursement. Submission of inaccurate information may also lead to investigations for fraud and abuse.

BOX 9-4   CONCEPT REVIEW
Impact of Inaccurate Coding—Payment Determination

• Incorrect reimbursement

• Payment denial

• Third-party audit

• Fraud or abuse investigation

Outpatient and Non-patient Services

Coding system requirements for outpatient and non-patient services are outlined in Figure 9-6. Hospital outpatient facility charges are submitted for services provided by various departments within the hospital. Outpatient services include ambulatory surgery, emergency room, observation, radiology, and pathology/laboratory. These facility charges are generally reported on the CMS-1450 (UB-04). The coding systems used are HCPCS Level I CPT and Level II Medicare National Procedure Codes. ICD-10-CM diagnosis codes are used to report patient conditions in FL 67, 67A-Q, 70, and 72. An example of outpatient coding and claim form reporting is illustrated in Figure 9-7.

Inpatient Services

Coding and claim form requirements for hospital inpatient services are outlined in Figure 9-6. Hospitals submit facility charges for inpatient services on the CMS-1450 (UB-04). The services are posted through the chargemaster by various hospital departments including the Health Information Management (HIM) Department. Each item in the chargemaster is associated with an HCPCS code. HCPCS codes are not always required in FL 44 for inpatient claims; however, they are printed on the detailed itemized statement. ICD-10-CM diagnosis codes are used to report the principal diagnosis, other diagnoses, admitting diagnosis, and external cause of injury in FL 67, 67A-Q, 69, and 72. Significant procedures performed during the visit are reported using ICD-10-PCS codes and they are reported in FL 74a-e. An example of coding systems and claim form requirements for hospital inpatient services is illustrated in Figure 9-8.

To ensure accurate and effective coding, coders should develop good coding habits such as “NEVER code from the index” and “IF IT IS NOT DOCUMENTED, DO NOT CODE.” A coder must be consistent in the process he or she follows to assign a code, and a coder must follow those good coding habits in every coding situation (Figure 9-9).

Accurate coding requires knowledge of coding system formats, content, and principles. Knowledge of coding guidelines is also essential to accurate coding. Coding guidelines vary according to the category of service, as discussed previously. To gain an understanding of the variations, we will explore outpatient and inpatient coding guidelines for the ICD-10-CM, HCPCS, and ICD-10-PCS coding systems.

ICD-10-CM General Diagnosis Coding Guidelines

ICD-10-CM general coding guidelines are located in Volume I, Section I.B of the ICD-10-CM manual. These guidelines provide instruction to coders regarding when conditions should be coded and how to use the coding system. The guidelines also include instructions regarding each code section. To ensure accurate coding and compliance, it is critical for hospital coding professionals to have knowledge of the guidelines and to effectively apply the guidelines when coding patient conditions documented in the medical record. It is also important for coders to adopt good coding habits. The following topics are included in the official general coding guidelines.

ICD-10-CM Outpatient Diagnosis Coding Guidelines

ICD-10-CM coding guidelines for outpatient services are located in Volume II, Section IV of the manual. Section IV includes coding guidelines that are applicable to all outpatient services including hospital-based outpatient services. Section IV includes the following outpatient guidelines for selection of the first-listed condition (primary diagnosis): coding uncertain diagnoses, coexisting conditions, and coding diagnoses for diagnostic, therapeutic, preoperative, and ambulatory surgery services.

ICD-10-CM Inpatient Diagnosis Coding Guidelines

ICD-10-CM coding guidelines for inpatient services are located in Volume III of the ICD-10-CM manual. Section II and III of the official guidelines contain information related to coding the principal and other diagnoses for inpatient services. Coders require knowledge of these guidelines to ensure compliance and to code effectively so the hospital receives the appropriate reimbursement. The following section provides an overview of several official guidelines related to the selection of principal and other diagnoses as outlined in the ICD-10-CM Official Coding Guidelines.

Selection of the Principal Diagnosis

The principal diagnosis is defined in the Uniform Hospital Discharge Data Set (UHDDS) as “that condition established after study to be chiefly responsible for the admission of the patient to the hospital for care.” Condition after study refers to the diagnosis made after an examination and/or diagnostic tests are performed. Section II of the guidelines provides information regarding coding the principal diagnosis in various circumstances. Several of those guidelines are outlined below.

Two or More Comparative or Contrasting Conditions

There may be a case where the medical record indicates two or more comparative or contrasting conditions documented as “either/or.” For inpatient cases, the guidelines indicate the conditions should be coded as if the diagnoses were confirmed and sequenced according to the circumstances of the admission. If a determination cannot be made regarding which diagnosis should be the principal diagnosis, either condition may be listed.

Example: Two or More Comparative or Contrasting Conditions
Patient is admitted with nausea, vomiting, and recurrent abdominal pain. Patient has a history of diverticula. The admitting physician documented the patient’s diagnosis as cholecystitis or diverticulitis of the small intestine. Patient scheduled for abdominal series and a gallbladder scan tomorrow.
Principal diagnosis:	Cholecystitis	K81.Ø
	Diverticulitis	K57.12
Note: Either condition may be used as the principal diagnosis because the physician stated “cholecystitis or diverticulitis.”

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1. Hospital Introduction
2. Patient Accounts and Data Flow
3. Prospective Payment Systems (PPS)
4. Health Insurance Portability and Accountability Act (HIPAA)

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