Coding Guidelines and Applications (HCPCS, ICD-10-PCS, and ICD-10-CM)

Chapter 9


Coding Guidelines and Applications (HCPCS, ICD-10-PCS, and ICD-10-CM)




Key Terms




Acronyms and Abbreviations


AHA


American Hospital Association


AHIMA


American Health Information Management Association


AMA


American Medical Association


APC


Ambulatory Payment Classifications


BMI


Body mass index


CCI


Correct Coding Initiative


CDC


Centers for Disease Control and Prevention


CDM


Charge Description Master or chargemaster


CPT


Current Procedural Terminology


CMS


Centers for Medicare and Medicaid Services


E/M


Evaluation and Management


EMTALA


Emergency Medical Treatment and Labor Act


HAC


Hospital-acquired condition


HCPCS


Healthcare Common Procedure Coding System


HIM


Health Information Management


ICD-10-CM


International Classification of Diseases, 10th Revision, Clinical Modification


ICD-10-PCS


International Classification of Diseases, 10th Revision, Procedure Coding System


IOM


Internet-Only Manual


IPPS


Inpatient Prospective Payment System


MCE


Medicare Code Editor


MCM


Medicare Carrier Manual


MS-DRG


Medicare Severity-Diagnosis Related Groups


MUE


Medically Unlikely Edits


NCCI


National Correct Coding Initiative


NCHS


National Center for Health Statistics


OCE


Medicare Outpatient Code Editor


OPPS


Outpatient Prospective Payment System


POA


Present on admission


PPS


Prospective Payment Systems


RBRVS


Resource-Based Relative Value Scale


UB-04


Uniform Bill, CMS-1450


UHDDS


Uniform Hospital Discharge Data Set



The objective of this chapter is to provide a basic understanding of HCPCS and ICD-10 guidelines for diagnosis and procedure coding in the hospital setting. The standard code set currently listed under HIPAA for coding procedures, services, and items is the Healthcare Common Procedure Coding System (HCPCS) and the International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM), Volume III. In accordance with HIPAA provisions, the ICD-9-CM will be replaced with the International Classification of Diseases, 10th Revision (ICD-10). The compliance date for implementation of ICD-10 was set for October 1, 2013. However, the Department of Health and Human Services (DHHS) has published a final rule that includes delaying the ICD-10 compliance date to October 1, 2014. Hospital coding and billing professionals are required to have an understanding of the ICD-9-CM coding system and will need to transition to ICD-10. In an effort provide current and future knowledge required for hospital professionals, this text presents concepts of coding using ICD-9-CM and ICD-10. The prior chapters presented concepts regarding coding medical conditions and significant procedures using ICD-9-CM. This chapter will focus on coding guidelines for the HCPCS and the ICD-10 coding systems.


Coding principles and guidelines vary by provider, category of service, and payer type. The challenge for hospital coding and billing professionals is to understand those variations and effectively apply guidelines applicable to coding hospital services. Hospital coding and billing professionals must also understand the relationship between billing and coding. This relationship is significant because coding describes diagnostic and therapeutic services provided and medical conditions that explain why services were provided. Concepts on documentation, coding, claim forms, and the billing process were covered in previous chapters. This chapter will provide a brief review of those concepts, demonstrating the relationship between coding and billing. The chapter will then explore diagnosis and procedure coding guidelines and their appropriate application. The basic steps to coding conditions and procedures using ICD-10-CM, HCPCS and ICD-10-PCS will be revisited to assist with the application of coding guidelines using case scenarios.



Relationship Between Billing and Coding


To maintain financial stability, hospitals must bill patients and third-party payers for services rendered and obtain reimbursement in a timely manner. Billing is the process of submitting charges for services, procedures, and items to patients and third-party payers. The hospital billing process is complex, and it involves all functions required to bill for services rendered. Functions of the billing process are interrelated, as various departments within the hospital complete them.


The billing process begins when the patient is received at the hospital for outpatient services or an inpatient admission. Patient care services are rendered and documented in the patient’s medical record. Facility charges for services, procedures, and items are posted through the Charge Description Master (CDM), also referred to as the chargemaster, by various departments including the Health Information Management (HIM) Department. Facility charges represent the cost and overhead (technical component) of providing patient care services, including space, equipment, supplies, drugs and biologicals, and technical staff. All items listed in the chargemaster are associated with the appropriate procedure code that describes it. Professional services provided in a hospital-based clinic or primary care office are posted to the patient’s account using an encounter form. Charges for professional services represent the professional component of services performed by a physician or other non-physician provider. The hospital may submit charges for professional services provided in a hospital-based clinic, such as an Evaluation and Management (E/M) service when the physician is employed by or under contract with the hospital. The patient’s medical record is reviewed to identify and code services rendered during the patient visit and the medical reason(s) why services were required.


Each function in the process can be thought of as an individual step contributing to the completion of patient statements and claim forms. The function of coding is integral to the billing process. The relationship between coding and billing is simply that coding is required to bill for services rendered. Codes are used on claim forms to describe diagnostic and therapeutic services, procedures, items, and medical conditions documented in the patient’s medical record. A diagnosis code(s) should explain the medical necessity for the service or procedure. The relationship between coding and billing is illustrated in Figure 9-1, which highlights functions of the billing process and the departments responsible for performing those functions.





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.





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 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.




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.




Coding System Variations


The first step to accurate coding is to understand what coding system is required for submission of charges to various payers. Coding system requirements and guidelines vary by payer and by category of service: outpatient, non-patient and inpatient, as illustrated in Figure 9-6. This section will explore examples of coding system variations for outpatient and inpatient services to provide a basic understanding of the reporting requirements for each service category.





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.




BOX 9-1   Test Your Knowledge
RELATIONSHIP BETWEEN BILLING AND CODING; CODING SYSTEM VARIATIONS


True/False





Fill-in-the-Blank




6. Written descriptions of services, procedures, items, and patient conditions are translated into procedure or diagnosis _________.


7. Documentation is a critical element in the coding and billing process. Documentation contains information regarding _____________ rendered and the __________ __________ for those services.


8. The ________ _____ in coding states “IF IT IS NOT DOCUMENTED, DO NOT CODE IT.”


9. Payment determination may result in _________ of the claim, __________ of all or part of the claim, or the payer may place the claim in a “pending status”, pending additional information.


10. Two claim forms used to submit charges to third-party payers are the _____________, used to submit charges for physician and outpatient services, and the ________________, used to submit facility charges.



Matching


Select the answer option that matches the descriptions below.





11. ____ The process of checking claim data against the payer’s data file and to check codes to identify problems related to services billed. Coding errors and issues involving medical necessity can be identified through this process.


12. ____ Edits that 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 services.


13. ____ A computerized program that incorporates Medicare edits designed to check inpatient claim data.


14. ____ The edits developed by the CMS to establish correct coding practices nationwide that would help to eliminate improper coding.


15. ____ 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.


16. ____ Identify the coding systems required for reporting outpatient services, procedures, items, and patient conditions, effective October 1, 2014.


17. ____ The category of service that includes: ambulatory surgery, emergency room, observation, radiology, and pathology/laboratory.


18. ____ Identify the coding system required for reporting of significant procedures performed on an inpatient basis, effective October 1, 2014.


19. ____ A reimbursement method for Medicare inpatient services implemented under the Inpatient Prospective Payment System (IPPS).


20. ____ A reimbursement method for Medicare outpatient services implemented under the Outpatient Prospective Payment System (OPPS).



ICD-10-CM Official Diagnosis Coding Guidelines


ICD-10-CM Official Guidelines for Coding and Reporting are provided by the Centers for Medicare and Medicaid Services (CMS) and the National Center for Health Statistics (NCHS). CMS and NCHS are agencies within the Department of Health and Human Services (DHHS). ICD-10-CM guidelines were developed and approved by the Cooperating Parties for ICD-10-CM. The Cooperating Parties include the American Hospital Association (AHA), the American Health Information Management Association (AHIMA), the Centers for Medicare and Medicaid Services (CMS), and the National Center for Health Statistics (NCHS). The guidelines published by the DHHS are also published in the Coding Clinic for ICD-10-CM, published by the AHA. Compliance with the ICD-10-CM official coding guidelines will be required in accordance with HIPAA provisions effective October 1, 2014.


Diagnosis coding guidelines are developed for the purpose of providing instruction and clarification to coding and billing professionals. The official guidelines provide instruction specific to outpatient and inpatient coding when the ICD-10-CM code range does not provide clarification. It is important to remember that the conventions take precedence over the guidelines in ICD-10-CM. The ICD-10-CM manual also contains general coding guidelines that are applicable to coding for all health care settings.


ICD-10-CM Official Guidelines for Coding and Reporting, located in Volume II, provides coders with critical information about how to use the ICD-10-CM coding system. It also includes instructions on how to code and report various clinical circumstances. The guidelines are broken down into the following sections:



Section I, ICD-10-CM conventions were discussed in the diagnosis coding chapters. This chapter will focus on the general coding guidelines, selection of the principal diagnosis, reporting additional diagnoses, and diagnostic coding and reporting guidelines for outpatient and inpatient services. The section will conclude with a brief discussion regarding present on admission (POA) reporting guidelines outlined in Appendix I of the ICD-10-CM official guidelines.



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.




Level of Detail in ICD-10-CM Coding


ICD-10-CM codes can be three to seven characters. A three-character code may be used when there is no further subdivision within a code range. When a code range includes 4, 5, 6, and 7 characters, the code will not be considered valid if it is not coded to the highest number of characters. It is essential to code to the highest level of specificity. The code ranges listed below are examples of coding to the highest level of specificity. Code range I1Ø does not include codes that further specify hypertension, therefore I1Ø is a valid code. The code range I7Ø does include further specification and therefore a 7-character code is required.


































































ICD-10-CM CHAPTER 9: DISEASES OF THE CIRCULATORY SYSTEM
  I1Ø Essential (primary) hypertension
  I7Ø Atherosclerosis
    I7Ø.Ø Atherosclerosis of aorta
    I7Ø.1 Atherosclerosis of renal artery
    I7Ø.2 Atherosclerosis of native arteries of the extremities
      17Ø.2Ø Unspecified atherosclerosis of native arteries of extremities
      I7Ø.2Ø1 Unspecified atherosclerosis of native arteries of extremities, right leg
      I7Ø.2Ø2 Unspecified atherosclerosis of native arteries of extremities, left leg
      I7Ø.2Ø3 Unspecified atherosclerosis of native arteries of extremities, bilateral legs
      I7Ø.2Ø8 Unspecified atherosclerosis of native arteries of extremities, other extremity
      I7Ø.2Ø9 Unspecified atherosclerosis of native arteries of extremities, unspecified extremity


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Multiple Coding for a Single Condition


A single condition may require multiple codes to fully describe the patient’s condition. When the condition is not part of an etiology or manifestation, when the condition is due to an underlying cause, or when describing late effects or complications, multiple codes may be required. The “use additional code”, “code first,” and “code, if applicable” conventions tell the coder that multiple codes are required. It is important to review the chapter-specific guidelines to ensure accurate reporting of multiple codes. The condition, histoplasmosis, is an example of a multiple coding, as illustrated below.



















ICD-10-CM CHAPTER 1: CERTAIN INFECTIOUS AND PARASITIC DISEASES
  B39 Histoplasmosis
    Code first associated AIDS (B20)
    Use additional code for any associated manifestations, such as: endocarditis (I39) (I39), meningitis (G02), pericarditis (I32) (I32), and retinitis (H32)


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Combination Codes


A combination code is a single code used to classify two diagnoses, or a diagnosis with an associated secondary process (manifestation), or a diagnosis with an associated complication. When the combination code describes the conditions documented in the medical record, multiple codes should not be used. If the combination code is not specific, an additional code may be used to fully describe the conditions documented in the medical record. For example, a patient’s medical record describes the condition of atherosclerotic heart disease with angina pectoris. The diagnosis code I25.11Ø “Atherosclerotic heart disease of native coronary artery with angina pectoris” is assigned. I25.11Ø is a combination code that describes the diagnosis “atherosclerotic heart disease” and the manifestation “angina pectoris.”






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.








Ambulatory Surgery


On ambulatory surgery cases, code the diagnosis for which the surgery was performed. If the postoperative diagnosis is different from the preoperative diagnosis, a code for the postoperative diagnosis should be assigned, since it is most definitive.



















Example: Ambulatory Surgery
Patient admitted to the hospital Ambulatory Surgery Center for exploratory surgery for a suspected malignant neoplasm in the pancreas. The patient was prepped and draped in the usual fashion. A tumor was identified and removed. Pathologic findings: Islet cell tumor.
Postoperative diagnosis: Islet cell tumor D13.7
Preoperative diagnosis: Observation for suspected malignant neoplasm ZØ3.89
Note: The postoperative diagnosis (islet cell tumor) is selected as the principal diagnosis.


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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.


Mar 24, 2017 | Posted by in NURSING | Comments Off on Coding Guidelines and Applications (HCPCS, ICD-10-PCS, and ICD-10-CM)
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