Procedure Coding (HCPCS and ICD-10-PCS)
The objective of this chapter is to provide an overview of coding procedures, services, and items provided during a hospital visit using HCPCS and ICD-10-PCS. Hospital coding and billing professionals are required to have an understanding of procedure coding systems. The ability to understand and apply coding principles and guidelines is essential to ensure that procedures, services, and items provided are described accurately and to make sure the hospital is in compliance with coding guidelines. 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 standards set under HIPAA, 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 Service (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 on 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 procedures, services, and items using HCPCS and the ICD-10-PCS coding system. A discussion of the history and purpose of procedure coding will highlight the importance of procedure coding in the health care industry. A brief review of how procedure coding relates to documentation, medical necessity, claim forms, reimbursement, and diagnosis coding will further demonstrate the importance of procedure coding. Variations in coding system utilization are outlined to illustrate appropriate code usage for outpatient, non-patient, and inpatient services. The content, format, and conventions of the Healthcare Common Procedure Coding System (HCPCS) and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) is reviewed to provide an overview of coding using these systems. The chapter will close with a discussion of the basic steps to coding using HCPCS and ICD-10-PCS codes.
The classification and coding of procedures, services, and items constitute a newer development than the coding of conditions, which began in the 17th century. Procedure coding systems were developed in the 1960s to provide a standardized system for providers to report procedures to third-party payers for reimbursement. The system also allows for collection of data to be used for statistical purposes. Historically, physicians and other providers submitted a written description of procedures and services rendered on the claim form to explain charges. Payers experienced difficulty in processing claims submitted with the written descriptions. Additionally, tracking, monitoring, and statistical analysis using the written descriptions was a very complex process. The need for a standardized system of reporting procedures and services was first addressed when the American Medical Association (AMA) developed the Current Procedural Terminology (CPT) coding system. Other procedure coding systems were later introduced such as HCPCS Medicare National Codes and the International Classifications of Diseases (ICD) Procedure Coding System, as illustrated in Figure 8-1.
Prior to 1983, more than 120 different coding systems were used in the United States. The billing process was extremely complex because of the variations in payers’ guidelines, claim forms, and coding systems. This complex system of billing was costly for payers and providers. Since the government became a major payer of health care services, efforts to control costs have led to various levels of standardization in the administration of health care claims.
Legislative intervention, the Health Insurance Portability and Accountability Act (HIPAA) of 1996, laid the foundation for the standardization of transactions. HIPAA regulations highlighted standard procedure code sets required for submission of claims to payers effective October 2003 as the Healthcare Common Procedure Coding System (HCPCS) for reporting services, procedures, and items and the International Classifications of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) for coding patient conditions and significant procedures. In accordance with HIPAA provisions, effective October 1, 2014, the standard code set for reporting hospital diagnoses and procedure will be Heath Care Common Procedure Coding System (HCPCS), National Drug Codes (NDC), and the International Classifications of Diseases, 10th Revision (ICD-10), as illustrated in Figure 8-2.
In 1983, the Health Care Financing Administration (HCFA), now known as the Centers for Medicare and Medicaid Services (CMS), adopted the HCFA Common Procedure Coding System (HCPCS) for use when submitting claims to Medicare carriers. Other payers such as Blue Cross/Blue Shield followed suit and adopted HCPCS for claim submission. In 1983, HCPCS consisted of three levels of codes: Level I CPT codes; Level II Medicare National Codes; and Level III Local Regional codes. In June 2001, the procedure coding system name was changed to the Healthcare Common Procedure Coding System (HCPCS). Healthcare Common Procedure Coding System (HCPCS) is the standard coding system adopted under HIPAA for use in coding services, procedures, and items. The HCPCS coding system consists of two levels of codes—Level I CPT and Level II Medicare National Codes.
The International Classification of Disease, 9th Revision, Clinical Modification (ICD-9-CM) Volume III procedure coding system has been the primary coding system for reporting significant procedures performed during a hospital inpatient stay since 1979. The International Classification of Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) is scheduled to replace ICD-9-CM Volume III procedure codes. The standard code set under HIPAA for coding procedures, services, and items effective October 1, 2014 will be HCPCS, NDC, and ICD-10-PCS.
The World Health Organization (WHO) published the newest version of the ICD with a new name, the International Classification of Diseases, 10th Revision (ICD-10), in 1993. ICD-10 has been implemented in many countries including the United Kingdom, France, Australia, Germany, and Canada. WHO granted permission to the National Center for Health Statistics (NCHS), an agency under the Centers for Disease Control and Prevention (CDC), to clinically modify the ICD-10 diagnosis coding system and to create a procedure coding system to replace ICD-9-CM Volume III. The ICD-10 consists of two coding systems, each presented in a separate manual.
• The International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) diagnosis coding system is the system scheduled to replace ICD-9-CM Volumes I-II for coding patient conditions (reasons for health services) in all health care settings. ICD-10-CM is the clinical modification of the World Health Organization’s ICD-10.
• The International Classification of Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) is the procedure coding system scheduled to replace ICD-9-CM Volume III in accordance with HIPAA provisions. The ICD-10-PCS was developed by 3M Health Information System under contract with CMS.
The system was designed to provide the level of detail required to assess and track the quality of medical processes and outcomes and compile statistics that are valuable tools for research. The development of ICD-10-PCS was performed with the goal of incorporating the following attributes:
Other principals followed in the development of ICD-10-PCS:
A significant difference between ICD-9-CM Volume III and ICD-10-PCS is the manual content and the code format. The indexes contained in both systems outline procedures alphabetically by main term and subterms. Codes are listed in the index to provide direction to the appropriate code section. The tabular list in ICD-9-CM Volume III is a numeric list of codes. ICD-10-PCS provides alphanumeric tables that are used to construct a valid code. A valid code in ICD-9-CM Volume III is 2 to 4 digits. A valid code in ICD-10-PCS is 7 alphanumeric characters. Table 8-1 illustrates some of the differences between ICD-9-CM Volume III and ICD-10-PCS.
|ICD-9-CM Volume III||Bypass, Coronary Artery-1 artery||ICD-10-PCS|
Separate manual divided into three sections:
|Bypass, Coronary Artery-1 artery|
|Alphabetic index—main terms bold||Bypass||Alphabetic index—main terms||Bypass|
|Tabular list—numeric listing of codes||36.1||Table|
Ø21 Medical and surgical section, Central Nervous System, Bypass
|Code structure and reporting||Code structure and reporting|
|Conventions||NEC, NOS, EXCLUDES||Conventions|
|Conventions and format||Main term, subterm||Conventions and format||Main term, subterm, and tables|
(Data from Centers for Medicare and Medicaid Services Web site, ICD-10 Development, www.cms.gov/ICD10/.)
Procedure coding systems are designed to provide a standardized system for describing and classifying data regarding services rendered. The use of coding classification systems provides an efficient method to collect, track, research, and analyze specified data. Coded health care data constitute the primary key to reimbursement and statistical analysis by hospitals, insurance companies, health care facilities, and other relevant organizations. Quality coding is necessary to ensure accurate and reliable data is gathered for budgeting, clinical research, credentialing, peer review, education, financial analysis, marketing, patient care, quality assurance, risk management statistics, strategic planning, utilization management, and other internal or external facility purposes. Procedure codes are used to communicate with various payers regarding procedures, services, or items provided during a hospital visit. Payers determine reimbursement using the procedures codes submitted.
Hospital coding professionals should master an understanding of coding guidelines and principals to ensure that an accurate description of procedure(s) is given, compliance with coding guidelines is achieved, and proper reimbursement is obtained.
The definition of coding is the assignment of numeric or alphanumeric codes to all health care data elements of outpatient and inpatient care. Procedure coding is the process of translating written descriptions of procedures, services, and items documented in the patient’s medical record into numeric or alphanumeric codes. Procedure coding is an essential component of the billing process (Figure 8-3). The description of procedures, services, and items provided during a hospital visit is communicated to payers using procedure coding systems. The process begins when the patient presents at the hospital with a health care issue that requires attention, or for a service that involves health care status. The physician or other provider reviews the history, performs an examination, and prepares a plan of care. Patient care services are rendered in accordance with physician’s orders and the plan of care. Written descriptions of health care services, procedures, and items are documented in the patient’s medical record. Charges are posted by various departments through the Charge Description Master (CDM), also called the chargemaster. All procedures, services, and items listed in the chargemaster are associated with a code from the appropriate procedure coding system (Figure 8-4). Heath Information Management (HIM) personnel are responsible for coding patient conditions and significant procedures documented in the patient medical record that are not posted through the chargemaster.
Procedure coding systems allow for the collection of data regarding procedures and services performed and the various items used to diagnose and treat patient conditions. The data gathered through the use of these coding systems can be monitored, tracked, and retrieved for various purposes such as research, education, and administration, as illustrated in Figure 8-5.
Data from procedure coding systems are used to research various patterns in the diagnosis and treatment of conditions. Researchers can monitor treatments provided for specific conditions to determine those that result in the best patient outcomes. Research data are also used to identify ways to improve or invent new procedures and technology. Through monitoring of these data, researchers can identify various risk factors related to specific procedures, services, or items.
Data from procedure coding systems can be used to educate health care professionals and the public. The education of health care professionals can be enhanced through knowledge gained by analyzing data from these coding systems. New treatments, supplies, and medications can be monitored for the assessment of positive outcomes that show a decrease in mortality and morbidity. Educating the public on topics such as disease prevention is also enhanced through the use of procedure code data.
There are various administrative uses of data collected from procedure coding systems. Data can be used to evaluate, assess, monitor, and pay for health care services. Many payers use data collected through these systems to develop and implement policies and procedures related to the quality and utilization of health care services. Procedure coding data are also used by payers to develop reimbursement systems. Providers analyze procedure code data to assess and negotiate payer contracts. To code effectively, it is important to understand the relationship of procedure coding to documentation, medical necessity, claim forms, and reimbursement.
Procedure coding relates to all aspects of the billing process. The process of procedure coding is dependent on information documented in the medical record. Charges for services are described on the claim form using procedure codes. Payers conduct medical necessity reviews and payment determination based on the procedure and diagnosis codes submitted. In essence, procedure coding is the key to obtaining reimbursement for services rendered. It is important for hospital coding and billing professionals to understand how procedure coding relates to documentation, medical necessity, claim forms, and reimbursement, as illustrated in Figure 8-6.
Documentation is the term used to describe information recorded in the medical record regarding patient conditions, procedures, services, supplies, equipment, and medications provided as part of the patient’s care. The patient’s medical record is the foundation for coding. When coding procedures, services, and items it is necessary to read the record to identify the service or item that must be coded for billing purposes. A code from HCPCS or ICD-10-PCS is assigned to accurately describe the service or item documented in the medical record. Figure 8-7 illustrates an example showing the assignment of HCPCS Level I and ICD-10-PCS procedure codes to describe a coronary bypass procedure performed during the hospital inpatient stay.
The challenge for coders is to be absolutely certain the code assignment represents what is in the record. Remember, the golden rule in coding is “IF IT IS NOT DOCUMENTED, DO NOT CODE IT.” It is important that the coder does not read into the scenario and code a condition that is not supported by the documentation. If the record lacks specific information required to select a code, the coder should pursue more specific information from the physician or other provider. Most hospitals have a physician query process for coders to clarify information. Coders should always follow good coding habits such as WHEN IN DOUBT, QUERY THE PHYSICIAN.
Medical necessity is the term used to describe procedures and services that are considered reasonable and medically necessary to address the patient’s condition based on standards of medical care. Medical necessity is determined by payers based on a review of procedure and diagnosis codes submitted. The diagnosis code must describe a medical reason for the service that meets medical necessity criteria. Medical necessity guidelines are generally determined based on standards of medical care; however, they do vary by payer.
Medicare publishes National Coverage Determinations (NCD) that set forth the extent to which Medicare will cover specific services, procedures, or technologies on a national basis. Local Medical Review Policies (LMRP) are published by Medicare Administrative Contractors (MAC) to provide information regarding diagnosis codes that support medical necessity along with other statutory provisions. A final rule was published indicating Local Coverage Determinations (LCD) would replace Local Medical Review Policies (LMRP) effective 2005. Local Coverage Determinations (LCD) are published by Medicare Administrative Contractors (MAC) to provide information regarding medical necessity criteria. The difference between the LCD and the LMRP is that Local Coverage Determinations (LCD) does not contain information regarding statutory provisions.
It is critical for coders to review LCD policies to understand medical necessity requirements for services, procedures, and items. Payers will not provide reimbursement for services that are not medically necessary. It is also critical for coders to understand coding and payer specific guidelines. Figure 8-8 illustrates the Local Coverage Determination (LCD) for mammography. NCD policies can be found on the CMS Web site at www.cms.gov/medicare-coverage-database.
Claim forms are used to submit charges for services rendered to payers for reimbursement. The CMS-1450 (UB-04) is the claim form primarily used to submit hospital services. There may be a situation where a payer requires the CMS-1500 for specified services. Codes that describe services and diagnoses are listed on the claim form. Procedures, services, and items are reported on the claim form using the HCPCS and/or ICD-10-PCS procedure coding systems.
The fields used to record diagnosis and procedure codes on the CMS-1450 (UB-04) are highlighted in Figure 8-9. Procedure codes are reported on the claim form in FL 44 and FL 74a-e. Diagnosis codes that describe the medical reason for services are reported in FL 67A-Q, 69, 70, and 72. HCPCS Level I and II codes are reported in FL 44 in accordance with payer guidelines. ICD-10-PCS codes are recorded in FL 74a-e to describe significant procedures performed during an inpatient stay.
Medicare and other third-party payers will provide reimbursement for medical services that are covered in accordance with the patient’s health care plan or policy; however, they must be medically necessary. For example, a payer will not pay for a lung biopsy if the diagnosis codes do not represent a medical condition that would indicate the need for a biopsy, such as a lung mass and family history of lung cancer.
Procedure coding systems are used to communicate with payers regarding services, procedures, and items provided for the purpose of obtaining reimbursement. As discussed in previous chapters, the ICD-9-CM diagnosis coding system is currently used to report the medical reason why services, procedures, and items are provided. The ICD-10-CM diagnosis coding system will replace ICD-9-CM effective October 1, 2014. The chapters also highlighted coding system variations based on service category, which illustrates diagnosis coding systems used for all service categories as illustrated in Table 8-2. Unlike diagnosis code usage, procedure code utilization varies by service category. Service categories include outpatient, non-patient, and inpatient. The following section presents procedure coding system variations using HCPCS and ICD-10-PCS based on services provided on an outpatient, non-patient, or inpatient basis.
|CLAIM FORM REPORTING AND CODING SYSTEM VARIATIONS|
|Hospital Service Categories|
ICD-9-CM Volume III
|Level II Medicare National||Effective 10/1/14|
|OUTPATIENT—Outpatient services are provided and patient is discharged within 24 hours.|
|Ambulatory Surgery||FL 67A-Q, 70, 72||FL 44||FL 44||∗ Varies by payer|
Used to report significant procedures on the CMS-1450 (UB-04) in FL 74a-e.
|FL 67A-Q, 70, 72||FL 44||FL 44|
Radiology, Laboratory, Physical Therapy
|FL 67A-Q, 70, 72||FL 44||FL 44|
|Other Outpatient Services|
Infusion Therapy and Observation
|FL 67A-Q, 70, 72||FL 44||FL 44|
|Durable Medical Equipment Provided on an outpatient or inpatient basis||FL 67A-Q, 70, 72||FL 44||FL 44||Required on inpatient claims.|
|Hospital Based Primary Care Office or Hospital-Based Clinic||FL 67A-Q, 70, 72||FL 44||FL 44|
|NON-PATIENT—Specimen is received and processed; the patient is not present.|
|Non-patient services: Pathology, Laboratory||FL 67A-Q, 70, 72||FL 44||FL 44|
|INPATIENT—The patient is admitted with the expectation that he or she will be in the hospital for more than 24 hours.|
|Inpatient services||FL, 67A-Q, 69, 72||FL 44||FL 44||FL 74 a-e|
Outpatient services are procedures or services performed and the patient is released from the hospital within 24 hours. Outpatient services include ambulatory surgery and ancillary department services such as radiology, emergency room, and observation. HCPCS Level I and/or HCPCS II codes are used for reporting procedures, services, and items provided on an outpatient basis. Some payers may require ICD-10-PCS procedure codes in addition to HCPCS codes on ambulatory surgery claims. Most hospital outpatient services are reported on CMS-1450 (UB-04) including ambulatory surgery. Professional services provided by a physician in a hospital-based primary care clinic or other clinic are reported by the hospital if the physician is employed by or under contract with the hospital.
Outpatient procedures, services, or items are recorded in the patient’s medical record. Charges are posted through the chargemaster by the departments involved in the patient’s care. The Health Information Management Department (HIM) receives the medical record after the patient is discharged. HIM personnel assign codes for patient diagnoses and procedures that are not posted through the chargemaster. The procedure and diagnosis codes are used for the appropriate Ambulatory Payment Classification (APC) assignment. It is important to remember hospital services that are considered outpatient services, which include emergency room, observation, ambulatory surgery, and a hospital-based primary care clinic visit. The reporting of diagnosis and procedure codes for an ambulatory surgery case on CMS-1450 (UB-04) is illustrated in Figure 8-10.
Non-patient services are those involving tests or procedures performed on a specimen when the patient is not present. Laboratory testing on a specimen sent to the hospital from the physician’s office is an example of a non-patient service. Department personnel post non-patient services through the chargemaster. Non-patient services are coded using HCPCS Level I and Level II codes (Table 8-2). Most hospital non-patient services are submitted on the CMS-1450 (UB-04).
Inpatient services are provided to patients who are admitted to the hospital for more than 24 hours. The patient is assigned a room/bed required for overnight accommodations. Procedures, services, and items provided during the inpatient stay are recorded in the patient’s medical record. Inpatient services are reported on the CMS-1450 (UB-04) using HCPCS and ICD-10-PCS procedure codes. Claims for inpatient cases require ICD-10-PCS codes for significant and other procedures and they are recorded in form locator (FL) 74a-e. It is important to note that when a patient is admitted from the emergency room or observation, all services are reported on the inpatient claim.
A significant procedure is one that is (1) surgical in nature, or (2) carries a procedural risk, or (3) carries an anesthetic risk, or (4) requires specialized training. This definition is stated in the Uniform Hospital Discharge Data Set (UHDDS), as published in the Federal Register in 1985.
Other significant procedures performed during the stay are recorded in FL 74a-e as illustrated in Figure 8-11. It is important to remember that payers will compare the principal and other procedures codes with the principal and other diagnosis codes to determine medical necessity.
Charges for services provided on an inpatient basis are posted through the chargemaster by the departments involved in the patient’s care. Each service and item listed in the chargemaster is associated with an HCPCS code. The inpatient claim is a summary claim that categorizes all charges in revenue code categories, and therefore HCPCS codes may not be required on the claim form in accordance with payer specifications. A revenue code is a four-digit numeric code developed and maintained by the National Uniform Billing Committee (NUBC) to categorize like services and items. Revenue codes are reported on the CMS-1450 (UB-04) claim form.
After the patient is discharged, the medical record is forwarded to HIM for coding of patient conditions and procedures not posted through the chargemaster. The principal diagnosis and procedure codes are used to determine the Medicare Severity-Diagnosis Related Groups (MS-DRG) assignment. Figure 8-12 illustrates an example of coding an inpatient case for reporting on the CMS-1450 (UB-04).
It is important for hospital billing and coding personnel to have an understanding of the coding process in a hospital and how coding relates to documentation, medical necessity, claim forms, and reimbursement. It is also important to understand coding system variations to ensure services are coded and reported in accordance with guidelines. This section will provide a review of the content, format, and conventions of the procedure coding systems, which is essential to understanding the basic steps to coding.
A brief review of HCPCS Level I CPT and Level II Medicare National Codes is provided since it is the coding system used for all physician and outpatient services. It is important to remember, the intent of this text is to transition that knowledge into the hospital environment. The review of the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) will be more in-depth because it is the new coding system that will be used to describe significant procedures performed during a hospital impatient stay.