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Diagnosis Coding is Vital to Fair Compensation


Medical practices need to focus more attention on the specificity and completeness of their diagnosis coding in order to be compensated fairly.

In a fee-for-service environment, physician reimbursement is based on the fee associated with a CPT code. The diagnosis code establishes the medical necessity for the service, telling the payer what symptoms, conditions, or diseases necessitated the visit, diagnostic test, or procedure. Almost any diagnosis code (except some V and E codes in ICD-9) supports the medical necessity for an office visit or other E&M code, whereas the diagnosis codes that support a procedure or diagnostic test are typically limited and often specific. In either situation, using a current, valid diagnosis code gets the claim paid.

Physicians know that other healthcare entities are paid based on diagnosis coding, of course. Hospitals and Medicare Advantage plans have long queried physicians for specific diagnosis codes because they affected hospital reimbursement, but not physician reimbursement. And, medical practices in larger markets have entered into contracts that varied payments after a contract year based on diagnosis coding.

Two things have changed for medical groups. Medicare Accountable Care Organizations (also known as shared savings plans) are expanding and more commercial insurers are changing the terms of their contracts with medical groups. Medical groups are signing contracts that adjust payment for a contract year based on quality measures, outcomes, utilization, and the acuity of care for a patient population. The payer measures acuity of care by looking at the patient's age, gender, and diagnoses. And, where does the payer get the list of patient diagnoses? Claims.

Medical practices need to focus more attention on the specificity and completeness of their diagnosis coding. Although private payers may not share their list of codes that carry a risk adjustment, or the value of each adjustment, Medicare does share this for Medicare Advantage plans, and it is a good place for a practice to start. There are 3,000 ICD-9 codes that are assigned a risk-adjusted factor. These can be downloaded from the CMS website, along with the file for risk-adjusted ICD-10 codes.

But, there is no need to search through the list. There are a few principles that can guide medical practices. Pay special attention to the following:

1. Disease complications

If the patient has a complication of their disease, report it. For example, rather than report 250.00 if the patient has a diabetic complication such as neuropathy select the combination code. Add on a code for the manifestation - the neuropathy. Or, if the patient has ulcers related to varicose veins or other vascular disease select the specific code for that condition.

2. Hypertensive disease states

Review the coding for hypertensive heart and kidney disease in categories 402, 403, and 404.

If the patient has related hypertensive heart or kidney disease, do not report a code from category 401.

3. Depression

Don't only code 311 for depression. If the patient has a major depression, look at the codes in category 296.


Code 496 is an unspecified code for COPD. Look at codes in categories 491, 492, and 493.

5.  Body Mass Index

Add a code for body mass index below 19 or above 35.

6. Additional status codes

Add codes for the status of artificial openings into the body, for long-term insulin, or anti-coagulation, or HIV status.

Although physician time is limited, it is a good practice to annually review and update the patient's problem list, perhaps at the patient's preventive or wellness visit. For this face-to-face encounter, report the conditions that were assessed or evaluated. Document the monitoring of conditions followed by other physicians. And, report these codes on the claim for that visit.

There are many more conditions that are assigned a risk-adjusted factor. But, even without reviewing them, follow the simple premise to report diagnosis codes that accurately and completely describe the severity of the patient's condition.

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