Diagnosis Coding: Why It Is So Important

Claims are paid based on the CPT code submitted to the payer. The diagnosis code supports medical necessity and tells the payer why the service was performed.

Years ago, I worked with the surgeon who wanted to list all of the patient's underlying medical conditions on the claim form for the surgical service. He would say to me "Betsy, I want the insurance company to know just how sick this patient is." The thought-bubble over my head was "the insurance company doesn't care." But that was then and this is now. In fee-for-service medicine, physician services are paid based on the fee associated with the CPT or HCPCS code submitted on the claim form. The diagnosis code supports the medical necessity for the service and tells the payer why the service was performed. It can be the source of denial if it doesn't show the medical necessity for the service performed.

Code for population acuity

Medicare Advantage plans - but not the physicians who care for patients in Medicare Advantage plans - are already paid partially based on a risk-adjusted factor. CMS varies the payment per patient, per month based on the how sick the whole population of patients are. Many large medical groups have this same type of adjustment with private insurance companies. Accountable care organizations base part of their reimbursement on a determination of the acuity of their population of patients. That is, some insurance contracts pay a higher rate at the end of a contract year to practices or systems that care for sicker patients. An insurance company measures the acuity of a group of patients the by age/gender distribution and by diagnosis coding on claim forms. As our healthcare system transitions from fee-for-service medicine, more groups will have these types of adjustments made to their overall payments. For most of these contracts, the medical condition is considered for that patient if reported once in a year.

Code to highest level of specificity

Of course, medical groups must still comply with general diagnosis coding guidelines while doing this. The guidelines say to use the diagnosis code that describes the patient's diagnosis, symptom, condition, or complaint. If the diagnosis is not known, use a sign or symptom rather than "rule out" or "possible" for outpatient services. Code to the highest level of specificity. Using unspecified codes when a more specific code is accurate will get the current claim paid in most situations but may not support a more serious level of acuity in risk-based contracts.

Code for chronic conditions

The CMS and ICD-9 guidelines also say, "Code a chronic condition as often as applicable to the patient's treatment." If a patient is seen multiple times for the same condition, code the service on multiple visits. The last guideline, "Code all documented conditions which coexist at the time of the visit that require or affect patient care or treatment. (Do not code conditions which no longer exist)," requires additional explanation. First, if the patient no longer has the condition, do not put it on the claim form. It may be accurate to select a "history of" code. If the condition is mentioned in the past medical history but is not addressed at this visit, don't report it. If the condition is considered - even if that physician isn't treating it - do report it on the claim form.

In the opening example of the surgeon who performed a procedure on a patient with multiple underlying medical problems, the surgeon was planning a colorectal surgery on a patient with heart disease and hypertension. Prior to the surgery, the surgeon wanted the patient to see her cardiologist. The assessment lists the colorectal disease and notes the referral to the cardiologist. List the heart disease and hypertension on the claim form because the guidelines instruct us to "Code all documented conditions which coexist at the time of the visit that require or affect patient care or treatment."

Compliance and revenue in physician practices now focuses on procedural coding. When diagnosis coding affects revenue, expect scrutiny on the accuracy of diagnosis coding.

Betsy Nicoletti is the cofounder of Codapedia.com. She is the author of "A Field Guide to Physician Coding." She believes all physicians can improve their compliance and increase their revenue through better coding. She may be reached at betsy.nicoletti@gmail.com or 802 885 5641.