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June 18, 2020

Reducing Denials through Correct Coding

Medicare develops both National and Local Coverage Determinations (NCD and LCD) to set forth coverage parameters for a variety of diagnostic and therapeutic services. Implementation of coverage policy can occur through post-payment review or clinical editing. The latter requires providers to translate the medical record into a series of codes, then placed on a claim for payment.

As part of our responsibility as a Medicare Administrative Contractor (MAC), CGS Administrators continually monitors utilization patterns and claim adjudication in Kentucky and Ohio, the J15 jurisdiction. Our data and our appeals experience indicate that a substantial number of claim denials occurring as a result of clinical editing are due to incorrect coding. Extensive use of unspecified and non-specific codes and lack of coding to specificity among specific codes account for a substantial number of these denials. The impact of these denials is protean. Providers incur interruption in receipts and the administrative and time expense of filing an appeal, while MACs incur the expense of the evaluation and processing appeals. Correct coding of claims upon the first submission will avoid delays in processing of services.

Unspecified and non-specific codes

"Code also" codes

ICD-10-CM, the latest version of the coding set, represents a significant expansion of the number of diagnostic codes, allowing for more specificity in coding. Nevertheless, unspecified codes are still represented in this set. While necessary, they substantially contribute to claim denials for incorrect coding.

  • Unspecified codes are distinctly different from codes that contain the words "other" or "other specified" codes in their descriptor.
  • These codes are labeled "non-specific" codes and indicated as different from "unspecified codes" through color-coding in the ICD-10 book. 
  • Non-specific codes are used when the code series contains a list of specific sites or entities but does not list all the possibilities.
  • In the case where the record reflects a specific site or entity not on the list, a "non-specific" code should be used rather than an "unspecified" code.

ICD-10-CM, among other changes from ICD-9-CM, included the concept of laterality in the code set.

  • These codes series, exemplified by "left" and "right" in code descriptors such as "left foot" or "right foot," rarely if ever, merit the use of an unspecified code. Some sections of ICD-10-CM, particularly the M00-M99 series and the S00-T88 series of codes, musculoskeletal system disease and Injury, poisoning, and consequences of external causes, respectively, typically have extensive coding choices based upon anatomical considerations in addition to laterality.
  • The use of unspecified codes should be infrequent here as well.

These codes and code series typically require a second code to adequately describe the condition.

  • ICD-10-CM uses the phrase "code also" directly after the code descriptor to indicate the need for a second code.
  • Frequently, that second code is missing on claims that might otherwise be payable.

For example;

The code Z51.12 [Encounter for antineoplastic immunotherapy] requires a second code, since there are many conditions for which such therapy is medically necessary and many where it is not. A code labeled "code also" does not speak to position on the claim, only that additional code is needed.


Coding to Specificity

7th character

The ICD-10-CM character set contains codes of 3-7 digits.

  • Coding must be done as specifically as possible.
  • If the code is three digits and offers no additional digits, then three-digit coding is adequate.

Where such codes contain child codes (indented under the parent code), then the additional digit or digits are required if the code is to be considered valid.

Some of the code sets in ICD-10-CM require a 7th character. A red circle with the number "7" precedes the code and its descriptor. Where the code is less than six characters and requires a seventh, a capital "X" should be used as a placeholder. The seventh character can also contain special notations about the episode of care. For instance, codes in the series S00-T88, require seventh characters.

Those characters are:

  • 7th character "A, Initial encounter is used for each encounter where the patient is receiving active treatment for the condition
  • 7th character "D", subsequent encounter is used for encounters after the patient has completed active treatment of the condition and is receiving routine care for the condition during the healing or recovery phase.
  • 7th character "S", sequelae, is for use for complications or conditions that arise as a direct result of a condition, such as scar formation after a burn.

A frequent coding mistake is to consider a second or subsequent visit for a condition or problem where the patient is still receiving active treatment, to be a subsequent encounter and use the "D" as the seventh character.

The "A" seventh character should be used as long as the current episode of care generates encounters for active treatment and the "D" reserved for routine after care.


Examples of incorrect coding:

J2182 Mepolizumab and J45.909 Unspecified asthma, uncomplicated

  • According to the FDA label, Mepolizumab is indicated for one specific type of asthma. Use of the unspecified code for this therapy will result in a claim denial.

Heart Failure (ICD-10 code series I50)

  • Different types of heart failure (i.e. Systolic, diastolic, combined, etc.) are treated differently. For instance, heart failure is one of the criteria by which we determine whether an implantable defibrillator is reasonable and necessary. All patients with heart failure have diagnostic studies that are, in most cases, sufficient to classify their disorder. Coding to specificity and avoiding the use of unspecified codes can help to avoid claim denials.

7th Character coding

  • The proper code to report for a patient seen for the first time, for treatment of a second degree burn of the right forearm would be T22.211A. Additional visits two and three at weekly intervals to debride and/or dress the burn would be coded the same way. Although these are subsequent visits, the 7th digit remains "A" as this signifies active treatment for the condition. 7th character "D" would represent incorrect coding, since the visits are for active treatment. Should the patient develop a scar and require treatment for that, the same code would be used but with an "S" for the 7th character since this is a sequalae to the burn.

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