Importance of Correct Diagnosis Coding

ICD-10 coding guidelines indicate to use the diagnosis code that best describes the patient’s diagnosis, symptom, condition, or complaint. If the diagnosis is unknown, use a sign or symptom for outpatient services. Using unspecified codes when a more specific code is accurate, however may not support a more serious level of acuity. Below are two reasons why diagnosis reporting is so important.

  • Medical Necessity: 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.
  • Payment Based on Risk Adjustment: Risk Adjustment is a methodology of adjusting estimated or perceived risks as they relate to diagnosis codes of patients. Specific diagnoses must be documented in a face-to-face visit by the treating provider. Diagnosis must be documented each year, ongoing as each year is evaluated. In Risk Adjustment models, diagnosis codes carry a risk adjustment value. This is similar to the concept of RVU (Relative Value Units) assigned to CPT codes. The more severe or complex a diagnosis, the higher its value.

Impact of Correct Diagnosis Coding

Utilizing the correct Diagnosis Code will help convey the true seriousness of the conditions being addressed during the patient visit.

Code to the Highest Level of Specificity:

  • With fee-for-service coding, higher level Evaluation and Management (E/M) codes identify serious encounters, utilizing more medical decision making, and are reimbursed at a higher rate. All the more importance in reporting the diagnosis appropriately so that it captures the medical necessity.
  • With Risk Adjustment cases, E/M has much less value. Instead, specific diagnosis codes communicate the seriousness of medical decision making. Therefore coding to the highest level of specificity is important.

Choose the Right Partner:

Bill Dunbar and Associates can assist with thoughtful, strategic planning and thorough education and training throughout your organization with ICD-10 coding. The process and approach we recommend are imperative steps to help make your training and education of ICD-10 both successful and profitable. We offer on-site training that is specifically designed to educate your staff on all aspects of ICD-10. In addition, our online training tools are available 24/7 to accommodate the needs of your entire staff.

Contact BDA to get started.