Institute on Medicare and Medicaid Payment Issues March 28 30, 2012 Robert A. Pelaia, JD, CPC

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1 I. Introduction Institute on Medicare and Medicaid Payment Issues March 28 30, 2012 Robert A. Pelaia, JD, CPC Senior University Counsel for Health Affairs - Jacksonville robert.pelaia@jax.ufl.edu Introduction to Medical Coding for Payment Lawyers A. Coding is the process of using codes to represent clinical information. Codes can be used to describe both (i) diagnostic information (i.e., information relating to a patient s clinical condition or diagnosis) and (ii) services and supplies provided to a patient. B. Two primary coding systems currently are used in the United States for billing purposes. 1. ICD-9-CM-International Classification of Diseases, 9 th Revision, Clinical Modification Diagnosis Coding 2. CPT Current Procedural Terminology, Fourth Edition Procedural Coding II. ICD-9-CM-International Classification of Diseases, 9 th Revision, Clinical Modification A. Organization of ICD-9-CM - Diagnosis Coding 1. ICD-9-CM is organized into three volumes. a. Volume 2 Alphabetic Index to Diseases (i) Volume 2 is presented first and provides an alphabetic index to the Tabular List of Diseases in Volume 1. This logical placement of the Alphabetic Index allows you to locate terms quickly for verification in the Tabular List. The alphabetic index includes: (a) (b) Section 1 Index to Diseases (Includes Hypertension Table & Neoplasm Table) Section 2 Alphabetic Index to Poisoning and External Causes of Adverse Effects of Drugs and Other Chemical substances Table of Drugs and Chemicals

2 (c) Section 3 Index to External Causes b. Volume 1 Tabular List of Diseases (In back of ICD-9 book, behind Volume 2) (i) (ii) Volume 1 lists the ICD-9-CM codes in numeric order. The main classification of diseases and injuries in Volume 1 consists of 17 chapters. About half of the chapters represent conditions that affect a specific body system and the other classify conditions by etiology (the cause or origin of a disease). Two supplementary classifications included in Volume 1 are V codes and E codes. V codes are used to code those conditions not included in the main classification that are still considered diagnoses. E codes are used as additional codes to illustrate the external situations responsible for injuries and other conditions. The tabular list has the following seventeen chapters. 1. Infectious and Parasitic Disease ( ) 2. Neoplasms ( ) 3. Endocrine, Nutritional and Metabolic Diseases and Immunity Disorders ( ) 4. Diseases of the Blood and Blood-Forming Organs ( ) 5. Mental Disorders ( ) 6. Nervous System and Sense Organs ( ) 7. Diseases of the Circulatory System ( ) 8. Diseases of the Respiratory System ( ) 9. Diseases of the Digestive System ( ) 10. Diseases of the Genitourinary System ( ) 11. Complications of Pregnancy, Childbirth, and the Puerperium ( ) 12. Diseases of the Skin and Subcutaneous Tissue ( ) 13. Diseases of the Musculoskeletal System and Connective Tissue ( ) 14. Congenital Anomalies ( ) 15. Certain Conditions Originating in the Perinatal Period ( ) 16. Symptoms, Signs and Ill-Defined Conditions ( ) 17. Injury and Poisoning ( ) Page 2 of 11

3 B. Two supplementary classifications included in Volume 1 are V codes and E codes. 1. V Codes a) Supplementary Classification of Factors Influencing Health Status and Contact with Health Services (non-sick health maintenance codes). b) V01-V89 c) V codes are used to code those conditions not included in the main classification that are still considered diagnoses 2. E Codes a) Supplementary Classification of External Causes of Injury and Poisoning. b) E800-E999 c) E codes are used as additional codes to illustrate the external situations responsible for injuries and other conditions. C. Anatomy of an ICD-9-CM Code 1. All codes have at least three digits. The three digit codes are referred to as the category codes. 2. Subcategories Most (but not all) of the Volume 1 category codes have either one or two levels of subcategories. The first subcategory is indicated by the addition of a decimal point and a fourth digit after the category code. The second subcategory level is indicated by the addition of a fifth digit. 3. Main terms are set flush with the left-hand margin. They are printed in bold type and begin with a capital letter. 4. Subterms are indented one standard indention to the right under the main term. They are printed in regular type and begin with a lowercase letter. 5. More specific subterms are indented farther and farther to the right as needed, always indented by one standard indention from the preceding sub term and listed in alphabetical order. Page 3 of 11

4 D. Assigning ICD-9-CM Diagnostic Codes 1. Basic Guidelines Using the ICD-9-CM coding system requires training and experience; however, the general process for assigning ICD-9-CM codes is as follows: a. Review the clinical documentation and identify the term or terms that best describe the patient s diagnosis, disease, condition, or symptoms. b. Look up the term or terms that best describe the patient s diagnosis, disease, condition, or symptoms in Volume 2 (the alphabetic index) and identify the code that appears to apply. c. Look up the selected code in Volume 1 (the tabular list) to make the definitive code selection. Pay careful attention to any exclusion notes or other instructions in Volume Multiple Codes and Sequencing Issues E. Mini ICD-9-CM Quiz a. In many cases, proper diagnosis coding will require that more than one ICD-9-CM be used to describe the patient s diagnosis, disease, condition, or symptoms. Although beyond the scope of this outline, it is important to realize that when multiple codes are used, special rules must be followed to properly sequence the codes (i.e., report them in the correct order). 1. Chronic obstructive bronchitis 2. Childhood asthma with acute exacerbation 3. Dermatitis due to cat hair III. ICD-10-CM-International Classification of Diseases, 10 th Revision, Clinical Modification A. ICD-9-CM is slated to be replaced with ICD-10-CM. B. ICD-10 Implementation 1. ICD-9 was implemented in 1979 and is becoming outdated 2. No longer meets the advances in medicine and technology 3. Running out of code expansion capability Page 4 of 11

5 4. ICD-10-CM is the tenth revision of the International Classification of Diseases. C. Why Make Changes? 1. Modernize Technology 2. Increased information for public health 3. ICD-10 code changes impact virtually every system and business process in plan and provider organizations with significant impacts on billing and reimbursement D. Final Rule Published January 16, October 1, 2013 Compliance date for implementation of ICD-10-CM. ICD- 9-CM codes will not be accepted for services provided on or after October 1, NO MORE DELAYS 3. No impact on CPT codes. E. ICD-10 Structure 1. 69,099 diagnosis codes characters 3. Character 1 is alpha (all letters except U are used) 4. Character 2 is numeric 5. Characters 3-7 are alpha or numeric 6. Use of decimal after 3 characters 7. Use of dummy placeholder x 8. Alpha characters are not case-sensitive F. ICD-10 Examples Pressure Ulcers 1. ICD-9-CM = 9 Pressure Ulcer Codes 2. ICD-10-CM = 125 Pressure Ulcer Codes Page 5 of 11

6 G. ICD-10 Examples Laterality 1. C Malignant neoplasm of lower-outer quadrant of right female breast 2. C Malignant neoplasm of lower-outer quadrant of left female breast 3. C Malignant neoplasm of lower-outer quadrant of unspecified female breast H. ICD-10 Examples - Eyes and Ohs! Ones and Zeros! Uh-Oh! 1. I Codes Diseases of Circulatory System I Cerebral infarction due to thrombosis of right vertebral artery 2. O Codes Pregnancy/Childbirth O Pre-existing diabetes mellitus, type 1, in pregnancy, third trimester I. ICD-10-CM: Similarities to ICD-9-CM 1. Tabular List is a chronological list of codes divided into chapters based on body system or condition 2. Tabular List is presented in code number order 3. Same hierarchical structure 4. Codes are looked up the same way i. Look up diagnostic terms in Alphabetic Index ii. Then verify code number in Tabular List J. Mini ICD-10-CM Quiz 1. Chronic obstructive bronchitis 2. Childhood asthma with acute exacerbation 3. Dermatitis due to cat hair IV. CPT Current Procedural Terminology, Fourth Edition A. Background CPT was developed by the American Medical Association and first published in The current version, CPT 2008, is sometimes referred to as CPT-4 because it is the fourth edition of CPT (the annual updates are not considered new editions). Page 6 of 11

7 B. CPT Codes are updated through a deliberative process of adding, deleting, and revising codes. CPT codes are updated and revised by the AMA s CPT Editorial Panel, on an annual basis. According to the AMA, "The Panel is comprised of 16 members, 11 nominated by the AMA and one each from the Blue Cross and Blue Shield Association, the Health Insurance Association of America, HCFA, the American Hospital Association, and the co-chair of the Health Care Professionals Advisory Committee (HCPAC). C. Application of CPT CPT is used primarily for reporting physician services (i.e., professional services ) and technical component services provided in conjunction with professional services. D. Organization of CPT 1. Overall Organization CPT is divided into six main sections, followed by thirteen appendices and an alphabetic index. 2. Sections and Subsections The CPT codes are listed in numeric order within sections and subsections. a. Evaluation and Management ( ) CMS has published Documentation Guidelines for Evaluation and Management Services (the first section of CPT). There are currently two versions of the Documentation Guidelines, a 1995 version and a 1997 version. Medicare permits physicians to use whichever version of Documentation Guidelines are most favorable to the physician. b. Anesthesia ( ) c. Surgery ( ) d. Radiology ( ) e. Pathology and Laboratory ( ) f. Medicine ( ) 3. Each of the main sections is further divided into subsections. For example, the surgery section is generally divided into one subsection for each major body system. 4. Section guidelines appear at the beginning of each of the six CPT sections. In addition, subsection guidelines appear at the beginning of most of the subsections. In general, the section and subsection guidelines provide definitions and the information necessary to properly select CPT codes from the applicable section/subsection. Page 7 of 11

8 5. Appendix A Modifiers 6. Appendix B Summary of Additions, Deletions and Revisions 7. Appendix C Clinical Examples 8. Appendix D Summary of CPT Add-on Codes 9. Appendix E Summary of CPT Codes Exempt from Modifier Appendix F Summary of CPT Codes Exempt from Modifier Appendix G Summary of CPT Codes That Include Moderate (Conscious) Sedation 12. Appendix H Alphabetic Index of Performance Measures by Clinical Condition or Topic 13. Appendix I Genetic Testing Code Modifiers 14. Appendix J Electrodiagnostic Medicine Listing of Sensory, Motor and Mixed Nerves 15. Appendix K Product Pending FDA Approval 16. Appendix L Vascular Families 17. Appendix M Crosswalk to Deleted Codes 18. Alphabetical Index E. Anatomy of a CPT Code 1. CPT Codes a. CPT codes are five digit numeric codes. 2. Modifiers a. Modifiers are used to provide additional information about the service performed (or the circumstances under which the service was performed) that goes beyond the CPT code description. b. Modifiers are two digit numeric codes preceded by a hyphen (e.g., -51 Reduced Services) that are appended to the CPT code. c. Examples of circumstances in which a modifier might be used include: Page 8 of 11

9 (i) (ii) (iii) -23 to indicate unusual circumstances (e.g., to indicate that general anesthesia was necessary even though the particular procedure performed is typically performed without anesthesia or with local anesthesia); -26 to indicate that only the professional component of a procedure was performed even though the procedure typically includes both a professional and a technical component; or -52 to indicate that the complete service as contemplated by the CPT code description was not provided (e.g., the physician discontinued a procedure that had already begun based on a change in the patient s condition). F Selecting an E&M Code 1. Determine the name level of the History component. 2. Convert this name level of history into a number level for the specific category of service that you have determined applies to your E/M service. a. Suppose, for example, that you determine enough documentation is present to support a Detailed level history. However, this name level of history needs to be converted into a number level for the particular E/M category you are billing from. If you are billing the E/M service from the NEW Patient Office Visit subcategory, there are five number levels within this category (99201, 99202, 99203, 99204, and 99205). A Detailed history is listed as a component of the Level 3 code within this category (99213), so for this E/M category of service, the Detailed name level of history translates into a Level 3 history. b. Different categories of service may result in a different number level. For instance, a Detailed name level of history translates to a (number) Level 4 history when looking at the ESTABLISHED Patient Office Visit range of codes. For inpatient admission E/Ms billed from the Initial Hospital Care category, only three number levels are present (99221, 99222, and 99223), and a Detailed history is associated with the Level 1 code within that category, meaning a Detailed history is a Level 1 history for an inpatient admission E/M code. c. In cases where a name level is associated with TWO number levels, credit the higher number level. For example, in the NEW Patient Office Visit subcategory, a Comprehensive level of history is associated with both the Level 4 and Level 5 codes Page 9 of 11

10 within that category, so the Comprehensive history would be converted to a (number) Level 5 history in this category. 3. Determine the name level of the Exam component. 4. Convert the name level of the Exam into a number level using the same method as was used for the History component. 5. Determine the name level of the Medical Decision-Making component. 6. Convert the name level of Medical Decision-Making into a number level using the same method as the previous two components. 7. With a number level in hand for each of the three key components, determine whether you must now apply the 3/3 rule or 2/3 rule to arrive at the final level. a. This can be determined by reviewing the language within any of the code descriptions within a certain E/M category of service. For instance, in the beginning of each of the five code descriptions for NEW Patient Office Visits, the language reads which requires these 3 key components. When this language is present, the 3/3 rule applies. b. For the ESTABLISHED Patient Office Visit subcategory, note that the language in each code descriptor (other than for 99211, a minimal nurse E/M service) reads which requires at least 2 of these 3 key components. 8. Apply the 3/3 rule or 2/3 rule, whichever was determined to apply to the category in question. a. 3/3: When using the 3/3 rule, the LOWEST of the three individual component levels IS the final visit level. b. 2/3: When using the 2/3 rule, the NEXT-TO-LOWEST component level IS the final visit level. G. Mini E&M Coding Quiz 4. New Patient Visit (3/3 rule) Level 3 History (detailed) Level 3 Exam (detailed) Level 2 MDM (straightforward) Page 10 of 11

11 5. New Patient Visit (3/3 rule) Level 5 History (comprehensive) Level 4 Exam (comprehensive) Level 3 MDM (low complexity) 6. Established Patient Visit (2/3 rule) Level 4 History (detailed) Level 3 Exam (expanded problem focused) Level 2 MDM (straightforward) 7. Established Patient Visit (2/3 rule) Level 2 History (problem-focused) Level 2 Exam (problem-focused) Level 3 MDM (low complexity) H. Assigning CPT Codes 1. As with the ICD-9-CM coding system, using CPT properly requires training and experience. 2. The general process for assigning a CPT code is as follows: I. Mini CPT Quiz a. Review the clinical documentation and identify the term or terms that best describe the service provided. b. Look up the term or terms that best describe the service provided in the CPT index to identify the code that appear to apply. c. Look up the selected code in the main body of CPT to make definitive code selection. Pay careful attention to the applicable section and subsection guidelines and to any other notes contained in the manual. Also, pay careful attention to the use of indentations and semicolons. In some cases, a related code is indented and printed below another code. Only the portion of the description of the first code up to the semicolon (referred to as the common portion ) should be treated as a part of the indented code. d. Determine whether any modifiers are required and, if so, select the appropriate modifiers from Appendix A of CPT. 1. Soft Tissue Shoulder Biopsy 2. Removal of Foreign Biopsy, External Eye; Conjunctival Superficial 3. Electrolyte Panel - Pathology Page 11 of 11