Chapter 6: Coding and Billing Basics

CHAPTER 6 to justify the codes submitted to third-party payers for reimbursement. This applies not only to Medicare but to all other insurance carriers throughout the country. Coding and Billing Basics Therefore, documentation of the encounter with the patient is now not only important for good patient care, Teresa Thompson, BS, CPC, CMSCS, CCC but also for third-party reimbursement and utilization of healthcare dollars. DOCUMENTATION TABLE OF CONTENTS 1. Overview of Physician Coding and Billing General Principles of Documentation 2. Documentation 3. Diagnosis Coding The Golden Rules for documentation are, “If it is not 4. Procedure Coding documented, it did not happen and it is not billable. If 5. Evaluation and Management Codes it is illegible, it is not billable.” With those guidelines 6. Levels of Service Selection for Evaluation and Management Codes in mind, the general principles of documentation for 7. References patient care are as follows: • Chief complaint • Relevant history OVERVIEW OF PHYSICIAN CODING AND • Physical exam findings BILLING • Diagnostic tests and their medical necessity • Assessment/impression and/or diagnosis With the increase in oversight and the continuous • Plan/recommendation for care pressure to provide healthcare services in the most cost-efficient method, it’s necessary to thoroughly • Length of visit, if counseling and/or understand the current reimbursement system to coordination are provided maintain an active and financially healthy practice. • Date of service and the verifiable, legible Physician services are routinely submitted to third- identity of provider party payers in alphanumerical as well as numerical codes for appropriate compensation. Third-party insurers are reviewing documentation to justify payment of services, data and utilization. This This alpha numerical and numerical coding system does not mean that every encounter will be reviewed is a translation of the information documented in prior to payment. However, third-party insurance the medical record. The purpose of this translation is companies have the right to review chart notes prior appropriate compensation for the healthcare provider to payment if they choose. From a clinical aspect, as well as data collection for analysis by the healthcare the physician or other healthcare provider is looking systems for all patients and their diseases. With HIPAA, at documentation for appropriate information to documentation of the patient encounters is mandatory AAAAI Practice Management Resource Guide, 2014 edition 1 CHAPTER 6—Coding and Billing Basics continue care of the patient, as well as support for International Classification of Diseases (ICD), which reimbursement. was created by the World Health Organization (WHO) and modified by the U.S. Health and Human The physician is responsible for selecting the Services Department. The HCPCS system is used diagnosis and the procedure codes based on the for services, procedures, drugs and supplies. The documentation created for the encounter. The ICD-9-CM (International Classification of Diseases, diagnosis is the medical necessity for the procedure(s) 9th edition, Clinical Modification) codes are the or service(s) performed and needs to be as specific diagnosis codes used to provide medical necessity for as possible. A fee is set for each current procedural services and procedures. On October 1, 2015, a new terminology (CPT) code independent of what the system for diagnosis coding will be implemented: carriers are reimbursing. The fee may be based on ICD-10-CM. This system will expand the number of a percentage of Medicare, or it may be based on codes available from 14,000 to >60,000. The codes the cost of doing business for the practice. Many will be alphanumeric and require more detailed practices have an encounter form, “superbill” or route specificity to code each patient encounter accurately. slip to communicate between the physician and the billing/coding staff about the nature of the services DIAGNOSIS CODING provided to the patient and the medical justification (diagnosis codes) for the encounter. The U.S. Centers The ICD-9-CM codes have been available for use for Medicare and Medicaid Services (CMS) publish since 1977. However, only since 1989 have the ICD- a physician fee schedule each year that has relative 9-CM codes been required for physician professional value units (RVUs) assigned to each code. The services. In the spring of each year, diagnosis codes RVU is determined by the work, malpractice and are reviewed and new codes are created. At the same overhead expense for each code. The physician fee time, other diagnosis codes are revised to reflect the schedule also includes a conversion factor, which is a diseases and conditions physicians are treating. The dollar amount determined by the U.S. Congress and new, revised and deleted code changes are published the CMS. This conversion factor then is multiplied in the spring and are implemented for coding by the RVU for each code to determine the financial on Oct. 1 of each year. ICD-9 and ICD-10 coding value of each code according to Congress and the guidelines are similar. The system has been changed CMS. A practice may want to use a percentage of to allow more diagnosis codes for specific diseases, this conversion factor and the RVUs for each code to give more options for tracking morbidity and as published in the Federal Register to determine the mortality for the Center of Disease Control and to fee schedule for the practice. have continuity with the World Health Organization. There is more flexibility with ICD-10 since there are The coding systems currently in use for physician more codes to choose as the appropriate diagnosis. services are the Healthcare Common Procedure Since the coding guidelines are similar for ICD-9 Coding System (HCPCS), which was created by CM, emphasis will be placed on learning the new the American Medical Association (AMA), and the AAAAI Practice Management Resource Guide, 2014 edition 2 CHAPTER 6—Coding and Billing Basics ICD-10CM codes, which will become the standard Unique to the ICD-10CM coding system is the use coding system for use in physician practices. of the letter “X” as a placeholder when the diagnostic code needs to be expanded but there isn’t a number ICD-10-CM coding system is arranged in the same or letter appropriate to use to complete the code format as the ICD-9CM book with the book divided expansion for a specific place. For example, an initial into two sections: the index − an alphabetical list encounter for a scorpion sting would be coded as of terms and their corresponding code − and the T63.2X1. The “x” is required to enable the expansion tabular section − a sequential alphanumeric list of of the code to the seventh place to complete the code. codes divided into chapters based on body system or condition. The Alphabetical Index is arranged The Alphabetical Index section of the ICD-10CM with an index to Disease and Injuries, The Neoplasm books is arranged in the same manner as the ICD- Table, Table of Drugs and Chemicals and the Index 9 CM book, with the exception that it lacks a to External Causes and injuries. The Tabular list hypertension table. The alphabetical section also contains categories and subcategories of codes. The has a guide to indicate with a √ when the code will format for the codes is alphanumerical, with each need an additional digit to make for a complete code. code beginning with an alpha character and then The alphabetical section is considered the index having a mix of alpha and numerical characters for for the numerical section of the book and should each code. A valid code may range from three to be used as a person would use any other index, as seven characters. a beginning point to determine where to find the correct code. Behind the alphabetical section is the These diagnosis codes are divided into chapters, Neoplasm Table. The Neoplasm Table list contains sections, subsections and subcategories. The list diagnosis codes for malignant primary, malignant below gives you a look at the code breakdown: secondary, Ca in situ, benign, uncertain behavior, • First character of a three character category is a and unspecified behavior neoplasms. Some of these letter codes may require additional digits not shown in the • Second and third characters may be numbers or Index. Again, to code completely, the codes will need alpha characters to be selected from the Tabular section of the ICD- 10CM book to verify laterality as well as specificity • Fourth and fifth characters define subcategories for the code. The third index in the alphabetical and also may be either alpha or numerical section is the Table of Drugs and Chemicals and characters the last index is the Table of External Cause or • Sixth and seventh characters also may be either Accident Codes. Again, the appropriate manner for numerical or alphabetical. These characters are coding would be to use these sections as indexes and further divisions of the subcategories described determine the appropriate code from the tabular in the first through fifth position of the ICD- section of the book. 10CM codes. AAAAI Practice Management Resource Guide, 2014 edition 3 CHAPTER 6—Coding and Billing Basics The chapters in the tabular section are divided as follows: • Chapter 1 – Certain Infectious and Parasitic Diseases • Chapter 12 – Diseases of the Skin and Subcutaneous (A00-B99) Tissue (L00-L99) • Chapter 2 – Neoplasms (C00-D49) • Chapter 13 – Diseases of the Musculoskeletal System • Chapter

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