1. Chapter 10
Coding for Medical Necessity

2. Applying Coding Guidelines
Coding may not be a problem when reviewing short diagnosis, procedure, and service statements
When working with case scenarios, sample reports, or patient records, the diagnosis, procedure, or service to code is based on provider documentation

3. Applying Coding Guidelines (continued)
Code only diagnoses, procedures, and services documented in the patient record as having been treated or medically managed
Medically managed means that even though a diagnosis might not receive direct treatment during an encounter, the provider has to consider that diagnosis when determining treatment for other conditions

4. Applying Coding Guidelines (continued)
Questions to consider before assigning codes to a diagnosis include:
Does the diagnosis or condition support a procedure or service provided during this encounter?
Did the provider prescribe a new medication or change a prescription for a new or existing diagnosis or condition?
Are positive diagnostic test results documented in the patient record to support a diagnosis or condition?
Did the provider have to consider the impact of treatment for chronic conditions when treating a newly diagnosed condition?

5. Applying Coding Guidelines (continued)
Up to 12 ICD-10-CM codes can be reported on a CMS-1500 claim
When completing a claim, match appropriate diagnosis code(s) with reported procedure or service codes
Providers often document past conditions that are not active problems, and such conditions are not reported on a claim

6. Applying Coding Guidelines (continued)
Report ICD-10-CM codes on the claim:
Beginning with first-listed diagnosis
Followed by secondary diagnoses (e.g., coexisting conditions) treated or medically managed
Link CPT or HCPCS level II code for each procedure or service with diagnosis that proves medical necessity for performing procedure or service

7. Applying Coding Guidelines (continued)
Remember!
One or more diagnosis code(s) are linked with each procedure or service code reported on the CMS claim
Up to 12 ICD-10-CM codes are entered next to letters A-L in Block 21 of the CMS-1500 claim
Appropriate diagnosis pointer(s) (letters) from Block 21 are reported in Block 24E to justify medical necessity of procedure or service code reported in Block 24D

8. Coding and Billing Considerations
Incorporate the following as part of practice management:
Completion of Advance Beneficiary Notice (ABN) when appropriate
Implementation of auditing process
Review of LCDs and NCDs
Complete and timely patient record documentation
Use of OCE software for outpatient hospital claims

9. Patient Record Documentation
Must justify and support medical necessity of procedures and services reported to payers
Documentation should be generated at the time of service or shortly thereafter

10. Patient Record Documentation (continued)
Delayed entries within a reasonable time frame (24 to 48 hours) are acceptable for the following purposes:
Clarification
Correction of errors
Addition of information not initially available
When certain unusual circumstances prevent documentation at the time of service

11. Patient Record Documentation (continued)
Delayed entries to authenticate services or substantiate medical necessity for purpose of reimbursement are prohibited
Patient record cannot be altered; doing so is considered tampering with documentation

12. Patient Record Documentation (continued)
Errors must be legibly corrected so a reviewer can determine origin of corrections
Use of correction fluid (e.g., Wite-Out™) is prohibited
Corrections or additions must be dated, timed, and legibly signed or initialed

13. Patient Record Documentation (continued)
Patient record entries must be legible
Entries are to be dated, timed, and authenticated by the author

14. Auditing Process
Routinely audit patient records and CMS-1500 or UB-04 claims to assess:
Coding accuracy
Documentation completeness
Review encounter forms to ensure accuracy of ICD-10-CM, CPT, and HCPCS level II codes

15. Medical Coverage Database
Used by MACs, providers, and other professionals to:
Determine whether a procedure or service is reasonable and necessary for diagnosis or treatment of an illness or injury

16. Medicare Coverage Database (continued)
National coverage determinations (NCDs)
Local coverage determinations (LCDs)
National coverage analyses (NCAs)
Coding analyses for labs (CALs)
Medicare Evidence Development & Coverage Advisory Committee (MedCAC) proceedings
Medicare coverage guidance documents

17. Medical Coverage Database (continued)
NCDs and LCDs:
Link diagnosis codes with procedures or services that are considered reasonable and necessary for diagnosis or treatment of illness or injury
Specify under what clinical circumstances a service is covered (including under what clinical circumstances it is considered to be reasonable and necessary) and coded correctly

18. Outpatient Code Editor
Abbreviated as (OCE)
Software used to edit outpatient claims
Reviews submissions for coding validity and coverage
Edits result in one of the following dispositions:
Rejection
Denial
Return to provider (RTP)
Suspension

19. Coding from Case Scenarios
STEP 1 – Read entire case scenario to:
Obtain overview of problems presented
Obtain overview of procedures and services performed
Research any word or abbreviation not understood
STEP 2 – Reread problem and highlight:
Diagnoses, symptoms, or health status that supports, justifies, and/or proves medical necessity of any procedure or service performed

20. Coding from Case Scenarios (continued)
STEP 3 – Assign codes to documented:
Diagnoses, health status, signs, and symptoms
Procedures and services
STEP 4 – Assign modifiers to CPT and HCPCS level II codes, if applicable

21. Coding from Case Scenarios (continued)
STEP 5 – Identify first-listed condition
STEP 6 – Link each procedure or service to a diagnosis, symptom, or health status for medical necessity

22. Coding from Patient Reports
Patient record:
Serves as business record for patient encounter
Is maintained as manual record or in automated format
Contains documentation of health care services provided to a patient
Supports diagnoses, justifies treatment, and documents treatment results
Primary purpose is to provide continuity of care

23. Coding from Patient Reports (continued)
Secondary purposes of patient record do not relate directly to patient care, and include:
Evaluating the quality of patient care
Providing information to payers for reimbursement
Medico-legal interests
Providing data for use in:
Clinical research and epidemiology studies
Education and public policy making
Facilities planning and health care statistics

24. Coding from Patient Reports (continued)
Clinic notes use two major formats:
Narrative clinic note
SOAP note
Diagnoses, procedures, and services can be selected and coded from either format
Both require documentation to support level of E/M service reported on CMS-1500

25. Narrative Clinic Note
Written in paragraph form

26. SOAP Note Written in outline format
SOAP is acronym derived from first letter of topic headings used in the note
Subjective – contains chief complaint and patient’s description of presenting problem
Objective – contains documentation of measurable or objective observations made during physical examination and diagnostic testing

27. SOAP Note (continued) SOAP (continued)
Assessment – contains diagnostic statement and may include physician’s rationale for diagnosis
Plan – statement of physician’s future plans for the work- up and medical management of the case

28. SOAP Note (continued)

29. Diagnostic Test Results
Documented in two locations:
Clinic notes
Laboratory reports
Quantify data
Summarize diagnostic implications in clinic notes
Other diagnostic tests include interpretation by responsible physician

30. Sample Laboratory Report

31. Sample Radiology Report

32. Operative Reports
Short narrative description of minor procedure performed in physician office
Formal report dictated by surgeon
Contain the following information:
Date of surgery
Patient identification
Pre- and postoperative diagnosis
List of procedure(s) performed
Name(s) of primary and secondary surgeons
Signature of surgeon

33. Operative Reports (continued)
Narrative contains:
Positioning and draping of patient
Achievement of anesthesia
Detailed description of how procedure was performed
Identification of incision made
Instruments, drains, and so on used during surgery
Identification of abnormalities found during the surgery
Description of how hemostasis was obtained
Description of closure of surgical site
Condition of patient upon leaving operating room

34. Sample Operative Report

35. Procedure for Coding Operative Reports
STEP 1 – Make copy of operative report
Make notations in the margin
Highlight special details
The above can be done without marking up original (which must remain in patient record)
STEP 2 – Carefully review list of procedures performed

36. Procedure for Coding Operative Reports (continued)
STEP 3 – Read narrative of report and make a note of procedures to be coded
STEP 4 – Identify main term(s) and subterms for the procedure(s) to be coded

37. Procedure for Coding Operative Reports (continued)
STEP 5 – Underline and research any terms in the report that you cannot define
STEP 6 – Locate main term(s) in CPT index
STEP 7 – Research all suggested codes

38. Procedure for Coding Operative Reports (continued)
STEP 8 – Return to CPT index to locate any additional codes
STEP 9 – Investigate possibility of adding modifiers to CPT codes
STEP 10 – Code postoperative diagnosis

39. Procedure for Coding Operative Reports (continued)
STEP 11 – Review code options with physician who performed procedure if case is unusual
STEP 12 – Assign final code numbers for procedures verified in steps 3 and 4

40. Procedure for Coding Operative Reports (continued)
STEP 13 – Properly sequence codes, listing first the most significant procedure performed during episode
STEP 14 – Be sure to destroy copy of operative report (e.g., shred it) after abstracting and coding process is completed