Introduction to diagnostic coding

Diagnostic coding

A diagnosis has many purposes in healthcare. Patient treatment plans are based on the diagnosis. Reimbursement from insurance companies is based, in part, on the diagnosis. Researchers use diagnoses for their studies. Diagnostic coding has been used to standardize the reporting of medical conditions, illnesses, and injuries. It was initially developed to study the causes of mortality. Over time, diagnostic coding has been expanded to include all diseases and conditions. TheWorld Health Organization (WHO) has established the International Classification of Diseases (ICD). This classification system is in its tenth revision and is known as the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM). These codes are used for the following:

• Mortality data
• Epidemiologic data
• Billing purposes

The ICD-10-CM allows providers to be much more specific when assigning diagnostic codes than was possible with previous revisions. This will, in turn, result in more accurate data collection and billing practices. Every year, the Centers for Medicare and Medicaid Services (CMS) reviews the ICD-10-CM coding manual. The update was published on October 1.

Additions, revisions, and deletions are made to many of the diagnostic codes, code descriptions, and guidelines. You must always use the current year’s coding manual to ensure accurate coding and comply with regulatory guidelines.

The Health Insurance Portability and Accountability Act (HIPAA) has mandated that specific code sets be used to help standardize the process of claims submission. The ICD-10-CM is the mandated diagnostic code set.

This chapter looks at the structure of the ICD-10-CM codes and how to accurately determine the correct code.

Understanding diagnostic coding

We will start this chapter by looking at the history of medical coding. With this background, you can better understand why we do medical coding and how it has changed over time. We will also be looking at how medical coding is used in the United States.

The history of medical coding

Medical coding began as medical classification in 17th century England. John Graunt, a statistician, wanted to study the causes of mortality in children under age 6, so he developed a medical classification system. In the mid-1800s, William Farr, a medical statistician, established a more organized disease classification to widen the system to patients of all ages. The principles of Farr’s classification method, and those of Jacques Bertillon, chief of statistics for the city of Paris, developed into the International List of Causes of Death, which was published in Chicago in 1893 by the International Statistics Institute. This list is revised every 10 years. After the League of Nations was established in 1920, its members saw the need for a variety of stakeholders to use the classification system, including insurers, health administrators, hospitals, and military medical providers. The name of the list was changed to the International List of Diseases.

In 1946 the International Commission of the World Health Organization (WHO) established codes to define specific infectious diseases, parasites, symptoms, and causes of death. This code set was called the Manual of the International Statistical Classification of Diseases, Injuries, and Causes of Death (ICD).

(Note: It is important to understand the difference between the ICD and the Clinical Modification versions [i.e., ICD-10-CM]. The ICD is the international version, copyrighted and published by the WHO. The WHO authorized an adaptation for use in the United States, although all modifications had to conform to WHO conventions. The adaptation currently used in the United States is the ICD-10-CM. [Other countries also may apply for adaptations.] The Clinical Modification version provides much more detail and sometimes has separate sections for procedures.)

In 1995 the WHO approved the development of the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) code set. This code set has a different format from that of the ICD-9-CM. As of October 1, 2015, the ICD-10-CM has been used in the United States. The ICD-11 was formally adopted by the World Health Assembly on May 25, 2019 to be effective beginning January 1, 2022. The U.S. is expected to adopt ICD-11 in 2025.

Medical coding in the united states

As history dictates, the original purpose of medical coding was to collect statistical data. The United States is the only country in the world that uses coding for health insurance reimbursement purposes. Providers are responsible for billing the insurance company for any services rendered during the encounter (i.e., any meeting between a patient and a healthcare provider), and the provider must use approved medical codes for these procedures and services to obtain reimbursement. This means that the provider must supply diagnostic information that demonstrates the need for the rendered procedures or services. The provider assigns a diagnosis through an assessment of the patient.

All components of the encounter (i.e., diagnostic findings, procedures, and services) are used to determine the charges and generate an insurance claim. This chapter focuses on the ways the medical assistant should gather diagnostic information and translate it into a diagnostic code. The ICD-10-CM coding manual is used for this purpose.

What is diagnostic coding?

Diagnostic coding changes written descriptions of diseases, illnesses, or injuries into alphanumeric codes. The ICD-10-CM code set uses up to seven characters to identify the disease or injury. Using the ICD-10-CM can help ensure both accurate health record documentation and efficient claims processing.

The ICD-10-CM code set is available through online resources, within the electronic health record (EHR) as an encoder or as a print manual. The print manual is produced by several publishers and may use different layouts, symbols, color coding, and some other features. For the coding manual, however, the format, conventions, tables, appendices, content, and basic structure are the same.

When you use the ICD-10-CM, you will be choosing a standardized alphanumeric code for the diagnostic statement assigned by the provider. Diagnostic statements are found in the following documents:

• Operative reports
• Discharge summaries
• History and physical exam (H&P) reports
• Reports on ancillary diagnostic services (e.g., radiology, pathology, and laboratory reports)

All of these should provide the patient’s diagnosis or diagnoses. Healthcare providers use these reports to code and report clinical information. Diagnostic coding is required for participation in Medicare and Medicaid programs and by most insurance companies. The diagnostic codes are used on insurance claims. The ICD-10-CM codes tell the insurance company why the healthcare services or procedures were done. These codes are linked to the procedures that are performed. If the diagnosis code does not match the healthcare services or procedures provided, it may not be paid for. This linking can determine if a procedure or service is paid for. The diagnostic code can show that a procedure or service was medically necessary. If it is not medically necessary, the insurance company will not pay for it. For example, if diabetes mellitus is the diagnosis and the procedure is a throat culture, the insurance company would not pay it as it is not medically necessary for the treatment of diabetes mellitus. The ICD-10-CM is also used to keep track of various healthcare statistics related to disease and injury. Practice management software, clearinghouses, and insurance companies recognize these codes, which simplifies the coding process and speeds reimbursement to healthcare providers.