Outsourced Strategies International 1-800-670-2809 
Why Diagnostic Coding Is Crucial for 
Medical Practices 
Simply put, d...
Outsourced Strategies International 1-800-670-2809 
patients are. Several medical practice groups also have 
this type of ...
Outsourced Strategies International 1-800-670-2809 
· 250.21: Diabetes with hyperosmolarity, 
type I [juvenile type], not ...
Outsourced Strategies International 1-800-670-2809 
scenarios in the correct manner, accurate codes are 
indispensable. 
I...
Outsourced Strategies International 1-800-670-2809 
 Here the three digit code ‘250’ represents diagnostic 
category whil...
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Why Diagnostic Coding Is Crucial for Medical Practices

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In addition to procedural codes, diagnosis codes are also quite important for medical practices to receive good reimbursement. Here are the reasons for that.

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Why Diagnostic Coding Is Crucial for Medical Practices

  1. 1. Outsourced Strategies International 1-800-670-2809 Why Diagnostic Coding Is Crucial for Medical Practices Simply put, diagnostic coding is used in the healthcare industry to classify and organize different categories of diseases, disorders and symptoms. This type of coding is crucial for medical practices to provide healthcare services to patients and at the same time make them more manageable for practices. Diagnosis codes also serve as a communication channel between physicians and insurance agencies. In case of fee-for-service model, physician services are paid on the basis of fee associated with relevant procedural codes (CPT or HCPCS) submitted in the claim form. However, the diagnosis codes support the medical necessity of a particular service and clarify why such a service was performed. The payers may deny the claims if they find no medical necessity with the service. Experts suggest several reasons why diagnosis coding has so much importance in the health care industry.  Coding for Acuity of Patients – Medicare plans pay the claims partially on the basis of a risk adjustment factor and CMS varies the payment per patient, per month according to how sick the whole group of
  2. 2. Outsourced Strategies International 1-800-670-2809 patients are. Several medical practice groups also have this type of adjustment with private insurance companies. Reimbursement by Accountable Care organizations is partly based on a determination of the acuity of their patient population. This means that at the end of the contract year, some insurance contracts pay a higher rate to systems/practices that care for sicker patients. In all cases, the insurers determine the acuity of a group of patients on the basis of age/gender distribution and by the diagnosis code on claim forms.  Code for the Highest Level of Specificity – It is very important to specify the patient’s symptom, condition or complaint clearly. It is also required to use a sign or symptom for outpatient services if the diagnosis is not known, instead of ‘rule out’ or ‘possible’. Diagnosis needs highest level of specificity. Unspecified diagnosis can’t justify the medical necessity of a particular service and makes the payers deny your medical claims. This will also hamper effective disease management and research efforts. ICD-9 code system provides separate codes for specific conditions. Let’s see this with the example of diabetes mellitus. · 250: Diabetes mellitus · 250.2: Diabetes with hyperosmolarity · 250.20: Diabetes with hyperosmolarity, type II or unspecified type, not stated as uncontrolled
  3. 3. Outsourced Strategies International 1-800-670-2809 · 250.21: Diabetes with hyperosmolarity, type I [juvenile type], not stated as uncontrolled · 250.22: Diabetes with hyperosmolarity, type II or unspecified type, uncontrolled · 250.23: Diabetes with hyperosmolarity, type I [juvenile type], uncontrolled However, a new diagnosis code system is expected to be introduced in 2015, which would look for higher specificity than ICD-9 (example given below). · E11: Type 2 diabetes mellitus · E11.0: Type 2 diabetes mellitus with hyperosmolarity · E11.00: Type 2 diabetes mellitus with hyperosmolarity, without nonketotic hyperglycemic-hyperosmolar coma (NKHHC) · E11.01: Type 2 diabetes mellitus with hyperosmolarity, with coma  Report Chronic Conditions – If a patient visits the hospital for the same condition multiple times, the services rendered should be reported. The conditions that co-exist during the visit that require or affect patient care should be documented while it is not required to report the condition no longer exists. If the condition is mentioned in the past medical history, but not addressed during the visit, then it should not be reported on the claim. In order to report all this
  4. 4. Outsourced Strategies International 1-800-670-2809 scenarios in the correct manner, accurate codes are indispensable. It is always crucial for physicians to determine the proper care, appropriate tests and effective treatment for their patients. Diagnosis coding enables them to establish standard treatment for each diagnosis. The codes specify particular symptoms (for example, white blood counts) in detail to standardize the treatment. Tips to Improve the Accuracy of ICD-9 Codes The American Board of Family Medicine conducted a study involving 600 physicians in 2009 and 2010 which revealed fatigue and abdominal pain as the two most common symptoms misdiagnosed. In order to eliminate misdiagnosis and ensure smooth billing process, you need to perform accurate diagnosis coding.  You should always code to the highest level of specificity. If possible, extend the code to the fourth or fifth digit. We can take the previous example of diabetes mellitus to explain this. · 250: Diabetes mellitus · 250.2: Diabetes with hyperosmolarity · 250.20: Diabetes with hyperosmolarity, type II or unspecified type, not stated as uncontrolled
  5. 5. Outsourced Strategies International 1-800-670-2809  Here the three digit code ‘250’ represents diagnostic category while the four digit code ‘250.2’ represents associated complications and five digit code ‘252.20’ represents the type of diabetes and its level of control. Depending upon the diabetic condition, you may need to use the entire five digits to specify it accurately.  If there is more than one diagnosis listed for your patient, prioritize them. You should first code the primary diagnosis (the major reason for the patient) followed by the next most diagnosis and so on.  If you suspect a specific condition for your patient, code only the sign or symptom that brought that patient for the particular visit until you confirm the diagnosis with further tests. Otherwise make a definitive diagnosis.  Link the ICD-9 codes reported to the relevant service code on the claim form. This will help payers to identify why such a service was rendered and establish medical necessity. Physicians are responsible for choosing the codes and submitting them to the payers. In the case of large medical practice groups, it may not be that smooth for physicians to balance their time between patient care and clinical documentation. Medical practices can team with coding professionals to solve this issue and submit accurate claims within deadline to obtain correct reimbursement.

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