Subjective What the patient reports (symptoms, concerns, personal experiences)

Example: "Patient complains of chest pain and nausea."

Objective: What the provider observes or measures

Example: "Blood pressure is 150/90 mmHg; ECG shows ST elevation."

CPT codes Describe procedures and services (e.g., office visits, surgeries)
CPT/HCPCS Code ("What"): What service or procedure was performed? (e.g., an office
visit, a blood test, an appendectomy, a crutch).

ICD-10-CM codes Describe diagnoses and medical conditions

"Why was the patient seen?"
ICD-10-CM Code ("Why"): Why was that service or procedure necessary? What
condition or problem did the patient have that required this intervention? (e.g.,
hypertension, diabetes, acute appendicitis, a fractured leg).

Every CPT/HCPCS code submitted on a claim must be linked to at least one ICD-
10-CM diagnosis code that justifies the medical necessity of that service.

When to Use "Assign only the combination code when that code fully identifies the
Multiple Codes diagnostic conditions involved or when the Alphabetic Index so directs. Multiple
vs. Combination coding should not be used when the classification provides a combination code
Codes that clearly identifies all of the elements documented in the diagnosis."

🧩 NEC (Not Think of "NEC" as meaning "there's more information here, but the
Elsewhere code set doesn't get that granular."
Classified) It indicates that the documentation is specific, but the classification system
simply doesn't have a distinct code for that specific diagnosis.
Coders are encouraged to use the most specific code available, and NEC is a
fallback when that specificity isn't matched by an existing code.
This is often found in the Tabular List (the detailed list of codes) under "other
specified" entries.
Think of it like this: Imagine you have a very unique LEGO piece that
doesn’t fit into any of the standard sets. You’ve described it in detail,
but there’s no specific set for it.

• What it means: The doctor has given a detailed description of a

condition, but there’s no exact code for it in the system.

• What you do: Use a general code that says, “This doesn’t fit
anywhere else.”

NOS (Not "NOS" means "the documentation isn't detailed enough."

Otherwise It's used when the provider hasn't provided the necessary information to select
Specified) a more precise code.
While acceptable when documentation is truly vague, coders generally aim to avoid NOS
codes by querying the provider for more specific information if possible.
Using an NOS code often indicates a lack of specificity in the clinical documentation.

Excludes1 Think of Excludes1 as a strict "do not code together" rule.

It's commonly used when two conditions are different forms of the same
underlying condition (e.g., congenital vs. acquired, or acute vs. chronic that are
truly distinct and not coexisting).
Important Exception: There's an exception when the two conditions are clearly
unrelated. If it's not clear, the provider should be queried for clarification. For instance, if
a code includes a broad term and also has an Excludes1 for a specific aspect of that term,
but another distinct condition also falls under the broad term, it might be acceptable to
code both if the conditions are genuinely unrelated. This exception requires careful
consideration and often provider clarification.

Excludes2 Think of Excludes2 as "you can code both if they coexist."

It implies that the excluded condition is a separate, distinct condition that may or may not
 occur with the code above the note.
These notes often clarify situations where two conditions might seem related but are
actually distinct and can be present simultaneously.

Brackets [ ] = Meaning: Brackets are used in the ICD-10-CM to enclose:

Synonyms/Alterna Synonyms, alternative wordings, or explanatory phrases: These are non-essential
te Terms modifiers that provide additional clarity or alternative ways to express the same
diagnosis.
Manifestation codes: In the Alphabetic Index, brackets are also used to enclose
codes for manifestations that are required to be assigned with the underlying
condition (following the "Code First" rule).

Parentheses ( ) = Meaning: Parentheses are used to enclose nonessential modifiers. These are
Nonessential supplementary terms or words that may or may not be present in the physician's
Modifiers diagnostic statement without affecting the code selection. The presence or absence of the
terms in parentheses does not alter the code assignment.
Purpose:
To provide additional descriptive terms that can be used with the main term.
To guide the coder in finding the correct code, regardless of whether these extra
descriptive words are present in the documentation.

Colon: = Meaning: A colon in the Tabular List indicates that the term (or code) preceding the colon
Incomplete requires additional terms to make it a complete and assignable code. It signifies that the
Terms/More code is incomplete and needs more specific information to be valid.
Information Purpose: To direct the coder to the next level of specificity required to accurately assign
Required a code. You cannot stop at a code that ends with a colon; you must go further.

Coding Meaning: An "Includes" note defines or clarifies the content of a specific code category
Instruction: or block of codes. It lists conditions that are included in the category or under the specific
"Includes" Notes code above the note.
Location: "Includes" notes appear in the Tabular List immediately under a three-
character code title or a specific code.
Purpose:
o To provide examples of diagnoses that are covered by the code(s)
above.
o To help coders understand the scope and intent of a particular code or
category.
o To ensure consistency in coding by clarifying what specific terms fall
under a broader heading.

Coding Meaning: A "See also" note provides a cross-reference that advises the coder to look
Instruction: "See elsewhere in the Alphabetic Index if the desired entry is not found under the initial term. It
also" Notes suggests that there might be a more appropriate or specific code under the referenced
term.
Purpose: To guide the coder to alternative or related terms that might lead to a more
precise code, preventing premature selection of a less specific code.

Coding Meaning: A "Code also" note indicates that two codes may be required to fully
Instruction: "Code describe a condition, but the sequencing rule is not fixed (i.e., it doesn't specify which
also" Notes code should come first). This is different from "Code First," where the sequence is
mandatory. "Code also" appears when the condition described by the code where the
note is found may occur with another condition, and both are equally important to
capture.
Purpose: To ensure that all relevant aspects of a patient's condition are documented by
assigning all necessary codes, even if there isn't a strict cause-and-effect relationship that
dictates a "Code First" scenario.

Sequencing Rule: Meaning: This instructional note indicates that the underlying or primary
"Code First" condition that causes or manifests as the condition described by the code must
be coded first. The code with the "Code First" note describes a manifestation,
sign, or symptom of another disease.
Location: You will find "Code First" notes in the Tabular List (the detailed listing of codes)
directly under a code category or specific code.
Purpose: To establish a clear causal relationship between two conditions and ensure that
the etiology (the underlying cause) is always identified before its manifestation.
How it Works:
o The "Code First" note directs you to code the etiology (the cause) first.
o The code with the "Code First" note then follows, describing the
 manifestation (the symptom or secondary condition).

Sequencing Rule: Meaning: This instructional note indicates that a secondary code should be added to
"Use Additional provide more complete information about the patient's condition. The code with the "Use
Code" Additional Code" note describes the primary diagnosis, and an additional code is needed
to describe a manifestation, complication, or associated condition that is not inherently
part of the primary code but is relevant to the patient's care.
Location: Like "Code First," you'll find "Use Additional Code" notes in the Tabular List
under a code category or specific code.
Purpose: To provide greater specificity and a more comprehensive picture of the
patient's clinical situation when a single code cannot capture all relevant details.

Principal Definition: The principal diagnosis is the condition established after study to be
Diagnosis chiefly responsible for occasioning the admission of the patient to the hospital
(Inpatient for care.
Setting) Key Phrase: "Established after study" means that the diagnosis is determined after
the physician has had the opportunity to evaluate the patient, perform tests, and arrive at
a definitive conclusion about why the patient needed to be admitted. It's not necessarily
the admitting diagnosis, as the admitting diagnosis might change after investigation.

Primary Diagnosis Definition: The primary diagnosis (often referred to as the "first-listed
(Outpatient/Ambu diagnosis" in outpatient guidelines) is the condition, problem, or other reason
latory Setting) chiefly responsible for the outpatient visit or encounter.
Key Phrase: "Chiefly responsible for the outpatient visit" means why the patient
came to that specific visit. It focuses on the reason for the encounter on that particular
day.
Distinction from Inpatient: Unlike inpatient, where "after study" is key, the
outpatient primary diagnosis is often determined at the end of the visit, based on why the
patient presented and what was addressed.

Secondary Definition: All other diagnoses that coexist at the time of admission/encounter, that
(Additional) develop subsequently, or that affect the treatment received or the length of stay. These
Diagnoses are conditions that are not the principal/primary reason for the visit but are relevant to
the patient's care.
Examples: Co-morbidities (e.g., diabetes, COPD), complications that develop during the
stay (e.g., pneumonia after surgery), or other significant conditions that required
monitoring or treatment.

The Fundamental "Always sequence principal/primary diagnosis first unless guidelines say
Sequencing Rule: otherwise"
This is the golden rule of coding. Once the principal (inpatient) or primary
(outpatient) diagnosis is identified, that code is always listed first.
 "Unless guidelines say otherwise" is a critical caveat. This refers to the specific
instructional notes we discussed earlier:
"Code First": If the principal/primary reason for the encounter is a manifestation, and a
"Code First" note applies, then the underlying etiology will be sequenced first, even if the
manifestation brought the patient in. The guidelines implicitly dictate the sequencing in
these specific scenarios.

POA (Present on While not a sequencing rule, the POA indicator is reported for inpatient diagnoses to
Admission) distinguish conditions that were present when the patient was admitted from those that
Indicator: developed during the hospital stay. This is critical for quality metrics and reimbursement.

In essence:
1. Identify the chief reason for the encounter/admission.
2. Look for that condition in the ICD-10-CM Alphabetic Index.
3. Navigate to the Tabular List and review all notes (Includes, Excludes1,
Excludes2, Code First, Use Additional Code, Colons, Parentheses, Brackets).
4. Apply all relevant sequencing guidelines to determine the correct order of
codes.
5. List the principal/primary diagnosis first, followed by all other relevant
secondary diagnoses in the appropriate order based on guidelines and the
patient's clinical situation

Key Rule: Explain External cause codes are never sequenced as the principal (inpatient) or
Injury Causes, primary (outpatient) diagnosis.
Not Listed First They are always supplementary codes, providing additional information about a primary
(Always diagnosis from other chapters (e.g., an injury code from Chapter 19: S00-T88).
Secondary) The primary diagnosis is the nature of the injury or condition (e.g., S82.201A for displaced
transverse fracture of shaft of right tibia, initial encounter for closed fracture).
How they are Used:
You must first code the actual injury or condition (e.g., fracture, burn, poisoning,
adverse effect).
Then, you add the appropriate external cause code(s) to describe how it happened.
Most complete coding requires multiple external cause codes to describe all
relevant circumstances (cause, intent, place, activity).

Key Rule: Can Be Unlike external cause codes, Z codes can be sequenced as the principal(inpatient) or
Primary for primary (outpatient) diagnosis in specific, well-defined situations.
Routine Exams, This is the main distinguishing factor from most other diagnostic codes, which
Aftercare, Chemo, typically represent diseases or injuries.
Dialysis

Unbundling vs. Unbundling: Improperly coding components of a procedure separately when they are
Add-on Codes: already included in a comprehensive code. This is considered fraudulent.
Add-on Codes: CPT codes designated by a "+" symbol. These codes describe
additional work performed in conjunction with a primary procedure and are
never reported alone. They are explicitly designed to be reported in addition to a
primary service.

Evaluation & E/M coding is foundational and has undergone significant changes in recent
Management years, particularly for office/outpatient visits.
(E/M) (99202–  2023+ Guidelines (Office/Outpatient and many other E/M categories): For most
99499) E/M services, coders now choose the E/M level based on one of two methods:
1. Medical Decision Making (MDM): This is the predominant method.
2. Total Time: All time spent on the date of the encounter.
MDM Components
MDM is assessed by meeting the requirements of at least two out of three of
the following elements:
 Problems Addressed:
o What to Consider: The number and complexity of the patient's
diagnoses or management issues. This includes new problems,
established problems (managed or stable), and the complexity of
addressing them.
o Complexity Levels (Examples):
 Self-limited or Minor: A problem that runs a definite and short
course, is transient, and often resolves spontaneously (e.g.,
common cold).
 Stable, Chronic Illness: Hypertension, stable diabetes.
 Acute, Uncomplicated Illness/Injury: Cystitis, sprain.
 Undiagnosed New Problem with Uncertain Prognosis:
Headache, abdominal pain where the cause is not yet known.
 Acute, Complicated Illness: A severe exacerbation of asthma,
acute pyelonephritis.
 Chronic Illness with Exacerbation, Progression, or Side Effects
of Treatment: Worsening heart failure.
 Acute or Chronic Illness or Injury that Poses a Threat to Life or
Bodily Function: Myocardial infarction, stroke, severe
respiratory distress.

Risk of What to Consider: The risks associated with the patient's condition, the diagnostic
Complications procedures (including invasive ones), and the management options (including
and/or Morbidity medications, surgery, or decisions to forgo care).
or Mortality of Complexity Levels (Examples):
Patient Minimal: Over-the-counter medications, minor surgery (e.g., skin biopsy).
Management: Low: Prescription drug management (e.g., antibiotics), decision for minor surgery with
identified risks.
Moderate: Prescription drug management with potential for side effects, decision for
elective major surgery (e.g., knee replacement), diagnosis or treatment of a life-
threatening illness.
High: Decision for emergent major surgery (e.g., appendectomy), decision not to
resuscitate, use of controlled substances with risk of addiction, treatment of an acute or
chronic condition that poses a threat to life or bodily function with highly complex or
dangerous therapies.
Select highest level met in at least 2 of 3 elements: To choose an E/M level
 (e.g., 99203 or 99214), you must meet or exceed the requirements for at least two of
the three MDM components. For example, if a patient has moderate problems and
moderate data, but only minimal risk, the overall MDM is Moderate (assuming two
elements met the moderate level).
Document specifics supporting MDM level: Comprehensive and specific documentation is
paramount. The physician's notes must clearly reflect the complexity of the problems, the
data reviewed, and the risks involved in managing the patient.

Time-Based Includes all time spent on the encounter date (not just face-to-face): For E/M
Coding (2023+ services, time coding now accounts for all physician/QHP time spent on the
Guidelines) date of the encounter, not just the face-to-face interaction with the patient.
This includes both face-to-face and non-face-to-face activities.
Examples of included time:
o Preparing to see the patient (e.g., reviewing past records).
o Obtaining and/or reviewing history.
o Performing a medically appropriate examination/assessment.
o Counseling and educating the patient/family.
o Ordering or interpreting tests/procedures.
o Referring and communicating with other healthcare professionals.
o Documenting in the electronic health record.
o Independently interpreting results (not separately billable).
o Care coordination.
Use CPT time thresholds exactly; no rounding up: Each E/M code has a specific
time range. The total time documented must fall within that range for the code
to be valid. You cannot round up to meet a higher level.

Verifying codes in Detail: After identifying a potential code in the index, you must go to the Tabular List (for
the Tabular List ICD-10-CM) or the main body of the CPT manual (for CPT codes). This step is crucial for
(ICD) or CPT verifying the code, reading all associated notes (e.g., "Includes," "Excludes1," "Code
manual. First," "Use Additional Code" for ICD-10-CM; parenthetical notes, guidelines for CPT), and
ensuring the most specific and correct code is selected.

Sequencing codes Detail: As previously discussed, ICD-10-CM requires identifying the principal diagnosis
based on (inpatient) or primary diagnosis (outpatient) first, followed by relevant secondary
principal and diagnoses. CPT codes are typically sequenced with the most resource-intensive or
secondary primary procedure first, followed by secondary procedures, often guided by bundling
diagnoses or rules and modifier application.
procedures.
Link diagnosis Detail: This is the "why" linked to the "what." Every CPT/HCPCS code submitted on a claim
codes (ICD-10-CM) must be linked to at least one ICD-10-CM diagnosis code that justifies the medical
with CPT/HCPCS necessity of that service. This is critical for claims processing and payment.
codes for
justification.

Multiple Diagnoses A single CPT/HCPCS code can be linked to multiple ICD-10-CM codes if multiple diagnoses
and Procedures: contribute to the medical necessity of that single service.
Conversely, multiple CPT/HCPCS codes can be linked to the same ICD-10-CM code if
multiple services were performed to address the same diagnosis.
The primary diagnosis should always be linked to the service it primarily justifies. Other
relevant diagnoses can also be linked if they support the medical necessity.

The Global Surgical The Global Surgical Package covers preoperative, intraoperative, and postoperative care
Package over 0-day, 10-day, or 90-day periods.
Detail: Most surgical procedures have a "global period" (e.g., 0 days for minor procedures,
10 days for intermediate, 90 days for major). This package includes:
 Preoperative care (e.g., decision for surgery on the day of or
day before the procedure).
 Intraoperative care (the surgery itself).
 Postoperative care (routine follow-up visits related to the
surgery during the global period).

Employ unlisted Detail: These are codes ending in "99" (e.g., 29999 for Unlisted procedure,
codes when no musculoskeletal system). They are used for new or unusual procedures for which a
existing CPT Code specific CPT code has not yet been established.
Matches the Why they exist: The medical field is constantly evolving. New procedures, technologies,
Service. and approaches emerge frequently. CPT codes are updated annually, but there's always a
 lag. Unlisted codes provide a mechanism to describe and bill for these novel services
before a specific, permanent CPT code is created.
"Last Resort" Rule: It's crucial to understand that unlisted codes are considered the "last
resort" in coding. A coder should exhaust all avenues within the CPT manual to find a
specific or comprehensive code that accurately describes the service. This includes:
 Checking the specific code section for the body system.
 Looking at combination codes.
 Considering codes that might include the service as a bundled
component.
 Reviewing definitions and parenthetical notes meticulously.
 Searching the CPT index thoroughly under various terms.
 Consulting the CPT Assistant (AMA's official publication for
coding advice) or other authoritative coding resources for
guidance on similar procedures.

National Correct NCCI Procedure-to-Procedure (PTP) Edits: The "LEGO Rules" for Billing
Coding Initiative Think of NCCI PTP edits as a set of rules from Medicare (or other insurance companies)
(NCCI) edits. that tell you which medical procedures (the "what’s" or CPT codes) can and cannot be
billed together on the same day for the same patient.

Procedure-to-Procedure (PTP) Edits: These are the "edits" you mentioned. They identify
code pairs that should not be reported together for the same patient on the same date of
service.
Column 1/Column 2: NCCI PTP edits are presented as Column 1 and Column 2 codes. If
both codes are billed, the Column 1 code is usually paid, and the Column 2 code is
denied.

Modifier Indicators: Crucially, PTP edits have "modifier indicators" (0, 1, or 9).

"0" (Zero): NO EXCEPTION. These LEGOs NEVER snap together.

"0" (Zero): A modifier is NOT allowed. The two codes should never be billed
together.

"1" (One): EXCEPTION POSSIBLE. These LEGOs CAN snap together IF...
"1" (One): A modifier IS allowed. This means that under certain circumstances
(e.g., distinct anatomical site, separate encounter), the two codes can be billed
together if an appropriate NCCI-associated modifier (like -59 or one of the
X{EPSU} modifiers) is appended to the Column 2 code, indicating that the
services were truly separate and not bundled.

"9" (Nine): NOT APPLICABLE. This rule doesn't even apply here.
"9" (Nine): Not applicable. The edit does not apply.
The Rule: If you bill both codes in a pair, Medicare's system will typically pay for the
Column 1 code and deny the Column 2 code. It's like saying, "We'll pay for the big LEGO
house (Column 1), but the small LEGO door (Column 2) is already part of the house, so we
won't pay for it separately."L

Medically Unlikely Medicare (and other insurance companies) have looked at all the procedures and
Edits (MUEs): The services, and for many of them, they've set a "common sense limit" on how many units
"Common Sense (or times) that service would reasonably be performed for one patient on one single day.
Limits" on How The Main Idea: Preventing Obvious Over-Billing
Much You Can Bill MUEs are designed to catch obvious mistakes or unusual billing patterns that are unlikely
to be medically necessary. It's a safeguard against overpayment.
"Maximum Units": The Most You Can Ask For
 For each CPT or HCPCS code, Medicare defines a "maximum number of units"
that they would typically expect to see for a single patient on a single date of
service.
 Example: If a specific lab test (like for a certain antibody) has an MUE of 1, it
means Medicare generally believes that a patient would only need one of those
particular tests performed on a given day.
If you bill for 2 units: The system will likely deny the second unit (and any units beyond
the limit). It's like the farmer saying, "I'll sell you your dozen eggs, but I'm not selling you
50 dozen right now. That just doesn't make sense."

Diagnosis Coding: Purpose: Describes patient diagnoses for statistical tracking, reimbursement, and medical
ICD-10-CM necessity.
Format: Alphanumeric (e.g., M54.5), 3–7 characters; use placeholders (X) if needed.
 Key Concepts:
 Laterality: 1=Right, 2=Left, 3=Bilateral.
 7th Character: A=Initial, D=Subsequent, S=Sequela.
 Combination Codes: Capture multiple conditions (e.g., E11.22 – Type 2 DM w/
nephropathy).
 Conventions:
o NEC = Not Elsewhere Classifiable
o NOS = Not Otherwise Specified
o Includes/Excludes1/Excludes2
o Code First / Use Additional Code
 Pitfalls:
o Using unspecified codes too often
o Skipping 7th character rules
o Ignoring combo codes and sequencing instructions

Procedure Coding: 🔹 E/M (99202–99499)

CPT®  2023+ Guidelines: Level based on Time or Medical Decision Making (MDM)
 MDM Elements:
o Problem complexity
o Data reviewed
o Risk of complications
 Modifiers:
o -25 = Significant, separately identifiable E/M
o -24 = Unrelated E/M during global period

🔹 Anesthesia (00100–01999)
 Units: Base + Time + Modifying
 Modifiers:
o AA = Anesthesiologist
o QX/QZ = CRNA
o P1–P6 = Physical status
 Pitfalls: Missing status/modifiers, confusing MAC vs. moderate sedation

🔹 Surgery (10000–69999)
 Includes: Pre-op, intra-op, and post-op care (global period: 0, 10, or 90 days)
 Important: Site, approach (e.g., open/laparoscopic), extent (e.g., partial/total)
 Modifiers:
o -50 = Bilateral
o -51 = Multiple procedures
o -58/-78/-79 = Global return to OR
o -59 / XE, XS, XP, XU = Separate/distinct service
 Pitfalls: Unbundling, missing margin measurements, incorrect modifier use

🔹 Radiology (70000–79999)
 Components:
o -26 = Professional
o -TC = Technical
o No modifier = Global
 Critical Elements: Body part, contrast use, views
 Pitfalls: Over-coding views, wrong contrast code, missing written report

🔹 Pathology & Laboratory (80000–89999)

 Panels: All components must be completed for bundled code
 Pathology levels: 88305 (routine) → 88309 (complex)
 Modifiers:
o -91 = Repeat test, same day
o -26 / -TC = Interpretation / Equipment
 Pitfalls: Incomplete panels, missing specimen documentation
 🔹 Medicine (90000–99999)
 Covers: Immunizations, injections, psychiatry, cardiology, etc.
 Injection/Infusion: Document drug, route, time, initial/subsequent
 Component modifiers: -26/-TC apply to EKGs, etc.
 Modifier -25: Often used for separate E/M
 Pitfalls: Time-based errors, wrong injection sequence, insufficient documentation
Inpatient vs. Area Inpatient Coding Outpatient Coding
Outpatient Coding Services to admitted patients (≥ Services to non-admitted patients (same
Definition
Comparison 2 midnights stay) day or <2 days)
Diagnosis
ICD-10-CM ICD-10-CM
Codes
Procedure
ICD-10-PCS CPT® / HCPCS
Codes
Inpatient coding rules, principal Outpatient coding rules, first-listed
Guidelines
diagnosis defined diagnosis based on encounter
Documentatio Admission notes, discharge
Provider notes, encounter forms
n summaries
Payment IPPS (MS-DRG based bundled
OPPS (APCs, procedure-based payments)
System payments)
Claim Forms UB-04 (CMS-1450) CMS-1500 or UB-04
Use of Sign, ~ Acceptable when:
Symptom, and o Definitive diagnosis not established.
Unspecified Codes o Insufficient clinical data available.
o Initial encounters pending further workup.
~ Avoid coding signs/symptoms integral to a diagnosis.
~ Do not upcode or guess codes; query providers when unclear.

Combination Codes ~ One code that covers two diagnoses or a diagnosis with its
manifestation/complication.
~ Use combination codes alone if they fully represent the clinical picture.
~ Add additional codes only if combination code lacks specificity.

💳 Payment Models – 1. Fee-for-Service (FFS)

How Providers Are o Providers get paid for each service or procedure they do.
Paid o More services = more money, but it doesn’t always reward better
outcomes.
2. Value-Based Payment Models
o Providers are rewarded for quality and results, not quantity.
o Examples:
 Pay-for-Performance (P4P) – Bonuses for meeting certain
quality goals.
 Accountable Care Organizations (ACOs) – Groups of providers
share savings if they deliver better care at lower cost.
3. Capitation
o A provider gets a fixed amount of money per patient per month or year.
o They get paid the same, whether or not the patient uses services.
💵 Payment Models
Model How It Works
Fee-for-Service Paid per service—encourages
(FFS) volume
Value-Based
Paid based on quality and outcomes
Models
Fixed amount per patient
Capitation
(monthly/yearly)
💵 Reimbursement 1. IPPS (Inpatient Prospective Payment System)
Mechanisms – How o Used when a patient stays in the hospital.
Services Are Priced o Hospitals are paid based on the MS-DRG (how sick the patient is and
what they were treated for).
2. OPPS (Outpatient Prospective Payment System)
o Used for services like same-day surgery or X-rays.
o Payments are based on APCs (Ambulatory Payment Classifications).
3. RBRVS (Resource-Based Relative Value Scale)
 o Used to figure out how much a doctor visit or procedure should cost.
o It considers the doctor's time, training, and overhead.
💰 Reimbursement Mechanisms
Syste
Used For Payment Based On
m
Inpatient
IPPS MS-DRGs (Diagnosis Related Groups)
hospital
Outpatient
OPPS APCs (Ambulatory Payment Classifications)
services
RBRV Physician Relative Value Units (RVUs) under
S services Medicare Part B
📋 Medical Coding 1. Evaluation and Management (E/M) Codes
Guidelines (The o Used for office visits or checkups.
Rules for Translating o Typically follow SOAP notes: Subjective, Objective, Assessment, Plan.
Care into Codes)
2. Medicare Compliance
o Must follow rules like:
 NCDs (National Coverage Determinations) – Medicare rules for
the whole country.
 LCDs (Local Coverage Determinations) – Local rules set by
Medicare contractors.
3. ABNs (Advance Beneficiary Notices)
 A form that tells Medicare patients that a service might not be
covered, and they may have to pay out of pocket.
🔍 Evaluation and Based on SOAP structure:
Management (E/M) o Subjective: What the patient reports
Documentation o Objective: What the provider observes/examines
o Assessment: Provider’s diagnosis/clinical judgment
o Plan: Treatment or management strategy
 E/M codes reflect complexity, time, and medical decision-making (MDM).
Understanding SOAP
~ Subjective: This component includes the patient’s own statements about their health,
symptoms, and concerns. It reflects the patient’s perspective and is the initial phase
of the SOAP note.
~ Objective: This contains the healthcare provider’s observations, examination findings,
and measurable data. It includes techniques like palpation, auscultation, and
percussion used during a physical exam.
~ Assessment: This involves the healthcare provider’s clinical evaluation and diagnosis
based on the subjective and objective data, identifying the health issues needing
intervention.
~ Plan: The plan outlines the approach to treatment, follow-up, or further testing. It
details next steps derived from the assessment to manage the patient’s condition.
 E/M Coding and SOAP Note Structure:
 Evaluation and Management (E/M) codes (e.g., 99202-99499) are used for office
visits, hospital visits, consultations, and other patient encounters where a
physician evaluates a patient's condition and manages their care.
 The documentation required for E/M services often aligns very well with the
SOAP note structure, which is a widely adopted method for organizing clinical
notes:
o S - Subjective: The patient's chief complaint, history of present illness,
review of systems, and past medical/family/social history, all as
reported by the patient. This corresponds to the History component of
E/M coding.
o O - Objective: Factual observations made by the healthcare provider,
including vital signs, physical exam findings, and results of diagnostic
tests. This aligns with the Examination and Medical Decision Making
(MDM) / Data components of E/M coding.
o A - Assessment: The physician's diagnosis or differential diagnoses for
the patient's condition. This is a crucial part of the Medical Decision
Making (MDM) component.
o P - Plan: The course of action, including treatments, medications, follow-
up instructions, referrals, and patient education. This is another vital
part of the Medical Decision Making (MDM) component, particularly the
"Management Options" and "Amount/Complexity of Data" and "Risk of
Complications/Morbidity/Mortality."
What Is a A combination code is one code that covers:
Combination
Code? • Two diagnoses (two health problems),

• A diagnosis with an associated secondary process (manifestation), or

• A diagnosis with an associated complication.

This approach simplifies coding by reducing the number of codes needed to

describe a patient’s condition.

When to Use a Combination Code

Use a combination code when:

• The code fully describes all aspects of the patient’s condition.

• The medical coding guidelines or Alphabetic Index direct you to use it.

For example, if a patient has Type 2 diabetes with diabetic retinopathy and
macular edema, instead of using separate codes for each condition, you’d use
the combination code E11.311.

When to Use Multiple Codes

Use multiple codes when:

• No single combination code accurately describes all aspects of the

patient’s condition.

• The conditions are unrelated or not commonly linked together.

For instance, if a patient has both asthma and a broken arm, you’d use
separate codes for each condition, as they’re unrelated and no combination
code exists for them together.

📦 NOS (Not Otherwise Specified)

Think of it like this: You’re packing a box but don’t label what’s
inside. It’s a mystery box!
• What it means: The doctor hasn’t provided enough details
about the condition.
• What you do: Use a general code that says, “Not specified.”

🚫 Excludes1
Think of it like this: You can’t wear two left shoes at the same time.
They just don’t go together.
• What it means: Two conditions can’t be coded together
because they can’t happen at the same time.
• What you do: Choose the one that best fits the situation.

🔄 Excludes2

Think of it like this: Wearing a raincoat and carrying an umbrella.

They serve different purposes but can be used together.
• What it means: Two conditions are different but can occur at
the same time.
• What you do: It’s okay to code both if the patient has both
conditions.

📝 Summary
• NEC: Detailed info, but no exact code exists.
• NOS: Not enough info provided.
• Excludes1: Don’t code these two together.
• Excludes2: Okay to code both if both are present.

Understanding these terms helps ensure accurate and effective

medical coding.

If you’d like more examples or further clarification, feel free to ask!

Certainly! Let’s break down these ICD-10-CM coding instructions using

simple analogies to make them easier to understand:

🧾 “Includes” Notes

What it means: An “Includes” note provides examples of conditions

that are covered by a specific code.

Analogy: Imagine a folder labeled “Fruits.” Inside, you find apples,

bananas, and oranges. The label “Fruits” includes these items.
Purpose: To help coders understand what specific conditions are
encompassed by a code.

Example: If a code for “Respiratory infections” includes “Common

cold” and “Bronchitis,” it means those conditions fall under that code.

🔍 “See also” Notes

What it means: A “See also” note suggests that you look at another
term in the Alphabetic Index for more information.

Analogy: It’s like a sign in a library that says, “For more books on this
topic, see the Science section.”

Purpose: To guide coders to alternative or related terms that might

lead to a more precise code.

Example: If you’re looking up “Infection” and see “See also Bacteria,”

it means you should also check under “Bacteria” for more specific
codes.

➕ “Code also” Notes

What it means: A “Code also” note indicates that you may need to
use an additional code to fully describe a condition.

Analogy: It’s like a recipe that says, “Add sugar. Also, add vanilla
extract.” Both ingredients are needed, but the order isn’t specified.

Purpose: To ensure that all relevant aspects of a patient’s condition

are documented by assigning all necessary codes.

Example: If a patient has diabetes and a foot ulcer, you might need to
code both the diabetes and the ulcer separately.

🔝 “Code First” Notes

What it means: A “Code First” note tells you to code the underlying
condition before the current condition.
Analogy: Think of it as telling a story: you need to introduce the cause
before discussing the effect.

Purpose: To establish a clear cause-and-effect relationship between

two conditions.

Example: If a patient has nerve pain due to diabetes, you would first
code the diabetes, then the nerve pain.

🧩 “Use Additional Code” Notes

What it means: A “Use Additional Code” note advises you to add

another code to provide more detail about a condition.

Analogy: It’s like adding a footnote to a sentence to give more

context.

Purpose: To provide greater specificity and a more comprehensive

picture of the patient’s clinical situation.

Example: If a patient has an infection, you might use an additional

code to specify the bacteria causing it.

📝 Summary
• “Includes”: Lists examples covered by a code.
• “See also”: Suggests checking another term for more
information.
• “Code also”: Indicates that an additional code may be needed.
• “Code First”: Instructs to code the underlying condition before
the current one.
• “Use Additional Code”: Advises adding another code for more
detail.

Understanding these notes ensures accurate and comprehensive

medical coding.

If you’d like more examples or further clarification, feel free to ask!

Certainly! Let’s break down these coding concepts using simple
analogies to make them easier to understand:
🏥 Principal Diagnosis (Inpatient Setting)

Definition: The principal diagnosis is the condition determined after

study to be chiefly responsible for the patient’s admission to the
hospital.

Analogy: Imagine you’re baking a cake, and you discover that the
main reason it didn’t turn out well is because you used salt instead of
sugar. After investigating, you identify the salt as the principal
problem.

Key Point: It’s not always the initial reason the patient came in; it’s
the main issue found after tests and evaluations.

🩺 Primary Diagnosis (Outpatient/Ambulatory Setting)

Definition: The primary diagnosis is the main reason for the patient’s
visit to the clinic or doctor’s office.

Analogy: Think of going to the mechanic because your car is making a

strange noise. The mechanic identifies a loose belt as the cause. That
loose belt is the primary reason for your visit.

Key Point: It’s determined at the end of the visit, based on what was
addressed during that specific encounter.

🧾 Secondary (Additional) Diagnoses

Definition: These are other conditions that exist at the time of

admission or develop during the stay and affect patient care.

Analogy: While fixing the loose belt, the mechanic also notices your
tires are worn out. The worn tires weren’t the reason you came in, but
they still need attention.

Key Point: These conditions are not the main reason for the visit but
are still important for treatment and care.

📋 Sequencing Rule: “Always sequence

principal/primary diagnosis first unless guidelines say
otherwise”
Explanation: When listing diagnoses, always put the main reason
(principal or primary diagnosis) first, followed by secondary diagnoses,
unless specific guidelines instruct otherwise.

Analogy: When telling a story, you start with the main event before
adding side details.

Key Point: Follow this order to ensure accurate and standardized

coding.

POA (Present on Admission) Indicator

Definition: This indicates whether a condition was present at the time

the patient was admitted to the hospital.

Analogy: It’s like noting if a scratch on a rental car was there before
you drove it off the lot.

Key Point: Helps distinguish between pre-existing conditions and

those that developed during the hospital stay.

⚠️External Cause Codes: Always Secondary

Explanation: Codes that describe how an injury or condition

happened (like falling off a ladder) are never listed as the main
diagnosis.

Analogy: If you break a vase, the fact that you tripped over a rug
explains how it happened, but the broken vase is the main issue.

Key Point: First, code the actual injury or condition, then add codes
that explain how it occurred.

✅ Z Codes: Can Be Primary in Specific Situations

Explanation: Z codes are used for situations like routine check-ups,

aftercare, chemotherapy, or dialysis and can be listed as the main
diagnosis in these cases.

Analogy: Going to the dentist for a regular cleaning isn’t because of a

problem but for maintenance; this visit still needs to be coded.
Key Point: Unlike external cause codes, Z codes can be the primary
reason for a visit when applicable.

Understanding these coding principles ensures accurate medical

records and appropriate patient care.
Certainly! Let’s break down the concepts of Unbundling and Add-on
Codes in medical billing using simple analogies:

🔗 Unbundling: Billing Separately for Combined

Services

What It Is:
Unbundling occurs when a healthcare provider bills separately for
individual components of a procedure that should be billed together
under a single comprehensive code.

Analogy:
Imagine ordering a combo meal at a restaurant that includes a burger,
fries, and a drink for $10. If the restaurant charges you $5 for the
burger, $3 for the fries, and $2 for the drink separately, you’re paying
more than the combo price.

Why It’s a Problem:

This practice can lead to overbilling and is considered fraudulent
because it results in higher charges than appropriate.

Example:
If a surgical procedure includes preoperative and postoperative care,
and the provider bills separately for these services instead of using a
single code that encompasses all, that’s unbundling.

➕ Add-on Codes: Supplementary Billing for Additional

Services

What They Are:

Add-on codes are specific CPT codes, indicated by a “+” symbol, used
to describe additional services performed in conjunction with a primary
procedure. They are never reported alone.

Analogy:
Think of ordering a base model car and choosing to add features like a
sunroof or premium sound system. These additions are only available
with the base model and can’t be purchased separately.

Key Characteristics:
• Designation: Identified by a “+” symbol in the CPT manual.
• Usage: Must be reported with a primary procedure code; cannot
stand alone.
• Description: Often include phrases like “each additional” or “list
separately in addition to primary procedure.”
• Reimbursement: Only reimbursed when appropriately paired
with a primary code.

Example:
During a psychotherapy session, if a provider conducts an additional
30-minute session beyond the standard time, they would use an add-
on code to bill for that extra time.

🧾 Summary Table
Aspect Unbundling Add-on Codes
Definition Billing separately for services that should be combined Billing for additional services
performed with a primary procedure
Indicator No specific symbol “+” symbol in CPT manual
Billing Alone Services billed separately Cannot be billed without primary code
Compliance Considered fraudulent Proper when used correctly
Example Separately billing for pre- and post-operative care Billing for extra time in a
therapy session

Understanding the difference between unbundling and add-on codes is

crucial for accurate medical billing and compliance.
Evaluation and Management (E/M) coding, encompassing CPT codes
99202–99499, is fundamental in medical billing. Recent updates have
streamlined the process, focusing on two primary methods for
determining the appropriate E/M service level: Medical Decision Making
(MDM) and Total Time spent on the encounter date.

🧠 Medical Decision Making (MDM)

MDM assesses the complexity of a patient’s condition and the decision-

making required. It involves three elements, with the E/M level
determined by meeting or exceeding two out of these three:
 1. Number and Complexity of Problems Addressed
• Examples:
• Self-limited or Minor: Common cold.
• Stable, Chronic Illness: Controlled hypertension.
• Acute, Uncomplicated Illness: Urinary tract infection.
• Undiagnosed New Problem with Uncertain Prognosis:
New-onset headache.
• Chronic Illness with Exacerbation: Worsening asthma.
• Acute or Chronic Illness Posing Threat to Life:
Myocardial infarction.
2. Amount and/or Complexity of Data to be Reviewed and
Analyzed
• Includes reviewing tests, ordering procedures, and consulting
with other healthcare professionals.
3. Risk of Complications and/or Morbidity or Mortality of
Patient Management
• Examples:
• Minimal: Over-the-counter medications.
• Low: Prescription drug management.
• Moderate: Decision for elective major surgery.
• High: Decision for emergency major surgery.

To select the appropriate E/M level, at least two of these elements

should meet or exceed the criteria for that level.

Total Time

Alternatively, E/M level can be determined by the total time a

physician or qualified healthcare professional spends on the encounter
date, including both face-to-face and non-face-to-face activities. This
encompasses:
• Reviewing patient records.
 • Performing examinations.
• Counseling and educating the patient/family.
• Ordering tests and procedures.
• Documenting clinical information.
• Coordinating care.

Each E/M code has specific time thresholds that must be met or
exceeded. For instance, CPT code 99242 requires at least 20 minutes
of total time .

📋 Key Points
• History and Examination: While still necessary for medical
necessity, the extent of history and physical examination no longer
determines the E/M level.
• Documentation: Accurate and detailed documentation is crucial
to support the chosen E/M level, whether based on MDM or total time.
• Flexibility: Clinicians can choose the method (MDM or total time)
that best represents the services provided during the encounter.

By understanding and applying these guidelines, healthcare providers

can ensure accurate E/M coding, reflecting the complexity and time
invested in patient care.
In medical coding, it’s important to know when to use a single code
(called a combination code) and when to use multiple codes. Let’s
break this down in a simple way:

🧩 What Is a Combination Code?

A combination code is like a special code that tells us two things at

once:
• It can describe two diagnoses (like two health problems).
• It can describe a diagnosis and its symptom.
• It can describe a diagnosis and a complication (a problem
caused by the diagnosis).
For example, if someone has diabetes that has caused kidney
problems, there’s a combination code that covers both the diabetes
and the kidney issue in one code.

🧩 When to Use a Combination Code

Use a combination code when:

• The code fully describes the patient’s condition.
• The coding book (called the Alphabetic Index) tells you to use it.

This means you don’t need to use two separate codes if one
combination code says it all.

🧩 When to Use Multiple Codes

Use multiple codes when:

• There’s no combination code that fits the situation.
• The combination code doesn’t give enough detail about the
condition.

In these cases, you’ll need to use more than one code to accurately
describe the patient’s health issues.

🧩 Why This Matters

Using the correct codes is important because:

• It helps doctors and nurses understand the patient’s health.
• It ensures the hospital or clinic gets paid correctly.
• It keeps medical records clear and accurate.

🧩 Remember

Always check if there’s a combination code available. If there is, and it

fully describes the condition, use it. If not, use multiple codes to make
sure all aspects of the patient’s health are recorded.

This approach helps everyone involved in the patient’s care and

ensures the medical records are as helpful as possible.
In medical coding, proper sequencing of diagnosis and procedure
codes is essential for accurate documentation, reimbursement, and
compliance. Here’s a comprehensive overview:

🩺 Diagnosis Code Sequencing (ICD-10-CM)

1. Principal vs. Secondary Diagnoses

• Inpatient Setting: The principal diagnosis is the condition
established after study to be chiefly responsible for the patient’s
admission. Secondary diagnoses are conditions that coexist at the
time of admission or develop subsequently and affect patient care.
• Outpatient Setting: The primary diagnosis is the main reason
for the encounter. Secondary diagnoses are additional conditions that
affect patient care during the visit.

2. Sequencing Rules
• “Code First” and “Use Additional Code”: Some conditions
require sequencing based on etiology and manifestation. For
example, if a manifestation code has a “Code First” note, the
underlying condition must be sequenced first.
• Multiple Diagnoses: When two or more diagnoses equally meet
the criteria for principal diagnosis, either may be sequenced first,
unless the circumstances of the admission, the therapy provided, or
the ICD-10-CM guidelines indicate otherwise.

3. External Cause Codes

• These codes provide additional information about the cause of
injuries or health conditions (e.g., fall, motor vehicle accident). They
are never sequenced as principal or primary diagnoses but are used
as supplementary codes.

Procedure Code Sequencing (CPT/HCPCS)

1. Primary and Secondary Procedures

• Primary Procedure: The main service performed during the
encounter, often the most resource-intensive or significant
procedure.
 • Secondary Procedures: Additional services performed during
the same encounter. These should be sequenced after the primary
procedure.

2. Add-on Codes
• Identified by a “+” symbol, add-on codes describe additional
services performed in conjunction with a primary procedure. They
cannot be reported alone and must follow the primary procedure
code.

3. Unlisted Codes
• Used when no specific CPT code exists for a new or unusual
procedure. These codes end in “99” (e.g., 29999 for unlisted
musculoskeletal procedure) and require detailed documentation to
describe the service provided.

4. National Correct Coding Initiative (NCCI) Edits

• Procedure-to-Procedure (PTP) Edits: Identify code pairs that
should not be reported together. Each pair has a modifier indicator:
• “0”: No modifier allowed; codes should not be reported together.
• “1”: Modifier allowed if appropriate circumstances are
documented.
• “9”: Edit does not apply.
• Medically Unlikely Edits (MUEs): Define the maximum units of
service that are considered reasonable for a single patient on a single
day.

🔗 Linking Diagnoses to Procedures

• Each CPT/HCPCS code must be linked to an ICD-10-CM code that
justifies the medical necessity of the service. This linkage is critical
for claims processing and reimbursement.
• Multiple Diagnoses for One Procedure: If multiple conditions
justify a procedure, all relevant ICD-10-CM codes should be linked to
the CPT/HCPCS code.
 • One Diagnosis for Multiple Procedures: If multiple
procedures are performed for the same condition, the same ICD-10-
CM code can be linked to each relevant CPT/HCPCS code.

Proper sequencing and accurate linkage between diagnosis and

procedure codes ensure compliance with coding guidelines and
facilitate appropriate reimbursement.
Area,Inpatient Coding,Outpatient Coding

Definition,Services provided to patients formally admitted to a hospital, typically involving a stay of two or more
midnights.,Services provided to patients who are not formally admitted, often involving same-day procedures or
visits.

Diagnosis Codes,ICD-10-CM for diagnoses; allows coding of uncertain diagnoses (e.g., “probable,”
“suspected”).,ICD-10-CM for diagnoses; requires confirmed diagnoses only.

Procedure Codes,ICD-10-PCS for inpatient procedures.,CPT® and HCPCS Level II codes for outpatient procedures
and services.

Diagnosis Sequencing,Principal diagnosis is the condition established after study to be chiefly responsible for
occasioning the admission.,First-listed diagnosis is the main reason for the encounter, based on the chief complaint
and services provided.

Documentation,Comprehensive records including admission notes, progress notes, operative reports, and discharge
summaries.,Provider notes, encounter forms, and other documentation pertinent to the specific visit.

Payment System,Inpatient Prospective Payment System (IPPS) using Medicare Severity Diagnosis Related Groups
(MS-DRGs).,Outpatient Prospective Payment System (OPPS) utilizing Ambulatory Payment Classifications (APCs).

Claim Forms,UB-04 (CMS-1450) for institutional billing.,CMS-1500 for professional services; UB-04 may be used for
facility charges.

Use of Sign/Symptom Codes,Permitted when a definitive diagnosis has not been established at discharge.,Used only
when no definitive diagnosis is made; coding of “probable” or “suspected” conditions is not allowed.

Combination Codes,Utilized to capture multiple conditions or a condition with associated complications.,Employed

when a single code can represent multiple diagnoses or a diagnosis with a manifestation.

Present on Admission (POA) Indicator,Required to identify conditions present at the time of inpatient admission.,Not
applicable in outpatient settings.

Coding Guidelines,Follows inpatient-specific coding guidelines, including the selection of principal and secondary
diagnoses.,Adheres to outpatient coding guidelines, focusing on the first-listed diagnosis and services rendered.
🏥 Inpatient vs. Outpatient Coding Comparison

Certainly! Here’s a comprehensive study guide based on the

information you’ve provided, designed to aid in mastering medical
coding concepts:

📘 Medical Coding Study Guide

1. Diagnosis Coding: ICD-10-CM

• Purpose: Describes patient diagnoses for statistical tracking,
reimbursement, and medical necessity.
 • Format: Alphanumeric codes (e.g., M54.5), comprising 3–7
characters.
• Key Concepts:
• Laterality: 1 = Right, 2 = Left, 3 = Bilateral.
• 7th Character: A = Initial encounter, D = Subsequent
encounter, S = Sequela.
• Combination Codes: Capture multiple conditions (e.g., E11.22 –
Type 2 DM with nephropathy).
• Conventions:
• NEC = Not Elsewhere Classifiable.
• NOS = Not Otherwise Specified.
• Includes/Excludes1/Excludes2 notes.
• “Code First” / “Use Additional Code” instructions.
• Common Pitfalls:
• Overuse of unspecified codes.
• Omitting required 7th characters.
• Ignoring combination codes and sequencing instructions.

2. Procedure Coding: CPT® and HCPCS

a. Evaluation & Management (E/M) Codes (99202–99499)

• 2023+ Guidelines:
• Code Selection Based On:
• Medical Decision Making (MDM): Evaluates problem
complexity, data reviewed, and risk.
• Total Time: All time spent on the date of the encounter,
including face-to-face and non-face-to-face activities.
• MDM Components:
• Problems Addressed: Number and complexity of diagnoses or
management issues.
 • Data Reviewed: Tests, records, and other information reviewed.
• Risk: Potential for complications, morbidity, or mortality.
• Modifiers:
• -25: Significant, separately identifiable E/M service.
• -24: Unrelated E/M service during a postoperative period.

b. Anesthesia (00100–01999)
• Calculation: Base units + Time units + Modifying units.
• Modifiers:
• AA: Anesthesia services performed personally by
anesthesiologist.
• QX/QZ: CRNA services with or without medical direction.
• P1–P6: Physical status modifiers indicating patient condition.

c. Surgery (10000–69999)
• Global Periods: Includes pre-op, intra-op, and post-op care (0,
10, or 90 days).
• Modifiers:
• -50: Bilateral procedure.
• -51: Multiple procedures.
• -58/-78/-79: Staged or related procedures during postoperative
period.
• -59 / XE, XS, XP, XU: Distinct procedural services.

d. Radiology (70000–79999)
• Components:
• -26: Professional component.
• -TC: Technical component.
• No modifier: Global service.
 • Critical Elements: Body part examined, use of contrast, number
of views.

e. Pathology & Laboratory (80000–89999)

• Panels: All components must be completed for bundled code.
• Pathology Levels: Range from 88305 (routine) to 88309
(complex).
• Modifiers:
• -91: Repeat clinical diagnostic laboratory test.
• -26 / -TC: Professional and technical components.

f. Medicine (90000–99999)
• Services Covered: Immunizations, injections, psychiatry,
cardiology, etc.
• Injection/Infusion Coding: Document drug, route, time, and
sequence (initial/subsequent).
• Modifiers:
• -25: Significant, separately identifiable E/M service.
• -26 / -TC: Professional and technical components.

3. Coding Principles
• Unbundling: Incorrectly reporting separate codes for procedures
that are included in a single comprehensive code.
• Add-on Codes: Identified by a “+” symbol; used for additional
services performed in conjunction with a primary procedure.
• Unlisted Codes: Used when no existing CPT code accurately
describes a service; codes typically end in “99” (e.g., 29999).

4. Code Sequencing and Linking

• Inpatient Coding:
• Principal Diagnosis: Condition chiefly responsible for
admission.
 • Secondary Diagnoses: Conditions that coexist at the time of
admission or develop subsequently.
• Outpatient Coding:
• Primary Diagnosis: Main reason for the encounter.
• Secondary Diagnoses: Other conditions addressed during the
visit.
• Procedure Coding:
• Sequence CPT codes with the most resource-intensive or primary
procedure first.
• Link each CPT/HCPCS code to the appropriate ICD-10-CM
diagnosis code to justify medical necessity.

5. National Correct Coding Initiative (NCCI) Edits

• Procedure-to-Procedure (PTP) Edits:
• Column 1/Column 2: Indicates which codes can be reported
together.
• Modifier Indicators:
• 0: No modifier allowed; codes should not be reported
together.
• 1: Modifier allowed; codes can be reported together if
appropriate circumstances are documented.
• 9: Edit does not apply.
• Medically Unlikely Edits (MUEs):
• Define the maximum units of service that a provider would report
under most circumstances for a single beneficiary on a single date
of service.

6. Inpatient vs. Outpatient Coding

Aspect Inpatient Coding Outpatient Coding
Definition Services to admitted patients (≥ 2 midnights stay) Services to non-admitted
patients (same day or <2 days)
Diagnosis Codes ICD-10-CM ICD-10-CM
Procedure Codes ICD-10-PCS CPT® / HCPCS
Guidelines Inpatient coding rules, principal diagnosis defined Outpatient coding rules, first-
listed diagnosis based on encounter
Documentation Admission notes, discharge summaries Provider notes, encounter forms
Payment System IPPS (MS-DRG based bundled payments) OPPS (APCs, procedure-based
payments)
Claim Forms UB-04 (CMS-1450) CMS-1500 or UB-04

7. Payment Models
• Fee-for-Service (FFS): Providers are paid for each service or
procedure performed.
• Value-Based Payment Models:
• Pay-for-Performance (P4P): Bonuses for meeting specific
quality goals.
• Accountable Care Organizations (ACOs): Groups of providers
share savings if they deliver better care at lower costs.
• Capitation: Providers receive a fixed amount per patient per
month or year, regardless of services provided.

8. Reimbursement Mechanisms
System Used For Payment Based On
IPPS Inpatient hospital MS-DRGs (Diagnosis Related Groups)
OPPS Outpatient services APCs (Ambulatory Payment Classifications)
RBRVS Physician