Understanding Medical Coding: A Comprehensive Guide, Second Edition by Sandra Johnson and Connie McHugh Vice President, Health Care Business Unit: William Brottmiller Editorial Director: Matthew Kane Acquisitions Editor: Rhonda Dearborn Product Manager: Sarah Duncan Editorial Assistant: Debra Gorgos Marketing Director: Jennifer McAvey Marketing Coordinator: Kimberly Duffy Technology Director: Laurie K. Davis Technology Project Manager: Mary Colleen Liburdi Technology Project Coordinator: Carolyn Fox Production Director: Carolyn Miller Production Manager: Barbara A. Bullock Content Project Manager: James Zayicek COPYRIGHT 2006, 2000 Thomson Delmar Learning, a part of the Thomson Corporation. Thomson, the Star logo, and Delmar Learning are trademarks used herein under license. Printed in United States of America 1 2 3 4 5 6 7 8 XXX 09 08 07 06 For more information, contact Thomson Delmar Learning, 5 Maxwell Drive, Clifton Park, NY 12065 Or find us on the World Wide Web at http://www.delmarlearning.com ALL RIGHTS RESERVED. Portions of this text 2000. No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution or information storage and retrieval systems without the written permission of the publisher. For permission to use material from this text or product, contact us by Tel (800) 730-2214 Fax (800) 730-2215 www.thomsonrights.com Library of Congress Cataloging-in- Publication Data Understanding medical coding : a comprehensive guide / [edited by] Sandra L. Johnson.--2nd ed. p. ; cm. Includes bibliographical references and index. 1. Nosology--Code numbers. I. Johnson, Sandra L., CMA. II. McHugh, Connie [DNLM: 1. Forms and Records Control-- methods. 2. Relative Value Scales. W 80 U55 2007] RB155.U525 2007 616.001'48--dc22 2006003055 ISBN 1-4180-1044-8 Notice to the Reader Publisher does not warrant or guarantee any of the products described herein or perform any independent analysis in connection with any of the product information contained herein. Publisher does not assume, and expressly disclaims, any obligation to obtain and include information other than that provided to it by the manufacturer. The reader is expressly warned to consider and adopt all safety precautions that might be indicated by the activities described herein and to avoid all potential hazards. By following the instructions contained herein, the reader willingly assumes all risks in connection with such instructions. The publisher makes no representations or warranties of any kind, including but not limited to, the warranties of fitness for particular purpose or merchantability, nor are any such representations implied with respect to the material set forth herein, and the publisher takes no responsibility with respect to such material. The publisher shall not be liable for any special, consequential, or exemplary damages resulting, in whole or part, from the reader s use of, or reliance upon, this material.
Chapter 1 Introduction to Coding KEY TERMS American Academy of Professional Coders (AAPC) American Health Information Management Association (AHIMA) Board of Advanced Medical Coding (BAMC) Centers for Medicare & Medicaid Services (CMS) Health Insurance Association of America (HIAA) Health Insurance Portability and Accountability Act (HIPAA) Healthcare Common Procedure Coding System (HCPCS) insurance abuse insurance fraud International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) Omnibus Budget Reconciliation Act (OBRA) Physicians Current Procedural Terminology (CPT) LEARNING OBJECTIVES Upon successful completion of this chapter, you should be able to: 1. Define coding and its purpose in health care. 2. Differentiate between insurance abuse and insurance fraud and list examples of each. 3. Recognize professional associations and credentials offered by each. 4. Identify the legal implications and ramifications of incorrect coding and the rules to follow for compliance and protection. 5. Name the resources available for coders. 6. List the types of codes used in health care and define each one. INTRODUCTION Centers for Medicare & Medicaid Services (CMS) An administrative agency within the Department of Health and Human Services (DHHS) that oversees Medicare, Medicaid, and other government programs. Formerly known as the Health Care Financing Administration (HCFA). Coding is defined as the translation of diagnoses, procedures, services, and supplies into numeric and/or alphanumeric components for statistical reporting and reimbursement purposes. Coding occurs when a medical term is cross-referenced into a three-, four-, or five-digit alphanumeric or numeric code. Coders abstract information from a patient record to assign the correct code(s). Knowledge of medical terminology is required to describe accurately the patient s reason for the encounter, which is the diagnosis, symptom, or complaint. Specific terms are also required to describe accurately surgical procedures, diagnostic tests, and medical services provided to the patient. With the passage of the Medicare Catastrophic Coverage Act of 1988, the Health Care Financing Administration (HCFA), now the Centers for Medicare & Medicaid Services (CMS), mandated the use of ICD-9-CM codes to report diagnoses and the treatment and HCPCS codes for services and supplies provided relative to those diagnoses. 1
2 Chapter 1 A CAREER AS A MEDICAL CODER The term coder actually describes many aspects of the coding/insurance specialist: Billers and/or coders who are employed in physician practices, immediate or urgent care centers, and other ambulatory providers of medical care. Coders in Health Information Administration departments of hospitals and skilled nursing facilities. Claims processors for government agencies and commercial insurance carriers. Educators in coding and insurance programs of allied health and vocational schools, community colleges, and universities. Self-employed consultants who work with medical practices assisting with billing, coding, auditing, and compliance issues. Writers and editors of informational and continuing education articles in professional journals and newsletters, and medical billing and insurance coding textbooks. The U.S. Department of Labor, Bureau of Labor Statistics projects careers in health insurance areas as noted in the previous list will increase through the year 2012. WHAT SKILLS ARE REQUIRED IN MEDICAL CODING? American Academy of Professional Coders (AAPC) The professional association for medical coders providing ongoing education, certification, networking and recognition, with certifications for coders in physicians offices and hospital outpatient facilities. While many medical coders have been trained on-the-job, formal training provided by allied health/vocational schools, community colleges, and universities is necessary. Such courses as medical terminology, anatomy and physiology, and basic coding as well as advanced instruction to include both the inpatient and outpatient coding essentials provide a good background for employment opportunities and the education necessary for certification. A certificate or degree in medical coding offered by educational institutions prepares an individual for both certification and employment. Computer skills are required for electronic claims processing and electronic data interchange (EDI) to share information between the provider and the insurance carrier. Internet knowledge is needed to explore the numerous web sites available to coders. Professional organizations, insurance companies, and government agencies such as Medicare and Medicaid, provide professional journals, newsletters, and bulletins via the Internet. Professional organizations also offer continuing education opportunities to their members online. Coding tools are available and listed later in this chapter. A credential in coding is recommended, and required by many health care facilities, as certification provides validation of the knowledge and skills necessary to earn respect and recognition in the profession. Recertification is required to maintain the credential and certification status by meeting continuing education requirements established by each association. Membership in a professional association is a benefit to a coder. Publications such as journals and newsletters as well as web sites for members-only provide continuing education, networking with other coding professionals, and employment and professional development opportunities. The American Academy of Professional Coders (AAPC) is an organization with national certification in four areas: Certified Professional Coder Apprentice CPC-A. This certification allows applicants who have not met the medical experience requirement in the outpatient setting the opportunity to become certified.
Introduction to Coding 3 Certified Professional Coder CPC. This certification is for coders with work experience and for the CPC-A who meet this requirement. Certified Professional Coder CPC-H. This certification is for hospital-based coders. Certified Professional Coder Apprentice CPC-HA. This certification allows hospital-based coders to become certified while working in coding to gain the experience required for the CPC-H credential. The AAPC can be contacted at www.aapc.com or at 800-626-8699. American Health Information Management Association (AHIMA) One of the four cooperating parties for ICD-9-CM. Professional association for over 38,000 Health Information Management Professionals throughout the country. The American Health Information Management Association (AHIMA) provides certification in three areas for health information management professionals: Certified Coding Associate CCA. This is certification for entry-level coders. Certified Coding Specialist CCS. This is a certification based on ICD-9-CM and CPT surgical coding performed in the hospital setting. Certified Coding Specialist/Physician Based CCS-P. This is certification for coders based on ICD-9-CM, multispecialty CPT coding, and HCPCS for physician practices. The AHIMA can be contacted at www.ahima.org or 312-233-1100. Board of Advanced Medical Coding (BAMC) An organization of coders, clinicians, and compliance professionals dedicated to the evaluation, recognition, and career advancement of professional medical coders within physician practices, facility and post-acute settings. The Board of Advanced Medical Coding (BAMC) provides specialty certification in the following areas: Anesthesia/Pain Management Cardiology Dermatology Facility Outpatient/Ambulatory Surgical Center Family Practice/Pediatrics Gastroenterology General Surgery Obstetrics/Gynecology Ophthalmology Orthopedics Radiology Urology The BAMC can be contacted at www.advancedmedicalcoding.com or 800-897-4509. EXERCISE 1 1 Visit the web site for the American Academy for Professional Coders www. aapc.com. Click on the Certification tab to read about the credentials available to coders in physician practices or other outpatient areas. Click on the Education tab to learn more about continuing education and recertification. Search the site for AAPC chapters in your state and local area, and workshops and seminars offered for recertification.
4 Chapter 1 WHAT IS FRAUD AND ABUSE? Health Insurance Portability and Accountability Act (HIPAA) Mandates regulations that govern privacy, security, and electronic transactions standards for health care information. insurance fraud Intentional, deliberate misrepresentation of information for profit or to gain some unfair or dishonest advantage. Health Insurance Association of America (HIAA) An agency providing statistics and resources for public health information which includes diseases, pregnancies, aging, and mortality. insurance abuse Inconsistent activities considered unacceptable business practice. To accurately assign codes, there must be an understanding of fraud and abuse and the rules of confidentiality. The Health Insurance Portability and Accountability Act (HIPAA) of 1996 defines insurance fraud as knowingly and willfully executing, or attempting to execute, a scheme or artifact: 1) to defraud any healthcare benefit program; or, 2) to obtain, by false or fraudulent pretenses, representing, or promising, any of the money or property owned by or under the custody or control of a health care benefit program. Statistics compiled by the Health Insurance Association of America (HIAA) identify the following major categories of health care fraud: Misrepresented diagnosis 43% Billing for services not performed 34% Waiver of patient deductibles 21% Other 2% Some examples of fraudulent activities are: Upcoding to a higher level of service to increase revenue. Submitting claims for services not medically necessary. Kickbacks or receiving rebates or any type of compensation for referrals. Misrepresenting a diagnosis to justify payment. Unbundling or billing separately for laboratory tests performed together in order to receive higher reimbursement. Billing Medicare patients a higher fee than non-medicare patients. Billing for services, equipment, supplies, or procedures that were never provided. Insurance abuse is not to be confused with fraud. Insurance abuse is defined as activities that are inconsistent with accepted business practices. Some examples of abuse are: overcharging for services, equipment, or procedures. violating participating provider agreements with insurance companies, such as routinely not collecting co-pays or unnecessary referrals to other providers. In some instances, routinely waiving a patient s co-pay could be considered a fraudulent activity as it is a violation of the insurance contract. improper billing practices. While fraud must be proven in a court of law as an intentional, deliberate act, coders and physicians must pay scrupulous attention to details when documenting medical information, coding, and submitting claims. Medical records documentation must be complete, legible, and accurate to appropriately assign Evaluation and Management codes; diagnosis codes must be correctly linked to the CPT codes to provide medical necessity for the service or procedure provided. If an abusive practice is ignored or continued without correction, an investigation as a potential fraudulent act could occur. The Health Insurance Portability and Accountability Act of 1996 establishes a formal link between government programs and the private insurance companies in an effort to provide recognition and penalties for submission of fraudulent claims. Penalties include a $10,000 fine per claim form when an individual knowingly and willfully misrepresents information submitted to result in greater payment or benefits, plus three times the fraudulent claim amount.
Introduction to Coding 5 Omnibus Budget Reconciliation Act (OBRA) A federal law outlining numerous areas of healthcare, establishing guidelines and penalties. There are also civil penalties for fraudulent claims and coding errors contained in the Omnibus Budget Reconciliation Act (OBRA) of 1987. OBRA penalizes the health-care provider for errors made by coders in the amount of $2,000 fine per violation (a single coding error), an assessment in lieu of damages of up to twice the amount of the error submitted on the claim, and exclusion from Medicare and Medicaid programs for up to five years. To avoid legal implications and ramifications, follow these rules: Keep current with coding and billing practices. Purchase new code books annually. Update encounter forms, charge tickets, and computer programs yearly as well. Know and understand coding rules and use them correctly. Code only what is documented in the medical record. If there is a question or confusion, ask for clarification. Respond to Explanation of Benefits (EOBs) and other correspondence from insurance companies. Failure to do so can be considered reckless disregard. Develop and follow a coding compliance program. This includes educating everyone in the practice of the importance of billing and coding policies, and these policies should be in a written format. The compliance plan should include provider credentialing, documentation standards for medical records, and training and education, as well as continuing education and professional development. A compliance officer or officers should be appointed to identify any noncompliant issues and make the necessary corrections. An internal audit system ensures that precertification authorizations have been completed and documented, and that codes assigned to procedures and services are relevant to the documentation in the medical record to provide medical necessity. TOOLS OF THE TRADE When it comes to coding and billing, the proper tools are essential for optimal reimbursement. Be sure the following resources are available in the workplace: current ICD-9-CM manual (issued every October) current CPT manual (issued every January) current HCPCS manual (issued every January) medical dictionary, including supplemental resources for medical abbreviations and acronyms carrier bulletins, newsletters, and Web sites Recommended Resources for Coders American Academy for Professional Coders www.aapc.com American Health Information Management Association www.ahima.org Board of Advanced Medical Coding www.advancedmedicalcoding.com Code Correct www.codecorrect.com CPT Assistant A monthly newsletter published by the American Medical Association (AMA), available by calling the AMA s Unified Service Center at 800-621-8335. Decision Coder www.decisionhealth.com Medicare Part B News www.partbnews.com National Correct Coding Initiative www.cms.hhs.gov/physicians/cciedits
6 Chapter 1 EXERCISE 1 2 Visit the web site for the American Health Information Management Association (AHIMA) at www.ahima.org. Click on About AHIMA to learn about the health information management profession, credentialing, and certification. Click on the HIM Resources to read more about ICD-10-CM. TYPES OF CODING Healthcare Common Procedure Coding System (HCPCS) Coding system that consists of CPT and national codes (level II), used to identify procedures, supplies, medications (except vaccines), and equipment. In 1983, Medicare created the Healthcare Common Procedure Coding System (HCPCS) (pronounced hick picks ). HCPCS codes are required when reporting services and procedures provided to Medicare and Medicaid beneficiaries. HCPCS is a three-level coding system: Level I CPT Level II National Codes Level III Local Codes Deleted 12/31/03 Level I CPT Codes Physicians Current Procedural Terminology (CPT) Numeric codes and descriptors for services and procedures performed by providers, published by the American Medical Association. The Physicians Current Procedural Terminology (CPT), published by the American Medical Association, is a listing of descriptive terms with codes for reporting medical services and procedures performed by health care providers. CPT provides uniformity in accurately describing medical, surgical, and diagnostic services for effective communication among physicians, patients, and third-party payers. CPT was introduced in 1966, and has undergone editing and modification to the current revision. The greatest change in CPT, having a major impact on coders, occurred in 1992 when evaluation and management services were created. This CPT section requires practitioners to make a decision as to level of service for offices, hospitals, nursing home services, etc. Because CPT codes are updated annually, Appendix B of the CPT book summarizes the changes since the previous edition, including additions and deletions essential for updating computer programs and/or encounter forms used in the facility. The CPT Manual is referred to today as a volume reflecting the year of publication (for example, CPT-2005.) This textbook will refer to this procedural coding manual as CPT. Modifiers Appendix A of the CPT book contains a complete list of modifiers. A modifier is a two-digit code added to the main CPT code indicating the procedure has been altered by a specific circumstance.
Introduction to Coding 7 CPT example: Procedure: Biopsy of right breast, needle core CPT code: 19100 The code 19100 indicates a unilateral procedure. To indicate a bilateral procedure, the modifier -50 would be added to the CPT code. Example: 19100-50. Level II National Codes (referred to as HCPCS) Level II consists of alphanumeric national codes supplied by the federal government. These codes supplement CPT codes enabling providers to report nonphysician services such as durable medical equipment, ambulance services, supplies and medications, particularly injectable drugs. When billing Medicare and Medicaid for supplies and medications, avoid using CPT code 99070 (supplies and materials provided by the physician over and above those usually included with the office visit or other services). Level II codes list supplies and medications, especially injectable drugs, in more detail. Examples of Level II codes: Injection, dimenhydrinate, up to 50 mg J1240 Elastic bandage (Ace) A4460 Modifiers Level II also contains modifiers that are either alphanumeric or letters that can be used with all levels of HCPCS codes. EXAMPLES: -LT used to identify procedures performed on the left side of the body -RR used to identify durable medical equipment to be rented A listing of HCPCS Level II codes is available for purchase as an individual publication updated annually. Level III Local Codes Level III codes called local codes were deleted 12/31/03 under HIPAA regulations. Many local code concepts were moved to Level II. EXERCISE 1 3 Visit the Medicare Part B web site at www.partbnews.com. This site provides a free List-serv to receive e-mail updates and allow access to related articles about reimbursement, coding, and current information relating to Medicare for both providers and beneficiaries.
8 Chapter 1 ICD-9-CM Codes International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) Coding system used to report diagnoses, diseases, and symptoms and reason for encounters for insurance claims. The International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) is a modification of ICD-9, which was created by the World Health Organization (WHO) based in Geneva, Switzerland. Since 1979, ICD-9-CM has provided a diagnostic coding system for the compilation and reporting of morbidity and mortality statistics for reimbursement purposes in the United States. It allows for the reporting of conditions, injuries, and traumas along with complications and circumstances occurring with the illness or injury. It also provides the reason for patient care. The ICD-9-CM contains three volumes. All health care facilities utilize Volume 1 (Tabular List of Diseases) and Volume 2 (Alphabetic Index to Diseases) to report diagnoses. Hospitals use Volume 3 to report inpatient procedures (CPT is used to report procedures performed in physician offices, ambulatory care centers, and hospital outpatient departments). ICD-9-CM requires assignment of the most specific code to represent the problem being treated by the provider. This means the primary diagnosis should be the one for the condition indicated within the medical record as the primary reason the patient sought medical care in an outpatient or office setting, or the principal diagnosis in an inpatient setting. ICD-9-CM serves three major functions for insurance purposes: 1. It justifies procedures and services rendered by the physician. 2. It assists in establishing medical necessity for services and procedures performed by the physician. 3. It serves as an indicator in measuring the quality of health care delivered by the physician provider. ICD-10-CM ICD-10-CM is still being modified for implementation in the near future. While changes and training will be necessary, the basic guidelines will remain the same as ICD-9-CM. Anatomy is the foundation for ICD-10-CM, and criteria to select and assign a diagnostic code will be based on etiology, site, or morphology. The format will remain in three volumes: Volume 1 Tabular List Volume 2 Instruction Manual Volume 3 Alphabetic List ICD-10-PCS will replace Volume 3 of the current ICD-9-CM publication. The greatest difference between ICD-9-CM and ICD-10-CM is the revised codes are alphanumeric with more detailed descriptions. Early planning is the key element for a smooth transition to ICD-10-CM. Cost will be a key player in the implementation as technology changes will need to be made. Also, there must be a plan on how business will be conducted during the transition phase. Chapter 2 will discuss format and implementation of ICD-10-CM.
Introduction to Coding 9 SUMMARY The ultimate goal in coding is to present a clear picture of medical procedures and services performed (CPT codes), linking the diagnosis, symptom, complaint, or condition (ICD-9-CM codes), thus establishing the medical necessity required for third-party reimbursement. Continuing education is a must for medical billers and coders. Staying current and up to date on all billing and coding regulations is mandatory. One example is CMS s enforcement of Evaluation and Management Documentation Guidelines, developed jointly by CMS and the American Medical Association (AMA). These guidelines clearly outline documentation required in a patient s medical record for the CPT code submitted on the claim form, giving requirements for specific levels of service. The goal is to provide consistency and uniformity in medical record documentation for evaluation and management services. Many delays have occurred as the AMA and CMS continue to review and test the new guidelines. Billers and coders must keep abreast of these changes for final approval of these guidelines and their enforcement. As we move closer to replacing ICD-9-CM with ICD-10-CM, coders well-versed in ICD-9-CM will find the transition to ICD-10-CM relatively straightforward as the format and many of the coding conventions remain the same. Training will be conducted for all persons involved in the coding and billing process. Chapter 2 of this text presents an overview of ICD-10. REFERENCES American Academy for Professional Coders (AAPC). www.aapc.com. American Health Information Management Association (AHIMA). www.ahima.org. Board of Advanced Medical Coding (BAMC) www.advancedmedicalcoding.com. Fordney, M., & French, L. (2003). Medical insurance billing and coding: an essentials worktext. Philadelphia: Elsevier. Green, M., & Rowell, J. (2006). Understanding health insurance: A guide to professional billing and reimbursement (8th ed.). Clifton Park, NY: Thomson Delmar Learning.