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Overview of CodingOverview of Coding

CHAPTER

11Chapter Outline

• Career as a Coder• Professional Associations and

Discussion Boards

• Coding Overview• Documentation as Basis for Coding• Health Data Collection

application service provider (ASP)

Assessment (A)assumption codingautomated case

abstracting softwareautomated recordCenters for Medicare

& Medicaid Services (CMS)

claims examinerclassifi cation systemclearinghouseCMS-1450CMS-1500codercodescodingcoding systemcontinuity of careCurrent Procedural

Terminology (CPT)databasedemographic data

diagnostic/management plan

discharge notedocument imagingdocumentationdowncodingelectronic health record

(EHR)electronic medical

record (EMR)encodingHCPCS level IIHCPCS national codeshealth care

clearinghouseHealthcare Common

Procedure Coding System (HCPCS)

health care providerhealth data collectionHealth Insurance

Portability and Accountability Act of 1996 (HIPAA)

health insurance specialist

health planhospitalisthybrid recordindexedinitial planintegrated recordInternational

Classifi cation of Diseases, Ninth Revision, Clinical Modifi cation (ICD-9-CM)

International Classifi cation of Diseases, Tenth Revision, Clinical Modifi cation (ICD-10-CM)

International Classifi cation of Diseases, Tenth Revision, Procedure Coding System (ICD-10-PCS)

internship

internship supervisorjammingjukeboxListservmanual recordmedical assistantmedical management

softwaremedical necessitymedical nomenclaturemedical recordObjective (O)online discussion

boardoptical disk imagingovercodingpatient education planpatient recordphysician query processPlan (P)problem listproblem-oriented record

(POR)

Key Terms

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4 Part I Coding Overview

progress notesproviderresident physicianscannersectionalized record

source-oriented record (SOR)

specialty codersSubjective (S)teaching hospital

teaching physiciantherapeutic plansthird-party administrator

(TPA)third-party payer

transfer noteUB-04unbundlingupcoding

Chapter Objectives

At the conclusion of this chapter, the student should be able to:

• Defi ne key terms.• Explain coding career opportunities and the coding credentialing process.• Identify professional associations and describe the benefi ts of membership.• Clarify student responsibilities during a coding internship.• Identify coding systems used for reimbursement, and indicate the relationship

between patient record documentation and accurate coding.

IntroductionThis chapter provides an overview of coding systems used to report inpatient and outpatient diagno-ses and procedures and services to health plans. It also focuses on coding career opportunities in health care, the importance of joining professional associations and obtaining coding credentials, the impact of networking with other coding professionals, and the development of opportunities for career advancement.

This chapter does not require the use of ICD-9-CM, CPT, or

HCPCS Level II coding manuals. However, later chapters

in this textbook do require them (because learning how

to code is easier when you use paper-based coding

manuals). The Encoder Pro CD-ROM, located inside the

back cover of this textbook, provides for a 30-day trial

use of encoding software. Do not install the software until

directed to do so by your instructor.

Note:

Career as a CoderA coder acquires a working knowledge of coding systems (e.g., CPT, HCPCS level II, and ICD-9-CM), coding principles and rules, government regulations, and third-party payer requirements to ensure that all diagnoses (conditions), services (e.g., offi ce visits), and procedures (e.g., surgery, x-rays) documented in patient records are coded accurately for reimbursement, research, and statistical pur-poses. Excellent interpersonal skills are required of coders because they communicate with providers about documentation and compliance issues related to the appropriate assignment of diagnosis and procedure/service codes.



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Chapter 1 Overview of Coding 5

TrainingTraining methods for those interested in pursuing a coding career include college-based programs that contain coursework in medical terminology, anatomy and physiology, health information management, pathophysiology, pharmacology, ICD-9-CM and HCPCS/CPT coding, and reimbursement methodologies. Many college programs also require students to complete a nonpaid internship (e.g., 240 hours) at a health care facility. Professional associations (e.g., the American Health Information Management Asso-ciation) offer noncredit-based coding training, usually as distance learning (e.g., Internet-based), and some health care facilities develop internal programs to retrain health professionals (e.g., nurses) who are interested in a career change.

Coding Internship

The coding internship benefi ts the student and the facility that accepts the student for placement. Stu-dents receive on-the-job experience prior to graduation, and the internship assists them in obtaining permanent employment. Facilities benefi t from the opportunity to participate in and improve the formal education process. Quite often, students who complete professional practice experiences (or internships) are later employed by the facility at which they completed the internship.

The internship supervisor is the person to whom the student reports at the site. Students are often required to submit a professional résumé to the internship supervisor and to schedule an interview prior to being accepted for placement. While this experience can be intimidating, it is excellent practice for the interview process that the student will undergo prior to obtaining permanent employment. Students should research the résumé writing and interview technique services available from the college’s career services offi ce. This offi ce will review résumés and will provide interview tips. (Some even videotape mock interviews for students.)

The internship is on-the-job training even though it is nonpaid, and students should expect to provide proof of immunizations (available from a physician) and possibly undergo a preemploy-ment physical examination and participate in facility-wide and department-specifi c orientations. In addition, because of the focus on privacy and security of patient information, the facility will likely require students to sign a nondisclosure agreement (to protect patient confi dentiality), which is kept on fi le at the college and by the professional practice site.

During the internship, students are expected to report to work on time. Students who cannot attend the internship on a particular day (or who arrive late) should contact their internship supervisor

Although graduates of medical assistant and medical

office administration programs typically do not

become employed as full-time coders, they often are

responsible for the coding function in a physician’s

office or medical clinic. This chapter provides the

following resources for students pursuing any health-

related academic program that includes coding as a

job function:

• Professional associations that offer coding and other

certifi cation exams.

• Internet-based discussion boards that cover coding

and other topics.

• Impact of HIPAA federal legislation on coding and

reimbursement.

• Coding references and other resources that facilitate

accurate coding.

• Physician query process as a way to prevent

assumption coding.

• Manual and automated patient record formats and

health data collection.

Note:

Note:

Breach of patient confi dentiality

can result in termination from

the internship site, failure of the

internship course, and even possible

suspension and/or expulsion from

your academic program. Make

sure you check out your academic

program’s requirements regarding

this issue.



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or program faculty, whoever is designated for that purpose. Students are also required to make up any lost time. Because the internship is a simulated job experience, students are to be well groomed and should dress professionally. Students should show interest in all aspects of the experience, develop good working relationships with coworkers, and react appropriately to criticism and direction. If any con-cerns arise during the internship, students should discuss them with their internship supervisor and/or program faculty.

CredentialsThe American College of Medical Coding Professionals (ACMCP), American Health Information Manage-ment Association (AHIMA) and the American Academy of Professional Coders (AAPC) offer certifi cation in coding. Credentials available from the ACMPS include the following:

• Coding Specialist for Payors (CSP)

• Facility Coding Specialist (FCS)

• Physician Coding Specialist (PCS)

Credentials available from AHIMA include the following:

• Certifi ed Coding Associate (CCA)

• Certifi ed Coding Specialist (CCS)

• Certifi ed Coding Specialist—Physician-based (CCS-P)

The AAPC offers the following core certifi cation exams:

• Certifi ed Professional Coder (CPC)

• Certifi ed Professional Coder, Apprentice status (CPC-A)

• Certifi ed Professional Coder—Hospital (CPC-H)

• Certifi ed Professional Coder—Hospital, Apprentice status (CPC-H-A)

• Certifi ed Professional Coder—Payer (CPC-P)

• Certifi ed Interventional Radiology Cardiovascular Coder (CIRCC)

The AAPC also offers specialty certifi cations in response to a demand for specialty coders who have obtained advanced training in medical specialties and who are skilled in compliance and reimbursement areas. A partial list of specialty credentials available from the AAPC include the following:

• Ambulatory Surgical Center (ASC)

• Anesthesia (ANEST)

• Cardiology (CARDIO)

• Cardiovascular and Thoracic Surgery (CTS)

• Emergency Department (ED)

• E/M Auditor (E/M)

• Family Practice Medicine (FP)

• Gastroenterology (GI)

• General Surgery (GENSG)

• Internal Medicine (INTMED)



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The American Medical Billing Association (AMBA) offers the Certifi ed Medical Reimbursement Spe-cialist (CMRS) exam, which recognizes the competency of members who have met high standards of profi ciency. According to AMBA, Certifi ed Medical Reimbursement Specialists (CMRS) are skilled in facili-tating the claims reimbursement process from the time a service is rendered by a health care provider until the balance is paid. The CMRS is knowledgeable in ICD, CPT, and HCPCS level II coding; medical terminology; insurance claims and billing; appeals and denials; fraud and abuse; Health Insurance Por-tability and Accountability Act (HIPAA) regulations; Offi ce of Inspector General (OIG) compliance; informa-tion and Internet technology; and reimbursement methodologies.

The type of health care setting in which you seek employment will indicate which credential(s) you should pursue. Inpatient and/or outpatient coders obtain CCS certifi cation, and physician offi ce coders choose the CCS-P and/or CPC credential. Outpatient coders also have the option of selecting the CPC-H credential. Insurance specialists who work for health care facilities and third-party payers obtain the CCS-P. Those who have not met requirements for fi eld experience as a coder can seek apprentice-level certifi cation as a CCA, CPC-A, or CPC-H-A.

Once certifi ed, both professional associations require maintenance of the credential through continu-ing education (CE) recertifi cation. AHIMA requires 20 CE hours per cycle (two years) for one credential and a total of 30 CEs per cycle (two years) if the individual is certifi ed as both a CCS and CCS-P. The AAPC requires 18 CE hours per year to maintain one core credential, 24 CE hours per year to maintain two core credentials, and 30 CE hours per year to maintain three core credentials.

Employment OpportunitiesCoders can obtain employment in a variety of settings, including clinics, consulting fi rms, government agen-cies, hospitals, insurance companies, nursing facilities, home health agencies, hospices, and physicians’ offi ces. Coders also have the opportunity to work at home for employers who partner with an Internet-based application service provider (ASP) (e.g., eWebCoding by ChartOne), which is a third-party entity that manages and distributes software-based services and solutions to customers across a wide area network (WAN) (computers that are far apart and are connected by telephone lines) from a central data center.

The AAPC continues to investigate further expansion

of its body of certifi cations to prepare coders for

profi ciency in medical and surgical specialty coding.

Technological advancements and changes in outpatient

and inpatient prospective payment system regulations,

such as medicare severity diagnosis-related groups

(MS-DRGs), create a compliance risk that has to be

carefully monitored. Specialty coders have the expertise

to monitor such areas, impacting the facility’s coding

and reimbursement process. Specialty coders typically

perform the following tasks:

• Analyze provider documentation for accuracy, completeness, and timeliness.

• Maintain and update chargemasters and/or encounter forms.

• Meet with coding staff members to educate them about revised rules and regulations.

• Review patient charges to accuracy in reported codes and modifi ers, and enter billing edits.

• Write letters of appeals to address third-party payer reimbursement denials.

Note:

OTHER PROFESSIONS RELATED TO THE CODER

One profession that is closely related to a coder is that of a health insurance specialist (or claims

examiner). When employed by third-party payers, these specialists review health-related claims to determine whether the costs are reasonable and medically necessary based on the patient’s diagnosis. This process involves verifi cation of the claim against third-party payer guidelines to authorize appropriate payment or to refer the claim to an investigator for a more thorough review.

(continued)



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Exercise 1.1 – Career as a CoderInstructions: Match the career with its description. Answers may be assigned more than once.

_______ 1. Answers telephones, greets patients, and updates and fi les patient medical records

_______ 2. Communicates with providers about documentation and compliance issues

_______ 3. Reviews claims for third-party payers to determine whether costs are reasonable and medically necessary

_______ 4. Schedules hospital admission and laboratory services

_______ 5. Verifi es claims against third-party payer guidelines to authorize appropriate payments

a. Coder b. Health insurance

specialist c. Medical assistant

Another profession that is closely related to a coder is the medical assistant. When employed by a provider, this person performs administrative and clinical tasks to keep the offi ce and clinic running smoothly. Medical assistants who specialize in administrative aspects of the profession answer tele-phones, greet patients, update and fi le patient medical records, complete insurance claims, process correspondence, schedule appointments, arrange for hospital admission and laboratory services, and manage billing and bookkeeping.

When employed by a physician’s offi ce, health insurance specialists and medical assistants per-form medical billing, coding, record keeping, and other medical offi ce administrative duties. Health insurance specialists (or claims examiners) and medical assistants receive formal training in college-based programs or at vocational schools. They also receive on-the-job training.

• Health insurance specialists (or claims examiners) and medical assistants often become certifi ed as a CCS or a CCS-P (through the AHIMA) or as a CPC-P (through the AAPC).

• The health insurance specialist also has the option of becoming credentialed by the: • Medical Association of Billers (MAB) as a Certifi ed Medical Billing Specialist (CMBS). • National Association of Claims Assistance Professionals (NACAP) as a Certifi ed

Claims Assistance Professional (CCAP) (assists consumers in obtaining full benefi ts from health care coverage) or as a Certifi ed Electronic Claims Professional (CECP) (converts patient billing information into electronically readable formats).

• National Electronic Billers Alliance (NEBA) as a Certifi ed Healthcare Reimbursement Specialist (CHRS).

• Health insurance specialists can participate in the International Claim Association (ICA) program of education. The ICA offers Associate, Life and Health Claims (ALHC) and Fel-low, Life and Health Claims (FLHC) examinations to claims examiners in the life and health insurance industries.

• Medical assistants often become credentialed as a Certifi ed Medical Assistant (CMA) through the American Association of Medical Assistants (AAMA) or as a Registered Medical Assistant (RMA) through the American Medical Technologists (AMT).

Health insurance specialists (or claims examiners) and medical assistants obtain employment in clinics, health care clearinghouses, health care facility billing departments, insurance companies, and physicians’ offi ces and with third-party administrators (TPAs). When employed by clearing houses, insurance companies, or TPAs, they often have the opportunity to work at home, where they process and verify health care claims using an Internet-based application server provider (ASP).



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Instructions: Match the professional association with the certifi cation exam it offers.

_______ 6. Certifi ed Coding Specialist (CCS)

_______ 7. Certifi ed Medical Reimbursement Specialist (CMRS)

_______ 8. Certifi ed Professional Coder (CPC)

_______ 9. Certifi ed Electronic Claims Professional (CECP)

_______ 10. Fellow, Life and Health Claims (FLHC)

a. AAPC b. NACAP c. AHIMA d. ICA e. AMBA

Professional Associations and Discussion BoardsStudents are often able to join a professional association (Table 1-1) for a reduced membership fee and receive most of the same benefi ts as active members (who pay much more!). Benefi ts of joining a pro-fessional association include the following:

• Eligibility for scholarships and grants

• Opportunity to network with members (internship and job placement)

• Free publications (e.g., professional journals)

• Reduced certifi cation exam fees

• Web site access for members only

Attending professional association conferences and meetings provides opportunities to network with professionals. Another way to network is to join an online discussion board (or Listserv) (Table 1-2), which is an Internet-based or e-mail discussion forum that covers a variety of topics and issues.

Table 1-1 Professional Associations

Career Professional Association

Coder American Academy of Professional Coders (AAPC) American Health Information Management Association (AHIMA)

Health Insurance Specialist

International Claim Association (ICA)American Medical Billing Association (AMBA)Medical Association of Billers (MAB)National Association of Claims Assistance Professionals (NACAP)

Medical Assistant American Association of Medical Assistants (AAMA)American Medical Technologists (AMT)

Table 1-2 Internet-Based Discussion Boards (Listservs)

Name of Discussion Board Web Site

AHIMA communities of practice AHIMA members can log in at https://www.ahimanet.org

Coders forum Go to http://www.advanceforhim.com and select “Forums” from the “Community” dropdown menu.

Hospital outpatient coders Go to http://list.nih.gov and click on the Browse link. Click on the OP-PPS-L (Outpatient Prospective Payment System List) link.

Medicare Part B claims Go to http://www.partbnews.com and click on the Join Part B-L Listserv link.

Physician offi ce lab billing, reimbursement, and compliance issues

Go to http://www.partbnews.com and click on the Join FREE POL-L Listserv link.



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Coding OverviewCoding systems and medical nomenclatures are used by health care facilities, health care providers, and third-party payers to collect, store, and process data for a variety of purposes (e.g., health care reimburse-ment). A coding system (or classifi cation system) organizes a medical nomenclature according to similar conditions, diseases, procedures, and services, and it contains codes for each. (ICD-9-CM arranges these elements into appropriate chapters and sections.) A medical

nomenclature is a vocabulary of clinical and medical terms (e.g., arthritis, gastritis, pneumonia) used by health care providers to docu-ment patient care. Codes include numeric and alphanumeric charac-ters that are reported to health plans for health care reimbursement, to external agencies (e.g., state departments of health) for data col-lection, and internally (acute care hospital) for education and research. Coding is the assignment of codes to diagnoses, services, and procedures based on patient record documentation.

EXAMPLE

CODING SYSTEMS:

• The International Classifi cation of Diseases, Ninth Revision, Clinical Modifi cation (ICD-9-CM) was adopted in 1979 to classify diagnoses (Volumes 1 and 2) and procedures (Volume 3). All health care facilities assign ICD-9-CM codes to report diagnoses; hospitals also report ICD-9-CM procedure codes for inpatient procedures and services. Eventually the International Classifi cation of Diseases, Tenth Revision, Clinical Modifi cation (ICD-10-CM) (and ICD-10-PCS) will be adopted to replace ICD-9-CM, but the implementation date has not yet been established.

• The International Classifi cation of Diseases, Tenth Revision, Procedure Coding System (ICD-10-

PCS) was developed by the National Center for Health Statistics (NCHS) to replace Volume 3 of ICD-9-CM; when implemented, it will be used to classify inpatient procedures and services.

• The Current Procedural Terminology (CPT) was originally published by the American Medical Association (AMA) in 1966. Subsequent editions were published about every fi ve years until the late 1980s, when the AMA began publishing annual revisions. CPT classifi es procedures and services, and it is used by physicians and outpatient health care settings (e.g., the hospital ambulatory surgery department) to assign CPT codes for reporting procedures and services on health insurance claims. CPT is considered level I of the Healthcare Common Procedure Coding System (HCPCS).

Note:

You are already familiar with a

well-known coding system called

the United States Postal Service

ZIP Code system, which classifi es

addresses as numbers (e.g.,

12345-9876).

Exercise 1.2 – Professional Associations and Discussion BoardsInstructions: Match the professional with the professional association. Answers may be assigned more than once.

_______ 1. AAMA

_______ 2. AAPC

_______ 3. NACAP

_______ 4. AHIMA

_______ 5. AMT

a. Coder b. Health insurance

specialist c. Medical assistant



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• The Healthcare Common Procedure Coding System (HCPCS) also includes level II (national) codes, called HCPCS level II (or HCPCS national codes), which are managed by the Centers for

Medicare & Medicaid Services (CMS), an administrative agency in the federal Department of Health and Human Services (DHHS). HCPCS level II classifi es medical equipment, injectable drugs, transportation services, and other services not classifi ed in CPT. Physicians and ambu-latory care settings use HCPCS level II to report procedures and services. (HCPCS level III local codes were discontinued in 2004. They had been managed by Medicare carriers and fi s-cal intermediaries (FIs), which are now called Medicare administrative contractors, or MACs, effective 2005. You might come across the use of HCPCS level III local codes in health care facility or insurance company databases.)

EXAMPLE

MEDICAL NOMENCLATURE:

• The Systematized Nomenclature of Medicine (SNOMED) was originally developed by the Col-lege of American Pathologists (CAP) in 1974 and is cross-referenced to the ICD-9-CM. It can also be considered a classifi cation system because it contains codes for activities within the patient record (e.g., medical diagnoses, procedures, nursing diagnoses, nursing pro-cedures, patient signs and symptoms, occupational history, and causes and etiologies of diseases).

• The current revision, of SNOMED, created in 2002, is called SNOMED Clinical Terms (or SNOMED CT); it includes comprehensive coverage of diseases, clinical fi ndings, therapies, procedures, and outcomes. It combines the content and structure of a previous revision of SNOMED with medical nomenclatures titled the United Kingdom’s National Health Service’s Clinical Terms Version 3 (formerly called Read Codes, developed in the early 1980s by Dr. James Read to record and retrieve primary care data in a computer).

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is federal legislation that amended the Internal Revenue Code of 1986 to:

• Improve portability and continuity of health insurance coverage in the group and individual markets.

• Combat waste, fraud, and abuse in health insurance and health care delivery.

• Promote the use of medical savings accounts.

• Improve access to long-term care services and coverage.

• Simplify the administration of health insurance by creating unique identifi ers for providers, health plans, employers, and individuals.

• Create standards for electronic health information transactions.

• Create privacy and security standards for health information.

To facilitate the creation of standards for electronic health information transactions, HIPAA requires two types of code sets to be adopted for the purpose of encoding data elements (e.g., procedure and service codes). Encoding is the process of standardizing data by assigning numeric values (codes or numbers) to text or other information (e.g., diagnosis and gender).

Large code sets encode:

• Diseases, injuries, impairments, other health-related problems, and their manifestations.

• Causes of injury, disease, impairment, or other health-related problems.

• Actions taken to prevent, diagnose, treat, or manage diseases, injuries, and impairments.

• Substances, equipment, supplies, or other items used to perform these actions.



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Small code sets encode:

• Race/ethnicity.

• Type of facility.

• Type of unit.

EXAMPLE

• SMALL CODE SET: A patient’s gender is assigned a 1 if male, a 2 if female, or a 3 if undetermined.

• LARGE CODE SET: The diagnosis “essential hypertension” is assigned ICD-9-CM code 401.9.

HIPAA also requires the following specifi c code sets to be adopted for use by clearinghouses, health plans, and providers:

• International Classifi cation of Diseases, Ninth Revision, Clinical Modifi cation (ICD-9-CM)

• Current Procedural Terminology (CPT)

• HCPCS level II (national codes)

• Current Dental Terminology (CDT)

• National Drug Codes (NDC)

A clearinghouse (or health care clearinghouse) is a public or private entity (e.g., billing service) that processes or facilitates the processing of health information and claims from a nonstandard to a stan-dard format. A health plan (or third-party payer) (e.g., Blue Cross/Blue Shield, a commercial insurance company) is an insurance company that establishes a contract to reimburse health care facilities and patients for procedures and services provided. A provider (or health care provider) is a physician or another health care professional (e.g., a nurse practitioner or physician assistant) who performs procedures or provides services to patients. Adopting HIPAA’s standard code sets has improved data quality and simplifi ed claims submission for health care pro-viders who routinely deal with multiple third-party payers. The code sets have also simplifi ed claims processing for health plans. Health plans that do not accept standard code sets are required to modify their systems to accept all valid codes or to contract with a health care clearinghouse that does accept standard code sets.

Coding ReferencesProfessional organizations that are recognized as national authorities on CPT, HCPCS, and ICD-9-CM cod-ing publish references and resources that are invaluable to coders. To ensure the development of excel-lent coding skills, make sure you become familiar with and use the following references and resources:

• AHA Coding Clinic for ICD-9-CM and AHA Coding Clinic for HCPCS, quarterly newsletters published by the American Hospital Association and recognized by the CMS as offi cial coding resources

• Conditions of Participation (CoP) and Conditions for Coverage (CfC), Medicare regulations published by CMS

• CPT Assistant and HCPCS Assistant, monthly newsletters published by the AMA and recognized by CMS as offi cial coding resources

• National Correct Coding Initiatives (NCCI), code edit pairs that cannot be used in the same claim (developed by CMS and published by the federal government’s National Technical Information Service [NTIS])

Note:

A health care clearinghouse is not a third-party administrator (TPA),

which is an entity that processes

health care claims and performs

related business functions for a

health plan. The TPA might contract

with a health care clearinghouse

to standardize data for claims

processing.



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• Compliance program guidance documents, guidelines published by the DHHS OIG

• ICD-9-CM Offi cial Guidelines for Coding and Reporting, guidelines provided by CMS and the NCHS to be used as a companion document to the offi cial version of the ICD-9-CM

• Outpatient Code Editor with Ambulatory Payment Classifi cation, software developed by CMS, distributed by NTIS, and used by hospitals to edit outpatient claims to help identify possible CPT/HCPCS coding errors and assign Ambulatory Payment Classifi cations (APCs) that are used to generate reimbursement

Incorporating the use of the above references and resources assists coders in avoiding the following abusive and fraudulent (dis-honest and illegal) coding practices:

• Unbundling (reporting multiple codes to increase reimbursement when a single combination code should be reported)

• Upcoding (reporting codes that are not supported by documentation in the patient record for the purpose of increasing reimbursement)

• Overcoding (reporting codes for signs and symptoms in addition to the established diagnosis code)

• Jamming (routinely assigning a 0 or 9 as the fourth- or fi fth-digit position of an ICD-9-CM disease code instead of reviewing the coding manual to select the appropriate code number)

• Downcoding (routinely assigning lower-level CPT codes as a convenience instead of reviewing patient record documentation and the coding manual to determine the proper code to be reported)

Exercise 1.3 – Coding OverviewInstructions: Match the type of code set with its description. Answers may be assigned more than once.

_______ 1. Race, ethnicity, type of facility, and type of unit

_______ 2. Substances, equipment, supplies, or other items

_______ 3. Actions taken to prevent, diagnose, treat, or manage diseases, injuries, and impairments

_______ 4. Causes of injury, disease, impairment, or other health-related problems

_______ 5. Diseases, injuries, impairments, other health-related problems, and their manifestations

Instructions: If the title is a coding system, enter a; if the title is a medical nomenclature, enter b.

_______ 6. SNOMED

_______ 7. National Health Service’s Clinical Terms Version 3

_______ 8. ICD-9-CM

_______ 9. HCPCS level II

_______ 10. Read Codes

a. Large code set b. Small code set

a. Coding system b. Medical nomenclature

Note:

Offi cial coding policy is published

in the AHA Coding Clinic for ICD-9-CM and AHA Coding Clinic forHCPCS, in the AMA’s CPT Assistant, and as National Correct Coding

Initiative (NCCI) edits. The AAPC and

AHIMA publish coding newsletters,

journals, and so on, but such

publications do not contain offi cial

coding policy.



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Documentation as Basis for CodingHealth care providers are responsible for documenting and authenticating legible, complete, and timely patient records in accordance with federal regulations (e.g., Medicare CoP) and accrediting agency standards (e.g., Joint Commission on Accreditation for Healthcare Organizations). The provider is also responsible for correcting or altering errors in patient record documentation.

A patient record (or medical record) is the business record for a patient encounter (inpatient or out-patient) that documents health care services provided to a patient. It stores patient demographic data and documentation that supports diagnoses, and justifi es treatment. It also contains the results of treatment provided. (Demographic data is patient identifi cation information that is collected according to facility policy and includes information such as the patient’s name, date of birth, mother’s maiden name, and Social Security number.) The primary purpose of the record is to provide for continuity of care, which involves documenting patient care services so that others who treat the patient have a source of information on which to base additional care and treatment. The record also serves as a communication tool for physicians and other patient care professionals. It assists in planning individual patient care and documenting a patient’s illness and treatment. Secondary purposes of the record do not relate directly to patient care and include:

• Evaluating the quality of patient care.

• Providing data for use in clinical research, epidemiology studies, education, public policy making, facilities planning, and health care statistics.

• Providing information to third-party payers for reimbursement.

• Serving the medicolegal interests of the patient, facility, and providers of care.

Documentation includes dictated and transcribed, typed or handwritten, and computer-generated notes and reports recorded in the patient’s records by a health care professional. Documentation must be dated and authenticated (with a legible signature or electronic authentication).

In a teaching hospital, documentation must identify what service was furnished, how the teaching physician participated in providing the service, and whether the teaching physician was physically pres-ent when care was provided. A teaching hospital is engaged in an approved graduate medical education (GME) residency program in medicine, osteopathy, dentistry, or podiatry. A teaching physician is a physi-cian (other than another resident physician) who supervises residents during patient care. A resident

physician is an individual who participates in an approved GME program. (Physicians who are authorized to practice only in a hospital setting are called hospitalists; some facilities also call them residents.)

Documentation in the patient record serves as the basis for coding. The information in the record must support codes submitted on claims for third-party payer reimbursement processing. The patient’s diagnosis must also justify diagnostic and/or therapeutic procedures or services provided. This is called medical necessity and requires providers to document services or supplies that are:

• Proper and needed for the diagnosis or treatment of a medical condition.

• Provided for the diagnosis, direct care, and treatment of a medical condition.

• Consistent with standards of good medical practice in the local area.

• Not mainly for the convenience of the physician or health care facility.

It is important to remember the familiar phrase “If it wasn’t documented, it wasn’t done.” The patient record serves as a medicolegal document and a business record. If a provider performs a service but doesn’t document it, the patient (or third-party payer) can refuse to pay for that service, resulting in lost revenue for the provider. In addition, because the patient record serves as an excellent defense of the quality of care administered to a patient, missing documentation can result in problems if the record has to be admitted as evidence in a court of law.



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EXAMPLE

MISSING PATIENT RECORD DOCUMENTATION:

A representative from XYZ Insurance Company reviewed 100 outpatient claims submitted by the Medical Center to ensure that all services billed were documented in the patient records. Upon reconciliation of claims with patient record documentation, the representative denied payment for 13 services (totaling $14,000) because reports of the services billed were not found in the patient records. The facility must pay back the $14,000 it received from the payer as reimburse-ment for the claims submitted.

MEDICAL NECESSITY:

• The patient underwent an x-ray of his right knee, and the provider documented “severe right shoulder pain” in the record. The coder assigned a CPT code to the “right knee x-ray” and an ICD code to the “right shoulder pain.” In this example, the third-party payer will deny reim-bursement for the submitted claim because the reason for the x-ray (shoulder pain) does not match the type of x-ray performed. For medical necessity, the provider should have docu-mented a diagnosis such as “right knee pain.”

• The patient underwent a chest x-ray, and the provider documented “severe shortness of breath” in the record. The coder assigned a CPT code to the “chest x-ray” and an ICD code to the “severe shortness of breath.” In this example, the third-party payer will reimburse the provider for services rendered because medical necessity for performing the procedure has been shown.

Coders are prohibited from performing assumption coding, which is the assignment of codes based on assuming, from a review of clinical evidence in the patient’s record, that the patient has certain diag-noses or received certain procedures/services even though the provider did not specifi cally document those diagnoses or procedures/services. According to the DHHS OIG Compliance Program Guidance for Third-Party Medical Billing Companies, assumption coding creates risk for fraud and abuse because the coder assumes certain facts about a patient’s condition or procedures/services although the physician has not specifi cally documented the level of detail to which the coder assigns codes. (Coders can avoid fraudulent assumption coding by implementing the physician query process that follows.)

EXAMPLE

ASSUMPTION CODING:

An elderly patient is admitted to the hospital for treatment of a fractured femur. Upon examina-tion, the physician documents that the skin around the fractured femur site has split open. X-ray of the left femur reveals a displaced fracture of the shaft. The patient underwent the following procedures: fracture reduction, skin incision, and full-leg casting. The physician documents “open fracture of shaft, left femur” as the fi nal diagnosis.

The coder assigns ICD-9-CM code 821.11 for the “open fracture of shaft, left femur,” which is correct. The coder assigns code 79.25 for the “fracture reduction and full-leg casting” procedure and code 86.09 for the “skin incision” procedure. Code 86.09 is correctly assigned; but code 79.25 is incorrect because its code description is “open reduction of fracture without internal fi xation, femur.” Although the patient has an open fracture, the physician did not perform an open reduction procedure. (An open reduction involves making a surgical incision to align displaced bones, and it may require external fi xation to heal properly.) In this case, the coder incorrectly “assumed” that an open reduction was performed because the patient’s open fracture was treated.

The code that should be assigned for this procedure is 79.05 because its code description is “closed reduction of fracture without internal fi xation, femur.” (A closed reduction involves casting the affected limb to stabilize the fracture for healing, and it might also require the physician to pull back two ends of bone that are touching each other and/or to correct any wide angles.) Of signifi -cance is that if the incorrect code (79.25) was submitted to the third-party payer, reimbursement would be $5,000. When the correct code (79.05) is submitted, reimbursement is just $3,000.



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When coders have questions about documented diagnoses or procedures/services, they should use a physician query process to contact the responsible physician to request clarifi cation about documenta-tion and the code(s) to be assigned. The process is activated when the coder notices a problem with documentation quality (e.g., an incomplete diagnostic statement when clinical documentation indicates that a more specifi c ICD-9-CM code should be assigned). The following guidelines should be followed when activating the physician query process:

• Query the physician based on clinical documentation provided in the patient record (e.g., lab report indicates an infectious organism but the physician did not document the organism in the diagnosis, diagnosis of urosepsis with symptoms of systemic infl ammatory response such as septicemia, documentation of anemia without etiology, clarifi cation of respiratory failure when documentation indicates respiratory distress but arterial blood gas analysis meets or exceeds established thresholds for respiratory failure).

• Determine whether the query will be generated concurrently (during inpatient hospitalization) or retrospectively (after patient discharge).

• Designate an individual who will serve as the physician’s contact during the physician query process (e.g., coding supervisor). Remember that the coder’s role is to assign codes based on documentation and that asking for clarifi cation is appropriate, but making an assumption about codes to be assigned is considered fraud. That means that coders should ask physicians open-ended questions to avoid leading the physicians by indicating a preference for a particular response. Coders do not make clinical assumptions—that is the sole responsibility of the physician.

• Use a query form (not scrap paper) to document the coder’s query and the physician’s response. If the completed query form is fi led in the patient’s record, determine whether it is considered an offi cial part of the record and subject to disclosure by those requesting copies of records or whether it is an administrative form that is not subject to disclosure. The query form could also be stored in an administrative fi le in the coding supervisor’s offi ce and the information resulting from the query documented kept in the patient record by the physician (e.g., an addendum to the discharge summary).

EXAMPLE

NEED FOR PHYSICIAN QUERY:

A patient is admitted with severe dyspnea (shortness of breath), chest pain, and fever. Upon physical examination, the physician documents rhonchi (gurgling sound in the lungs), wheezing, and rales (clicking, bubbling, or rattling sounds in the lungs). Laboratory data during the hospital-ization includes a culture and sensitivity report of sputum that documents the presence of gram-negative bacteria. The physician documents “viral pneumonia” as the fi nal diagnosis.

For this case, the coder should query the physician about the fi nal diagnosis because the “gram-negative bacteria” laboratory results indicate that this patient has bacterial pneumonia. Although the laboratory report is positive for “gram-negative bacteria,” it is inappropriate for the coder to assign a code for “bacterial pneumonia” without having queried the physician.

This case also includes documentation of signs and symptoms, which are due to the pneu-monia. Therefore, it is inappropriate for the coder to assign codes to symptoms of dyspnea, chest pain, fever or signs of rhonchi, wheezing, and rales.

The physician query results in the physician having the opportunity to correct the documented fi nal diagnosis.The coder will assign ICD-9-CM code 482.83 for pneumonia due to gram-negative bacteria (482.83) (instead of code 480.9 for viral pneumonia). The facility will receive additional reimbursement for reporting code 482.83 (approximately $3,500) compared to code 480.9 (approximately $2,500). Not querying the physician would have resulted in a loss of $1,000 to the facility.



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Patient Record FormatsHealth care facilities and physicians’ offi ces usually maintain either manual or automated records, and sometimes maintain a hybrid record. A manual record is paper-based, while an auto-

mated record uses computer technology. A hybrid record consists of both paper-based and computer-generated documents, which means the facility or offi ce creates and stores some patient reports as paper-based records (e.g., handwritten progress notes, physician orders, and graphic charts) and some documents using a computer (e.g., transcribed reports and automated labora-tory results). A variety of formats are used to maintain manual records, which include the source-oriented record (SOR), problem-oriented record (POR), and integrated record. Automated record formats include the electronic health record (EHR) (or computer-based patient record, CPR), electronic medical record (EMR), and optical disk imaging. Hybrid records use a combination format, such as the POR for paper-based reports and EMR for computer-stored reports.

Manual Record Formats

Source-oriented record (SOR) (or sectionalized record) reports are organized according to documentation (or data) source (e.g., ancillary, medical, and nursing). Each documentation (or data) source is located in a labeled section.

The problem-oriented record (POR) systematic method of documentation consists of four components:

• Database

• Problem list

• Initial plan

• Progress notes

The POR database contains patient information collected on each patient, including the following:

• Chief complaint

• Present conditions and diagnoses

• Social data

• Past, personal, medical, and social history

• Review of systems

• Physical examination

• Baseline laboratory data

The POR problem list serves as a table of contents for the patient record because it is fi led at the beginning of the record and contains a numbered list of the patient’s problems, which helps to index documentation throughout the record. The POR initial plan contains the strategy for managing patient care and any actions taken to investigate the patient’s condition and to treat and educate the patient. The initial plan consists of three categories:

• Diagnostic/management plans (plans to learn more about the patient’s condition and the management of the conditions)

• Therapeutic plans (specifi c medications, goals, procedures, therapies, and treatments used to treat the patient)

Note:

The workbook CD-ROM contains

electronic records that, if printed,

generate paper-based records. When

viewed on a computer monitor, they

are considered to be a sort of EHR.

True EHRs are generated by multiple

providers using specialized software,

and results are stored electronically

in a format that is easily retrievable

and viewable by users.



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• Patient education plans (plans to educate the patient about conditions for which the patient is being treated)

The POR progress notes are documented for each problem assigned to the patient, using the SOAP structure:

• Subjective (S) (patient’s statement about how he or she feels, including symptomatic information [e.g., “I have a headache”])

• Objective (O) (observations about the patient, such as physical fi ndings, or lab or x-ray results [e.g., chest x-ray negative])

• Assessment (A) (judgment, opinion, or evaluation made by the health care provider [e.g., acute headache])

• Plan (P) (diagnostic, therapeutic, and education plans to resolve the problems [e.g., patient to take Tylenol as needed for pain])

A discharge note is documented in the progress notes section of the POR to summarize the patient’s care, treatment, response to care, and condition on discharge—documentation of all problems is included. A transfer note is documented when a patient is being transferred to another facility. It summa-rizes the reason for admission, current diagnoses and medical information, and reason for transfer.

Integrated record reports are arranged in strict chronological date order (or in reverse date order), which allows for observation of how the patient is progressing according to test results and how the patient responds to treatment based on test results. Many facilities integrate only physician and ancil-lary services (e.g., physical therapy) progress notes, which require entries to be identifi ed by appropriate authentication (e.g., complete signature of the professional documenting the note as Mary Smith, RRT, registered respiratory therapist).

Automated Record Formats

The electronic health record (EHR) is a collection of patient information documented by a number of providers at different facilities regarding one patient. It is a multidisciplinary (many specialties) and mul-tienterprise (many facilities) approach to record keeping because it has the ability to link patient informa-tion created at different locations according to a unique patient identifi er (or identifi cation number). The EHR provides access to complete and accurate health problems, status, and treatment data; it contains alerts (e.g., of drug interaction) and reminders (e.g., prescription renewal notice) for health care provid-ers. According to the Journal of Contemporary Dental Practice, February 15, 2002, some professionals prefer to “use electronic instead of the earlier term computer-based because electronic better describes the medium in which the patient record is managed.”

The electronic medical record (EMR) is created on a computer, using a keyboard, a mouse, an optical pen device, a voice recognition system, a scanner, or a touch screen. Records are created using vendor software, which also assists in provider decision making (e.g., alerts, reminders, clinical decision sup-port systems, and links to medical knowledge). Numerous vendors offer EMR software, mostly to physi-cian offi ce practices that require practice management solutions (e.g., appointment scheduling, claims processing, clinical notes, patient registration).

Optical disk imaging (or document imaging) provides an alternative to traditional microfi lm or remote (off-site) storage systems because patient records are converted to an electronic image and saved on storage media (e.g., optical disks). Optical disk imaging uses laser technology to create the image, and a scanner is used to capture paper record images onto the storage media (e.g., optical disk). It allows for rapid automated retrieval of records. Although labor-intensive, optical disk imag-ing serves as an interim measure for facilities that want to move away from paper-based medical records toward development of an EHR. For optical disk imaging, the paper record must be prepared for scanning (e.g., removal of staples and separation of pages) so documents can pass through the scanner properly. The paper record is inserted into a document feeder (similar to that on a copy



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machine) that is attached to the scanner, and each report is pulled through the scanner so the image is saved to optical disk. Each scanned page is indexed, which means it is identifi ed according to a unique identifi cation number (e.g., patient record number). A unique feature is that documents for the same patient do not have to be scanned at the same time. Because each scanned page is indexed, the complete patient record can be retrieved even when a patient’s reports are scanned at a later time. Jukeboxes store large numbers of optical disks, resulting in huge storage capabilities (e.g., gigabytes of data). Optical disk imaging systems can also be networked, or connected, to other computer equipment in the facility, such as transcription systems and diagnostic imaging systems, which allows other data and documents to be added to the optical disk imaging system, thus creat-ing a complete patient record.

Exercise 1.4 – Documentation as Basis for CodingInstructions: If the statement indicates a primary purpose of the patient record, enter a. If the statement indicates a secondary purpose of the patient record, enter b.

_______ 1. Continuity of patient care

_______ 2. Evaluating quality of patient care

_______ 3. Providing data for use in clinical research

_______ 4. Serving medicolegal interests of patient, facility, and providers

_______ 5. Submitting information to payers for reimbursement

Instructions: Complete each statement.

6. The business record for a patient encounter that documents health care services provided to a patient is called a(n) .

7. Patient identifi cation information collected according to facility policy, which includes the patient’s name, date of birth, and so on, is called .

8. The primary purpose of the record is to provide for , which involves documenting patient care services so that others who treat the patient have a source of information on which to base additional care and treatment.

9. The patient’s diagnosis must justify diagnostic and/or therapeutic procedures or services provided, which is called .

10. A paper-based record is called a(n) record. 11. When reports are organized according to data source, the record is

being used. 12. When reports are arranged in strict chronological date order (or reverse date order), the

record is being used. 13. An automated record that is created on a computer, using a keyboard, a mouse, an

optical pen device, a voice recognition system, a scanner, or a touch screen is called the .

14. An automated record that provides an alternative to traditional microfi lm or remote storage systems because patient records are converted to an electronic image and saved on storage media is called .

15. The equipment that stores large numbers of optical disks, resulting in huge storage capabilities, is called a(n) .

a. Primary purpose b. Secondary purpose



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Health Data CollectionHealth data collection is performed by health care facilities and providers for the purpose of administra-tive planning, submitting statistics to state and federal government agencies (and other organizations), and reporting health claims data to third-party payers.

Reporting Hospital DataHospitals and other health care facilities use automated case abstracting software to collect and report inpatient and outpatient data for statistical analysis and reimbursement purposes. Data is entered in an abstracting software program (Figure 1-1), and the facility’s billing department imports it to the UB-04 (or CMS-1450) claim (Figure 1-2) for submission to third-party payers. The facility’s information technology department generates reports (e.g., procedure index) (Figure 1-3), which are used for statistical analy-sis. The UB-04 (or CMS-1450) is a standard claim (uniform bill) submitted by health care institutions to payers for inpatient and outpatient services. (The UB-04 is based on the UB-92, which was developed in 1992 and discontinued in 2007. There was also a UB-82, which was developed in 1982 and discontin-ued when the UB-92 was implemented.)

Figure 1-1 Sample data entry screen. (Permission to reuse granted by QuadraMed.)

EXAMPLE

Procedure indexes, profi t/loss statements, and patient satisfaction surveys are used by health care planning and forecasting committees to determine the types of procedures performed at its facilities and the costs associated with providing such services. As a result of report analysis, procedures that contribute to the facility’s profi ts and losses can be determined; in addition, some services may be expanded while others are eliminated.



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1 2 4 TYPEOF BILL

FROM THROUGH5 FED. TAX NO.

a

b

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ECI

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A B C D E F G HI J K L M N O P Q

a b c a b c

a

b c d

ADMISSION CONDITION CODESDATE

OCCURRENCE OCCURRENCE OCCURRENCE OCCURRENCE SPAN OCCURRENCE SPANCODE DATE CODE CODE CODE DATE CODE THROUGH

VALUE CODES VALUE CODES VALUE CODESCODE AMOUNT CODE AMOUNT CODE AMOUNT

TOTALS

PRINCIPAL PROCEDURE a. OTHER PROCEDURE b. OTHER PROCEDURE NPICODE DATE CODE DATE CODE DATE

FIRST

c. d. e. OTHER PROCEDURE NPICODE DATE DATE

FIRST

NPI

b LAST FIRST

c NPI

d LAST FIRST

UB-04 CMS-1450

7

10 BIRTHDATE 11 SEX 12 13 HR 14 TYPE 15 SRC

DATE

16 DHR 18 19 20

FROM

21 2522 26 2823 27

CODE FROMDATE

OTHER

PRV ID

THE CERTIFICATIONS ON THE REVERSE APPLY TO THIS BILL AND ARE MADE A PART HEREOF.

b

.INFO BEN.

CODEOTHER PROCEDURE

THROUGH

29 ACDT 30

3231 33 34 35 36 37

38 39 40 41

42 REV. CD. 43 DESCRIPTION 45 SERV. DATE 46 SERV. UNITS 47 TOTAL CHARGES 48 NON-COVERED CHARGES 49

52 REL51 HEALTH PLAN ID

53 ASG.54 PRIOR PAYMENTS 55 EST. AMOUNT DUE 56 NPI

57

58 INSURED’S NAME 59 P.REL 60 INSURED’S UNIQUE ID 61 GROUP NAME 62 INSURANCE GROUP NO.

64 DOCUMENT CONTROL NUMBER 65 EMPLOYER NAME

66 67 68

69 ADMIT 70 PATIENT 72 73

74 75 76 ATTENDING

80 REMARKS

OTHER PROCEDURE

a

77 OPERATING

78 OTHER

79 OTHER

81CC

CREATION DATE

3a PAT.CNTL #

24

b. MED.REC. #

44 HCPCS / RATE / HIPPS CODE

PAGE OF

APPROVED OMB NO.

e

a8 PATIENT NAME

50 PAYER NAME

63 TREATMENT AUTHORIZATION CODES

6 STATEMENT COVERS PERIOD

9 PATIENT ADDRESS

17 STAT STATE

DX REASON DX

496

ALFRED MEDICAL CENTER AETNA100 MILITARY HIGHWAY, SUITE 1BUFFALO

548 MAIN STREETALFRED NY

US 999 12345678914802 NY 14802

20037791452-25535 111

123456789 0102YY 0103YY6075551234 6075554321FOSTER MIKE 987654321

FOSTER MIKE

FOSTER MIKE 18 987654321 COMMERCIAL 495G

FOSTER MIKE3420 CANYON DRIVEALFRED NY 14802

02141969

11 0102YY

0324 CHEST XRAY SINGLE VIEW 71010 010204 1 74 50

74 50123ABC7890

74

0104YY1

AETNA 1265891895 Y Y

1

50

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ALFRED3420 CANYON DRIVE

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496

71010 0102YY

496 496234XYZ8901

TOWNSEND RHEA

71 PPSCODE

QUAL

LAST

LAST

National UniformBilling CommitteeNUBC™

OCCURRENCE

QUAL

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QUAL

LIC9213257

CODE DATE

A

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a

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b

Figure 1-2 UB-04 claim containing sample patient data (with highlighted form locators that contain ICD-9-CM and CPT codes)



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Figure 1-3 Sample procedure index

Reporting Physician Offi ce DataComputerized physicians’ offi ces use medical management software to enter claims data and either electronically submit CMS-1500 claims data to third-party payers or print paper-based CMS-1500 claims that are mailed or faxed to clearinghouses or payers for processing. The CMS-1500 is a standard claim submitted by physicians’ offi ces to third-party payers. Medical management software (e.g., Affi nity by QuadraMed, HealthQuest by McKesson Information Solutions, The Medical Manager, and Soft-Aid Medi-cal Offi ce Suite) is a combination of practice management and medical billing software that automates the daily workfl ow and procedures of a physician’s offi ce or clinic. The software automates the following functions:

• Appointment scheduling (e.g., initial and follow-up appointments) (Figure 1-4)

• Claims processing (e.g., CMS-1500 claims processing) (Figure 1-5)

• Patient invoicing (e.g., automated billing) (Figure 1-6)

• Patient management (e.g., patient registration) (Figure 1-7)

• Report generation (e.g., accounts receivable aging report) (Figure 1-8)

Medical assistants and insurance specialists use medical management software to collect data for reimbursement purposes by locating patient information, inputting ICD-9-CM and CPT/HCPCS codes for diagnoses and procedures/services, and generating and processing CMS-1500 claims. Medical man-agement software generates claims for a variety of medical specialties, and claims can be printed and mailed to clearinghouses, TPAs, or third-party payers for processing. The software also allows for sub-mission of HIPAA-compliant electronic claims to clearinghouses, TPAs, or third-party payers.



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Figure 1-4 Appointment scheduling screen. (Permission to reuse granted by Soft-Aid, Inc.)

Figure 1-5 Claims processing screen. (Permission to reuse granted by Soft-Aid, Inc.)



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Figure 1-6 Billing screen. (Permission to reuse granted by Soft-Aid, Inc.)

Figure 1-7 Patient registration screen. (Permission to reuse granted by Soft-Aid, Inc.)



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Figure 1-8 Accounts receivable aging report. (Permission to reuse granted by Soft-Aid, Inc.)

When records are reviewed to select ICD-9-CM, CPT, and HCPCS codes for reporting to third-party payers, documentation in the patient record serves as the basis for coding. Coders are responsible for reviewing patient records to select the appropriate diagnoses and procedures/services to which codes are assigned. Information in the record must support the codes submitted on claims for third-party payer reimbursement processing. The patient’s diagnosis must justify diagnostic or therapeutic procedures or services provided (medical necessity), and the provider must document services or supplies that:

• Are proper and needed for the diagnosis or treatment of a medical condition.

• Are provided for the diagnosis, direct care, and treatment of a medical condition.

• Meet the standards of good medical practice in the local area.

• Are not mainly for the convenience of the physician or health care facility.

Claims can be denied if the medical necessity of procedures or services is not established. Each procedure or service reported on the CMS-1500 claim must be linked to a condition that justifi es the necessity for performing that procedure or providing that service. If the procedures or services delivered are determined to be unreasonable and unnecessary, the claim is denied. On the UB-04 claim, proce-dures/services are not linked; however, payers often request copies of patient records to review docu-mentation to verify diagnoses, procedures, and services reported on the claim.



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Exercise 1.5 – Health Data CollectionInstructions: Complete each statement. 1. Appointment scheduling and claims processing are processes associated with

software. 2. Hospital coders use automated software to collect and report

inpatient and outpatient data for statistical analysis and reimbursement purposes. 3. Physicians’ offi ces submit data to third-party payers on the claim. 4. Hospitals submit data to third-party payers on the claim. 5. Claims are denied if of procedures or services is not established.

SummaryA coder is expected to master the use of coding systems, coding principles and rules, government regu-lations, and third-party payer requirements to ensure that all diagnoses, services, and procedures docu-mented in patient records are accurately coded for reimbursement, research, and statistical purposes. To prepare for entry into the profession, students are encouraged to join a professional association. They usually pay a reduced membership fee and receive most of the same benefi ts as active members. The benefi ts of joining a professional association include eligibility for scholarships and grants, opportunity to network with members, free publications, reduced certifi cation exam fees, and Web site access for members only.

Coding systems and medical nomenclatures are used by health care facilities, health care provid-ers, and third-party payers to collect, store, and process data for a variety of purposes. A coding system organizes a medical nomenclature according to similar conditions, diseases, procedures, and services; it contains codes for each. A medical nomenclature is a vocabulary of clinical and medical terms used by health care providers to document patient care. Codes include numeric and alphanumeric characters that are reported to health plans for health care reimbursement and to external agencies for data col-lection and internally for education and research. Coding is the assignment of codes to diagnoses, ser-vices, and procedures based on patient record documentation.

Health care providers are responsible for documenting and authenticating legible, complete, and timely patient records in accordance with federal regulations and accrediting agency standards. The pro-vider is also responsible for correcting or altering errors in patient record documentation. Health data collection is performed by health care facilities to do administrative planning, to submit statistics to state and federal government agencies, and to report health claims data to third-party payers for reim-bursement purposes.

Internet LinksAHA Central Offi ce Go to http://www.ahacentraloffi ce.org to review resources available at the AHA

Central Offi ce Web site. The American Hospital Association’s (AHA) Central Offi ce serves as the offi cial U.S. clearinghouse for proper use of ICD-9-CM, HCPCS level I (CPT), and HCPCS level II codes for hospitals, physicians, and other health professionals.

American Academy of Professional Coders (AAPC) http://www.aapc.com

American Association of Medical Assistants (AAMA) http://www.aama-ntl.org



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Chapter 1 Overview Of Coding 27

American College of Medical Coding Specialists http://www.acmcs.org

American Health Information Management Association (AHIMA)

http://www.ahima.org

American Institute for Chartered Property Casualty Underwriter and Insurance Institute of America (AICPCU/IIA)

http://www.aicpcu.org

American Medical Billing Association (AMBA) Go to http://www.ambanet.net and click on the American Medical Billing Association link.

American Medical Technologists (AMT) http://www.amt1.com

Decision Health electronic newsletters http://ezines.decisionhealth.com

LexiCode Corp. Go to http://www.LexiCode.com and click on the Remote Coding Services link.

Medical Association of Billers (MAB) http://www.physicianswebsites.com

PlatoCode Go to Click www.platocode.com to explore “computer assisted coding” (CAC), which uses computer software to automatically generate medical codes based upon review of online clinical documentation provided by healthcare practitioners. CAC uses “natural language processing” theories to generate codes that are reviewed and validated by coders for reporting on third-party payer claims. Go to http://www.platocode.com/movie.html link to visualize the CAC process.

Study Checklist❏ Read this textbook chapter and highlight key concepts.

❏ Create an index card for each key term.

❏ Access the chapter Internet links to learn more about concepts.

❏ Complete the chapter review, verifying answers with your instructor.

❏ Complete WebTutor assignments and take online quizzes.

❏ Complete Workbook chapter, verifying answers with your instructor.

❏ Complete StudyWare, including coding cases, and receive immediate feedback.

❏ Access the Online Companion Web site for updates and additional information at www.delmarlearning.com/companions; click on Allied Health, and then click on 3-2-1 Code It!, Second Edition, Student Resources.

❏ Form a study group with classmates to discuss chapter concepts in preparation for an exam.

Review

Multiple ChoiceInstructions: Circle the most appropriate response.

1. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires types of code sets to be adopted for the purpose of encoding data

elements. a. two c. four b. three d. five



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2. Which is considered to be a small code set according to HIPAA? a. actions taken to prevent, diagnose, treat, and manage diseases and injuries b. causes of injury, disease, impairment, or other health-related problems c. diseases, injuries, impairments, and other health-related problems d. race, ethnicity, type of facility, and type of unit

3. Which is a code set adopted by HIPAA for use by clearinghouses, health plans, and providers? a. ABC codes c. NDC b. CMIT d. SNOMED

4. The purpose of adopting standard code sets was to: a. establish a medical nomenclature to standardize HIPAA data submissions. b. improve data quality and simplify claims submission for providers. c. increase costs associated with processing health insurance claims. d. regulate health care clearinghouses and third-party administrators.

5. According to HIPAA, health plans that do not accept standard code sets are required to modify their systems to accept all valid codes or to contract with a(n):

a. electronic data interchange. c. insurance company. b. health care clearinghouse. d. third-party administrator.

6. Which is a vocabulary of clinical terms used by health care providers to document patient care? a. classification system c. medical nomenclature b. demographic data d. Nosologia Methodica

7. The requirement that the patient’s diagnoses justify diagnostic and/or therapeutic procedures or services provided is called:

a. continuity of care. c. medical necessity. b. facilities planning. d. policy making.

8. Which is the business record for a patient encounter (inpatient or outpatient) that documents health care services provided to a patient?

a. demographic data c. jukebox b. financial record d. medical record

9. The primary purpose of the record is , which involves documenting patient care services so that others who treat the patient have a source of information on which to base additional care and treatment.

a. continuity of care c. medicolegal b. medical necessity d. quality of care

10. Which is a secondary purpose of the medical record, which does not relate directly to patient care? a. clinical research c. discharge note b. continuity of care d. hybrid record

11. Which type of medical record format stores documentation in labeled sections? a. integrated record c. source-oriented record b. problem-oriented record d. SOAP notes

12. A progress note contains diagnoses of muscle strain and weakness. This statement would be located in the portion of the POR progress note.

a. Assessment c. Plan b. Objective d. Subjective



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Chapter 1 Overview Of Coding 29

13. A progress note contains documentation that the patient is to be followed in the physician’s office two weeks after discharge from the hospital. This statement would be located in the

portion of the POR progress note. a. Assessment c. Plan b. Objective d. Subjective

14. A progress note contains documentation that the EKG showed elevated T-wave changes. This state-ment would be located in the portion of the POR progress note.

a. Assessment c. Plan b. Objective d. Subjective

15. Which is documented in the progress note section of the POR to summarize the patient’s care, treatment, response to care, and condition on discharge?

a. demographic data c. medical necessity b. discharge note d. transfer note

16. Which is used to capture paper record images onto the storage media? a. EHR c. jukebox b. EMR d. scanner

17. To provide the maximum benefit to students, internships are typically work experiences that are arranged by academic program faculty.

a. elective c. optional b. nonpaid d. voluntary

18. To whom does the student report at the professional practice experience (or internship) site? a. supervisor c. physician b. patient d. program faculty

19. Which is a benefit of joining a professional association? a. free certification examination fees b. opportunities to network with other members c. reduced benefits as compared with nonmembers d. Web site-only access to professional journals

20. Which processes health care claims and performs related business functions for a health plan? a. health care clearinghouse c. third-party administrator b. health care provider d. third-party payer



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