Four Reasons to Step Up Your Diagnosis Coding Specificity

Betsy Nicoletti, M.S., CPC August 7th, 2012

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Four reasons to step up your diagnosis coding by expert Betsy Nicoletti

I admit it.  Sometimes, I’ve been a lazy diagnosis coder when submitting claims for physician office and hospital services.  One diagnosis code worked as well as two for that office visit, and a non-specific diagnosis code paid the same amount as a specific diagnosis code for that subsequent hospital visit.  Diagnostic tests and procedures required more attention, but since payment for physician services is based on CPT rather than ICD-9–well, sometimes I’ve been a lazy diagnosis coder.

Those days are gone. I’ve seen the error of my ways.  Accurate and complete diagnosis coding establishes the medical necessity for a service, and for the intensity and volume of services provided.  And while hospitals have at least part of their reimbursement based on diagnosis coding, some physician groups have contracts for which diagnosis coding affects reimbursement.

Here are the top four reasons to ramp up your diagnosis coding. 

1. Medical necessity for diagnostic tests.  Whether performing the test in the office or ordering a lab or imaging test to be done elsewhere, a specific covered indication will ensure payment and decrease queries to clinicians.  If a service is not covered for that patient condition or indication, the practice can obtain an Advance Beneficiary Notice.

2. Risk-based contracts.   The CEO of a large group practice told me that when he arrived in his new position, no one cared about coding because most of the group’s commercial contracts were capitated.  This led to a disinterest in both procedural and diagnostic coding.   The result was a decrease in payments at the end of the contract year, because the payer said that their patients were not as sick as the patients treated by other groups.  This was at variance with physician report and the socioeconomic status of the population.  So, why would the payer believe that the patient population wasn’t all that sick?  Where did they get that idea?  Claims.  Specifically, the procedure and diagnosis coding reported on claims, which are still submitted in a capitated environment.  Accurately documenting the conditions being treated and reporting that on claims increased the group’s risk-adjusted payment.

3. Medicare shared savings and Value Based Modifiers.  Do you think this doesn’t apply to you because you don’t have risk-adjusted capitated contracts?  Think again.  Medicare is capturing diagnosis coding on claims forms, and will use this data as one of the criteria in applying bonus payments to groups starting in 2015 for groups with more than 25 professionals, and for all groups in 2017.  It is not simply diagnosis coding, but the acuity of the patient population factors into the calculation.  CMS will be measuring costs and outcome, as well as how sick your patient group is.  How will they know how sick your patients are?  Specific diagnosis coding submitted on your claim form.  Pay particular attention to chronic conditions and their associated complications.  CMS will be calculating cost per capita and cost per capita for patients with COPD, DM, CAD, CHF and kidney disease.  If patients have those conditions, code to the highest  degree of specificity and code complications.

4. ICD-10 Readiness. Would an article about diagnosis coding be complete without a discussion of ICD-10? By now, you’ve heard the horror stories about how specific and detailed ICD-10 is.  That’s true.  You’ve heard that we are leaping from 14,000 ICD-9 codes to 70,000 ICD-10 codes.  And that CMS has proposed moving the effective date from October 1, 2013 to October 1, 2014.  The single best thing a practice can do today to prepare for ICD-10 is use the most specific ICD-9 codes to describe the conditions being treated and reported today.  It will help clinicians get into the habit of documenting specifically and give coders expertise in assigning and sequencing multiple conditions and complications.  This will stand your practice in good stead when we do transition to ICD-10.

Having turned over a new leaf about diagnosis coding, I’m hoping to keep my past lazy habits a secret, just between us.  I hope I can count on your discretion! 

Betsy Nicoletti, M.S., CPC, is the founder of, a wiki for physician reimbursement. She is a nationally known speaker and consultant, and can be reached at She most recently wrote for Getting Paid on Your Nine-Step Plan to Better Practice Collections, Part I and Part II

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What Is the SGR, and How Does It Affect How Your Practice Gets Paid?

Kathy McCoy, MBA August 2nd, 2012

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What is the CMS SGR and what does it mean to your practice revenue?

You may have been seeing debate over the fate of the SGR in the news lately, and wondering what the SGR is all about, how it got started, and what it means to your practice’s bottom line.

The sustainable growth rate, or SGR, is a reimbursement formula that was adopted as a minor piece of the Balanced Budget Act of 1997, replacing the previous method of cost controls implemented by CMS. The SGR formula was intended to ensure that the yearly increase in the expense per Medicare beneficiary did not exceed the growth of the gross domestic product (GDP). This formula takes into account four factors:

  1. Estimated percentage change in the cost of physicians’ services
  2. Estimated percentage change in the number of Medicare fee-for-service beneficiaries
  3. Estimated 10-year average annual percentage rate change in GDP
  4. Estimated percentage change in expenditures due to changes in laws or regulations

By performing a series of calculations, a conversion rate is arrived at that determines how much physicians will be paid. The problem comes when the cost of physicians’ services rises faster than the GDP, which is precisely what has happened. The resulting negative conversion rate dictates that physicians’ reimbursement rates must be cut to make up the difference.

For this reason and others, complete implementation of the SGR has been postponed year over year. While there have been minor adjustments, these adjustments have always minimized the increases in the reimbursement rates Medicare pays physicians. While the GDP continues its less-than-optimum growth at the same time that costs continue to rise, the gulf between the two rates widens. When combined with the deferred increases that have accumulated from every year since 2001, we see a snowball (or avalanche, if you are in its path) growing so fast that coming to terms with the total percentage of SGR-required Medicare reimbursement reduction – 30% in January of 2013 — would mean disaster for physicians.

Congress has struggled with the SGR, and in October of 2011, the Medicare Payment Advisory Commission (MedPAC), tasked with advising Congress on issues affecting the administration of the Medicare program, voted to officially endorse a plan to repeal the SGR. MedPAC sees SGR as fundamentally flawed, creating instability where it was intended to do the opposite.

In addition to the problems with reimbursement, MedPAC finds that primary care physicians (PCPs) are being affected to a greater degree than are specialists, with access to PCPs for both privately insured and Medicare beneficiaries becoming increasingly difficult. MedPAC intends to replace SGR with a formula that would keep rates steady for PCPs and would cut payments to specialists for the next decade.

The American Medical Association is in agreement with MedPAC regarding SGR, and also calls for its elimination. In order to fix what it feels is “unsustainable,” AMA requests five years of positive pay updates while Medicare tests various pay models that would address cost concerns and at the same time enhance care coordination, quality and appropriateness of care.

Just last month, CMS unveiled a proposal to pay doctors to coordinate patient care following a discharge from a hospital starting in 2013. As reported, “While the proposed fee schedule moves toward improving care coordination in Medicare, CMS also outlined a series of cuts to pay rates next year over which the agency has less control. The sustainable growth rate that helps calculate Medicare payments would cut fees by a projected 27% next year, which is slightly lower than some past projections. But CMS stated that figure is an estimate that will be finalized when a final rule comes out by Nov. 1. Congress has passed legislation to stop similar cuts over the last decade by freezing or raising physician rates.”

One means of paying for the positive pay updates, favored by the AMA and gaining support among lawmakers, is to use funding saved by the drawdown in US troops fighting in Afghanistan and Iraq. Representative Allyson Schwartz (D, Pa.) said, “Using part of the savings achieved through the reduction of military operations in Iraq and Afghanistan offers a unique and limited-time opportunity to resolve a budgetary problem that grows more costly with each passing month.”

Whichever way the political winds blow this fall, the shadow of the SGR will continue to loom until it is repealed for good.

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Claim Appeals: Tips for Appealing an Adverse Benefit Determination

Kathy McCoy, MBA August 1st, 2012

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If you’ve received a claim denial from a patient’s insurance provider and you have determined that the claim was submitted without errors, you should appeal the denial. In our webinar last week on Effective Appeals in Medical Billing: Breaking Through the Barricade to Get Paid featuring speaker Elizabeth Woodcock, she revealed that 75% of appeals result in denials being overturned – and paid.

Whether your denial was based on a billing dispute or a medical necessity determination, your claim appeals are a legal process and require diligent preparation.

The Patient has the Authority

When you appeal a claim, you are appealing on behalf of the patient and not the physician or provider. As the provider or medical biller, you are not authorized to appeal an adverse benefit determination without a signed authorization from the patient. An Assignment of Benefit form is not sufficient authorization, as it only authorizes the claimant to receive payment from the payer on the patient’s behalf.

With authorization secured from the patient, you have specific steps to follow in order to submit a claim appeal. Remember, the appeal is a legal process. This means that at some point you may have to use the court system. Any information that you use in your appeal may become evidence in court and may even be used against you. Before you proceed with a claim appeal, you should determine how far you wish to take your appeal.

Gather Evidence

When you are filing a claim appeal, you should be as prepared as a lawyer going to trial. The insurance company or payer that denied your claim should have already disclosed to you the nature of the adverse benefit determination. That communication should clearly state the reason that you were denied payment or not paid in full, including the following information:

  • Reason(s) for the denial
  • References to the plan provision on which the denial is based
  • A description of the information/documentation required to appeal the claim
  • Procedures for appealing a decision.

You may request additional documentation, including copies of the patient’s benefit manual or any specific plan rules, rate tables, fee schedules and criteria used to ensure that the plan rules were consistently applied to your claim. The payer may also hire medical, occupational or other experts to obtain specific knowledge regarding conditions of your claim. The payer is not required to disclose the identity of these experts, but must provide that information when requested by the claimant.

Prepare and File Your Appeal

By comparing the documentation provided to you by the payer with the documentation you already have regarding the patient, including chart notes, you should be able to determine where the problem lies. Draft a strong appeal letter summarizing all relevant information regarding the claim in question. Stick to the basics, avoiding any information that is not essential to the claim. File your appeal in a timely manner, and make note of the date in a file you create specifically for this claim. Follow up regularly and try to speak with the same people whenever you contact the company. With documentation and diligence, your adverse benefit determination can be overturned and the bill paid.

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