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

1. Outsourced Strategies International 1-800-670-2809
Why Diagnostic Coding Is Crucial for
Medical Practices
Simply put, diagnostic coding is used in the healthcare
industry to classify and organize different categories of
diseases, disorders and symptoms. This type of coding is
crucial for medical practices to provide healthcare
services to patients and at the same time make them more
manageable for practices. Diagnosis codes also serve as a
communication channel between physicians and insurance
agencies. In case of fee-for-service
model, physician
services are paid on the
basis of fee associated with
relevant procedural codes
(CPT or HCPCS) submitted
in the claim form. However,
the diagnosis codes support
the medical necessity of a
particular service and clarify why such a service was
performed. The payers may deny the claims if they find no
medical necessity with the service.
Experts suggest several reasons why diagnosis coding has
so much importance in the health care industry.
 Coding for Acuity of Patients – Medicare plans pay
the claims partially on the basis of a risk adjustment
factor and CMS varies the payment per patient, per
month according to how sick the whole group of

2. Outsourced Strategies International 1-800-670-2809
patients are. Several medical practice groups also have
this type of adjustment with private insurance
companies. Reimbursement by Accountable Care
organizations is partly based on a determination of the
acuity of their patient population. This means that at
the end of the contract year, some insurance contracts
pay a higher rate to systems/practices that care for
sicker patients. In all cases, the insurers determine the
acuity of a group of patients on the basis of age/gender
distribution and by the diagnosis code on claim forms.
 Code for the Highest Level of Specificity – It is very
important to specify the patient’s symptom, condition
or complaint clearly. It is also required to use a sign or
symptom for outpatient services if the diagnosis is not
known, instead of ‘rule out’ or ‘possible’. Diagnosis
needs highest level of specificity. Unspecified
diagnosis can’t justify the medical necessity of a
particular service and makes the payers deny your
medical claims. This will also hamper effective
disease management and research efforts. ICD-9 code
system provides separate codes for specific conditions.
Let’s see this with the example of diabetes mellitus.
· 250: Diabetes mellitus
· 250.2: Diabetes with hyperosmolarity
· 250.20: Diabetes with hyperosmolarity,
type II or unspecified type, not stated as
uncontrolled

3. Outsourced Strategies International 1-800-670-2809
· 250.21: Diabetes with hyperosmolarity,
type I [juvenile type], not stated as
uncontrolled
· 250.22: Diabetes with hyperosmolarity,
type II or unspecified type, uncontrolled
· 250.23: Diabetes with hyperosmolarity, type
I [juvenile type], uncontrolled
However, a new diagnosis code system is expected to be
introduced in 2015, which would look for higher specificity
than ICD-9 (example given below).
· E11: Type 2 diabetes mellitus
· E11.0: Type 2 diabetes mellitus with
hyperosmolarity
· E11.00: Type 2 diabetes mellitus with
hyperosmolarity, without nonketotic
hyperglycemic-hyperosmolar coma (NKHHC)
· E11.01: Type 2 diabetes mellitus with
hyperosmolarity, with coma
 Report Chronic Conditions – If a patient visits the
hospital for the same condition multiple times, the
services rendered should be reported. The conditions
that co-exist during the visit that require or affect
patient care should be documented while it is not
required to report the condition no longer exists. If the
condition is mentioned in the past medical history, but
not addressed during the visit, then it should not be
reported on the claim. In order to report all this

4. Outsourced Strategies International 1-800-670-2809
scenarios in the correct manner, accurate codes are
indispensable.
It is always crucial for physicians to determine the proper
care, appropriate tests and effective treatment for their
patients. Diagnosis coding enables them to establish
standard treatment for each diagnosis. The codes specify
particular symptoms (for example, white blood counts) in
detail to standardize the treatment.
Tips to Improve the Accuracy of ICD-9 Codes
The American Board of Family Medicine conducted a
study involving 600 physicians in 2009 and 2010 which
revealed fatigue and abdominal pain as the two most
common symptoms misdiagnosed. In order to eliminate
misdiagnosis and ensure smooth billing process, you need
to perform accurate diagnosis coding.
 You should always code to the highest level of
specificity. If possible, extend the code to the fourth or
fifth digit. We can take the previous example of
diabetes mellitus to explain this.
· 250: Diabetes mellitus
· 250.2: Diabetes with hyperosmolarity
· 250.20: Diabetes with hyperosmolarity, type
II or unspecified type, not stated as
uncontrolled

5. Outsourced Strategies International 1-800-670-2809
 Here the three digit code ‘250’ represents diagnostic
category while the four digit code ‘250.2’ represents
associated complications and five digit code ‘252.20’
represents the type of diabetes and its level of control.
Depending upon the diabetic condition, you may need
to use the entire five digits to specify it accurately.
 If there is more than one diagnosis listed for your
patient, prioritize them. You should first code the
primary diagnosis (the major reason for the patient)
followed by the next most diagnosis and so on.
 If you suspect a specific condition for your patient,
code only the sign or symptom that brought that
patient for the particular visit until you confirm the
diagnosis with further tests. Otherwise make a
definitive diagnosis.
 Link the ICD-9 codes reported to the relevant service
code on the claim form. This will help payers to
identify why such a service was rendered and establish
medical necessity.
Physicians are responsible for choosing the codes and
submitting them to the payers. In the case of large medical
practice groups, it may not be that smooth for physicians to
balance their time between patient care and clinical
documentation. Medical practices can team with coding
professionals to solve this issue and submit accurate claims
within deadline to obtain correct reimbursement.