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Updated on: November 21, 2016

A Saving Grace? What the New Grace Period Means and Does Not Mean for ICD-10 Unspecified Coding

Original story posted on: August 10, 2015

With the recent Centers for Medicare & Medicaid Services (CMS) announcement of a “grace period” related to ICD-10 coding specificity for Part B physician claims, there is a spotlight on unspecified ICD-10 codes.

But how much will health information management (HIM) leaders need to worry about unspecified codes? According to a recent review of more than 30,000 dual-coded inpatient and outpatient cases, coding and documentation review specialists will have plenty about which to worry.


The ICD-10 coding system’s greater specificity has been framed as a benefit by ICD-10 proponents, who say it will capture meaningful clinical detail and new technologies associated with modern medicine. Skeptics, meanwhile, have criticized the increased specificity as a burden with limited value. The grace period is intended to provide physicians and supporting staff — only those who are billing under Medicare Part B — more time to learn the ICD-10 coding system without penalizing them for certain coding errors on claims related to code specificity.

Review of the aforementioned cases reveals a high percentage of documentation that can only support unspecified codes. Optum360 analyzed the pattern of unspecified code use for several hospital and physician organizations that participated in an ICD-10 early adopter program using its computer-assisted coding solution. For approximately 12,500 inpatient cases coded in the program, the data showed that 26.2 percent of assigned ICD-10-CM codes were unspecified. Similarly, for approximately 20,500 outpatient cases coded in the program, 28.7 percent of assigned ICD-10-CM codes were unspecified. This data points to unspecified code use being quite common, at least at this early stage of ICD-10 implementation.

Unspecified codes are fully valid ICD-10 codes that have the term “unspecified” in the official description. In most cases, unspecified codes are used when more specific information is not present in the medical record. A number of different aspects of a diagnosis code can be categorized as unspecified. These include laterality, body location, trimester, type of condition, severity, underlying organism, and others.

ICD-10-CM and ICD-10-PCS differ in their approach to unspecified codes. Similar to the ICD-9 diagnosis coding system, there are numerous unspecified codes within ICD-10-CM. A comparison of official descriptions of diagnosis codes shows that 20.9 percent of codes in ICD-9-CM include the concept of unspecified, and 32.0 percent of codes in ICD-10-CM include the concept. Laterality is the major source of the increase in unspecified codes in ICD-10-CM, with nearly 13,000 codes having unspecified laterality. While unspecified codes are common in ICD-10-CM, they do not exist in the ICD-10-PCS coding system.

The significant percentage of unspecified codes in ICD-10-CM does not tell us how often those codes will be used in practice. Ideally, medical records would include the level of detail necessary to assign more specific codes. Certainly there is a concern that physicians will be compelled to spend additional time on their documentation to meet the new ICD-10 coding requirements. The grace period is intended to help alleviate that concern.

CMS has clarified previous statements about the grace period. After the joint announcement by CMS and the American Medical Association (AMA) in July, many observers raised questions related to the meaning of the phrase “family of codes.” In a July 27 FAQ, CMS made an important clarification related to the meaning of that phrase: a “family” of codes is the same as the ICD-10 three-character category. The flexibility for specificity will relate to codes submitted on claims that are within the same three-character category. This flexibility, however, does not change the requirement to submit Part B claims with fully valid ICD-10 codes. Just submitting the three-character category code when additional characters are required under ICD-10-CM will be considered an invalid claim.

Another important part of the clarification relates to national and local coverage determination policies — NCDs and LCDs. The grace period does not change how carriers will apply LCD and NCD policies, meaning “coverage policies that currently require a specific diagnosis under ICD-9 will continue to require a specific diagnosis under ICD-10.”

What’s the bottom line? Provider organizations have some important takeaways from the CMS clarifications:

  • Preparations for the ICD-10 implementation date should continue to move forward. Other payers are not required to adhere to the grace period defined by CMS.
  • Providers also should be familiar with their carrier policies and the requirements for specificity within those policies. The grace period will not relax the requirements of NCD and LCD policies.
  • Results from hospital and physician organizations that have coded in ICD-10 are showing a relatively high level of use of unspecified ICD-10-CM codes, including codes for unspecified laterality. This points to opportunities to improve documentation to reduce some usage of unspecified codes and to include information that likely would be clinically relevant.
  • For hospitals, the requirements for specificity in ICD-10-PCS coding do not support valid codes that are unspecified. Physicians working in the inpatient setting will be affected by the requirements of PCS coding.



Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.
Mark Morsch, MS

Mark L. Morsch is the co-inventor of the LifeCode Natural Language Processing (NLP) engine with three patents on NLP technology for computer-assisted coding (CAC). He serves as vice-chair of the HIMSS Health Story Project and was co-chair of the AHIMA-sponsored CAC Summit in 2011 and 2012. Mr. Morsch is an author and speaker on the effective use of NLP in healthcare and has over 20 years of experience developing NLP solutions. Morsch is also an AHIMA-approved ICD-10 trainer was named an Optum Fellow in 2012. He holds Master of Science and Bachelor of Science degrees in electrical engineering from Clarkson University.

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