Updated on: November 28, 2016

Erroneous Selection of Principal Diagnoses Impacting Reimbursement

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Original story posted on: November 14, 2016
What could be most directly impacting reimbursement among hospitals and health systems? The problem could be, in many cases, the selection of principal diagnoses, since they drive the medical diagnosis-related groups (DRGs).

For past 12 months, the health information management (HIM) consulting division at Panacea Healthcare Solutions has been conducting ICD-10 coding reviews among the nation’s hospitals, and during these reviews we detected a recurring problem: the selection of the principal diagnosis. Fortunately, advice is at hand with the 2017 ICD-10-CM Official Coding and Reporting Guidelines for inpatients.

Some areas on which to focus include the following:

A.  Codes for Symptoms, Signs, and Ill-Defined Conditions: Symptom codes are rarely a principal diagnosis when a diagnosis has been established during the patient’s stay.

B.  Two or More Interrelated Conditions, Each Potentially Meeting Principal Diagnosis Definition: Either condition may be the principal diagnosis if treatment is equal for the conditions.

C.  Two or More Diagnoses that Equally Meet the Principal Diagnosis Definition: In the absence of any guidance from the code set, and if treatment is equal, then either condition may be the principal diagnosis.

D.  Two or More Comparative or Contrasting Conditions: If diagnoses are documented as either/or (or similar terms) and circumstances of admission are equal, then either condition may be the principal diagnosis.

E.  Symptoms Followed by Comparative/Contrasting Diagnoses: This guideline has been deleted for the 2017 fiscal year.

F.  Original Treatment Plan not Carried Out: The reason for the admission should still be the principal diagnosis, as this condition necessitated the admission.

G.  Complications Following Surgery or Other Medical Care: If admission is for the complication resulting from surgery or other medical care, then the complication is sequenced as the principal diagnosis. An additional code may be assigned for the specific complication.

H.  Uncertain Diagnoses: If the diagnosis at time of discharge is listed as probable, suspected, likely, questionable, possible, etc., then code the condition as if it existed. (Note: this is only applicable to short-term, acute, long-term care, and psychiatric facilities).

I.  Admission from Observation:

a.  For an admission following medical observation, if the patient is admitted from medical observation for a condition that does not improve, assign that condition as the principal diagnosis
b.  For an admission following post-operative observation, assign the condition that is responsible for the inpatient admission as the principal diagnosis

J.  Admission from Outpatient Surgery:

a.  If the reason for the inpatient admission is a complication, then assign complication as the principal diagnosis.
b.  If there is no complication, then assign the reason for outpatient surgery.
c.  If unrelated condition that necessitates admission arises, then assign that condition as a principal diagnosis.

K.  Admission/Encounter for Rehabilitation:Sequence the condition that requires rehabilitation as the principal diagnosis. If the condition is no longer present, assign the appropriate aftercare code. For example, a patient who has osteoarthritis of the hip and undergoes a total hip arthroplasty should be assigned Z47.1 (Aftercare following joint replacement).

This advice comes from the American Hospital Association’s (AHA) Coding Clinic for the fourth quarter of 2016. For home health patients, use the same definition for principal diagnosis as listed in the UHDDS. In other words, list the reason for home healthcare as the principal diagnosis.

The Coding Clinic published for the fourth quarter of 2013 notes that patients admitted to skilled nursing homes’ rehabilitation unit should have the underlying reason for debility and deconditioning listed as the principal diagnosis.

There is a difference between principal diagnosis (used for inpatient settings) and first listed (used for outpatient settings). The “first listed code” terminology is used in lieu of principal diagnosis for facility- based outpatient encounters and provider-based office visits.

The 2017 Official Coding and Reporting Guidelines for ICD-10-CM provide guidance for assigning the first listed code for outpatients. These rules for assigning the first listed code include:

  1. Outpatient Surgery: Assign the reason for surgery, even if the procedure is cancelled.
  2. Observation Status: Assign the reason that the patient was placed in observation status. This diagnosis may be a medical condition, complication, or reason for outpatient surgery.
  3. Ancillary/Testing: Assign the reason for testing. The reason may be signs or symptoms for the diagnostic tests. Medical policies are used to determine medical necessity and are often checked prior to any testing.
And the last rule in outpatient coding is that only confirmed diagnoses are coded. Conditions that are possible, probable, ruled out, suspected, etc.  are not coded, which is why signs and symptoms are frequently coded for outpatients.

These guidelines are part of the coding basics for ICD-10-CM for various healthcare settings. The definitions did not change; only the diagnosis codes changed.

Those definitions are old friends that we need to embrace in our new coding times.
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.
Laurie Johnson, MS, RHIA, CPC-H, FAHIMA, AHIMA-Approved ICD-10-CM/PCS Trainer

Laurie M. Johnson, MS, RHIA, FAHIMA is currently a senior healthcare consultant for Revenue Cycle Solutions, based in Pittsburgh, Pa. Laurie is an American Health Information Management Association (AHIMA) approved ICD-10-CM/PCS trainer. She has more than 35 years of experience in health information management and specializes in coding and related functions. She has been a featured speaker in over 40 conferences. Laurie is a member of the ICD10monitor editorial board and makes frequent appearances on Talk Ten Tuesdays.

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