Updated on: November 28, 2016

IRF Coding for ICD-10 and the Tricky Seventh Character

By Angela Phillips, PT
Original story posted on: November 9, 2015

As we begin coding inpatient rehabilitation facility (IRF) claims using ICD-10, it is prudent to review Medicare’s clarification about the use of seventh-character extension in ICD-10-CM under the IRF Prospective Payment System (PPS). Earlier this year, the Centers for Medicare & Medicaid Services (CMS) issued the following clarification related to the seventh-character extensions:

“As indicated in the FY 2015 IRF PPS Final Rule (79 FR 45872), effective with discharges occurring on or after October 1, 2015, ICD-10-CM codes with the seventh-character extension of ‘D’ are not included in the ICD-10-CM versions of the ‘List of Comorbidities,’ ‘ICD-10-CM Codes That Meet Presumptive Compliance Criteria,’ or ‘Impairment Group Codes That Meet Presumptive Compliance Criteria.’ Thus, ICD -10-CM diagnosis codes with the seventh-character extension of ‘D,’ if used on the IRF-PAI, will not identify a case as meeting the IRF 60-percent rule requirements under the presumptive methodology. The instructions outlined in the FY 2015 IRF PPS final rule regarding use of the seventh character in the IRF setting apply to reporting on the IRF-PAI only.” 

The clarification can be located on the CMS website.

Under ICD-10-CM, certain codes require the use of a seventh character in the code, and each seventh character has one of the following meanings:

  • The seventh character ‘‘A’’ in the code indicates that the diagnosis is an initial encounter.
  • The seventh character ‘‘D’’ in the code indicates that the patient is receiving aftercare for the injury or illness. We often refer this situation as a “subsequent” encounter.
  • The seventh character ‘‘S’’ in the code indicates that the patient no longer requires care for any aspect of the initial injury or illness itself, but that the patient is receiving care for a late effect of the injury or illness. We also refer to this as treatment for “sequelae.”

Discussion in the Final Rule for the 2015 fiscal year related to the use of ICD-10-CM discussed the rationale for the exclusion of codes, including a seventh digit of “D.” CMS’s rationale was that the inclusion of codes with the seventh digit “D” would actually be adding conditions to the lists that were not previously included under ICD-9-CM.

What Does This Mean to IRFs?

CMS further clarified that “in the IRF context, we define the patient as having a current diagnosis requiring the use of the seventh character extension of ‘’A’’ if the patient requires current treatment for the injury and if the diagnosis has a direct effect on the patient’s rehabilitation therapy program in the IRF.”

What Diagnoses Are Most Likely to be Impacted?

The table below summarizes the primary impairment groups that will be impacted based on a review of Section 6 or the updated IRF-PAI Training Manual. 

Impairment Group 



  • No 7th character requirements

Brain Dysfunction

  • No 7th character requirements

Traumatic Brain Dysfunction

  • Significant impact of 7th character
  • Consider whether this is an initial encounter or sequelae

Neurologic Conditions

  • No 7th character requirements

Spinal Cord Dysfunction

  • Impact of 7th character requirements on traumatic spinal cord dysfunction


  • Impact of 7th character requirements on traumatic amputation


  • No 7th character requirements

Pain Syndromes

  • Impact of 7th character on sprains/strains


  • Impact of 7th character on fractures or complications due to devices or grafts
  • Consider whether this is an initial encounter or sequelae


  • No 7th character requirements


  • No 7th character requirements


  • Significant impact of 7th character
  • Consider whether this is an initial encounter or sequelae

Congenital Deformities

  • No 7th character requirements

Other Disabling Impairments

  • No 7th character requirements

Major Multiple Trauma

  • Because trauma includes combinations of other codes there will be significant impact of the 7th character

Developmental Disability

  • No 7th character requirements


  • No 7th character requirements

Medically Complex Conditions

  • Impact on skin disorders (open wounds, etc.)
  • Impact on Medical / Surgical complications (complications of internal device, implant and graft)

As a rule of thumb, IRFs will note that the seventh-character requirement is typical following a trauma or fracture. It is important to work with your coding staff to identify whether the encounter is a continuing encounter for “current treatment for the injury or illness,” whether the IRF admission is for treatment of the sequelae of the injury or illness, or whether, in fact, the IRF is providing aftercare.

If IRFs inadvertently code “aftercare” for conditions that should be coded as initial encounters or sequelae, there can be an impact not only on tier-level reimbursement, but also on whether the case qualifies as a CMS-13 admission. Conversely, coding theseventh digit as initial or sequelae when it should be coded as “aftercare” can result in billing errors.

Where Do We Go for Help?

Successfully navigating the road to success in ICD-10 coding requires ongoing education and vigilance. IRFs should partner with their professional coding staffs to be certain that there is clear documentation to support the codes assigned and that there is an appropriate understanding of the use of the seventh digit.

Coding: The Bottom Line

Coding the IRF-PAI under ICD-10 is the same as it was using ICD-9 codes. The etiological diagnosis code is the code for the acute condition responsible for the admission to the IRF. Codes for the history of the condition or a late effect – or aftercare – are only reported if there was a prior inpatient rehabilitation program completed for the same condition or impairment. 

All other codes on the IRF-PAI and on the UB-04 follow the ICD-10 Official Guidelines for Coding and Reporting. In general, these guidelines indicate that:

  • Since the IRF is considered a post-acute care facility, conditions (other than the etiological diagnosis) that are treated prior to admission to the IRF should be reported with codes that include history of, status post, aftercare, and late effects. 
  • Codes for acute conditions are reported when they are still present or being actively treated. Examples of these conditions are:  Parkinson’s, diabetes, cellulitis, infections, and pneumonia. 


Join RAC University on December 10 for Inpatient Rehabilitation Facilities: Solving Your "I've Had it Up-to-Here" World with a Angela Phillips, PT. Finally, with all the new regulations coming at you, there's a webcast that's absolutely the light at the end of the IFR tunnel. Register here.


About the Author

Angela M. Phillips, PT, is president and chief executive officer of Images & Associates. A graduate of the University of Pennsylvania’s School of Allied Health Professions, she has over 35 years of experience as a consultant, healthcare executive, hospital administrator, educator, and clinician. Ms. Phillips is one of the nation’s leading consultants assisting inpatient rehabilitation facilities in operating effectively under the Medicare Prospective Payment System (PPS) and in addressing key issues related to compliance.

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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.

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