Inpatient Medical Coding Study Guide

This study guide is designed to help you review key concepts for inpatient medical coding, focusing on the Certified Inpatient Coder (CIC) exam.

I. Core Principles of Inpatient Coding

Purpose of Medical Coding: The process of translating diagnoses and procedures into alphanumeric characters to statistically capture data for research, planning, risk management, quality improvement, and most importantly, reimbursement.
Importance of Accuracy: Accurate coding is paramount as it directly impacts reimbursement and the integrity of healthcare data.
- Inpatient vs. Outpatient: Inpatient: Requires an admitting order, patient admitted into inpatient status, typically involves a stay of two midnights or more. Goals include higher specificity for diagnoses, coordinating care for multiple diagnoses. Signs and symptoms can be coded while determining the definitive diagnosis.
- Outpatient: Patient discharged in less than 24 hours, often after ER visits, diagnostic tests, or minor procedures, even if admitted for observation.
- Primary Coding Systems: ICD-10-CM: International Classification of Diseases, 10th Revision, Clinical Modification - used for diagnoses.
- ICD-10-PCS: International Classification of Diseases, 10th Revision, Procedure Coding System - used for inpatient procedures.
- CPT/HCPCS Level II: Used for outpatient services and procedures (including professional services in inpatient settings).

II. Medical Record Documentation and Ethical Considerations

Quality of Documentation: Accurate coding hinges entirely on the quality of medical record documentation. Coders must review the complete patient story.
- Key Medical Record Components:Discharge Summary (DS): Synopsis of the entire hospital course.
- Emergency Room (ER) Record: Chief complaint and admitting diagnosis, if applicable.
- Admission History and Physical (H &P): Must be performed and documented within 24 hours of admission.
- Progress Notes: Daily recordings by healthcare providers detailing patient progress and plan of care.
- Operative Reports (OR Reports): Essential for coding surgical procedures.
- Laboratory and Radiology Reports: Provide diagnostic information, but codes cannot be assigned solely from these without attending physician documentation of clinical significance. However, additional details (e.g., area of fracture) for confirmed diagnoses can be taken.
Provider Documentation: Code assignment is generally based on the patient’s provider’s diagnostic statement (physician or legally accountable practitioner).
Queries: A crucial communication tool used by coders or CDI specialists to clarify ambiguous, inconsistent, or incomplete documentation. Queries must not include the financial impact of the response.
Compliance: Adherence to coding guidelines is a legal requirement under HIPAA. Compliance plans are effective in preventing fraud and abuse, even if currently voluntary (as per ACA 2010 implementation date not set). RADV audits seek out errors and can result in significant financial penalties.
Privacy Rule: Ensures Personal Health Information (PHI) is kept private and disclosed only to covered entities.

III. ICD-10-CM Coding Guidelines (Diagnoses)

Highest Specificity: Codes must be used at their highest number of characters and to the highest level of specificity documented.
- **Sequencing Codes: ** Principal Diagnosis: The condition established after study to be chiefly responsible for occasioning the admission. This is paramount for MS-DRG assignment and reimbursement.
- Other Diagnoses (Secondary Diagnoses): All conditions that coexist at admission or develop subsequently that affect treatment and/or length of stay.
- Order: Principal diagnosis, then complications, then comorbidities.
Signs and Symptoms (R00-R99): Acceptable for reporting when a definitive diagnosis is not established. Generally not coded if integral to a definitive disease process.
“Code First” / “Use Additional Code”: Instructions for sequencing etiology (underlying cause) and manifestation. Manifestation codes (often with “in diseases classified elsewhere”) are never principal diagnoses.
Combination Codes: A single code classifying two diagnoses or a diagnosis with a secondary process/complication. Use when available.
Laterality: Code separate left and right if no bilateral code exists. Query if unspecified.
Uncertain Diagnoses (Inpatient Only): Code “probable,” “suspected,” “likely,” “questionable,” “possible,” or “still to be ruled out” diagnoses as if they exist at discharge.
- Exceptions: HIV and certain identified influenza viruses (J09, J10) must be confirmed to be coded. COVID-19 also needs confirmation, but provider documentation is sufficient.
POA Indicators: Assigned to principal and secondary diagnoses to specify if a condition was present at inpatient admission. Crucial for Medicare payment and quality reporting.
Chapter-Specific Guidelines Focus: Neoplasms (sequencing based on reason for encounter), hypertension with heart/kidney disease (presumed causal link), acute MI (within 4 weeks), CVA (unilateral weakness = hemiparesis/hemiplegia), acute respiratory failure (can be principal or secondary), VAP (explicit provider documentation), pressure ulcers (staging from clinicians, code highest stage achieved).
Z Codes: Factors Influencing Health Status and Contact with Health Services. Provide reasons for encounters or additional health status info. Not procedure codes. Categories include contact/exposure, vaccinations, status codes (e.g., CABG status), history codes, aftercare codes (not for injuries), follow-up codes, counseling codes, obstetrical/reproductive services, newborns, pre/post-procedural exams, prophylactic organ removal, elective termination of pregnancy.

IV. ICD-10-PCS Coding Guidelines (Procedures)

Seven Characters: Each code has seven alphanumeric characters, each with a specific meaning. All seven characters must be specified.
- A. Section: Broad healthcare service (e.g., Medical and Surgical - 0).
- B. Body System: General physiological system or anatomical region.
- C. Root Operation: The objective of the procedure. This is paramount. Coders must interpret physician documentation.
- D. Body Part: Specific anatomical site.
- E. Approach: Method to reach the operative site (e.g., Open, Percutaneous, Percutaneous Endoscopic).
- F. Device: Identifies if a device remains (e.g., synthetic substitute, infusion device). “No Device” if none.
- G. Qualifier: Additional information about the procedure.
Root Operation Categories & Examples:Take out some or all of a body part: Excision (portion), Resection (all), Detachment (extremity), Destruction (eradicate without physically taking out), Extraction (pulling/stripping out by force).
Always involve a device: Change, Removal, Replacement, Insertion, Revision, Supplement.
Alter tubular body part: Restriction, Occlusion, Dilation, Bypass.
Take out solids, fluids, gases: Drainage (fluids/gases), Extirpation (solid matter), Fragmentation (breaking solid matter).
Other objectives: Alteration, Creation, Fusion.
Other repairs: Repair, Control.
Cutting or separation only: Division, Release.
Examination only: Inspection, Map.
Put in/back or move body part: Transplantation, Reattachment, Transfer, Reposition.
Key PCS Guidelines: Alphabetic Index & Tables: Always verify codes found in the Alphabetic Index in the Tabular List/Tables.
Biopsy Procedures: Coded with Excision, Extraction, or Drainage + “Diagnostic” qualifier. If followed by definitive treatment at the same site, both are coded.
Planned/Canceled Procedures: No code if canceled before patient presents. If canceled after presentation but before starting, code principal diagnosis + Z code for cancellation. If started but not completed, code the root operation performed. If aborted before any root operation, code “Inspection.”
Bilateral Procedures: Single code with bilateral body part value if it exists. Otherwise, code each separately.
Conversion to Open: If an endoscopic procedure is attempted but converted to open, two codes are necessary (one for endoscopic, one for open).
Integral Components: Steps necessary to reach and close the operative site (including anastomosis) are not coded separately.
Bypass Procedures: Coded by identifying the body part bypassed “from” (4th character) and then “to” (7th character qualifier).
Lithotripsy: Fragmentation.

V. Reimbursement and Payment Systems

MS-DRGs (Medicare Severity Diagnosis-Related Groups): The classification system for inpatient hospital stays, dictating reimbursement. Based on principal diagnosis, secondary diagnoses (CCs/MCCs), and procedures. There are approximately 767 MS-DRGs.
Grouper Software: Computerized software program used to classify or group codes for reimbursement purposes.
Outpatient Prospective Payment System (OPPS): Used by CMS for outpatient services, implemented in 2000 . It’s a set rate-per-service (flat fee). Multiple APCs (Ambulatory Payment Classifications) can be assigned to one outpatient record, unlike the single DRG in inpatient. MACs do not use OPPS.
HINN (Hospital Issued Notice of Noncoverage): Used when the hospital disagrees with the provider on a longer inpatient stay (HINN 10), or for pre-admission/admission (HINN 1). Patients are often responsible for 20% of costs for Part B services.
Two-Midnight Rule: For Medicare to cover an inpatient stay, the physician must expect the patient to require hospital care spanning at least two midnights.
Chargemaster: A system that helps set up the bill efficiently for inpatient stays, automatically populating the UB-04 form. Requires regular review for outdated codes or complex procedures/complications.
Revenue Codes: Indicate the type of service or department where services were rendered. Memorizing them is not necessary for the CIC exam, but understanding their purpose is.
Payment Methodologies: Percent/Billed Charges (facility accepts a percentage), Case Rates (case-by-case based on demographics, comorbidities).
Anesthesia: A separate entity from the hospital; anesthesiologist/CRNA services are billed separately.
Teaching Facilities: Residents can treat patients under physician supervision, but billing must reflect combined documentation and the level of work performed by each. Medical students do not get paid or bill for procedures.

VI. Professional Development and Resources

AAPC CIC Certification: Focuses entirely on inpatient facility coding (UB-04, DRGs, PCS, inpatient reimbursement). Requires a strong understanding of ICD-10-CM and ICD-10-PCS, inpatient reimbursement, and abstracting complex charts.
AHIMA CCS Certification: Covers both inpatient and outpatient facility coding.
Study Materials: Current year’s ICD-10-CM and ICD-10-PCS code books are essential and open-book for the exam. Utilize appendices (e.g., Appendix B for root operation definitions).
Recommended Knowledge: Strong grasp of medical terminology, anatomy, pathophysiology, pharmacology, and surgical techniques is crucial.
CCO Resources: Webinars, Blitz courses, QPIN course, Find-A-Code, Club membership, Help Desk, Topic Requests, Internships.

Quiz: Inpatient Medical Coding Concepts

Instructions: Answer each question in 2-3 sentences.

What is the primary distinction between “Principal Diagnosis” in inpatient coding and “First-Listed Diagnosis” in outpatient coding, and why is this distinction important?
Explain the “two-midnight rule” in the context of Medicare inpatient stays.
Describe the core objective of the ICD-10-PCS root operation “Extirpation” and provide an example.
When is it acceptable to code a diagnosis as “probable” or “suspected” in an inpatient setting, and what are some key exceptions to this guideline?
What is the primary purpose of a “query” in inpatient medical coding, and what is one crucial element that must not be included in a query?
How does the assignment of ICD-10-PCS codes directly influence hospital reimbursement for inpatient stays?
Explain the guideline for coding bilateral procedures in ICD-10-PCS when a bilateral body part value does not exist.
Briefly describe the purpose of Present on Admission (POA) indicators in inpatient coding.
According to ICD-10-PCS guidelines, what action should a coder take if a diagnostic biopsy is immediately followed by a more definitive treatment at the same operative site?
In the context of a teaching facility, what is the key difference in billing for services provided by a medical student versus a resident?

Answer Key

The “Principal Diagnosis” for inpatient coding is the condition chiefly responsible for occasioning the admission after study, which is critical for MS-DRG assignment and reimbursement. In outpatient settings, the “First-Listed Diagnosis” is simply the main reason for the encounter. This distinction ensures appropriate hospital payment and accurate health statistics.
The “two-midnight rule” for Medicare dictates that a physician must expect a patient to require hospital care spanning at least two midnights for the stay to be covered as inpatient. This rule helps determine the appropriate patient status (inpatient vs. observation) and influences facility costs.
The core objective of “Extirpation” in ICD-10-PCS is taking or cutting out solid matter from a body part. An example would be the removal of a kidney stone (lithotomy) or a blood clot (thrombectomy) from a vessel.
In an inpatient setting, diagnoses qualified as “probable,” “suspected,” “likely,” “questionable,” “possible,” or “still to be ruled out” can be coded as if they exist at discharge. However, HIV and certain identified influenza viruses (J09, J10) are exceptions and must be confirmed by the provider to be coded.
The primary purpose of a query is to clarify unclear, inconsistent, or incomplete documentation in the medical record to ensure accurate code assignment. A crucial element that must not be included is the financial impact of the response, to avoid influencing physician documentation for reimbursement purposes.
ICD-10-PCS codes, along with the principal diagnosis and other secondary diagnoses, directly determine the assignment of Medicare Severity Diagnosis-Related Groups (MS-DRGs). These MS-DRGs are the fundamental basis for hospital reimbursement for inpatient stays, meaning incorrect PCS coding leads to incorrect payments.
If the identical procedure is performed on paired anatomic organs or tissues (e.g., eyes, ears, knees) and a bilateral body part value does not exist for that body part, then each procedure must be coded separately. This ensures accurate representation of all services rendered.
Present on Admission (POA) indicators specify whether a patient’s diagnosis was present at the time of inpatient admission or if it developed during the hospital stay. These indicators are crucial because they affect Medicare payment for certain conditions and are vital for quality reporting, especially regarding Hospital-Acquired Conditions (HACs).
According to ICD-10-PCS guidelines, if a diagnostic biopsy (coded with an appropriate root operation and “Diagnostic” qualifier) is immediately followed by more definitive treatment (e.g., excision of the lesion) at the same operative site, both procedures must be coded. This ensures all services performed are accurately captured.
Medical students do not get paid or bill for any procedures they perform; their role is primarily to observe and learn. Residents, however, can see and treat patients under the supervision of a physician, and their services can be billed by the facility, provided the documentation reflects the combined work of both the resident and the supervising physician.

Essay Format Questions

Discuss the critical importance of documentation quality in inpatient medical coding. Explain how inadequate documentation can lead to common coding errors and subsequent denials, and what strategies coders can employ (including the use of queries) to mitigate these issues.
Compare and contrast the inpatient payment system (MS-DRGs) with the outpatient payment system (OPPS). Detail how each system categorizes services for reimbursement and identify the key factors that influence payment in both settings.
Analyze the role of ICD-10-PCS root operations in accurately coding inpatient procedures. Choose three distinct root operations (e.g., Excision, Drainage, Replacement) and explain their definitions, key criteria, and how a coder translates physician documentation into the correct PCS terminology.
Explain the “Uncertain Diagnosis” guideline for inpatient coding, providing examples of when it applies and its critical exceptions. Discuss the ethical implications of this guideline and the importance of provider confirmation for specific conditions.
Outline the process of sequencing diagnoses in an inpatient setting, focusing on the Uniform Hospital Discharge Data Set (UHDDS) definitions for Principal Diagnosis and Other Diagnoses. Discuss how secondary diagnoses, including complications and comorbidities, impact MS-DRG assignment and, consequently, hospital reimbursement.

Glossary of Key Terms

AAPC (American Academy of Professional Coders): A professional organization that provides education, certification, and networking opportunities for medical coders, including the CIC certification.
ABN (Advance Beneficiary Notice of Noncoverage): A notice given to Medicare beneficiaries when a service may not be covered by Medicare.
Acute Care Facilities: General hospitals that provide short-term care for various illnesses and injuries.
Admitting Diagnosis: The diagnosis provided at the time of patient admission to the hospital.
AHIMA (American Health Information Management Association): A professional organization that provides education, certification, and resources for health information management professionals.
Alphabetic Index (ICD-10-CM/PCS): An alphabetical listing of terms and their corresponding codes, serving as the first step in the coding process. Codes must always be verified in the Tabular List or Tables.
Ambulatory Payment Classifications (APCs): A classification system used in the Outpatient Prospective Payment System (OPPS) to group outpatient services for reimbursement. Multiple APCs can be assigned per visit.
Ancillary Reports: Diagnostic reports, such as laboratory and radiology results, that provide vital information but cannot be used solely for code assignment without physician documentation of clinical significance.
Anesthesia: Medical management to provide pain relief and sedation during surgical procedures; often billed separately from hospital services.
Approach (ICD-10-PCS): The fifth character in an ICD-10-PCS code, describing the method used to reach the operative site (e.g., Open, Percutaneous, Percutaneous Endoscopic).
Body Part (ICD-10-PCS): The fourth character in an ICD-10-PCS code, identifying the specific anatomical site on which the procedure was performed.
Body System (ICD-10-PCS): The second character in an ICD-10-PCS code, representing the general physiological system or anatomical region.
Bypass (Root Operation): Altering the route of passage of the contents of a tubular body part.
Certified Inpatient Coder (CIC): A professional certification offered by AAPC, specializing in inpatient facility coding.
Chargemaster: A comprehensive listing of all services, supplies, and procedures that a hospital charges, used for billing and populating the UB-04 form.
Clinical Documentation Improvement (CDI): A program or process focused on improving the quality of clinical documentation to accurately reflect patient severity and acuity, ensuring appropriate code assignment and reimbursement.
CMS (Centers for Medicare and Medicaid Services): The federal agency that administers Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP), and maintains coding systems like ICD-10-PCS.
Complication: A condition arising during the hospital stay that adversely affects the patient’s condition or treatment, often influencing MS-DRG assignment.
Comorbidity: A pre-existing condition that coexists with the principal diagnosis and affects the patient’s treatment or length of stay, often influencing MS-DRG assignment.
Compliance Programs: Voluntary (though widely adopted) programs based on the Patient Protection and Affordable Care Act of 2010, designed to ensure claims accuracy, prevent fraud and abuse, and establish corrective actions.
Control (Root Operation): Stopping, or attempting to stop, postprocedural or other acute bleeding.
Conversion to Open Procedure: When an attempted endoscopic procedure is converted to an open procedure due to complications; requires two separate procedure codes.
CPT (Current Procedural Terminology): A medical code set used to describe medical, surgical, and diagnostic services and procedures, primarily for outpatient and professional services.
Detachment (Root Operation): Cutting off all or a portion of an extremity.
Device (ICD-10-PCS): The sixth character in an ICD-10-PCS code, identifying if a device remains in place after the procedure.
Diagnostic (Qualifier): A qualifier used with root operations like Excision, Extraction, or Drainage to indicate that the procedure was performed for diagnostic purposes (e.g., biopsy).
Dilation (Root Operation): Expanding an orifice or lumen of a tubular body part.
Division (Root Operation): Cutting into a body part to separate or transect it.
Documentation Quality: The completeness and accuracy of medical record entries, which is fundamental for correct medical coding and reimbursement.
Drainage (Root Operation): Taking or letting out fluids and/or gases from a body part.
DRGs (Diagnosis-Related Groups): A classification system that categorizes inpatient hospital stays into groups for payment purposes, based on patient diagnoses, procedures, age, and other factors.
E/M Codes (Evaluation and Management Codes): CPT codes used to bill for physician services related to patient evaluation and management, including history, exam, and medical decision-making.
Excision (Root Operation): Cutting out or off a portion of a body part without replacement.
Extirpation (Root Operation): Taking or cutting out solid matter from a body part.
Fragmentation (Root Operation): Breaking solid matter into pieces.
Fusion (Root Operation): Joining together articular body parts.
Grouper: Computerized software that classifies medical codes (ICD-10-CM and ICD-10-PCS) into MS-DRGs for reimbursement purposes.
HCPCS Level II (Healthcare Common Procedure Coding System Level II): A standardized coding system primarily used to identify products, supplies, and services not included in CPT codes, such as ambulance services, durable medical equipment, and drugs.
HINN (Hospital Issued Notice of Noncoverage): A notice given to Medicare beneficiaries when a hospital determines that a continued inpatient stay or specific services are no longer medically necessary, or if the hospital disagrees with the provider on the length of stay.
HIPAA (Health Insurance Portability and Accountability Act): Federal law that mandates adherence to coding guidelines and protects the privacy and security of patient health information (PHI).
ICD-10-CM (International Classification of Diseases, 10th Revision, Clinical Modification): The official system for assigning codes to diagnoses in the United States, used in all healthcare settings.
ICD-10-PCS (International Classification of Diseases, 10th Revision, Procedure Coding System): The official system for assigning codes to inpatient procedures in the United States.
Inpatient Status: A patient’s classification requiring an admitting order and admission to a hospital, typically for a stay expected to span at least two midnights.
Inspection (Root Operation): Visually and/or manually exploring a body part. Not coded separately if performed to achieve the objective of another procedure or as part of a more distal inspection.
Insertion (Root Operation): Putting in a nonbiological device that monitors, assists, performs, or prevents a physiological function, but does not replace a body part.
Laterality: Coding for the specific side of the body (left, right, bilateral) affected by a condition or procedure.
MAC (Medicare Administrative Contractor): Private health care insurers that contract with CMS to process Medicare Part A and Part B medical claims.
Medical Decision Making (MDM): A component of E/M coding that reflects the complexity of establishing a diagnosis, the amount and complexity of data reviewed, and the risk of complications/morbidity/mortality.
Medical Necessity: The justification that a healthcare service or admission is reasonable and necessary for the diagnosis or treatment of illness or injury, based on accepted medical standards.
Medical Student: An individual enrolled in medical school; cannot bill for services or independently perform procedures.
Medicare Code Editor (MCE): Software that reviews coded claims data for validity and consistency with Medicare coding guidelines, identifying potential errors.
MS-DRG (Medicare Severity Diagnosis-Related Group): A refinement of DRGs that accounts for patient severity by incorporating the presence of complications and comorbidities (CCs) or major complications and comorbidities (MCCs), affecting reimbursement.
NCHS (National Center for Health Statistics): Part of the CDC, responsible for maintaining and updating ICD-10-CM and, along with CMS, ICD-10-PCS.
Neoplasm Sequencing: Specific guidelines for coding malignant neoplasms based on the reason for the healthcare encounter (e.g., primary treatment, secondary treatment, complication).
Official Guidelines for Coding and Reporting: Comprehensive rules for accurate ICD-10-CM and ICD-10-PCS coding, jointly approved by the Cooperating Parties (AHA, AHIMA, CMS, NCHS).
Operating Room Procedure (ICD-10-PCS): Procedures identified in ICD-10-PCS as requiring the use of an operating room, which affects MS-DRG assignment.
Other Diagnoses (Secondary Diagnoses): Conditions that coexist at admission, develop subsequently, or affect treatment/length of stay.
Outpatient Prospective Payment System (OPPS): Medicare’s payment system for hospital outpatient services, implemented in 2000, which assigns Ambulatory Payment Classifications (APCs) to services.
Pathological Fracture: A fracture caused by disease rather than trauma. Coding guidelines specify sequencing with the underlying neoplasm if the fracture is the focus of treatment.
Pathophysiology: The disordered physiological processes associated with disease or injury, essential knowledge for coders to interpret clinical documentation.
Percutaneous Approach: Entry by puncture or minor incision, of instrumentation through the skin or mucous membrane to reach the site of the procedure, without direct visualization of the site itself.
Percutaneous Endoscopic Approach: Entry by puncture or minor incision, of instrumentation through the skin or mucous membrane, with visualization of the site using an endoscope.
PHI (Protected Health Information): Individually identifiable health information that is protected under the HIPAA Privacy Rule.
POA (Present on Admission) Indicator: An indicator assigned to diagnoses to specify whether a condition was present at the time of inpatient admission.
Principal Diagnosis: The condition, determined after study, that was chiefly responsible for the patient’s admission to the hospital. It is the most important concept for inpatient coders as it drives MS-DRG assignment.
Principal Procedure: The procedure performed for definitive treatment, rather than for diagnostic or exploratory purposes, or one necessary to manage a complication. Most related to the principal diagnosis if multiple apply.
Prolonged Services: CPT codes used to report time spent by a physician or other qualified health care professional beyond the typical time for a primary E/M service.
Query: A formal communication from a coder or CDI specialist to a provider seeking clarification on ambiguous, inconsistent, or incomplete medical record documentation.
Qualifier (ICD-10-PCS): The seventh character in an ICD-10-PCS code, providing additional information about the procedure.
Radiation Therapy (Section D): A section in ICD-10-PCS for procedures involving the therapeutic use of radiation.
RADV Audits (Risk Adjustment Data Validation Audits): Audits conducted by CMS to ensure the accuracy of diagnoses submitted for risk adjustment, which can result in financial penalties.
Reimbursement: The payment made by an insurance company or government program to a healthcare provider for services rendered.
Release (Root Operation): Freeing a body part from an abnormal physical constraint.
Removal (Root Operation): Taking out a device from a body part.
Repair (Root Operation): Restoring a body part to its normal anatomic structure and function.
Replacement (Root Operation): Putting in or on a device that physically takes the place of a body part.
Reposition (Root Operation): Moving a body part to its normal or other suitable location.
Resection (Root Operation): Cutting out or off all of a body part without replacement.
Resident: A physician who has graduated from medical school and is undergoing specialized training in a hospital. Can treat patients under supervision.
Root Operation (ICD-10-PCS): The third character in an ICD-10-PCS code, representing the objective of the procedure. It is the most critical component for accurate PCS coding.
Section (ICD-10-PCS): The first character in an ICD-10-PCS code, identifying the broad healthcare service, such as “Medical and Surgical.”
Sequela: The late effects of an injury or illness.
Severity of Illness (SOI): A measure of the degree of physiological decompensation or organ system derangement present in a patient due to disease. Influences MS-DRG assignment.
Signs and Symptoms: Objective evidence or subjective complaints of a condition. Coded in ICD-10-CM when a definitive diagnosis is not established.
Skilled Nursing Facility (SNF): A facility providing skilled nursing care and rehabilitation services. Not included in inpatient status.
Specificity (Highest Level of): Coding to the most precise detail supported by documentation.
Status Codes (Z Codes): Indicate that a patient is a carrier of a disease, has sequelae of a past disease, or the presence of a prosthetic/mechanical device.
Swing Beds: Hospital beds that can be used for either acute or skilled nursing care; services provided in these beds are generally not included in inpatient status for billing.
Tabular List (ICD-10-CM): A numerical listing of all ICD-10-CM codes, organized by chapter, providing detailed instructions, exclusions, and conventions.
Tables (ICD-10-PCS): A structured format in ICD-10-PCS where codes are built character by character, ensuring all seven characters are specified.
Time-Based Coding (E/M): Using the total time spent by the physician on the date of service to select the appropriate E/M code level, particularly for office and other outpatient E/M services.
Transfer (Root Operation): Moving, without taking out, all or a portion of a body part to another location to take over the function of all or a portion of a body part.
Transplantation (Root Operation): Putting in or on all or a portion of a living body part from another individual or animal to physically take the place and/or function of a similar body part.
Two-Midnight Rule: Medicare policy stating that for an inpatient admission to be covered under Part A, the physician must expect the patient to require hospital care for at least two midnights.
UB-04 Form: The universal billing form used by institutional healthcare providers (e.g., hospitals) for submitting claims, particularly for inpatient services.
UHDDS (Uniform Hospital Discharge Data Set): A minimum set of data elements collected for inpatient hospital discharges, used to standardize data collection and reporting.
Uncertain Diagnosis: A diagnosis qualified by terms such as “probable,” “suspected,” or “possible.” In inpatient coding, these are generally coded as if confirmed at discharge, with specific exceptions.
Urosepsis: A non-specific term that is not synonymous with sepsis; requires clarification from the provider for accurate coding.
Z Codes: A category of ICD-10-CM codes (Z00-Z99) used to report reasons for encounters other than a disease or injury, or to describe factors influencing health status.

The Medicaid National Correct Coding Initiative (NCCI) program allows for states to reduce improper payments in Medicaid and Children’s Health Insurance Program (CHIP).
The Medicaid NCCI methodologies must be applied to Medicaid fee-for-service (FFS) claims which are submitted with and reimbursed on the basis of Healthcare Common Procedure Coding System (HCPCS) and Current Procedural Terminology (CPT) codes. This includes claims reimbursed on an FFS basis in state Medicaid Primary Care Case Management (PCCM) managed care programs. Application of NCCI methodologies to FFS claims processed by limited benefit plans or Managed Care Organizations (MCOs) is desirable but optional. The Medicaid NCCI program has significant differences from the Medicare NCCI program.

Examples of differences include:

Some Medicare NCCI edits are not present in the Medicaid NCCI program, while others are present but differ in some way from the Medicare NCCI edits.
Medicaid NCCI PTP edits for DME are unique to the Medicaid program (i.e., the Medicare NCCI program does not have DME NCCI PTP edits).
The Medicaid NCCI program has certain edits unique to the Medicaid NCCI program (e.g., edits for codes that are noncovered or otherwise not separately payable by the Medicare program).
Unlike Medicare, for which most MUE edits are applied based on the date of service, Medicaid MUEs are applied separately to each line of a claim.

States must download the NCCI edit files available on a secure portal (RISSNET) rather than using the publicly available files. States must ensure that they or their vendor uses the appropriate Medicaid NCCI edits to adjudicate Medicaid claims.

Types of Medicaid NCCI Edits

NCCI for Medicaid contains two types of edits:

Procedure-to-Procedure (PTP) edits define pairs of Healthcare Common Procedure Coding System (HCPCS) /Current Procedural Terminology (CPT) codes that should not be reported together for a variety of reasons. The PTP edits prevent improper payments when incorrect code combinations are reported.
Medically Unlikely Edits (MUEs) define, the maximum Units of Service (UOS) reported for a HCPCS/CPT code on the vast majority of appropriately reported claims by the same provider/supplier for the same beneficiary on the same date of service.

Replacement Files

April 10, 2025 - Replacement Files (2nd Quarter, 2025 ) - CMS issued replacement files for NCCI Medicare MUE (PRA/OPH) to update the MUE value for Healthcare Common Procedure Coding System (HCPCS) code J1628 effective date April 1, 2025, retroactive to 10/01/2024. Updated public replacement files for Medicare and available using the links in the left navigation pane.
January 29, 2025 - Replacement Files (1st Quarter, 2025 ) - CMS issued replacement files for NCCI Medicaid MUE (PRA/OPH/DME) to update the MUE value for Healthcare Common Procedure Coding System (HCPCS) code J0911 effective date January 1, 2025 . Updated public replacement files for Medicaid and available using the links in the left navigation pane.
Posted Sep 14, 2023 Replacement Files (4th quarter of 2023 ) - CMS issued replacement files for NCCI Procedure to Procedure (PTP) edits for the October 1, 2023 files (PRA and OPH). Effective July 1, 2023, CMS implemented NCCI PTP edits between Column One codes 80305, 80306, and 80307 for presumptive test(s), and Column Two codes G0480 - G0483, and G0659 for definitive test(s). CMS will withdraw these edits retroactive to July 1, 2023 in a replacement file for the 4th quarter of 2023 . CMS posted a replacement file on the NCCI PTP webpage.
Effective July 1, 2023, CMS implemented bypassable NCCI PTP edits between Column One codes 22630, 22632, 22633 and 22634, and Column Two codes 63052 and 63053 . CMS will delete these edits in the October 1, 2023 edit files. Providers/suppliers may choose to hold claims until implementation of the October 1, 2023 edit files.
CMS issued replacement files with the following changes:
Posted Dec. 7, 2022: Replacement Files (1st quarter 2023 ) - CMS issued replacement files for NCCI Procedure to Procedure (PTP) edits and updated for the January 1, 2023 files (PRA and OPH).

Deactivation Requests

Section 6507 of the Affordable Care Act requires states to use “compatible” NCCI methodologies when paying applicable Medicaid claims. If a state determines and documents that there is no other feasible way to comply with Medicaid NCCI edits, the state can send a request to deactivate that edit or those individual edits by emailing the NCCI Contractor at NCCIPTPMUE@cms.hhs.gov.
States are no longer required to send NCCI deactivation requests to CMS Regional Offices.

NCCI Contact Information

The NCCI program may address general questions and concerns about the NCCI program and edits. You must submit claim-specific inquiries to your State Medicaid Agency. This includes appeals of NCCI-related denials; see Submitting an Appeal below.

The NCCI program cannot answer questions outside of our scope, or questions about other CMS programs or about other payors. For example, we cannot answer questions about local coverage determinations, changes to code descriptors or status indicators, or modifiers not associated with NCCI.

The NCCI webpages include edit files, the Medicare NCCI Policy Manual, FAQs, and additional information. CMS does not provide a look-up service or a clean claims tool.
You may submit inquiries about the NCCI program, including those related to NCCI (PTP, MUE, and Add-On) edits, in writing via email to NCCIPTPMUE@cms.hhs.gov.

** * *NOTE * *** Don’t submit any Personally Identifiable Information (PII) or Protected Health Information (PHI).

Submitting an Appeal

States are not required to have a formal appeals process to address claim denials. However, states must ensure that providers have an adequate opportunity to alert them to potential errors associated with claim denials, including those generated by NCCI edits, and that providers have a way to resubmit claims or provide additional documentation to support their claims.
You must submit appeals to your responsible State Medicaid Agency, not the NCCI contractor. For CMS policy on provider appeals of denials of payment for HCPCS / CPT codes billed in Medicaid claims due to the Medicaid NCCI methodologies, see State Medicaid Director Letter 11-003 (PDF). The NCCI contractor cannot process specific claim appeals and cannot forward appeal submissions to the appropriate appeals contractor.

Helpful Educational Materials

How To Use NCCI Tools (PDF): Learn to navigate the CMS Medicaid NCCI webpages and work with Medicaid procedure-to-procedure edits and medically unlikely edits. Find information on how to access and use the Medicaid NCCI files available to the general public.
CMS no longer participates in the National Medicaid Enterprise Hub (NMEH) calls. However, states can continue to obtain information on the NCCI program via our website and the NCCI Mailbox at NCCIPTPMUE@cms.hhs.gov. As an alternative, states can contact their State Program Integrity Directors to obtain the Fraud, Waste, and Abuse (FWA) Technical Advisory Group (TAG) call information. Please note that only state staff (no contractors) may attend FWA TAG calls.
Proper Use of Modifiers 59, XE, XP, XS, and XU (PDF) Posted June 8, 2021
NCCI MUE and PTP Edit Savings Guidance for State Medicaid Agencies (PDF) - November 2019

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