Coding Denials: Back to Basics

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Original story posted on: October 14, 2020

Coding must be supported by documentation, but also by the Official Coding Guidelines.

While preparing for a clinical validation presentation on acute kidney injury denials, I took inventory of the most common denials and recoveries obtained by payers. It came as no surprise that sepsis, severe malnutrition, and encephalopathy were at the top of the list; however, coding recoveries were close on the heels of even the top clinical validation denials. Upon closer analysis, it was noted to be hugely impactful to the revenue stream. 

With the 2021 version of ICD-10-CM and a fresh set of Official Coding Guidelines becoming effective Oct. 1, it appears to be relevant to refresh our knowledge of basic coding guidelines in general.

Most of the denials tracked were associated with the secondary diagnosis not meeting coding guidelines. Under the MS-DRG system, payers often scrutinize claims with one secondary diagnosis that is a complication or comorbidity (CC) or a major complication or comorbidity (MCC). They can easily mine this data, and such claims are often considered low-hanging fruit. However, when considering APR-DRGs, they will likely be considering claims with a severity of illness, or SOI, of 2-4, particularly for a length of stay that is somewhat shorter. Therefore, it becomes imperative to ensure that the coding is supported not just by documentation, but also by the Official Coding Guidelines. So let us revisit the guidelines as they relate to assigning secondary diagnoses.

Guidance for assigning or reporting additional diagnoses falls under Section III, Reporting Additional Diagnoses. There we are reminded of the following:

  • For reporting purposes, the definition for “other diagnoses” is interpreted as additional conditions that affect patient care, in terms of requiring:
    • Clinical evaluation;
    • Therapeutic treatment;
    • Diagnostic procedures;
    • Extended length of hospital stay; or
    • Increased nursing care and/or monitoring.
  • The UHDDS item No. 11-b defines other diagnoses as “all conditions that coexist at the time of admission, that develop subsequently, or that affect the treatment received and/or the length of stay. Diagnoses that relate to an earlier episode which have no bearing on the current hospital stay are to be excluded.”
  • Previous conditions

If the provider has included a diagnosis in the final diagnostic statement, such as the discharge summary or the face sheet, it should ordinarily be coded. Some providers include in the diagnostic statement resolved conditions or diagnoses and status-post procedures from previous admissions that have no bearing on the current stay. Such conditions are not to be reported, and are coded only if required by hospital policy.

When the payer reviews the medical record, their auditor will examine those secondary diagnoses that are affecting payment to determine if they were evaluated, treated, etc. They will also look to see if they were noted to be previous conditions that have no bearing on the current stay – or if, in fact, they were ruled out. Many times, these secondary diagnoses simply do not meet the UHDDS definition; consequently, the hospital does not have a credible defense for appeal.

While performing audits of these denial types, root cause analyses most often boil down to a couple areas:

  • Problem Lists


The problem with problem lists is that they come in many shapes and sizes, meaning that some providers document current problems, while others have a laundry list of lifetime complaints. Other times, the lists are not updated from encounter to encounter, or perhaps there is a copy-and-paste issue happening. Whatever the case, the coder needs to verify that they are current conditions that somehow have a bearing on the admission in terms of evaluation or treatment.

For example, one record was notable for “fatty liver” on the problem list, a condition that was affecting the severity of illness, and thus, payment. If the patient did indeed have fatty liver, there was no evaluation, diagnostics, treatment, nor medication that would support reporting this as an additional diagnosis.

Another chart audit revealed a secondary diagnosis reported for “morbid obesity.” There was also noted to be a history of gastric bypass surgery. Upon further review, the patient had massive weight loss and was no longer morbidly obese. The problem list had not been updated.

  • Preoperative H&P


When a patient is scheduled for surgery, a history and physical exam (H&P) must be present prior to the surgery. Often, the H&P is obtained from the provider’s office or primary care office, and not performed bedside. The record from the office may contain every condition the patient has or has had. In an age of risk adjustment, most conditions are coded in the outpatient setting. Keep in mind that outpatient coding guidelines are a different animal altogether.

As an example, the H&P for one patient who presented for back surgery had a secondary diagnosis of vitamin deficiency, which was affecting the SOI. Upon review of the record, it was noted in the H&P that at some point, the diagnosis for vitamin deficiency was added, and it was likely carried over for each encounter. However, it had no bearing on this two-day admission and should not have been coded. 

While payers are getting more aggressive, coders must step up to the challenge by applying coding guidelines accurately and thoroughly. They must also be on the lookout for missed opportunities, which will be the topic of a future article.

Robin Sewell, CDIP, CCS, CPC, CIC

Robin Sewell, CDIP, CCS, CPC, CIC, is a 25-year healthcare consultant with a background that includes outpatient and inpatient revenue cycle as well as RAC and clinical validation audits on the payer side of healthcare. Robin is the founder and creator of Cleopatra "Queen of Denial" revenue cycle denial management application on behalf of hospitals.

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