Correct Coding Concepts and Payment Integrity

A beginner’s guide to claims code editing logic.

The U.S. healthcare system is highly complicated and extremely expensive. There are many layers between the provider of medical services and the payment for those services. This overly complex system leads to inefficiencies resulting in incorrectly paid claims and the need to spend even more time and money in recoveries.

Because of the incredible volume of claims being submitted every day, no payer can review each claim, or even a percentage of claims, individually. Manual checks significantly increase claims processing expenses. Therefore, payers employ a variety of automated claims editing or auditing systems to review the codes submitted on professional claims for validity and accuracy and to process claims as efficiently as possible.

By way of definition, healthcare payment integrity is the process of ensuring a claim for healthcare services is paid correctly. To put it simply, this is to ensure that payment is made by the payer:

To the right healthcare provider;
For eligible members or beneficiaries;
According to contractual terms;
At the correct price; and
For medically appropriate services.

There is a considerable amount of variability between payers, but coders should know the basic code editing guidelines most payers follow.

* The term “payer” is used here in the most general sense to refer to entities, both commercial and government, that provide health insurance coverage.

NCCI Edits

The National Correct Coding Initiative (NCCI), implemented by the Centers for Medicare & Medicaid Services (CMS), promotes national correct coding methodologies and controls improper coding leading to inappropriate payment. NCCI edits focus on codes that should not be reported together. Most commercial insurers use some version of the NCCI edits for their commercial members.

In an NCCI code pair edit, the Column II codes deny when submitted with Column I codes unless a modifier is allowed to bypass the edit. Modifiers should ALWAYS be used judiciously and supported by the medical documentation.

Occasionally, claims are submitted to the payer out of sequence. In other words, the Column II code is submitted first, on a separate claim, and the Column I code is submitted later. Many claims editing systems are able to catch these submission errors. The code that comes in first is paid and the second one is denied, even if it is the Column I code.

Global Edits

Payment for a CPT® code includes reimbursement for the procedure as well as any pre-procedure work and post-procedure follow-up. This is the global concept.

For example, a provider should not bill a separate evaluation and management (E/M) service code for checking a patient’s sutures within the global period of the surgical procedure. The same concept applies to maternity claims. There is one code for the global maternity package that includes prenatal, postnatal, and delivery. Claims are reviewed to ensure there is no unbundling.

For codes that have technical and professional components, payers generally have a system in place to verify that no overpayment occurs. If one provider is paid for the global service, then no one else can be paid for either the technical or professional component.

Frequency Edits

Another concept that is enforced by payers has to do with limiting the reported units of certain codes. Medically Unlikely Edits (MUEs), developed by CMS, represent the maximum units of service a provider would report under most circumstances for a single beneficiary on a single date of service. Not all codes have a published MUE. In addition, commercial payers are not required to follow CMS guidelines and may set different limits or assign limits to codes not listed by CMS.

In general, if you try to bill for units over the established limit, the claim line either denies or is recoded to a lower limit, depending on the claims editing system in use. Included in frequency edits are codes that are only billed once a week, once a year, or once in a lifetime.

Drug units are an especially difficult area because the units and the drug description are not always a 1-to-1 match. For example: J2270 Injection, morphine sulfate, up to 10 mg. The MUE assigned is 9 units. If the patient is given 100 mg (let’s hope not), the units are 10, not 100. CMS-based code editing systems would deny this line or re-code it to 9 with the assumption that it was a coding error. The provider would need to contact the payer to verify that 10 units is correct.

Correct Coding Edits

Claims editing systems enforce the official guidelines in the ICD-10-CM code book, as well as the chapter guidelines and parenthetical notes in the CPT® code book. If the code books instruct you not to code this with that, then don’t do it.

Add-on Codes

Add-on codes filed without the base code are denied. In cases where the add-on procedure and the base procedure are performed by different providers who each bill separately, you must refer to the specific payer’s rules.

New vs. Established Patients

The CPT® code book explains the difference between a “new” patient and an “established” patient. This is fairly straightforward on its face; however, it can get complicated when determinations are based on the provider’s identification number, the group or practice’s identification number, their tax ID number, or some other identifier. Different editing systems look at different criteria when trying to figure out if the patient is new to this provider or practice.

Diagnosis Codes

Claims editing systems generally review ICD-10-CM codes to verify they are coded to the highest specificity. Manifestation codes cannot be first-listed diagnosis code on the claim. Other sequencing rules may also be enforced.

General code editing logic is frequently applied to:

Diagnosis and procedure mismatch
Diagnosis vs. age or gender
Procedure vs. age or gender

Some payers no longer employ gender editing. But still, a prostatectomy on a female or a hysterectomy on a male might cause some confusion. Another possible problem occurs when payers allow services for newborn infants to be entered on the mother’s policy prior to the baby getting their own policy. Claims for a circumcision on the mother’s policy, for example, could cause the claim to deny or suspend for review.

Payer-specific Edits

Payers have systems in place to enforce their own rules. Most payers publish their medical and reimbursement guidelines online in the interest of transparency. These guidelines spell out what is covered with specific coverage criteria and what is not covered. Many payers also include helpful coding information, such as what codes are considered investigational/experimental and what ICD-10-CM codes are required.

Unlisted codes can be used when it is appropriate to do so. Just be aware that unlisted codes suspend the claim for review. These codes cannot be processed unless the payer knows exactly what services they represent.

Just as there are many different payers, there are many different code editing systems. They don’t all agree with each other. And to add one more layer of complexity, different employer groups within the same insurance company could have specific benefits for their employees. For example: Not all employer groups include infertility treatment in their employee benefits package. Payers have system edits in place to deny non-covered services per contract.

The importance of understanding correct coding principles cannot be overstated. Knowing and abiding by the rules goes a long way toward increasing efficiency for both providers and payers of healthcare services.

Anna Nicholson, RN, CPC, CPC-I, is a graduate of the nursing program at UNC Greensboro and is a former Army nurse. She has over 20 years’ experience in utilization management and review, appeals, and medical policy development with Blue Cross Blue Shield of North Carolina. She is a member of the Chapel Hill East, N.C., local chapter.

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