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WHAT IS THE PURPOSE OF ICD CODING?. Presented by: Tracy D’Errico, RHIA Director HIM Department. PURPOSES OF ICD-9-CM. ICD-9-CM is a statistical tool used to convert medical diagnoses and inpatient hospital procedures into numbers. The code set has five primary applications.

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what is the purpose of icd coding


Presented by:

Tracy D’Errico, RHIA

Director HIM Department

purposes of icd 9 cm
  • ICD-9-CM is a statistical tool used to convert medical diagnoses and inpatient hospital procedures into numbers. The code set has five primary applications.
    • Reporting and Research
    • Monitoring Quality of Patient Care
    • Communication and Transactions
    • Reimbursement
    • Administrative Uses
reporting and research
Reporting and Research

The statistical data are used for a variety of reasons throughout the world to provide a consistent,

  • defined way of reporting. For example, to report that patients have the disease of chest pain, medical coders assign an ICD-9-CM code that always classifies chest pain the same way. Imagine trying to gather data on diseases if the conditions were listed alphabetically; chest pain could be reported in different ways, such as “pain in the chest” and “pain: chest.” Having diagnoses and procedures reported in a consistent manner is essential for a variety of uses.
  • ICD-9-CM codes are also very important in the study of medication effects on patients with certain diseases. For example, if a pharmaceutical company wants to research the effects of a new drug on patients with lung cancer, ICD-9-CM codes can be used to identify a patient population with that disease and to include those patients in the study.
  • Researchers can also use ICD-9-CM to look at trends in health care among different patient groups. Federal agencies such as the CDC conduct research and report health care data using ICD-9-CM codes. The CDC’s annual report of the number of patients discharged from hospitals by disease and by age is based on ICD-9-CM codes. At the national and state levels, the code set is used to track cases of prevalent conditions such as HIV, influenza, pneumonia, and other communicable diseases.
monitoring the quality of patient care
Monitoring the Quality of Patient Care
  • The quality of the care provided to patients can be measured in many ways, and ICD-9-CM often plays an important role. For example, all of a hospital’s patients with hip replacements may be asked to complete questionnaires about their pain control after surgery. To perform this survey, researchers identify the patients who underwent hip replacements by the ICD-9-CM code listed in their medical records.
  • Other examples include monitoring quality of care by collecting statistics on treatment for heart attacks and death rates of patients with particular diseases. Evaluating quality of care for people with certain diagnoses or procedures allows health care providers to improve services.
communications and transactions
Communications and Transactions
  • Because ICD-9-CM is a nationally used classification system, the code meanings are a method of consistent communication. Providers can communicate with payers about the reason for services (the diagnoses) and the services provided (the procedures) using ICD-9-CM.
  • Payer policies often use code numbers in communications to providers. For example, a Medicare coverage policy is often explained by listing the diagnosis codes that are appropriate for a set of procedure codes.
  • Much of the focus of ICD-9-CM is insurance reimbursement. Payment for services rendered to hospital inpatients is based on their diseases and conditions. If the health care visit is not coded correctly, payment to the hospital could be incorrect. All hospital inpatients must have their visits coded in ICD-9-CM. For Medicare patients, these codes are then used to calculate a diagnosis related group (DRG) payment. Consideration of the diagnoses and procedures and the patient’s gender, disposition, and age all contribute to the DRG calculation and thus to a payment.
  • ICD-9-CM diagnosis codes assigned to outpatients also affect payment.
  • ICD-9-CM is used to indicate the medical necessity of (reason for) patients’ health care visits to physician offices, clinics, and outpatient hospital departments. For example, a diagnosis of chest pain is the
  • reason for a chest X-ray. The diagnosis code explains why the procedure was performed.
administrative uses
Administrative Uses
  • Because ICD-9-CM is a standardized data set used throughout the country, it is easy to use coded data to study the types of patients seen and the services provided. For example, staffing decisions can be made based on the number of patients with a certain diagnosis. Using ICD-9-CM data, a hospital director knows that the hospital performs a hundred hip replacements per month and can schedule the appropriate amount of specialized nursing care for those patients.
  • Administrative budgeting, staffing, and marketing tasks that require the evaluation of patient types and services can be supported by review of ICD-9-CM codes reported for each patient..
icd 9 cm why change
ICD-9-CM: Why Change?

• Is 30 years old

• Based on the state of medical knowledge of the late 1970s with periodic updates applied

• Consists of outdated and obsolete terminology

• Inconsistent with current medical practice

• Inadequately describes diagnosis and procedures delivered in the 21st century

• Hampers the ability to compare costs and outcomes of different medical technologies, and

• Cannot support the U.S. transition to an interoperable health data exchange in the U.S.

• Is running out of space, and the limited structural design cannot accommodate advances in medicine and medical technology and the growing need for quality data

benefits of icd 10
Benefits of ICD-10

• Improved ability to measure health care services

• Increased sensitivity when refining grouping and reimbursement


• Enhanced ability to conduct public health surveillance

• Decreased need to include supporting documentation with claims

• Includes updated medical terminology and classification of diseases

• Provides codes to allow comparison of mortality and morbidity data

benefits of icd 101
Benefits of ICD-10

• Provides better data for:

  • – Measuring care furnished to patients
  • – Designing payment systems
  • – Processing claims
  • – Making clinical decisions
  • – Tracking public health
  • – Identifying fraud and abuse
  • – Conducting research
number of codes 2010
Number of Codes (2010)

• Diagnoses

ICD-9-CM 14,315

ICD-10-CM 69,099

• Procedures

ICD-9-CM 3,838

ICD-10-PCS 71,957

icd 10 cm codes can tell a different side of the diagnosis story
ICD-10-CM codes can tell a different side of the diagnosis story
  • As many may be aware, laterality has been added in ICD-10-CM to increase specificity. Codes assigned for conditions such as fractures, burns, and pressure ulcers will indicate right side versus left side. Don’t panic—there are still codes available for unspecified “sides.”
  • For example, consider the following ICD-10-CM categories:
    • L89.60 (pressure ulcer, unspecified heel)
    • L89.61 (pressure ulcer, right heel)
    • L89.62 (pressure ulcer, left heel)
  • Note that this series of codes also requires a sixth digit to identify the stage of the pressure ulcer (i.e., stage I-IV or unstageable).
  • Another example illustrating laterality is the ICD-10-CM code for a fracture of the shaft of the radius (ICD-10-CM category S52.3)
  • The fourth digit identifies the type of fracture (e.g., greenstick or transverse), and the fifth and sixth digits identify right versus left and in some cases whether the fracture was considered displaced or nondisplaced. The final character identifies if it was initial, subsequent, or sequela.
Why Are Coding and Documentation So Important for Medical Billing?By Jacqueline Wilson, eHow Contributor


  • Health care providers are paid for services based on numeric and alphanumeric codes assigned to a patient's diagnoses and procedures. These codes are then billed to insurance companies for reimbursement. The accuracy and adequacy of coding and documentation greatly affects medical billing.
  • Proves Medical Necessity of Treatment
    • Coding and documentation helps to prove the medical necessity of treatment. Supportive documentation explains what services were provided, so the appropriate codes can be assigned to explain why treatment was needed.
  • Assigns Appropriate Charges
    • Coding and documentation helps to assign charges to resources used in patient care. The narrative text is matched to a code that has a corresponding charge.
  • Provides Accurate Reimbursement
    • Coding is the main source for accurate reimbursement of services. Codes are grouped together to alert the insurance payer of patient treatment provided, so reimbursement can be made.
  • Facilitates Insurance Reviews
    • Insurance companies often perform random reviews to ensure that charges are valid. Supportive coding documentation helps insurance companies to understand why specific charges were submitted.
  • Helps Appeal Denials
    • In some cases, payers will deny medical claims that they feel are incorrectly coded or where treatment was unnecessary. Health care providers have the opportunity to appeal those reimbursement denials by submitting supportive coding documentation that explains why specific codes were assigned for reimbursement.
  • Resources
  • American Academy of Professional Coders
  • American Health Information Management Association