FY2022 IPPS Final Rule and Unspecified Laterality Diagnosis Codes

Did you get a chance to read the FY2022 IPPS Final Rule?  There is an interesting topic that was discussed regarding unspecified ICD-10-CM laterality diagnosis codes, to be exact.  In this coding tip we discuss that subject and possible ramifications of it in the coding world.

Unspecified ICD-10-CM Diagnosis Codes History

Throughout the history of ICD-CM, there have been unspecified diagnosis codes. This is because many times there is not sufficient information in the patient record or clinical information  for the physician to make specific diagnoses.  An ICD-10-CM code is considered unspecified if either of the terms “unspecified” or “NOS” are used in the code description. Coders are forced to use unspecified codes when further information is not documented.   Way back in 2015, right around the time ICD-10 was implemented, there was talk of the elimination or the denial of the use of unspecified diagnosis codes on claims.   There was quite a bit of uproar as requiring specific diagnosis codes and the querying that would be needed to accomplish this would have been overly burdensome for hospitals and providers right at the time of  ICD-10 implementation.  While diagnosis code specificity has always been the goal, providers were granted a reprieve in order to facilitate implementation of ICD-10. For the first 12 months of ICD-10-CM use, the CMS promised that Medicare review contractors would not deny claims “based solely on the specificity of the ICD-10-CM diagnosis code, as long as the physician/practitioner used a valid code from the right family.” Referred to as the “grace period,” this flexibility was intended to help providers implement the ICD-10-CM code set and was never intended to be permanent. In fact, this CMS-granted grace period expired on October 1, 2016.  Some third party payors started denying unspecified codes, but this has been intermittent depending on the payor.

Even our Official Guidelines for Coding and Reporting state:

  1. Conventions for the ICD-10-CM
  2. Other and Unspecified codes
  3. “Unspecified” codes

Codes titled “unspecified” are for use when the information in the medical record is insufficient to assign a more specific code. For those categories for which an unspecified code is not provided, the “other specified” code may represent both other and unspecified.

Unspecified Laterality ICD-10-CM Codes and FY2022 IPPS Changes

In the FY2022 Proposed Rule, CMS requested public comments on a potential change to the severity level designations for “unspecified” ICD-10-CM diagnosis codes that CMS was considering adopting for FY 2022. In connection with that request, they were also requesting public comments on the potential creation of a new MCE code edit involving these “unspecified” codes for FY 2022. Specifically, this MCE code edit could be triggered when an “unspecified” diagnosis code currently designated as either a CC or MCC, that includes other codes available in that code subcategory that further specify the anatomic site, is entered. We refer the reader to table 6P.3a  which is on the CMS website listed in the below link for the list of unspecified diagnosis codes that would be subject to this edit. Currently there are 3,490 unspecified codes.

This MCE edit would signal to the provider that a more specific code is available to report. CMS believes  this edit aligns with documentation improvement efforts and leverages the specificity within ICD-10.

In response to the FY2022 Proposed Rule comment period, “A number of commenters recommended (or urged) CMS to delay any possible change to the designation of these codes for at least two years to give hospitals and their physicians time to prepare.” 

So in the FY2022 Final Rule, CMS stated it is not changing severity levels, at least not yet. However what they DID finalize was this:

“After consideration of the public comments received, we are finalizing the implementation of a new code edit for “unspecified” codes, where there are other codes available in that code subcategory that further specify the anatomic site. As noted previously, the severity level of the unspecified diagnosis codes is unaffected and therefore this edit does not affect the payment the provider is eligible to receive.”

“We also note that, in consideration of commenters’ concerns that more time is needed to educate providers, the implementation date for this new edit is April 1, 2022. As such, we are finalizing the new edit for FY 2022, effective with discharges on and after April 1, 2022.” We are finalizing a new “Unspecified Code Edit: to read as follows:

  1. Unspecified Code Edit:    Unspecified codes exist in the ICD-10-CM classification for circumstances when documentation in the medical record does not provide the level of detail needed to support reporting a more specific code. However, in the inpatient setting, there should generally be very limited and rare circumstances for which the laterality (right, left, bilateral) of a condition is unable to be documented and reported.

The list of codes subject to this edit are identified in Table 6P.3a associated with this final rule.

When a code from the list displayed in Table 6P.3a is entered on the claim, the edit will be triggered. It is the provider’s responsibility to determine if a more specific code from that subcategory is available in the medical record documentation by a clinical provider. If, upon review, additional information to identify the laterality from the available medical record documentation by any other clinical provider is unable to be obtained or there is documentation in the record that the physician is clinically unable to determine the laterality because of the nature of the disease/condition, then the provider must enter that information into the remarks section. Specifically, the provider may enter “UNABLE TO DET LAT 1” to identify that they are unable to obtain additional information to specify laterality or they may enter “UNABLE TO DET LAT 2” to identify that the physician is clinically unable to determine laterality.” If not entered, the claim will be returned.

Unspecified ICD-10-CM Diagnosis Code Rate and What Hospitals Can Do

Hospitals and other providers may want to take a look at their unspecified diagnosis code rate before implementation of the above edit with discharges beginning April 1, 2022.  The unspecified diagnosis code rate is calculated by dividing the number of unspecified diagnosis codes by the total number of diagnosis codes assigned. Health information management professionals should be tracking and trending unspecified diagnosis code rates across the continuum of care.  This can also be drilled down to unspecified laterality codes.  Keep in mind that this is not really an error rate per se, but is an indicator of the quality of medical record documentation.  Early on in FY2016 when ICD-10 was implemented, HIA conducted numerous medical record reviews to determine the level of unspecified code use and made recommendations as to how our clients could improve specified code use through provider education.  Hospitals and other providers may want to perform similar audits before the April 1, 2022 implementation date. A review of the clinical documentation associated with these codes may reveal clinical details needed to assign a more specific diagnosis code.

Happy Coding!

Final Rule:   https://www.cms.gov/medicare/acute-inpatient-pps/fy-2022-ipps-final-rule-home-page
FY2022 Final Rule Tables:  https://www.cms.gov/medicare/acute-inpatient-pps/fy-2022-ipps-final-rule-home-page#Tables

The information contained in this post is valid at the time of posting. Viewers are encouraged to research subsequent official guidance in the areas associated with the topic as they can change rapidly.

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