Billing, Coding and Documentation: A Primer on Dermatology Billing and Coding Guidelines

Figure. The components required to generate International Classification of Diseases (ICD) and Evaluation and Management (E/M) level of service (LOS) codes.


This is a Coding Solutions guest series focusing on dermatology-specific billing, coding and documentation. Relevant inpatient and outpatient coding will be discussed and case scenarios presented. While the codes and topics discussed will not be all-inclusive, the most high yield topics will be reviewed and can serve as a quick reference for coding questions typically encountered by dermatologists.  

Proper, adequate coding and documentation has become an increasingly important aspect of modern medicine, especially with the prevalence of electronic health records (EHR). While electronic records provide some documentation benefits to the physician, such as legibility and ease of inter-physician communication, they also carry potential coding risks. Many EHR systems automatically calculate the level of service and procedure codes based on physician documentation. This can be convenient but carries the risk of coding incorrectly and potentially reduces the incentive to learn the nuances of coding. Regardless of the coding generated by the EHR or billing staff, the physician is ultimately responsible. 

The different coding systems used in medicine serve as a means of communication between medical providers and the insurance companies that pay for services rendered during a patient encounter. Some of the major influential players in the coding game include the World Health Organization (WHO), which is responsible for generating diagnosis codes, and the Centers for Medicare and Medicaid (CMS), which creates many of the coding rules and service codes that have then been largely adapted by private insurers. The American Medical Association (AMA) creates the widely accepted medical nomenclature used to report medical procedures and services under public and private health insurance programs.

Two main coding systems are commonly used by providers: the International Classification of Diseases (ICD) and the Current Procedural Terminology (CPT). The Figure illustrates the components required to generate ICD and CPT codes. The ICD is the widely used classification system for medical diagnoses. The ICD system is sponsored by the WHO and is used by numerous countries to record morbidity and mortality data. The United States has been using the ICD-9 system since 1979, which consists of more than 14,000 disease codes.1 These codes are typically 3 to 5 characters in length and the first digit may be alpha or numeric. Critics of the ICD-9 system cite the lack of specificity with regard to anatomic location and absence of codes for many known disease conditions. 

The ICD-10 system is used in many countries and the United States is scheduled to begin implementing ICD-10 in October 2015. ICD-10 diagnosis codes are much more detailed than ICD-9 and as a result there are more than 68,000 disease codes. These codes are typically 3 to 7 characters in length and all codes begin with an alpha character. ICD-10 more accurately represents the current breadth and depth of medical knowledge. While this article will not address specific ICD codes, reference manuals for both ICD-9 and ICD-10 guidelines are available.

The second coding system is the Current Procedural Terminology (CPT) codes that are used for coding all types of inpatient and outpatient procedures and services. Dermatology uses many of these codes to bill for in-office procedures like skin biopsies, destructions, excisions and Mohs surgery. Within the CPT coding system are the Evaluation and Management (E/M) codes, which are used to appropriately bill for level of office visit or inpatient visit. The E/M code is often referred to as the “level of service (LOS)” and requires documentation of history, exam findings and management decisions. Two guidelines for E/M coding exist: the 1995 guidelines and 1997 guidelines. While they are similar in overall structure, they differ in how a physician codes the history and physical exam. The 1995 guidelines use organ systems to achieve different levels of exam billing, whereas the 1997 guidelines use the body parts examined. The 1997 guidelines also allow physicians to bill at a higher level in the history portion for documenting multiple chronic illnesses. The 1997 guidelines are typically used by dermatologists for documentation due to the limited number of organ systems they examine. The CPT and E/M codes are generated by the AMA for use by the CMS. Historically, private insurers have adopted CMS coding and documentation guidelines to create their own structure for reimbursement. The physician needs to have extensive knowledge of all 3 coding systems in order to properly bill for their time and services. The first article in this series will focus on generating the appropriate E/M code for new and return patients. After discussing E/M codes, CPT procedure coding and inpatient documentation will be reviewed.

Outpatient Visit E/M Codes 

Almost all routine office visits will require a history, physical exam and management or medical decision making. Physicians indicate the level of this service, which is provided using an E/M code. The LOS for each E/M code is determined by looking at the detail and complexity in each of the 3 components of the encounter: history, physical exam and medical decision making. All 3 components are graded on a 5-point scale of complexity. The lowest level (level 1) represents a nurse visit with minimal complexity. The highest level (level 5) represents a detailed and comprehensive history and exam with high complexity of decision making. The office visit codes are 99201 to 99205 for new patients (Table 1), and 99211 to 99215 for return visits (Table 2). For new patients (defined as not seen by an individual practice within the past 3 years), the LOS is determined as the highest level documented in all 3 components of the encounter. For return patients, LOS is determined by the highest level documented in any 2 of the 3 components of the encounter. 

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