Ins and Outs of LCDs and NCDs

Accurate and complete ICD-9 and CPT coding are predicated upon coder review of the available medical record documentation at the time of code assignment with consistent application of and adherence to the ICD-9 CM Official Guidelines for Coding and Reporting.

Coders must maintain strict vigilance in following these coding guidelines along with Coding Clinic and CPT Assistant guidelines when interpreting clinical information within the record and assigning appropriate ICD-9 diagnosis and procedure codes. Specifically, coders cannot deviate from said coding guidelines in code assignment to affect payment from third-party payers on a claim for services rendered.

Yet, while clinical coding ethics and accuracy entail by definition unequivocal adherence to official coding guidelines and policies governing ICD-9 code assignment, coders also must be cognizant of and familiar with Medicare and other third-party payer policies governing clinical indications for procedures, including medical record documentation requirements and ICD-9 covered diagnoses as related to payment.

The business of coding embraces the concept and necessity for inclusion of local coverage determinations (LCDs) and national coverage determinations (NCDs) clinical documentation and code assignment requirements that affect payment from Medicare. Data integrity and compliance serve as the fundamental basis for all aspects of medical record coding.

Emphatically, coders do not assign ICD-9 diagnosis codes to get a claim paid. Just the same, coders must take the initiative to conceptualize and practically understand and apply the ins and outs of LCDs and NCDs as a complement to official coding guidelines and policies in the overall process of code assignment.

Coders Must Understand LCDs and NCDs
CMS develops NCDs to describe the circumstances for Medicare coverage nationwide for an item or service. NCDs generally outline the conditions for which an item or service is considered to be covered (or not covered) under Section 1862(a)(1) of the Social Security Act or other applicable provisions of the Act. Examples of widely used NCDs include those governing pacemaker insertion (single versus dual chamber) and automatic implantable cardioverter defibrillators.

A LCD is a decision by a Medicare administrative contractor (MAC), fiscal intermediary, or carrier whether to cover a particular item or service on a MAC-wide, intermediary wide, or carrier-wide basis in accordance with Section 1862(a)(1)(A) of the Social Security Act (i.e., a determination as to whether the item or service is reasonable and necessary).

Codes describing what is covered and what is not covered can be part of the LCD. This includes, for example, lists of HCPCs codes that spell out which items or services the LCD applies to, lists of ICD-9-CM codes for which the item or service is covered, lists of ICD-9 codes for which the item or service is not considered reasonable and necessary, etc. NCDs and LCDs are developed, released, and implemented only after the provider community has the opportunity to comment on draft versions of the respective LCDs/NCDs.

LCDs and NCDs are drafted, implemented, and utilized in determining medical necessity and payment for services billed by providers in the processing of submitted claims. LCDs and NCDs do not exist for every conceivable provider service as the management and updating process would become too daunting and unwieldy. Instead, LCDs and NCDs are considered and promulgated for those services that are high cost, high volume, and have a marked tendency to be over-utilized by clinicians.

MACs are free to decide which services will fall under a LCD, with common examples including advanced diagnostic imaging (CTs, MRIs, nuclear medicine scans), wound care (debridement, application of bio-engineered skin substitute), pain management, radiation therapy, chemotherapy, lesion removals, and cardiac stress tests, to name a few. These LCDs outline ICD-9 diagnoses that are considered a covered benefit and will affect payment from Medicare if a highlighted diagnosis is assigned and appears on the claim for processing and payment. Assignment of a covered diagnosis on the claim does not assure payment; provisions of clinical documentation and indications and limitations of coverage ultimately govern payment for services rendered as outlined in the LCD or NCD.

LCD Case Study
This example illustrates the necessity for coders becoming and maintaining familiarity with coverage guidelines outlined in published LCDs:

Patient was scheduled for and presented to the hospital outpatient department for a capsule endoscopy, esophagus through ileum. Physician order as well as physician interpretation and report explicitly included documentation of the fact the patient has occult GI bleeding with a recently performed negative upper and lower GI endoscopy. Results of the capsule endoscopy showed extensive diverticulitis of small intestine with bleed.

Coder, following official coding guidelines, assigned ICD-9 code 562.03-diverticultiis of small intestine with hemorrhage. On face value, this appears to be compliant, accurate, and complete coding. On the other hand, Medicare denied the billed claim for payment on the basis of lack of medical necessity. Let’s take a close look at the NGS Medicare LCD governing endoscopy by capsule and identify the code assignment deficiency contributing to nonpayment by Medicare for this service.

For Medicare to consider payment for capsule endoscopy, an upper and lower GI endoscopy must have been performed prior to performance of the capsule endoscopy and must be reported on the claim with the capsule endoscopy using ICD-9 diagnosis code V45.89- Other postsurgical status. Under the “ICD-9-CM codes for the small bowel capsule” section of the LCD, the following statements are made:

  • ICD-9-CM code V45.89 for purposes of this LCD indicates that a medically necessary upper endoscopy and colonoscopy related to the current episode of care were carried out before endoscopy by capsule was done. If the patient has had prior total colectomy, this ICD-9-CM code should still be used to signify the upper endoscopy was performed. Therefore, ICD-9-CM code V45.89 must be reported on all claims for endoscopy by capsule of the small bowel EXCEPT when performed in patients with documented intussusception (ICD-9-CM code 560.0) in order for coverage to occur. To support medical necessity for endoscopy by capsule of the small bowel, ICD-9-CM code V45.89 plus one (or more) of the ICD-9-CM codes listed below must be reported.

Clearly the coder overlooked reporting of the V45.89 diagnosis code to the detriment of a denial for payment of this claim, despite that the record explicitly outlined the fact the patient had underwent a prior upper and lower GI endoscopy with negative findings. Of note is the additional documentation requirements spelled out in this LCD that the coder should be familiar with as part of the record review and ICD-9 coding process as follows:

Additional documentation is required according to the specific indication for performing endoscopy by capsule:

  • If the beneficiary has GI blood loss or iron deficiency anemia or anemia secondary to the bleeding, the medical record must document that the prior upper GI endoscopy or colonoscopy failed to adequately reveal the source of bleeding.
  • If the provisional diagnosis is occult gastrointestinal bleeding without iron deficiency anemia, the medical record must document the presence of occult blood in fecal samples.
  • If the provisional diagnosis is Crohn’s disease, the medical record must document the signs, symptoms, and previous diagnostic work supporting this diagnosis.
  • If the provisional diagnosis is Crohn’s the medical record must document that, in the physician’s judgment, the patient does not have an intestinal stricture.
  • If small bowel involvement is suspected in a patient with known Crohn’s disease or other colitis, the medical record must document the signs, symptoms, and previous diagnostic work supporting this hypothesis.

The medical record must document the need for capsule endoscopy and contain reports or reference to the previous appropriate negative endoscopies performed prior to endoscopy by capsule.

Coders must recognize their responsibility in familiarizing and maintaining relevance in LCD/NCD content to the extent that the code assignment reflects and captures the physician’s clinical judgment for performance of a diagnostic test as appears in the documented order as well as the test results. In short, the business of coding represents an ideal that coding accuracy inherently includes the notion of code assignment for clinical and payment accuracy.

Payment accuracy is paramount to maintenance of fiscal health of the healthcare institution of which coders are a part. Clinical coding accuracy serves as a key provision of payment accuracy with the sum of each greater than each individual component. Seize the moment and take the next step: Explore the content of LCDs on your MAC or Fiscal Intermediary website.

Glenn Krauss is an independent revenue cycle consultant in Madison, Wisc., and author of “The Documentation Improvement Guide to Physician E/M.”

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