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Why Specificity Matters: ICD-10 Billing for Workers’ Comp

October 20, 2015 by Catherine Montgomery

On October 1st, both the U.S. health system and the California Division of Workers’ Compensation officially adopted ICD-10 diagnosis codes.

Specifically, the California Division of Workers’ Compensation Medical Billing and Payment Guide, Section 3.0 (a)(2) states that:

Although ICD-10 coding is required on or after October 1, 2015, for a twelve month period ending October 1, 2016, no medical treatment shall be denied based solely on an error in the level of specificity of the ICD-10 diagnosis code(s) used.

But what exactly does “specificity” mean?

Take a look at our breakdown of the structure of an ICD-10-CM code.

Screen Shot 2015-10-19 at 12.52.28 PM.png

An ICD-10-CM code is anywhere from 3 to 7 characters. The more characters present, the higher the level of specificity.

The first three characters of an ICD-10-CM code indicate the diagnosis category and the affected body part. In the example above, for characters 1-3:

  1. “S” indicates an injury.
  2. “S6” indicates an injury to the wrist, hand, and fingers.
  3. “S63” indicates a dislocation or a sprain to the wrist, hand, and fingers.

The second set of three characters offer further specificity about about the diagnosis: etiology, severity, laterality, and other important details that make the diagnosis even more specific. In example above, for characters 4-6:

  1. “S63.6” indicates an “other and unspecified” sprain.
  2. “S63.63” indicates a sprain of the interphalangeal joint.
  3. “S63.630” refers to a sprain of the interphalangeal joint of the right index finger.

Finally, the last character indicates whether the treatment was for an initial encounter, a subsequent encounter, or sequela (a complication that arises as a direct result of a condition). In the diagnosis example above:

  • “A” indicates a diagnosis for an initial encounter.

Although the ICD-10 diagnosis codes guide may indicate a higher level of specificity is required, denial of a medical treatment bill based on a lack of ICD-10 code specificity is not allowed.

For California workers’ comp billing, an incorrect 4th, 5th, and 6th character--the part of the ICD-10 code that indicates increased specificity--cannot lead to a denial of a bill for treatment until October 1st, 2016.

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