Q&A: Applying CMS’ ICD-10 guidance to medical necessity

Q: CMS released guidance last summer about not auditing or counting errors for the specificity of an ICD-10-CM code. CMS is not going to count the code as an error as long as the first three digits are correct. Does this apply to medical necessity diagnoses and edits?

A: There are two parts to your question. First, it is true—CMS did issue guidance about not considering a code to be in error based on the specificity (fourth through seventh characters) if the family code (the first three characters) is correct. However, this applies only to physician and practitioner claims that are billed under the Part B physician fee schedule and only for the first 12 months after implementation. This guidance does not apply to facility providers.

The second part of your question deals with specificity related to medical necessity as defined by National Coverage Determinations and Local Coverage Determinations. The need to specify medical necessity is not changed by the guidance; if there is a specific code required to support medical necessity, then all characters of the code must be accurate to meet medical necessity. This overrides the family code guidance.

For more, see CMS’ FAQs related to the guidance.

Editor’s note: Denise Williams, RN, CPC-H, senior vice president of revenue integrity services at Revant Solutions, in Fort Lauderdale, Florida, answered this question.