Coding to the Highest Level of Specificity

Insurance carriers often deny claims for not being coded to the highest level of specificity. As many billers are not coders they often don’t understand what has gone wrong or how to fix it.

If a service line is denied for this reason they are saying that the diagnosis code needs to be more specific. Some diagnosis codes are only three or four digits but many are five digits. The diagnosis must be coded to the absolute highest level for that code, meaning the most number of digits for the code being used.

For example, the diagnosis for hypertension begins with 401. However if you submit a cliam with the diagnosis 401 it will be denied. The code 401 requires a 4th digit. 401.0 is malignant essential hypertension. 401.1 is benign essential hypertension. 401.9 is unspecified essential hypertension. So to bill a claim with a diagnosis of hypertension it must be either 401.0, 401.1, or 401.9.

Another example of a diagnosis needing to be billed to a higher level of specificity would be diabetes. 250.0 indicates diabetes however you neeed a 5th digit to specify what type of diabetes. 250.00 is diabetes mellitus type two, 250.01 is diabetes mellitus type one (juvenile type), and 250.02 is diabetes mellitus type one uncontrolled and so on.

As you can see in the above example just putting 250.0 does not indicate specifically what the problem is. Without the fifth digit the claim is lacking enough information to be processed and therefore will be denied.

If you are unsure if the diagnosis is coded to the highest level of specificity you can look it up in an ICD9 code book or on the web. There are several websites with current ICD9 codes available. They will indicate if the code is coded to the highest level.

Some practice management systems have scrubbers that will catch under coded diagnosis and give you a warning. Sometimes the biller may recognize a truncated diagnosis (or a diagnosis requiring an additional digit.)

In either case the biller should go back to the coder or provider and ask them to be more specific with the diagnosis code so the claim can be resubmitted.

Medical Billing Services

New Mental Health Law Affects Benefits

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) signed by George Bush as part of the financial rescue package in October 2008 will take effect 1/1/2010. This law greatly affects mental health professionals and billers.

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 made changes to the Mental Health Parity Act (MHPA) of 1996 which allowed for too many restrictions to mental health benefits. The problem with the 1996 act was that it allowed for too many loopholes and still encouraged discrimination against mental health benefits.

The 2008 Act closed up some of those loopholes. For example, the 1996 MHPA allowed employers to limit the number of visits for mental health treatment whereas the 2008 Act states that mental health benefits can be no more restrictive than medical benefits.

The new law attempts to make coverage for mental health benefits equivalent to medical service benefits. If a health plan allows for out of network benefits for medical services, they must now allow the same out of network benefits for mental health.

The major provisions for the new law are:

• Does not allow employers or insurers to place stricter limits on mental health services than they have on medical benefits. This means not allowing higher co-pays, deductibles or limiting the number of visits.
• If a policy allows for out of network benefits for medical benefits it must allow the same out of network benefits for mental health.
• If a policy allows benefits for substance abuse, both in and out of network, the limitations cannot be more restrictive than they are for medical or mental health benefits.
• Any state parity measures are left in place.

We currently see many policies paying only 50% of the allowable with the patient responsible for the remaining 50%. Under the new law this will no longer be possible unless the health plan pays only 50% of the allowable for medical benefits as well as mental health. We have even seen mental health plans that pay only $10 per visit.

The Act unfortunately does not cover all insured people. Employers with 50 or less employees are exempt from this Act. Also, the law does not require health insurance plans to cover mental health and substance abuse disorders. It only applies to plans that have coverage for mental health or substance abuse.

What does this mean to the mental health provider? Mental health providers will not see as much discrimination for their services. Patients will not be penalized for seeing mental health professionals and will receive equal benefits.

It’s not a perfect solution and doesn’t cover everyone, but it is definitely a step toward equal benefits.

Mental Health Billing

Are You and Your Providers Breaking the Law

We have had a very hot topic on our forum lately regarding how medical billing services charge their providers. Most billers charge either a flat monthly fee, a per claim fee, or a percentage of the billing. But did you know that some states have laws on the books that prohibit physicians from entering into certain types of “fee splitting” arrangements?

It is very common for a medical billing service to charge a percentage of the money collected as a result of their efforts in billing the insurance claims but many billing services don’t realize that this practice is considered fee splitting and may be illegal. Several states have laws banning this practice and some have prosecuted doctors for paying this way.

The reason for fee splitting laws was not originally intended for medical billing services but does include billing services and providers including doctors, therapists and other health professionals. It was originally designed to prevent providers who had arrangements with other Medical providers to receive a kick back for referring patients for their services. But the way the law is written no one is allowed to share a percentage of the income of the provider except partners.

Many billers prefer charging a percentage as it provides a motivation for collecting all money due a provider and a selling point in marketing. It seems like an easy way to determine a reasonable fee and compare charges with other billing services.

Unfortunately it is the doctor or provider who gets in trouble for this practice. It is the provider who is splitting his or her fee.

The problem for the billing service is that the practice of fee splitting totally negates the contract with the provider. Although many billing services get away with charging a percentage in states where fee splitting is illegal, some states are starting to crack down on this practice.

If you are in a state which prohibits fee splitting or work with out of state providers who may reside in the fee splitting states it is a good idea to look at other options of charging for your work. Many billing services charge per claim, a flat fee, or at an hourly rate.

Many billing services who currently charge a percentage and learn about the fee splitting laws are reluctant to change. They have been using the percentage as a marketing technique and don’t know how to change to a different form of payment.

As Linda Walker points out on our forum, she uses not charging a percentage as a marketing technique. She asks the provider if they want to work with someone who would ask them to enter into an illegal contract.

If you are currently charging your providers a percentage in a fee splitting state there are several things you can do to change to a different method. Average out what the provider has been paying you for the last six months. Consider any unusual fluctuations in charges and come up with a flat monthly fee. You can also count the average number of claims each provider sends you in a month and come up with a per claim fee.

Yet another method would be to keep track of how much time you spend on each provider each week and multiply that times the dollar amount you would like to collect per hour. If you decide on the hourly rate make sure you allow for all your expenses not just your time.

The states which have fee splitting laws that we currently know of are N. Y., and Florida This does not mean other states do not have such laws. This list is just the ones we are aware of. Linda Walker has more information on the laws in various states on her website at If you run a medical billing service make sure you are not breaking the law by charging your providers in this fashion.

Medical Billing Information