ED Coding and Reimbursement Alert

Question: Our understanding is that the first-listed diagnosis must be used in lieu of the principal diagnosis when reporting observation. Often, the first listed diagnosis on the discharge summary is not the reason for the admission to observation. Should the reason for admission always be the first listed? If a patient is admitted for syncope, and the provider documents that the patient is dehydrated and is now in acute kidney failure and all the treatment was for the acute kidney failure/dehydration, should syncope still be the first listed diagnosis?

Codify Subscriber

Answer: You should report the diagnosis that’s chiefly responsible for the visit rather than the diagnosis listed first on the discharge summary. Because observation care is considered an outpatient service, you’ll follow the outpatient coding rules, which dictate that, in your example, you’d report the diagnoses for acute kidney failure first, followed by dehydration. You may also report the syncope as a third diagnosis.

Here’s why: “For outpatient claims, providers report the full diagnosis code for the diagnosis shown to be chiefly responsible for the outpatient services,” CMS says in Section 10.3 of Chapter 23 of the Medicare Claims Processing Manual.

“For instance,” the Manual says, “if a patient is seen on an outpatient basis for an evaluation of a symptom (e.g., cough) for which a definitive diagnosis is not made, the symptom is reported. If, during the course of the outpatient evaluation and treatment, a definitive diagnosis is made (e.g., acute bronchitis), the definitive diagnosis is reported.”

Therefore, in this case, the syncope is the symptom but the definitive diagnosis is the kidney failure, caused by dehydration.