Use ICD-10-CM Excludes Notes to Improve Coding (2024)

Excludes 1 and 2 notes often hold the key to preventing claims denials.

There are two type of excludes notes in the ICD-10-CM classification system: Excludes 1 and Excludes 2. Medical coders need to understand the meaning of these notes because they are integral to correct coding, and payers are beginning to deny claims based on them.
The definition of these notes can be found at the front of the code book, where the conventions of the classification system are explained. The notes themselves appear in the Tabular list under specific code categories and individual codes.

Excludes 1

An Excludes 1 note below a code or category heading indicates that every code to the right of the note is mutually exclusive of the codes below. The two conditions should not be coded together.
A clear example is diabetes. Types 1 and 2 of this condition are mutually exclusive and should not be coded together. Excludes 1 is also used to address codes under broad categories that might otherwise seem inclusive. J09 Influenza due to certain identified influenza viruses has an Excludes 1 note for influenza A/H1N1 because H1N1 is coded at J10 Influenza due to other identified influenza virus. This lets you know that this specific form of flu is not coded at J09.

Excludes 2

An Excludes 2 note is more flexible. It indicates the codes to the right of the note are not included in the conditions listed below. The codes may be reported together if the patient has both conditions and if no other coding restrictions apply. For instance, R-series codes have an Excludes 2 relationship with most other code series; however, if a patient presents with a cough and complains of right wrist pain, the provider may report R05 Cough (if no definitive diagnosis can be made), as well as M19.031 Primary osteoarthritis, right wrist.

Keep Up with Payer Policies

The excludes notes are not new, but they are being newly enforced. As payers update both their policies and their claims processing software, we’ll see more payers citing diagnosis exclusivity for claim denials.
When a claim is denied for an Excludes 1 note (the language payers often use is “mutually exclusive,” which is taken directly from the code book definition), the claim will need to be corrected and resubmitted with the relevant clinical documentation. For example, if a provider codes cystocele (N81.10 Cystocele, unspecified) with uterovagin*l prolapse (N81.4 Uterovagin*l prolapse, unspecified), it will be necessary to review the medical record and possibly to query the provider as to which code is correct and which should be removed. The provider’s documentation may say something like, “Prolapse moderate to severe with vagin*l ulceration.” In this case, which organ prolapsed is unclear, and a provider query will be necessary.
There is an exception to this rule: If the two conditions are truly unrelated, you may code both for the same service. The example provided in the coding guidelines is the use of F45.8 Other somatoform disorders with sleep-related teeth grinding (G47.63 Sleep related bruxism). Other somatoform disorders include both teeth grinding and psychogenic dysmenorrhea; however, if the provider documented that the patient has psychogenic dysmenorrhea and also grinds her teeth in her sleep, it would be appropriate to code both F45.8 (dysmenorrhea) and G47.63 (teeth grinding).
For an Excludes 2 denial, compare the medical record with the diagnoses listed on the claim to be sure all diagnoses accurately reflect provider documentation. Diagnoses with an Excludes 2 reference are often correctly coded together.
Example: A patient presents for her well woman exam. The provider documents all the elements for that exam and mentions that the patient is taking oral contraceptive medication. The provider states that the patient has no problems or side effects from the medication and would like to continue taking it. As long as the provider has documented this additional counseling, the provider may code Z01.419 Encounter for gynecological examination (general) (routine) without abnormal findings for the gynecological exam and Z30.41 Encounter for surveillance of contraceptive pills for the contraceptive surveillance — even though these share an Excludes 2 note. If the diagnosis codes are accurate, an appeal with records will be necessary.
An exception occurs when a sign or symptom is coded with the condition to which it is attributed. A classic example is coding fever with any illness that causes it. Likewise, do not report lower extremity edema with congestive heart failure, as the former is caused by the latter. If any sign or symptom has been reported with its causal condition, then this code will need to be removed and a corrected claim submitted.

Denial Prevention

Ideally, you will prevent Excludes 1 discrepancies rather than correct them. The most efficient way to prevent Excludes 1 denials is through billing system management. Updated databases that contain the Excludes 1 rules are key to ensuring that clean claims are being submitted to payers.
Manually preventing Excludes 1 errors can be tricky because the exclusions are not always obvious. For example, E83.52 Hypercalcemia is exclusive of hyperparathyroidism (E21.0-E21.3). This may be obvious to a clinician or specialty coder, but not to others without the same clinical knowledge.
The location of the excludes notes also presents a challenge. For example, E78.2 Mixed hyperlipidemia cannot be coded with 5-alpha-reductase deficiency (E29.1 Testicular hypofunction), but the note for this is not at E78.2. Instead, it’s contained within the excludes notes for Metabolic disorders (E70-E88) — which, in most code books, is several pages back from the code itself.
Familiarize yourself with the Excludes 1 notes for the chapters and codes you frequently use. Although this rule can present problems for you, it’s an important directive that can contribute to the accuracy of the medical record. Many electronic health records (EHRs) are not designed to alert providers to potential discrepancies in diagnosis reporting. Even billing software often does not contain the database required to prevent mutually exclusive codes from being reported together for a single service.
Now is the time for you to advocate for software updates and improvements. As our EHR and billing systems improve, so does the potential for more accurate patient records. Ultimately, increased record accuracy will lead to fewer claim denials, and that means more money for our practices.

Liz Gengarelly, MLIS, CPC, CPMA, CPB, CPPM, is a coder for Bon Secours Medical Group. She specializes in Maternal-Fetal-Medicine and provides coding support for infectious disease and a variety of E/M services. Gengarelly is a member of the Richmond, Va., local chapter.
Resource
Optum360 ICD-10-CM Expert for Physicians 2019