ICD-10: Documentation and coding

Cracking the Code

Alexander Miller

Dr. Miller, who is in private practice in Yorba Linda, California, represents the American Academy of Dermatology on the AMA-CPT Advisory Committee.

Bookmark and Share

Repeated messages from the AAD and other sources have stressed the importance of practicing ICD-10 coding in anticipation of the hard transition to ICD-10 on Oct. 1. If you have an electronic health records program that automatically extracts ICD-10 codes and presents them for billing, you may believe that you are fully protected from errors and are set for Oct. 1. Wrong. Electronic health records (and paper records, for that matter) can only direct diagnostic coding based upon what is entered into the record. If one is unaware of the ICD-10 coding requirements, then one may neglect to enter pertinent data that will determine optimal diagnostic codes.

Specifically, ICD-10 brings the following coding distinctions:

  • Alphanumeric codes with up to seven characters
  • Specificity
  • Laterality
  • Comorbidities
  • Encounter types

Alphanumeric codes

ICD-10 codes contain up to seven characters, starting with a letter. Many dermatologic codes are located in the “Diseases of the Skin and Subcutaneous Tissue” section of the ICD-10, in chapter 12. These all begin with the letter “L”. However, cutaneous neoplasms are listed elsewhere, in chapter two, and typically begin with the letter “C” for melanoma, basal cell carcinoma, and squamous cell carcinoma, or “D” for in situ tumors and benign tumors, including nevi, and neoplasms of uncertain behavior.


The medical record should provide sufficient detail (“granularity”) about a disease or encounter so as to allow for the greatest specificity in coding. Insufficient chart detail may lead to an “unspecified” diagnosis or “unspecified” location of a condition. Listing an “unspecified” tumor location (usually designated by a last character of “zero” or “nine” in the code) may lead to delayed claim adjudication and/or denials. Consequently, specifying necessary detail is crucial to proper coding and reimbursement.


In addition to describing the general location of a tumor or condition one must also define whether it is on the left or right side of a structure that has laterality, such as left versus right hand, left versus right eyelid, etc. Depending on the condition being coded, the fifth or sixth character (last digit) in a cutaneous tumor diagnosis code specifies laterality. For invasive and in-situ melanomas and in-situ cutaneous carcinomas, a last digit of “1” indicates the right side, and “2” denotes the left side. To keep you alert the ICD-10 presents a different numerical convention for basal and squamous cell carcinomas as well as for malignant neoplasms, not otherwise specified. For these latter three entities the last digit “2” specifies the right side, and “9” applies to the left side. Go figure!


The medical record should record complications and conditions associated with a primary disease. These may then be used to appropriately select diagnostic codes in addition to a primary code. Specifying additional data and diagnostic codes associated with the primary code provides greater information to the payer, and may serve to validate the complexity of a given patient care episode. Such detailed coding will become essential as alternative payment models begin to vary reimbursement levels for episodes of care, basing at least some of the reimbursements upon the complexity of the conditions undergoing treatment. [pagebreak]

Encounter types

The seventh and last spot in the sequence of ICD-10 alphanumeric codes is reserved for describing special circumstances, such as initial or subsequent encounters resulting from injuries or poisonings, or for ensuing sequelae. A sequela is a morbidity arising consequent to a prior injury or poisoning. For example, a keloid resulting from a dog bite would be appropriately described with the ICD-10 code for keloid followed with the additional pertinent dog bite code ending with an “S” for sequela. The types of encounters following an injury or poisoning are uniformly coded with one of three letters:

A = Initial

D = Subsequent

S = Sequela

Here is an example:

W58.03XA: Crushed by alligator, initial encounter (as alligators do not climb trees, nor do they fly, or jump, just how they would come to land on top to crush you challenges one’s imagination)

W58.03XD: Crushed by alligator, subsequent encounter (in case you survived the crushing to appear for a follow-up visit)

W58.03XS: Crushed by alligator, sequela (I bet there would be several of these)

Now, if you feel that crushing really refers to a crunching bite, maybe not: there is a distinct code set for alligator bites, also stratified by initial encounter, subsequent encounter, and sequela. So, maybe if an alligator were to nip at you, you would use the bite code, but if it were to bite and latch on, methodically grinding you into a crush artifact, then you would use the crush codes.

Example 1: A patient comes in for an examination following an excision of a Merkel cell carcinoma six months ago. You do a complete skin examination, palpate nodal basins, and evaluate any pertinent laboratory results. As no new tumor is identified, you append a diagnosis code for “Personal history of other malignant neoplasm of skin” (not melanoma): Z85.828.

Answer: Incorrect. The ICD-10 lists a specific code for a personal history of Merkel cell carcinoma: Z85.821. Code Z85.828 pertains to a history of all other cutaneous malignancies except for melanoma, which is specified with Z85.820. Note that although this visit is consequent to a prior Merkel cell carcinoma treatment, no sequela codes are appropriate, as these are reserved for complications resulting from injuries or poisonings.

Example 2: You biopsy and simultaneously destroy with curetting and electrodesiccation a lesion located on the left arm that you are certain is a basal cell carcinoma. You hold billing until the receipt of the pathology report. Whoa! The lesion is actually an amelanotic melanoma! You then apply ICD-10 code C43.62, malignant melanoma, left arm, and bill the insurer.

Answer: Correct. It is prudent to await the final pathology report when coding for a malignant entity, as it will allow for the greatest specificity in coding. [pagebreak]

Example 3: You excise a melanoma on the right chest. Your insurance biller submits a bill with ICD-10 diagnostic code C43.59. You are surprised at the coding, as you specified the right side and expected the last digit in the code to be a “1”, denoting a melanoma located on the right side of the patient. Was the billing done correctly?

Answer: Correct. Laterality is not applied to certain structures, including the lip, face, neck, trunk, breast, chest, back and buttocks. Therefore, C43.59, melanoma on trunk, is correct. Sites with laterality codes are: ear, eyelid, axilla, arm, hand, finger, leg, foot, toe.

Example 4: A patient with diabetes mellitus presents with a bilateral pretibial eruption that you diagnose as necrobiosis lipoidica diabeticorum (NLD). Your biller selects ICD-10 code L92.1, necrobiosis lipoidica, and sends the bill to the insurer.

Answer: Incorrect. Although code L92.1 does specify necrobiosis lipoidica, the patient also has diabetes mellitus. Optimal chart granularity would have revealed whether the diabetes was Type 1 or 2. Based upon the type of associated diabetes one would select the precisely descriptive ICD-10 code for necrobiosis lipoidica diabeticorum associated with Type 1 diabetes, E10.620, or Type 2 diabetes, E11.620. Although coding for necrobiosis lipoidica alone is technically acceptable, it is best to include codes that more fully describe the patient’s interrelated diagnoses. Note that laterality (left side, right side, or bilateral NLD) is not specified, as dermatology codes for laterality are limited principally to neoplasms, burns and ulcers.

Example 5: You evaluate a child with a facial hemangioma. As there is no location-specific ICD-10 code for a hemangioma, the diagnosis is coded as D18.00, “hemangioma, unspecified site.”

Answer: Incorrect. The zero at the end of the code sequence should act as a tip-off to a possibly incorrect code. In many, but not all, instances of cutaneous tumor codes a zero at the terminus of a line of ICD-10 code indicates an unspecified location or an unspecified type of tumor, and should prompt one to search for a more specific code. In this case, a more optimal code choice is D18.01, denoting “hemangioma of skin and subcutaneous tissue.”


Letters and numbers

The new code set, unlike ICD-9, includes both letters and numbers.

Of the letters, three are most important for dermatologists to remember:

L: corresponds to the “Diseases of the Skin and Subcutaneous Tissue” section of the ICD-10, chapter 12.

C: melanoma, basal cell carcinoma and squamous cell carcinoma, located in chapter two.

D: in situ tumors and benign tumors, including nevi, and neoplasms of uncertain behavior, also in chapter two.



Depending on the condition being coded, the fifth or sixth character (last digit) in a cutaneous tumor diagnosis code specifies laterality.

Invasive and in-situ melanomas and in-situ cutaneous carcinomas

A last digit of “1” indicates the right side.

A last digit of “2” denotes the left side.

Basal and squamous cell carcinomas and malignant neoplasms, not otherwise specified

A last digit of “2” specifies the right side.

A last digit of“9” applies to the left side.




Letters and numbers