CMS Pub. 100-04, ch. 3, § 20.2.1

A. - General

The MCE edits claims to detect incorrect billing data. In determining the appropriate MS-DRG for a Medicare patient, the age, sex, discharge status, principal diagnosis, secondary

diagnosis, and procedures performed must be reported accurately to the Grouper program.

The logic of the Grouper software assumes that this information is accurate and the Grouper

does not make any attempt to edit the data for accuracy. Only where extreme inconsistencies

occur in the patient information will a patient not be assigned to a MS-DRG. Therefore, the

MCE is used to improve the quality of information given to Grouper.

The MCE addresses three basic types of edits which will support the MS-DRG assignment:

• Code Edits - Examines a claim for the correct use of diagnosis and procedure codes.

They include basic consistency checks on the interrelationship among a patient's age,

sex, and diagnoses and procedures reported.

• Coverage Edits - Examines the type of patient and procedures performed to

determine if the services are covered.

• Clinical Edits - Examines the clinical consistency of the diagnostic and procedural

information on the claim to determine if they are clinically reasonable and, therefore,

should be paid.

B. - Implementation Requirements

The A/B MAC (A) processes all inpatient Part A discharge/transfer claims for both PPS and

non-PPS facilities (including waiver States, long-term care hospitals, and excluded units)

through the MCE. It processes claims that have been reviewed by the QIO prior to billing

through the MCE only for edit types 1, 2, 3, 4, 7, and 12. It does not process the following

kinds of claims through the MCE:

• Where no Medicare payment is due (amounts reported by value codes 12, 13, 14, 15,

or 16 equal or exceed charges).

• Where no Medicare payment is being made. Where partial payment is made, editing

is required.

• Where QIO reviewed prior to billing (condition code C1 or C3). It may process these

exceptions through the program and ignore development codes or bypass the program.

The MCE software contains multiple versions. The version of the MCE accessed by the

program depends upon the patient discharge date entered on the claim.

C. - Bill System/MCE Interface

The A/B MAC (A) installs the MCE online, if possible, so that prepayment edit requirements

identified in subsection C can be directed to hospitals without clerical handling.

The MCE needs the following data elements to analyze the claim:

• Age;

• Sex;

• Discharge status;

• Diagnosis (25 maximum - principal diagnosis and up to 24 additional diagnoses);

• Procedures (25 maximum); and

• Discharge date.

The MCE provides the A/B MAC (A) an analysis of "errors" on the claim as described in

subsection D. The A/B MAC (A) develops its own interface program to provide data to

MCE and receive data from it.

The MCE Installation Manual describes the installation and operation of the program,

including data base formats and locations.

D. - Processing Requirements

The hospital must follow the procedure described below for each error code. For claims

returned to the provider, the A/B MAC (A) considers the claim improperly completed for

control and processing time purposes. (See chapter 1.)

NOTE: The following instructions are based on ICD-9-CM diagnosis and procedure codes,

ICD-10-CM and ICD-10-PCS codes.

1. Invalid Diagnosis or Procedure Code

The MCE checks each diagnosis code, including the admitting diagnosis, and each procedure

code against a table of valid diagnosis and procedure codes. An admitting diagnosis, a

principal diagnosis, and up to 24 additional diagnoses may be reported. Up to 25 total

procedure codes may be reported on an inpatient claim. If the recorded code is not in this

table, the code is invalid, and the A/B MAC (A) returns the claim to the provider.

For a list of valid diagnosis or procedure codes see the "International Classification of

Diseases” revision applicable to the date of the inpatient discharge or other service and the

"Addendum/Errata" and new codes furnished by the A/B MAC (A). The hospital must

review the medical record and/or face sheet and enter the correct diagnosis/procedure codes

before returning the claim.

2. External Cause of Injury Code as Principal Diagnosis

External Cause of Injury codes describe the circumstances that caused an injury, not the

nature of the injury, and therefore are not recognized by the Grouper program as acceptable

principal diagnoses. In ICD-9-CM the external cause of injury diagnosis codes begin with

the letter E. In ICD-10-CM the external cause of injury codes begin with the letters V, W, X

and Y. For a list of all External cause of injury codes, see International Classification of

Diseases, 9th Revision, Clinical Modification (ICD-9-CM), and the International

Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM). The

hospital must review the medical record and/or face sheet and enter the correct diagnosis

before returning the claim.

3. Duplicate of Principal Diagnosis

Any secondary diagnosis reported on the claim that is the same code as the principal

diagnosis reported on the claim is identified as a duplicate of the principal diagnosis. This is

unacceptable because the secondary diagnosis may cause an erroneous assignment to a

higher severity level MS-DRG. Hospitals may not repeat a diagnosis code. The A/B MAC

(A) will delete the duplicate secondary diagnosis and process the claim.

4. Age Conflict

The MCE detects inconsistencies between a patient's age and any diagnosis on the patient's

record. Examples are:

• A 5-year-old patient with benign prostatic hypertrophy.

• A 78-year-old who delivers a baby.

In the above cases, the diagnosis is clinically impossible in a patient of the stated age.

Therefore, either the diagnosis or age is presumed to be incorrect. Four age code categories

are described below.

• A subset of diagnoses is intended only for “perinatal/newborn.” These are diagnoses

that occur during the perinatal or newborn period of age 0.

• Certain diagnoses are considered reasonable only for children between the ages of 0

and 17. These are "Pediatric" diagnoses.

• Diagnoses identified as "Maternity" are coded only for patients between the ages of 9

and 64.

• A subset of diagnoses is considered valid only for patients over the age of 14. These

are "Adult" diagnoses. For "Adult" diagnoses the age range is 15 through 124.

The list of diagnoses that are acceptable for each age category can be located in the most

current version of the Definition of Medicare Code Edits manual which is posted at:

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software

Prior versions of the manual can be located at:

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS

and select the final rule for the applicable Fiscal Year (FY) from the list on the left. Then

select the FY(CCYY) Final Rule Data Files, and scroll down to the Definition of Medicare

Code Edits link.

If the A/B MAC (A) edits online, it will return claims for a proper diagnosis or correction of

age as applicable. If the A/B MAC (A) edits in batch operations after receipt of the

admission query response, it uses the age based on CMS records and returns claims that fail

this edit. The hospital must review the Electronic Health Record (EHR), paper medical

record, and/or face sheet and enter the proper diagnosis or patient’s age before returning the

claim.

5. Sex Conflict

The MCE detects inconsistencies between a patient's sex and a diagnosis or procedure on the

patient's record. Examples are:

• Male patient with cervical cancer (diagnosis).

• Male patient with a hysterectomy (procedure).

In both instances, the indicated diagnosis or the procedure conflicts with the stated sex of the

patient. Therefore, either the patient's diagnosis, procedure or sex is incorrect.

The MCE contains listings of male and female related diagnosis and procedure codes and the

corresponding English descriptions. The hospital should review the EHR, paper medical

record, and/or face sheet and enter the proper sex, diagnosis, and procedure before returning

the claim.

6. Manifestation Code as Principal Diagnosis

A manifestation code describes the manifestation of an underlying disease, not the disease

itself, and therefore, cannot be a principal diagnosis. The MCE contains listings of diagnosis

codes identified as manifestation codes. The hospital should review the EHR, paper medical

record, and/or face sheet and enter the proper diagnosis before returning the claim.

7. Nonspecific Principal Diagnosis

Effective October 1, 2007 (FY 2008), the non-specific principal diagnosis edit was

discontinued and is only applicable when processing claims using MCE version 2.0-23.0

only.

8. Questionable Admission

There are some diagnoses which are not usually sufficient justification for admission to an

acute care hospital.

The MCE contains a listing of diagnosis codes identified as "Questionable Admission" when

used as principal diagnosis.

The A/B MACs (A) may review on a post-payment basis all questionable admission cases.

Where the A/B MAC (A) determines the denial rate is sufficiently high to warrant, it may

review the claim before payment.

9. Unacceptable Principal Diagnosis

There are selected codes that describe a circumstance which influences an individual's health

status but is not a current illness or injury; therefore, they are unacceptable as a principal

diagnosis. For example, the diagnosis code for family history of a certain disease would be

an unacceptable principal diagnosis since the patient may not have the disease.

In a few cases, there are codes that are acceptable as a principal diagnosis if a secondary

diagnosis is coded. If no secondary diagnosis is present the message "requires secondary dx"

will be returned by the MCE. The A/B MAC (A) may review claims with codes from the

Unacceptable Principal Diagnosis section and a secondary diagnosis. A/B MACs (A) may

choose to review as a principal diagnosis if data analysis deems it a priority.

If codes from the unacceptable principal diagnosis edit code list are identified without a

secondary diagnosis, the A/B MAC (A) returns the claim to the hospital and requests that the

applicable secondary diagnosis be entered. Also, any claims containing other "unacceptable

principal diagnosis" codes are returned.

The hospital reviews the EHR, paper medical record, and/or face sheet and enters the

appropriate principal diagnosis that describes the illness or injury before resubmitting the

claim.

10. Nonspecific O.R. Procedures

Effective October 1, 2007 (FY 2008), the non-specific O.R. procedure edit was discontinued

and is only applicable when processing claims using MCE version 2.0-23.0 only.

11. Noncovered O.R. Procedures

There are some O.R. procedures for which Medicare does not provide payment.

The A/B MAC (A) will return the claim requesting that the non-covered procedure and its

associated charges be removed from the claim, Type of Bill (TOB) 11X. If the hospital

wishes to receive a Medicare denial, etc., the hospital may submit a non-covered claim, TOB

110, with the non-covered procedure/charges. (For more information on billing non-pay

claims, see Chapter 1 of this Manual, Section 60.1.4).

12. Open Biopsy Check

Effective October 1, 2010, the open biopsy check edit was discontinued and is only

applicable when processing claims using MCE version 2.0 - 26.0.

13. Bilateral Procedure

Effective October 1, 2015, the bilateral procedure edit was discontinued and is only used

when processing claims using MCE version 2.0-33.0.

14. Invalid Age

If the hospital reports an age over l24, the A/B MAC (A) requests the hospital confirm if it

made a claim preparation error. If the beneficiary's age is confirmed to be over l24, the

hospital enters 123.

15. Invalid Sex

A patient's sex is sometimes necessary for appropriate MS-DRG assignment. The sex code

reported must be either 1 (male) or 2 (female).

16. Invalid Discharge Status

A patient's discharge status is sometimes necessary for appropriate MS-DRG assignment.

Discharge status must be coded according to the Form CMS-1450 and UB-04 conventions.

See Chapter 25.

17. Limited Coverage

For certain procedures whose medical complexity and serious nature incur extraordinary

associated costs, Medicare limits coverage to a portion of the cost.

18. Wrong Procedure Performed

Certain external causes of morbidity codes indicate that the wrong procedure was performed.

19. Procedure inconsistent with length of stay (LOS)

The following procedure code should only be coded on claims when the respiratory

ventilation is provided for greater than four consecutive days during the length of stay.

Effective with discharges on and after October 1, 2015, ICD-10-PCS code, 5A1955Z -

Respiratory Ventilation, Greater than 96 Consecutive Hours

Prior to this date, discharges on and after October 1, 2012, ICD-9-CM procedure code,

96.72, Continuous invasive mechanical ventilation for 96 consecutive hours or more

20. Unspecified Code

Unspecified codes exist for circumstances when documentation in the medical record does

not provide the level of detail needed to support reporting a more specific code. However, in

the inpatient setting, there should generally be very limited and rare circumstances for which

the laterality (right, left, bilateral) of a condition is unable to be documented and reported.

Effective April 1, 2022, the Unspecified Code edit will be triggered for certain unspecified

diagnoses codes currently designated as either a Complication or Comorbidity (CC) or Major

Complication or Comorbidity (MCC), that include other codes available in that code

subcategory that further specify the anatomic site, when entered on the claim. This edit

message indicates that a more specific code is available to report. It is the provider’s

responsibility to determine if a more specific code from that subcategory is available in the

medical record documentation by a clinical provider.

If, upon review, additional information to identify the laterality from the available EHR or

paper medical record, or documentation by any other clinical provider is unable to be

obtained or there is documentation in the record that the physician is clinically unable to

determine the laterality because of the nature of the disease/condition, then the provider must

enter that information into the remarks section.

The provider should submit the billing note/remarks that best identifies the primary reason

why specificity could not be determined:

Billing Note/Remarks Definition

UNABLE TO DET LAT 1 Provider is unable to obtain additional information

to specify laterality.

UNABLE TO DET LAT 2 Physician is clinically unable to determine

laterality.