What are ICD-10 Codes?

Q: What are ICD-10 codes?

ICD-10 codes are standardized codes used to classify medical diagnoses, symptoms, and health conditions for billing, reporting, and documentation.

Q: What’s the difference between ICD-10 and CPT codes?

ICD-10 codes explain why a patient was seen (the diagnosis), while CPT codes describe what was done (the service or procedure).

Q: Are ICD-10 codes used in outpatient billing?

Yes. ICD-10 codes are required for both outpatient and inpatient billing to indicate the reason for care and support claim approval.

Q: Do ICD-10 codes affect reimbursement?

Yes. ICD-10 codes support medical necessity, impact risk scoring (e.g., HCCs), and play a key role in determining whether a claim gets paid.

ICD-10 codes, part of the International Classification of Diseases, Tenth Revision, are a globally standardized set of alphanumeric codes used to document diagnoses, symptoms, and medical conditions. These codes are essential in U.S. healthcare for claim submission, risk adjustment, and quality reporting.

Maintained by the Centers for Medicare & Medicaid Services (CMS) and the National Center for Health Statistics (NCHS), ICD-10 codes must accompany CPT or HCPCS codes on every insurance claim. They help tell the “why” behind a service — identifying the reason a patient was seen, treated, or referred. From chronic illnesses to screenings and social determinants, ICD-10 codes form the diagnostic backbone of billing and care documentation.

Key Components of ICD-10 Codes

Stands for: International Classification of Diseases, 10th Revision
Required for documenting diagnoses, symptoms, and conditions
Maintained by CMS and NCHS in the United States
Replaced ICD-9 as of October 1, 2015
Codes are alphanumeric, starting with a letter and followed by numbers (e.g., E11.9)
Must appear on insurance claims alongside CPT/HCPCS codes
Used in billing, audits, quality tracking, and population health analytics
Supports value-based care and risk stratification (e.g., HCC coding)

ICD-10 codes follow a standardized alphanumeric format that allows for specificity and hierarchy in documenting medical conditions. Here’s how they’re typically structured:

$A table titled “ICD-10 Code Structure” explains how ICD-10 codes are formatted. The first character is a letter representing the general diagnostic category, such as “E” for endocrine conditions. The second and third characters are numbers that specify the condition, like “E11” for type 2 diabetes. A decimal separates the base category from extensions. The fourth through seventh characters provide details such as severity or encounter type, as in “S72.321A” for a specific fracture.$

How ICD-10 Codes Work in Practice

In healthcare settings, ICD-10 codes serve as the diagnostic counterpart to CPT and HCPCS codes. While CPT describes what was done, ICD-10 codes explain why — capturing the patient’s condition, symptoms, or reason for treatment.

Here’s how they fit into daily workflows:

1. Clinical Documentation

During or after a patient encounter, the provider documents any diagnoses, conditions, or reasons for the visit in the electronic medical record (EMR). These details are then used to assign appropriate ICD-10 codes.

2. Code Selection

ICD-10 codes are either:

Auto-suggested by the EMR based on charting inputs
Manually selected by providers or coding staff

For example, a patient with poorly controlled diabetes might be assigned E11.65, not just E11.9 — indicating a higher complexity level.

3. Claims and Risk Scoring

On insurance claims, ICD-10 codes:

Justify the CPT/HCPCS codes being billed
Determine medical necessity
Contribute to Hierarchical Condition Category (HCC) scoring for Medicare risk adjustment

4. Quality Programs and Reporting

ICD-10 codes feed into:

HEDIS measures
CMS quality reporting
Public health tracking
Population health tools

Billing and Documentation Rules for ICD-10 Codes

ICD-10 codes are essential for validating reimbursement. Every medical claim — whether submitted to Medicare, Medicaid, or a private payer — must include at least one diagnosis code from the ICD-10 system. These codes justify the medical necessity of the procedures or services being reported with CPT or HCPCS codes.

Key Billing Guidelines:

ICD-10 codes are required on all institutional (UB-04) and professional (CMS-1500) claims.
At least one ICD-10 diagnosis must be linked to each CPT/HCPCS code on the claim.
Providers should assign the most specific code available (e.g., E11.65 instead of E11.9) to reflect disease complexity.
Z codes can be used for social determinants of health (e.g., housing insecurity, caregiver strain) when relevant.
HCC-relevant codes (e.g., diabetes with complications, CHF, COPD) affect risk adjustment and may trigger care management eligibility.
Common documentation gaps include unspecified codes, mismatched diagnoses, or missing laterality — all of which can lead to denials or downcoding.

Important to Note: Proper ICD-10 usage isn’t just about billing — it also improves patient targeting for CCM, PCM, TCM, and other reimbursable care programs.

Frequently Asked Questions about ICD-10 Codes

1. What are ICD-10 codes?

ICD-10 codes are alphanumeric codes used to classify medical diagnoses, symptoms, and conditions. They are required for billing and quality reporting across U.S. healthcare systems.

2. What does ICD-10 stand for?

ICD-10 stands for International Classification of Diseases, Tenth Revision. It’s the global standard for diagnostic coding, maintained in the U.S. by CMS and NCHS.

3. What’s the difference between ICD-10 and CPT codes?

ICD-10 codes explain why a patient was seen (their condition or diagnosis), while CPT codes describe what was done during the visit (procedures or services).

4. Are ICD-10 codes used in outpatient billing?

Yes. ICD-10 codes are used in both inpatient and outpatient billing, including primary care, specialty clinics, and care management programs like CCM or PCM.

5. Do ICD-10 codes affect reimbursement?

Yes. ICD-10 codes are used to justify billed services and can impact claim approval, risk adjustment scoring, and quality measure performance. Accurate diagnosis coding is essential for getting paid — especially under value-based care models.