CMS-1500 claims — coding for services provided

Kaiser Permanente requires that all CMS-1500 claims submitted are reported using the specific code sets as adopted by HIPAA. The code sets for procedures, diagnoses, and drugs are:

Healthcare Common Procedure Coding System (HCPCS) for ancillary services/procedures.
Current Procedural Terminology (CPT-4) for physicians procedures.
International Classification of Diseases, version ICD-10 for diagnosis and hospital inpatient procedures.
National Drug Codes (NDC).

Refer to each specific code set for instructions in using codes appropriately. Some basic coding rules to keep in mind are:
Use only codes that are valid for the date of service.
Use modifiers on service lines when appropriate.
Include the National Drug Code when billing a physician-administered drug.
Follow all guidelines for diagnosis coding. These can be found in any ICD-10 published materials on the market. Special attention should be given to the following requirements:

  • Diagnosis codes should be coded to the highest specificity required for each code.
  • Refer to appropriate ICD guidelines in determining if a diagnosis code can be billed in the primary position, secondary position or either position.
  • Each diagnosis code should be "pointed" to the correct procedure code. Incorrect pointing could result in claim line denials.
  • For laboratory/pathology claims, the requesting physician must supply the initial diagnosis. For lab services interpreted by a physician/pathologist they are responsible for correcting that diagnosis, if necessary, when the final results of the test are available. The final diagnosis should be billed on the claim.

CMS publishes guidelines for completing the CMS-1500 form when billing for services. Refer to Medicare Claims Processing Manual: Chapter 26–Completing and Processing the Form CMS-1500 Data Set(PDF).

Some field elements to note include:
Field 17a: Include the appropriate taxonomy code for all lines of business.
Field 17b: List the 10-position National Provider Identifier (NPI).

Units of service

Follow guidelines for billing appropriate units for each service:
Some procedure code definitions list a specific number of lesions, centimeters, and minutes. These should be taken into account when billing units.
Some codes also have guidelines regarding the maximum number of units which can be billed on the code. The guidelines can be located at CMS Medically Unlikely Edits (MUEs).
Do not submit claims with units of less than one. We do not allow partial units.

Ambulatory surgical centers

When billing for facility services on a CMS-1500 claim form, modifier SG must be billed on the service line(s) in order to identify the claim as a facility charge.


Anesthesia claims must be billed using CPT-4 zero anesthesia codes. The appropriate anesthesia modifier is required on all anesthesia claims. Claims must include total minutes in the units field.

Code editing and review process

Most health plans, including Kaiser Permanente, have code editing processes in place to assure that claims are coded based on industry standard guidelines. Kaiser Permanente has adopted the best practice recommendation for Claim coding policy and edits: Standardization & transparency as outlined in Washington state Senate Bill 5346 and published through the administration simplification work of Washington Healthcare Forum.

Kaiser Permanente may, on occasion, either through the code editing process or claims audit process, review a provider's claims in more detail. It may be necessary for us to request the medical records documentation which support the services billed in order to complete these audits. Examples of coding reviews that might prompt a request for medical records documentation: codes with modifier 22, codes with modifier 59, "unlisted" codes, and high-level E&M codes.

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