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Medicaid Coding Rules

Medicaid is a state and federally funded insurance program for individuals and families who fall under eligibility requirements. Each state manages its own Medicaid program within federal guidelines. However, Medicaid policies vary from state to state. The National Correct Coding Initiative (NCCI), which was implemented by Medicare in 1996, ensures correct coding and reporting of services by clinicians. To receive payment, healthcare providers must code services using the Healthcare Common Procedure Coding System (HCPCS) and Current Procedural Terminology (CPT). Effective October 1, 2010, state Medicaid programs must implement NCCI under the Patient Protection and Affordable Care Act to decrease overpayments and Medicaid fraud.

  1. Level I Codes

    • Level I codes consist of Current Procedural Terminology (CPT). The American Medical Association defines CPT codes and updates them yearly.

    Level II Codes

    • Level II codes define services and procedures that patients receive. The Centers for Medicare and Medicaid Services (CMS) define level II codes and update them as needed.

    Reporting Codes

    • The NCCI automatically edits codes for services that should not be reported together. If two codes are reported together that should not be, Medicaid pays for the first code but not the second one. For instance, it is impossible for a female to have both a vaginal and abdominal hysterectomy on the same day.

    Modifiers

    • Modifiers are used when a medical condition necessitates that service and procedures occur at the same time where the NCCI would normally not allow. Modifiers are numbered codes that attach to HCPCS and CPT codes. They supply more in-depth information about the services provided.

    NCCI Edits

    • Medicaid NCCI edits apply to all services with the same date of service for the same Medicaid recipient. It does not matter if the services are reported on the same of separate claims, NCCI edits the date of service, level I codes, level II codes, modifiers, beneficiary and provider.

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