Time to Update the UHDDS Definition of Principal Diagnosis

A current movement within the clinical revenue cycle is putting utilization review and clinical documentation integrity (CDI) under the same reporting structure. There are many advantages to such an arrangement. One of the most underrated advantages is the potential for utilization review, CDI, and coding staff to work collaboratively to determine the most accurate principal diagnosis.

The assignment of the principal diagnosis is a clinically interpretive process, even when guided by coding rules. It is important to remember that the definition of the principal diagnosis was established under the Uniform Hospital Discharge Data Set (UHDDS) back in the 1980s. Not only has healthcare changed dramatically since the 1980s, but so has the complexity of the patient population (and increased scrutiny by payers).

Unfortunately, assignment of the principal diagnosis is often viewed through a narrow coding lens, instead of through a comprehensive revenue cycle approach. This is not to say professional medical coders are doing anything wrong; they are doing what they have been trained to do. However, being too focused on revenue, defined by the relative weight associated with the billed MS-DRG (e.g., case mix index), can result in unintended consequences, including increased denials, weakened appeal positions, and misalignment with quality measurement methodologies. All elements of the clinical revenue cycle must be aligned to minimize revenue leakage.

The principal diagnosis is defined by the UHDDS as “that condition established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care.” When code sequencing is not determined by coding conventions, which refers to the alphabetic index and tabular list, coders are to rely upon this definition and guidelines for the assignment of the principal diagnosis to direct their decision-making. However, even when principal diagnosis guidelines are applied, the overarching standard is determining which conditioned occasioned the admission.

Another term for this concept is medical necessity. Why did the patient need to be admitted to the hospital as an inpatient? Medical necessity, just like the ability to establish diagnoses, is the domain of independent licensed practitioners. The preamble of ICD-10-CM Official Guidelines for Coding and Reporting states that “a joint effort between the healthcare provider and the coder is essential to achieve complete and accurate documentation, code assignment, and reporting of diagnoses and procedures.” Yet, how often do coders or CDI specialists collaborate with the provider regarding the assignment of the principal diagnosis?

Even though coding guidance can be helpful when the condition responsible for occasioning the admission is not clear, query the provider for clarification. These queries are challenging to construct, but physicians need to be incorporated into the concurrent CDI record review process to support accurate sequencing and inpatient clinical revenue cycle alignment. T

his is where a close relationship with utilization review staff can be beneficial: they can work with CDI on how to best construct the query.

Assignment of the principal diagnosis has become increasingly complicated since the definition and corresponding coding guidelines were created. Outpatient services were not as robust then as they are today. In fact, outpatient healthcare is a growth area, while inpatient services are declining. In today’s healthcare environment, only complex patients meet medical necessity requirements for inpatient care. The National Institute for Healthcare Management reports that in six in 10 Americans live within at least one chronic condition, defined as a condition that lasts at least one year, requires ongoing medical attention, and may limit daily activities. This same report found that individuals with multiple chronic diseases account for 70 percent of all inpatient stays.

As a result, it is more difficult for CDI and coding professionals to determine which diagnosis, among all those that are present on admission, should be the principal diagnosis. Making this determination can be even more challenging when provider notes are full of inconsistencies due to multiple providers and specialties caring for the patient, as well as use of technology that allows notes to be copied and pulled forward – or automatically incorporates data from other sources.

The Administrative Simplification section of the Health Insurance Portability and Accountability Act (HIPAA) requires use of the ICD-10 code set in the inpatient setting, which in turn also requires adherence to the associated guidelines. Inpatient admission orders for Medicare beneficiaries are also established by federal statutes.

An admission order must be written by a practitioner who “is knowledgeable about the patient’s hospital course, medical plan of care, and current condition.” Furthermore, determining when inpatient care is appropriate is a “complex medical judgment.” Inpatient care is defensible when the provider expects the patient will “require hospital care that crosses two midnights.” The expectation should be based on “complex medical factors,” including the patient’s “history and comorbidities, the severity of signs and symptoms, current medical needs, and the risk of an adverse event.”

Physician judgement is a necessary component of inpatient medical necessity, and their clinical reasoning should be reflected in the selection of the principal diagnosis.

Incorrect selection of the principal diagnoses can have both direct and indirect impact (performance on quality measures and appeals) on reimbursement. The direct impact on reimbursement, in terms of coding, is obvious: the relative weight associated with the billed MS-DRG. The Centers for Medicare & Medicaid Services (CMS) agrees that there is nothing wrong with selecting the higher-weighted MS-DRG if two diagnoses equally meet the definition of principal diagnosis. But that is rarely the case, clinically or from a medical necessity perspective, and can lead to both inpatient medical necessity denials and DRG downgrades related to payor resequencing.

Until principal diagnosis selection is treated as a shared clinical‑administrative decision grounded in medical necessity, hospitals will continue to struggle with denials, quality performance, and defensibility – despite technically correct coding.

As the complexity of medicine and the business of healthcare have evolved, so should the definitions we use to represent healthcare services within claims data.

I hope you will join me for part two of this brief series, when I will further discuss the concept of co-equal diagnoses using the example of heart failure and acute respiratory failure.