ICD-10-CM has two distinct sets of guidelines depending on the care setting — one for outpatient encounters and one for inpatient admissions. These guidelines differ in meaningful ways and applying the wrong set of rules to the wrong setting is one of the most consistently tested error types on the CPC exam. This article makes the differences crystal clear so you always know which rules to apply.
The ICD-10-CM Official Guidelines for Coding and Reporting are published annually by CMS and the NCHS (National Center for Health Statistics). The guidelines are organized into four sections. Section I contains general coding guidelines that apply to all settings. Section II covers inpatient hospital guidelines. Section III covers reporting of additional diagnoses in the inpatient setting. Section IV covers outpatient coding guidelines. On the CPC exam, Sections II and IV are most heavily tested because of their key differences.
The single most important difference between inpatient and outpatient guidelines — and the one tested most frequently on the CPC exam — is how uncertain diagnoses are handled.
In the inpatient setting, if the physician documents a condition as “probable,” “suspected,” “likely,” “questionable,” “possible,” or “still to be ruled out” at the time of discharge — that condition may be coded as if it were confirmed. The rationale is that the patient has undergone extensive workup during the admission and the physician’s clinical judgment at discharge represents their best assessment.
Words that trigger this rule in the inpatient setting include: probable, suspected, likely, questionable, possible, consistent with, compatible with, and indicative of.
In the outpatient setting, the opposite rule applies. You never code a probable, suspected, or rule-out diagnosis as confirmed. Instead you code the sign or symptom that brought the patient in for care. The physician has not had the opportunity to complete a full workup and their uncertainty must be reflected in the code assignment.
The rules for what gets coded as an additional diagnosis also differ by setting:
| Situation | Inpatient | Outpatient |
|---|---|---|
| Chronic conditions | Code if monitored, treated, or affects care | Code if documented and affects management |
| Conditions that develop during stay | Code as additional diagnoses | Code if present and treated during encounter |
| Abnormal test findings | Code only if clinical significance is documented | Code if no definitive diagnosis established |
| Integral symptoms | Do not code separately when diagnosis confirmed | Do not code separately when diagnosis confirmed |
| Uncertain conditions | Code as confirmed if documented at discharge | Code signs/symptoms — never as confirmed |
It is important to know which care settings use outpatient guidelines regardless of how the visit is described. These are always outpatient settings governed by Section IV:
When a patient has multiple diagnoses at a single encounter, which one goes first on the claim? The answer depends entirely on the setting — inpatient hospital or outpatient. The terms used are different, the selection rules are different, and mixing them up is one of the most common errors beginner coders make. This article clears up the confusion once and for all.
The ICD-10-CM Official Guidelines for Coding and Reporting are divided into separate sections for inpatient and outpatient coding — and for good reason. The rules governing which diagnosis is reported first differ significantly between the two settings. Understanding which term applies in which setting is the foundation of this topic.
Used when a patient is admitted to an acute care hospital and occupies a bed overnight. The principal diagnosis is selected after study — meaning after all workup and treatment during the stay is complete.
Used in physician offices, clinics, emergency departments, same-day surgery, and outpatient settings. The first-listed diagnosis is the main reason for the visit — determined at the time of the encounter.
The Uniform Hospital Discharge Data Set (UHDDS) defines the principal diagnosis as the condition established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care. Three words in this definition are critical: after study.
This means the principal diagnosis is not necessarily what the admitting physician wrote on the admission order. It is the condition determined — after all testing, imaging, consultations, and treatment during the hospitalization — to be the primary reason the patient needed to be admitted. The admitting diagnosis and the principal diagnosis may be the same, but they are often different once the workup is complete.
In the outpatient setting, the term first-listed diagnosis replaces principal diagnosis. The first-listed diagnosis is the main condition treated or investigated during the encounter. For outpatient visits, code the condition to the highest degree of certainty — but do NOT code uncertain diagnoses as confirmed.
| Feature | Principal Diagnosis (Inpatient) | First-Listed Diagnosis (Outpatient) |
|---|---|---|
| Setting | Acute inpatient hospital admission | Physician office, clinic, ED, outpatient surgery |
| Timing of selection | After study — determined at discharge | At the time of the encounter |
| Uncertain diagnoses | Code as if confirmed (probable, likely, suspected) | Never code as confirmed — code signs/symptoms instead |
| Governing guidelines | UHDDS definition + Section II of ICD-10-CM guidelines | Section IV of ICD-10-CM guidelines |
| Admitting diagnosis | Reported separately from principal diagnosis | Not applicable |
Beyond the first-listed or principal diagnosis, additional diagnoses are reported when they affect patient care during the encounter. In the inpatient setting, additional diagnoses are called secondary diagnoses and include comorbidities, complications, and other conditions that require clinical evaluation, therapeutic treatment, diagnostic procedures, extended hospital stay, or nursing care. In the outpatient setting, additional diagnoses are coded when they are treated, affect treatment decisions, or are chronic conditions managed alongside the primary condition.
Sepsis coding is one of the most frequently tested and commonly misunderstood topics in medical coding. The ICD-10-CM guidelines for sepsis are detailed, specific, and slightly different from how many coders initially approach the condition. This guide breaks down sepsis coding step-by-step so you understand how to identify sepsis, code it correctly, and assign the proper site-of-infection diagnosis.
Sepsis is a life-threatening condition caused by the body’s response to infection. It occurs when microorganisms (bacteria, viruses, or fungi) spread into the bloodstream and trigger a systemic inflammatory response. Sepsis progresses in severity:
The first step in coding sepsis is to identify the organism causing the infection. ICD-10-CM requires you to code the specific organism whenever possible. The infecting organism is coded with a code from category A40 (Streptococcal sepsis) or A41 (Other sepsis).
| Organism Type | ICD-10-CM Code Range |
|---|---|
| Streptococcal sepsis | A40.0–A40.9 |
| Staphylococcal sepsis | A41.0–A41.1 |
| Streptococcal pneumoniae | A40.3 |
| E. coli sepsis | A41.5 |
| Pseudomonas sepsis | A41.5 |
| Sepsis, unspecified organism | A41.9 |
Once you’ve identified the organism, you must code the site where the infection originated. This is crucial because the source of infection affects treatment and patient outcomes. Common sites include:
If the patient develops severe sepsis or septic shock with acute organ failure, you must code the organ dysfunction. This includes:
Clinical Scenario: 68-year-old admitted with fever, shortness of breath, and low blood pressure. Chest X-ray shows left lower lobe pneumonia. Blood cultures grow Staphylococcus aureus. Patient requires mechanical ventilation.
Codes to Assign:
Why These Codes? The sepsis code comes first because sepsis was the reason for admission. The pneumonia code identifies where the infection originated. The respiratory failure code documents the acute organ dysfunction requiring mechanical ventilation.
Clinical Scenario: 82-year-old female with E. coli sepsis secondary to urinary tract infection. Patient has acute kidney injury requiring dialysis.
Codes to Assign:
Why These Codes? E. coli is a Gram-negative organism, so A41.5 applies. The UTI code shows the source. The acute kidney injury code documents the serious complication.
Clinical Scenario: Patient develops streptococcal sepsis on post-op day 3 after abdominal surgery. Source is intra-abdominal abscess from surgical site infection.
Codes to Assign:
Why These Codes? Streptococcal sepsis becomes the principal diagnosis. The peritonitis code identifies the infected site. The procedural complication code shows this is a post-operative infection.
| Condition | Definition | ICD-10-CM Code |
|---|---|---|
| Sepsis | SIRS with confirmed or suspected infection | A40–A41 |
| Severe Sepsis | Sepsis with acute organ dysfunction (still used in documentation) | A40–A41 + organ dysfunction codes |
| Septic Shock | Sepsis with persistent hypotension requiring vasopressor support | R57.2 (Septic shock) |
When a patient has septic shock, you code both the sepsis code (A40 or A41) AND the septic shock code (R57.2). Septic shock is always a serious complication and the codes work together to paint the complete clinical picture.
When you encounter sepsis in a medical record, ask yourself these questions:
Every medical claim submitted to an insurance payer requires two types of codes — procedure codes that describe what was done, and diagnosis codes that describe why it was done. ICD-10-CM is the system used for diagnosis coding in the United States. Understanding how it works is just as important as understanding CPT, and it is tested heavily on the CPC exam. This guide introduces ICD-10-CM from the very beginning.
ICD-10-CM stands for the International Classification of Diseases, 10th Revision, Clinical Modification. Let’s break that down:
The previous system, ICD-9-CM, had been in use since 1979 and had run out of room. With only about 14,000 codes, ICD-9 could not keep up with advances in medicine, new diseases, and the need for more specific documentation. ICD-10-CM solved these problems dramatically — it contains over 70,000 codes, allowing for a level of clinical specificity that was impossible under ICD-9.
More specificity means better data. Better data means more accurate tracking of disease patterns, more precise research, improved public health reporting, and more accurate payment for services. Specificity is the core purpose of ICD-10-CM.
| Feature | ICD-9-CM | ICD-10-CM |
|---|---|---|
| Code structure | 3–5 characters, numeric with some letters | 3–7 alphanumeric characters |
| First character | Always a number (except E and V codes) | Always a letter |
| Total codes | ~14,000 | ~70,000+ |
| Laterality | Not specified in most codes | Specified — left, right, bilateral |
| Implementation date | 1979–2015 | October 1, 2015 to present |
| Specificity | Limited | Highly detailed |
The ICD-10-CM codebook is divided into two main parts — the Alphabetic Index and the Tabular List. Just like the CPT codebook, you always start in the index and verify in the tabular list — never code from the index alone.
The Alphabetic Index lists conditions, diseases, symptoms, injuries, and other health problems in alphabetical order. Main terms are listed alphabetically with indented subterms beneath them that narrow down the diagnosis. The index contains three sections: the Index to Diseases and Injuries, the Index to External Causes, and the Table of Neoplasms.
The Tabular List organizes all ICD-10-CM codes numerically into 21 chapters based on body system or type of condition. Each chapter contains categories, subcategories, and codes with full descriptions, includes and excludes notes, and coding instructions.
| Chapter | Code Range | Content |
|---|---|---|
| 1 | A00–B99 | Infectious and parasitic diseases |
| 2 | C00–D49 | Neoplasms |
| 3 | D50–D89 | Blood and blood-forming organ diseases |
| 4 | E00–E89 | Endocrine, nutritional, metabolic diseases |
| 5 | F01–F99 | Mental, behavioral, neurodevelopmental disorders |
| 6 | G00–G99 | Nervous system diseases |
| 7 | H00–H59 | Eye and adnexa diseases |
| 8 | H60–H95 | Ear and mastoid process diseases |
| 9 | I00–I99 | Circulatory system diseases |
| 10 | J00–J99 | Respiratory system diseases |
| 11 | K00–K95 | Digestive system diseases |
| 12 | L00–L99 | Skin and subcutaneous tissue diseases |
| 13 | M00–M99 | Musculoskeletal and connective tissue diseases |
| 14 | N00–N99 | Genitourinary system diseases |
| 15 | O00–O9A | Pregnancy, childbirth, and puerperium |
| 16 | P00–P96 | Perinatal conditions |
| 17 | Q00–Q99 | Congenital malformations and chromosomal abnormalities |
| 18 | R00–R99 | Symptoms, signs, abnormal findings |
| 19 | S00–T88 | Injury, poisoning, external causes |
| 20 | V00–Y99 | External causes of morbidity |
| 21 | Z00–Z99 | Factors influencing health status (Z-codes) |
Not every patient visit involves a disease or injury. Sometimes a person comes in for a routine checkup, to receive a vaccine, or simply because they have a family history of cancer and want to be screened. These encounters still require diagnosis codes — and that is exactly what Z-codes are for. Chapter 21 of ICD-10-CM contains the Z-codes (Z00–Z99), and understanding when and how to use them is essential for both the CPC exam and real-world outpatient coding.
Z-codes are ICD-10-CM diagnosis codes that describe factors influencing health status and contact with health services — situations that are not classified as diseases or injuries but still explain why a patient is seeking care or provide important context about their health history. They replaced the V-codes used in ICD-9-CM and serve the same general purpose but with far greater specificity.
Z-codes can be used as first-listed diagnoses, as additional diagnoses, or in some cases only as additional diagnoses — never as the primary reason for a visit. Understanding which role a particular Z-code plays is part of mastering their use.
Used when a patient has been exposed to a communicable disease but shows no signs of infection. The patient has not yet contracted the disease — the encounter is for evaluation after potential exposure.
Example: Z20.828 — Contact with and exposure to COVID-19
Used when the sole reason for the encounter is to receive a vaccine. The Z-code is the first-listed diagnosis and the vaccine administration CPT code captures the procedure.
Used as first-listed diagnosis for all vaccination encounters regardless of vaccine type
Status codes indicate that a patient has a particular health status — such as having a device implanted, being a carrier of a disease, or having undergone a past procedure that affects current care. Status codes are typically used as additional codes alongside the primary diagnosis.
Added when a Type 2 diabetic patient uses insulin — one of the most commonly used status codes
Documents that the patient has had prior CABG surgery — affects ongoing cardiac care decisions
History codes capture significant past conditions that no longer exist but are relevant to current care. Personal history codes (Z86–Z87) document the patient’s own past conditions. Family history codes (Z80–Z84) document conditions in blood relatives that increase the patient’s own risk.
Used after breast cancer has been successfully treated and is no longer active — important for ongoing surveillance coding
Documents increased cardiovascular risk based on family history — supports medical necessity for preventive screenings
Screening codes are used when a patient with no signs or symptoms undergoes a test to detect a condition before it causes problems. The screening Z-code is the first-listed diagnosis for these encounters.
Used for routine colonoscopy screening in patients with no GI symptoms — the screening code, not a symptom, is first-listed
Used when a patient is observed after a suspected condition that is ultimately ruled out. The patient is observed but no disease or injury is confirmed at the end of the encounter.
Used when a patient is evaluated for a suspected condition that is ultimately not confirmed during the encounter
| Z-Code | Description | First-Listed or Additional? |
|---|---|---|
| Z00.00 | Encounter for general adult medical examination without abnormal findings | First-listed |
| Z23 | Encounter for immunization | First-listed |
| Z12.11 | Encounter for screening for colon cancer | First-listed |
| Z79.4 | Long-term use of insulin | Additional only |
| Z79.01 | Long-term use of anticoagulants | Additional only |
| Z87.891 | Personal history of nicotine dependence | Additional only |
| Z85.3 | Personal history of breast cancer | Additional only |
| Z34.– | Encounter for supervision of normal pregnancy | First-listed |
| Z51.11 | Encounter for antineoplastic chemotherapy | First-listed |
| Z96.641 | Presence of right artificial knee joint | Additional only |