By Mary-Beth Newell, RN, MS, SVP of Clinical Reimbursement, Limitlessli

Accurate ICD-10 diagnosis coding has never been more important in the skilled nursing environment. As reimbursement methodologies become increasingly sophisticated and Medicare contractors intensify their review of skilled nursing facility (SNF) claims, diagnosis coding has evolved from a clerical task into a critical clinical competency.

For nurse assessment coordinators, MDS professionals, reimbursement specialists, and interdisciplinary teams, selecting the correct diagnosis—and sequencing it appropriately—impacts far more than payment. It influences resident care plans, Quality Measures, medical necessity, survey outcomes, and the facility’s financial performance.

The good news? Most diagnosis coding errors are preventable through a structured review process and strong interdisciplinary collaboration.

One of the biggest misconceptions is that ICD-10 coding starts when the MDS is opened.

It actually begins the day the resident is admitted.

Every discipline contributes valuable clinical information that helps identify active diagnoses requiring coding. Nursing assessments, therapy evaluations, physician documentation, medication reviews, laboratory findings, diagnostic imaging, dietary assessments, and consultant reports all help establish the resident’s clinical picture.

Waiting until the assessment reference date (ARD) to review diagnoses often leads to missed opportunities and coding inaccuracies.

Facilities that consistently achieve accurate reimbursement typically validate diagnoses throughout the resident’s stay rather than only during MDS completion.

Perhaps no coding decision has a greater financial impact than selecting the primary diagnosis.

CMS expects the primary diagnosis to represent the condition chiefly responsible for the resident requiring skilled nursing facility services.

This differs from simply choosing:

• the first diagnosis listed on the hospital discharge summary,
• the most severe chronic illness,
• or the diagnosis with the highest reimbursement.

Instead, ask:

What condition is driving the skilled nursing or rehabilitation services being provided today?

The answer often requires reviewing therapy evaluations, nursing documentation, physician progress notes, and discharge summaries together.

An 84-year-old resident is hospitalized following a fall resulting in a left intertrochanteric hip fracture repaired with an ORIF.

At SNF admission:

• Pain is improving.
• Therapy is addressing transfers, gait, and ADLs.
• Nursing is managing surgical incision care.
• Orthopedic follow-up is scheduled.

The resident is no longer receiving treatment for the acute fracture itself.

The appropriate primary diagnosis is generally aftercare following surgery for fracture rather than the acute fracture code.

Selecting the incorrect diagnosis may place the resident into an incorrect PDPM clinical category.

A diagnosis should never be coded simply because it appears somewhere in the chart.

Instead, verify four questions:

1. Was the diagnosis established by the physician or qualified practitioner?
2. Is it currently active?
3. Does it affect resident care during the assessment period?
4. Is documentation present to support the diagnosis?

If the answer to any of these questions is “no,” additional clarification may be necessary before coding.

Secondary diagnoses should reflect the resident’s clinical complexity.

Common examples include:

• Diabetes
• CHF
• COPD
• Parkinson’s disease
• Chronic kidney disease
• Malnutrition
• Pressure injuries
• Dysphagia
• Depression
• Chronic respiratory failure

These diagnoses frequently affect nursing care, medication management, dietary interventions, therapy treatment plans, physician monitoring, or discharge planning.

Conversely, historical diagnoses that no longer require treatment generally should not be coded as active conditions.

The UB-04 has 17 boxes for secondary diagnoses. If a resident has more than 17 secondary diagnoses, check that the sequencing reflects active care and supports the PDPM HIPPS code.

ICD-10 continues to demand greater clinical specificity.

Instead of simply documenting “heart failure,” consider whether documentation identifies:

• systolic
• diastolic
• combined
• acute
• chronic
• acute-on-chronic

Likewise, pressure injuries require staging.

Diabetes requires identification of associated complications whenever documented.

Fractures require laterality and healing status.

Specific documentation improves coding accuracy while reducing clarification requests.

Certain diagnoses consistently generate findings during Medicare reviews and may result in a Return to Provider indicating the diagnosis cannot be used as a primary diagnosis.

Examples include:

Debility

Although frequently documented, debility cannot automatically serve as the primary diagnosis for PDPM.

Generalized Weakness

Weakness often represents a symptom rather than the underlying condition.

History Codes

Past medical history does not necessarily indicate an active diagnosis.

Malnutrition

Documentation should include provider confirmation and clinical support.

Dysphagia

Speech-language pathology evaluations frequently identify dysphagia before physician documentation is updated.

Collaboration with providers ensures documentation accurately reflects the resident’s condition. Active diagnoses should be included in the care plan with interventions addressing the issue.

During reimbursement audits, several patterns emerge repeatedly.

• Using the hospital discharge diagnosis without validating current clinical status
• Coding every diagnosis listed on the problem list
• Missing required aftercare codes
• Failing to capture active comorbidities
• Selecting unspecified diagnoses when greater specificity exists
• Coding diagnoses unsupported by physician documentation

Each error creates unnecessary reimbursement and compliance risk.

Diagnosis coding directly influences multiple PDPM payment components.

Correct coding affects:

• PT clinical category
• OT clinical category
• Nursing classification
• Speech-Language Pathology comorbidities
• Non-Therapy Ancillary (NTA) points
• Variable Per Diem calculations

Missing even one qualifying diagnosis may reduce payment for the entire stay.

Conversely, coding unsupported diagnoses exposes facilities to repayment demands and potential allegations of improper billing.

Accuracy—not optimization—must remain the goal.

The highest-performing organizations rarely leave diagnosis coding solely to the MDS coordinator. It is a collaborative process that involves:

• Nursing
• Therapy
• Physicians
• Nurse Practitioners
• Pharmacy
• Dietary
• Social Services
• Clinical reimbursement specialists

Each discipline contributes unique information that strengthens documentation and coding accuracy.

Before finalizing an MDS, ask:

• Does physician documentation support every diagnosis?
• Is the diagnosis active during the assessment period?
• Does it affect current resident care?
• Is the sequencing correct?
• Does the diagnosis support skilled services?
• Does documentation support PDPM classification?
• Have aftercare guidelines been reviewed?
• Have therapy evaluations been compared to physician documentation?
• Has the diagnosis been reviewed against current ICD-10-CM Official Guidelines?

The most successful MDS professionals don’t simply memorize diagnosis codes—they understand disease processes, clinical documentation, reimbursement methodology, and coding guidelines.

Strong coding requires clinical judgment. It requires asking questions. It requires collaboration.

Most importantly, it requires ensuring that every diagnosis accurately tells the resident’s story.

Accurate ICD-10 diagnosis coding is essential to compliant reimbursement, effective care planning, and regulatory success.

When facilities establish standardized diagnosis validation processes, educate interdisciplinary teams, and routinely audit coding practices, they reduce denials, improve documentation integrity, strengthen survey readiness, and ensure reimbursement accurately reflects resident acuity.

Ultimately, the goal is not to maximize payment—it is to accurately represent the complexity of the residents entrusted to our care. When documentation, coding, and clinical practice align, everyone benefits: the resident, the care team, and the organization.