Are all Diagnoses Present on Admission Co-Equal?

A common debate among clinical documentation integrity (CDI) professionals, physician advisors, and coders is what to sequence as the principal diagnosis when a patient arrives at the hospital with hypoxia and a history of heart failure.

Many view these diagnoses as “equally” meeting the definition for principal diagnosis, the “condition established after study to be chiefly responsible for occasioning the admission of the patient to the hospital for care.”

However, when we widen our lens to consider medical necessity, a utilization review concept, we can see that these diagnoses are not equal when it comes to supporting an inpatient admission. One is a chronic condition that can be effectively managed in the outpatient setting.

The other is a life-threatening condition that requires immediate intervention. Clinically, they are not co-equal, and the corresponding principal diagnosis coding guidelines of two co-equal diagnoses meeting the definition of a principal diagnosis should not be applied.

Full transparency: I have a bias towards sequencing acute respiratory failure as the principal diagnosis, due to my being an emergency department (ED) nurse. If a patient truly has both exacerbated systolic or diastolic heart failure and acute respiratory failure that are present on admission, I will sequence acute respiratory failure as the principal diagnosis. My clinical experience is that if we do not stabilize the patient (usually by removing fluids and providing respiratory support), the patient will die.

Acute respiratory failure is the thrust of care; it is the reason for inpatient care.

Being a former manager of utilization review also influences my bias towards sequencing acute respiratory failure as the principal diagnosis, from a medical necessity perspective. Why? When the patient is discharged, will they still be in acute respiratory failure?

No, it is a life-threatening condition that must be treated. Will the patient still have heart failure? Yes, it is a chronic condition whose symptoms can usually be managed in the outpatient setting.

Inpatient Care

In today’s healthcare environment, with increased payer friction, we need to ensure that medical necessity, clinical care (e.g., quality), and coding are aligned. Most patients who present to the ED with exacerbated heart failure without acute respiratory failure do not require inpatient care. When heart failure is driving hospital care, the patient typically needs short-term diuresis or titration of their medication to manage symptoms of volume overload. These patients often respond to treatment in fewer than two midnights (Medicare inpatient medical necessity criteria), unless they have comorbidities that slow down the diuresis process, like chronic kidney disease.

Heart-failure patients are at elevated risk of rapid respiratory decline. Even though the primary mechanism is circulatory failure, the immediate result is congestion of the lungs, which causes breathing (and therefore, perfusion) to be impaired. One of the first questions an ER nurse asks is how many pillows the patient uses if sleeping in a bed. More often than not, these patients sleep in recliners.

Cardiovascular mechanics drive dyspnea, not oxygenation failure, but the patient will succumb to cardiorespiratory failure if not treated. Cardiorespiratory failure is indexed to R09.2, respiratory arrest, with a note to see also, failure, heart. It also has an Excludes 1 code for respiratory failure.

Coding Guidelines

Unfortunately, ICD-10-CM does not have better, more accurate terminology, and we are left with a choice between heart failure exacerbation and acute respiratory failure. An argument can be made for both diagnoses when we view the case through the coding lens, but not when we look through a wider clinical revenue cycle lens, where all the elements must fit perfectly to minimize revenue leakage and unintended negative impacts on quality measures.

More often than not, when assigning the principal diagnosis in this situation, coders will default to coding guidelines for the selection of the principal diagnosis (in particular, the guideline for two or more diagnoses that equally meet the definition of principal diagnosis). There is a hierarchy to coding guidelines. Chapter- and condition-specific guidelines, which are included in Section I, take precedence over general principal diagnosis definitions and guidelines, in Section II. Chapter-specific guidelines exist because the general guidelines are insufficient for certain body systems, so further refinement is needed.

Acute respiratory failure-specific guidelines appear inconsistent on the surface, but the overarching requirement is demonstrating that acute respiratory failure does not meet the definition of the principal diagnosis. Consider the following:

• Acute respiratory failure can be assigned as the principal diagnosis when there are not overriding coding conventions or chapter-specific guidelines that require another diagnosis, like poisoning, to be sequenced as the principal diagnosis (p. 56).
• Respiratory failure may be a secondary diagnosis if it is present on admission but does not meet the definition of the principal diagnosis. (p. 56).
• When acute respiratory failure occurs in the setting of another acute condition like myocardial infarction, stroke, or aspiration pneumonia (examples within the guideline), the selection of the principal diagnosis depends on the circumstances of the admission. It is important to note that heart failure is not included as an example of an acute diagnosis, and clinically, it is classified as a chronic condition.

Only in situations when both diagnoses are equally responsible for occasioning the admission and sequencing is not guided by chapter-specific sequencing rules can the principal diagnosis guidelines (Section II, C) be applied. However, respiratory failure chapter-specific guidelines also specify, “if the documentation is not clear as to whether acute respiratory failure and another condition are equally responsible for occasioning the admission, query the provider for clarification (p. 57).” I rarely, if ever, see queries in these situations.

CMS Perspective

Heart failure and acute respiratory failure are not equal in the eyes of the Centers for Medicare & Medicaid Services (CMS), which is why heart failure is included in CMS quality measures related to readmissions and mortality. Prior to the implementation of value-based care, CMS found that a major driver of high Medicare costs were potentially preventable heart-failure readmissions. The goal of quality-based care is to shift to the CMS payment methodology from the quantity of care to the quality of care.

In fact, CMS is launching its Ambulatory Specialty Model (ASM) beginning January 2027, which will include heart failure to “improve prevention and upstream management of chronic disease, which would lead to reductions in avoidable hospitalizations and unnecessary procedures.”

CMS is implementing this mandatory program because heart failure is among the costliest conditions to traditional Medicare due to “low-value care” that includes “avoidable hospitalizations and unnecessary procedures,” which can “increase spending without resulting in long-term benefits or improved health outcomes.” Instead of targeting hospitals, this model is targeting specialists, like cardiologists, to encourage better coordination with primary care providers, especially among those who participate in Accountable Care Organizations (ACOs).

Conclusion

In today’s electronic record environment, the reason for admission may not be visible within the health record. If it is, providers often document an associated symptom, like admitting the patient for difficulty breathing or hypoxia. However, even if the provider documents the reason for admission as acute respiratory failure, heart failure may still be sequenced as the principal diagnosis.

Sometimes, this is based on the belief that the condition after study was heart failure, but that sequencing is not supported by either condition conventions or chapter-specific guidelines, both of which should be applied before a principal diagnosis guideline.

Sometimes, heart failure is sequenced as the principal diagnosis because without the use of mechanical ventilation, which is used less often these days, reimbursement is slightly higher when acute respiratory failure adds an major complication or comorbidity (MCC) as a secondary diagnosis.

Selection of the principal diagnosis is one of the most important decisions made by coders. It can make a claim more or less susceptible to a medical necessity denial or DRG downgrade, resulting in revenue leakage, or contribute to below-average performance on quality measures like mortality and readmissions. T

The work of the clinical revenue cycle is interconnected, and must be viewed through a broader lens to minimize denials.