What are the CMS coding guidelines?

CMS coding guidelines are the official rules and standards set by the Centers for Medicare & Medicaid Services (and cooperating parties like the CDC, AHA, and AHIMA) for reporting diagnoses, procedures, and services accurately under HIPAA.

Core Coding Systems

• ICD-10-CM: Used for diagnosis coding across all healthcare settings.
• ICD-10-PCS: Used for inpatient procedure coding in hospitals.
• HCPCS Level II: Maintained by CMS to identify products, supplies, and non-physician services like ambulance rides or durable medical equipment.
• CPT (HCPCS Level I): Maintained by the American Medical Association (AMA) for physician and professional medical procedures.

Key Principles and Rules

• Mandatory Adherence: Strict compliance is required under HIPAA regulations for electronic claims processing.
• Documentation Support: Codes must be based strictly on provider documentation in the medical record.
• Sequencing Rules: Acute conditions are sequenced before chronic conditions, and manifestation codes are listed second behind their underlying etiology.
• Conventions: Specific instructions (such as Excludes1 and Excludes2 notes) take absolute precedence over general guidelines.
• Present on Admission (POA): Inpatient acute care admissions require valid POA indicators for every diagnosis code to determine proper Medicare Severity-Diagnosis Related Group (MS-DRG) payment grouping.

CMS (Centers for Medicare & Medicaid Services) follows the American Medical Association's (AMA) Current Procedural Terminology (CPT) codes as Level I of the Healthcare Common Procedure Coding System (HCPCS), but enforces its own specific reporting and correct-coding rules through the Medicare NCCI Coding Policy Manual.

Core CMS CPT Coding Principles

• Maximum Specificity: Report the CPT code that describes the service or procedure performed to the greatest level of specificity possible.
• Complete Service: Report a CPT code only if all the services described by that code have been fully performed.
• No Unbundling: Do not report multiple separate CPT codes if a single, more inclusive code describes the entire service, or if the components are part of standard medical practice.
• Hierarchy: Providers must follow AMA CPT codebook instructions unless CMS issues conflicting or more restrictive guidelines in its manuals, rules, or notices.

National Correct Coding Initiative (NCCI) Edits

• Procedure-to-Procedure (PTP) Edits: Prevent improper unbundling by defining pairs of CPT codes that should not be reported together on the same date of service unless an appropriate clinical modifier (such as Modifier 25 or 59) allows it.
• Medically Unlikely Edits (MUEs): Set the maximum number of units of service (UOS) under a single CPT code that a provider can report for a single beneficiary on a single date of service.

The FY 2026 CMS official coding guidelines provide the mandatory rules and instructions for assigning and reporting diagnosis and procedure codes in U.S. healthcare settings from October 1, 2025, through September 30, 2026.

Overview and Compliance

• Governance: Approved by the AHA, AHIMA, CMS, and the National Center for Health Statistics (NCHS).
• HIPAA Requirement: Adherence to these guidelines is legally required for all HIPAA-covered entities.
• Precedence: Classification instructions and conventions always take precedence over general guidelines.

Structure of ICD-10-CM Guidelines

• Section I: Conventions, general guidelines, and chapter-specific instructions.
• Section II: Selection of principal diagnosis for non-outpatient settings.
• Section III: Reporting additional diagnoses for non-outpatient settings.
• Section IV: Diagnostic coding and reporting guidelines for outpatient services.

Key FY 2026 Updates

• New Codes & Changes: The fiscal year introduced 487 new diagnosis codes, 38 revisions, and 28 deletions, plus mid-year updates effective April 1, 2026.
• HIV/AIDS Reporting: Updated rules for confirmed status, asymptomatic cases, and antiretroviral therapy usage.
• Diabetes and Remission: Specific guidance for coding Type 2 diabetes with documentation of remission (E11.A).
• Multiple Sites: Clarified instructions on handling conditions affecting multiple distinct anatomical sites.

The official coding guidelines are the set of rules approved by the Centers for Medicare and Medicaid Services (CMS), the National Center for Health Statistics (NCHS), the American Hospital Association (AHA), and the American Health Information Management Association (AHIMA) for accurate medical diagnosis and procedure reporting.

Core Sections and Structure

The guidelines are divided into specific sections depending on the healthcare setting and application:

• Section I: Structure, conventions, and general or chapter-specific rules that apply to the entire classification system.
• Section II: Rules for selecting the principal diagnosis in non-outpatient and inpatient settings.
• Section III: Rules for reporting additional or secondary diagnoses in non-outpatient settings.
• Section IV: Guidelines specific to outpatient coding and reporting.

Key Rules and Compliance

• HIPAA Mandate: Adherence to these official guidelines is required under the Health Insurance Portability and Accountability Act (HIPAA) for healthcare claims.
• Precedence: The classification's official instructions and tabular list conventions take precedence over the general guidelines.
• Documentation: Coders must assign codes based on provider documentation rather than independent clinical validation.

You can view the full, updated text directly in the ICD-10-CM Coding Guidelines provided by CMS.

The Centers for Medicare & Medicaid Services (CMS) finalized major updates for Calendar Year (CY) 2026 focusing on payment adjustments, the Medicare Advantage program, and streamlined reporting.

Medicare Advantage and Part D Updates

• Payment Increases: Government payments to Medicare Advantage (MA) plans increase by an average of 5.06% (about $25 billion).
• Benefit Alignment: Part D rules align with the redesigned benefit structure and integrate provisions from the Inflation Reduction Act to manage prescription drug cost-sharing.
• Prescription Payment Plan: Codifies operations for the Medicare Prescription Payment Plan, featuring an automatic election renewal unless the enrollee opts out.

Physician Fee Schedule (PFS) Changes

• Conversion and Rates: Implements a 2.7% increase to the Medicare Economic Index (MEI) and updates valuation rules under the CY 2026 Physician Fee Schedule Final Rule.
• Telehealth and Supervision: Expands covered telehealth services, removes specific frequency limits, and adopts virtual direct supervision rules.
• Coding Adjustments: Expands the G2211 evaluation and management add-on code to home and residence visits, and introduces new behavioral health and Advanced Primary Care Management (APCM) codes.

Administrative and Regulatory Reductions

• Quality Measures: Reduces overall administrative reporting burden by lowering the number of quality measures by 5% year-over-year.
• Inpatient-Only List: Continues the three-year phase-out of the inpatient-only list by removing nearly 300 predominantly musculoskeletal procedures.