ICD-10-CM Structure, Conventions, and Notes

NHA Certified Billing and Coding Specialist CBCS

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1 Introduction and 2026 CBCS Exam Facts

Official 2026 CBCS Exam Facts How to Use This Guide Scoring, Time, and Question Strategy Current Manual Policy and Official Resources

2 Revenue Cycle Foundations

Revenue Cycle Map Patient Access to Charge Capture Claim to Payment Workflow Error Prevention and Rework Loops

3 Regulatory Compliance for Billing and Coding

HIPAA Privacy, Security, and Breach Recognition HITECH, FCA, Stark Law, and Anti-Kickback Basics OIG, Compliance Plans, and Audits Fraud, Abuse, and Documentation Risk

4 Confidentiality, Consent, and Professional Communication

PHI Identifiers and Minimum Necessary Consent, Authorization, and Release of Information Communicating with Patients, Providers, and Payers Ethical Escalation and Documentation Habits

5 Insurance Products and Payer Types

Commercial Plan Types Medicare, Medicaid, and TRICARE Secondary Payers, COB, and the Birthday Rule Workers' Compensation, Auto, and Other Third-Party Payers

6 Eligibility, Benefits, and Authorization

Intake Documents and Insurance Cards Eligibility, Benefits, Copay, Deductible, and Coinsurance Referrals, Preauthorization, and Predetermination ABN, Medical Necessity, and Self-Pay Workflows

7 Clinical Documentation and Abstraction

Anatomy, Terminology, and Acronyms Locating Relevant Documentation Abstracting Diagnoses, Procedures, and Services Provider Queries and Documentation Clarity

8 ICD-10-CM Guidelines and Sequencing

ICD-10-CM Structure, Conventions, and Notes Specificity, Laterality, and Episode of Care Sequencing, Code First, Use Additional Code, and Excludes Notes Medical Necessity and Diagnosis Support

9 CPT, E/M, and Procedure Coding

CPT Structure, Sections, and Symbols E/M Leveling, MDM, and Time Procedure Coding and Global Periods Specialty and Telehealth Coding Considerations

10 HCPCS, Modifiers, and Code Edits

HCPCS Level II and Medicare Codes High-Yield Modifiers NCCI, MUE, Bundling, and Unbundling Place of Service, Units, and Payer-Specific Rules

11 Claim Forms and Required Fields

CMS-1500 Professional Claims UB-04 Institutional Claims Diagnosis Pointers, Charges, Units, and NPIs Clean Claim Checklists

12 Electronic Claims, EDI, and Clearinghouses

EDI Transaction Map: 837, 835, 270, 271, 277CA, and 999 Clearinghouse Scrubbing and Front-End Rejections Payer-Specific Submission Rules Resubmission, Correction, and Timely Filing

13 Adjudication, Remittance, and Payment Posting

Adjudication Outcomes, Allowed Amounts, and Contractuals EOB, ERA, RA, CARC, and RARC Reading Patient, Payer Responsibility, and Secondary Billing Payment Posting, Adjustments, Writeoffs, and Credit Balances

14 Denials, Appeals, and Accounts Receivable Follow-Up

Rejections Versus Denials Denial Root Cause Analysis and Corrections Reconsiderations, Appeals, and Medicare Appeal Levels Aging Reports, Prioritization, and Follow-Up Notes

15 Patient Financial Responsibility

Estimates, Copays, Deductibles, and Coinsurance Assignment of Benefits and Financial Policies Statements, Payment Plans, and Hardship Workflows Collections Communication and FDCPA Awareness

16 Reporting, Reconciliation, and Revenue Cycle Improvement

Daily Balancing, Batches, and Deposits Productivity, Quality, and Denial Metrics Payer Trends, Contract Review, and Process Improvement Audit Trails, Documentation, and Compliance Reporting

17 Integrated CBCS Case Labs

New Patient Office Visit Case Diagnostic Test Authorization Case Surgical Global Period and Modifier Case Denial to Appeal Case

18 High-Yield CBCS Exam Traps

Sequencing Versus Bundling Traps Eligibility Versus Authorization Traps Privacy Versus Release of Information Traps Rejection, Denial, Write-Off, and Appeal Traps

19 Study Plan and Domain Remediation

Six-Week Study Plan Two-Week Final Review Plan Using Score Reports and Practice Data Building a Missed-Question Log

20 Exam-Day Readiness and Next Steps

Scheduling Deadlines and Test Delivery Pacing, Flagging, and Answer Changing After the Exam: Results, Retakes, and Renewal Career Next Steps After CBCS

ICD-10-CM Structure, Conventions, and Notes

Key Takeaways Explain This Topic AI

ICD-10-CM is used to report diagnoses, reasons for encounters, symptoms, abnormal findings, injuries, external causes, status, and other health factors.

Codes are alphanumeric and may require three to seven characters depending on category instructions and specificity.

The Tabular List, Alphabetic Index, instructional notes, inclusion terms, Excludes notes, code first notes, and use additional code notes guide code assignment.

A placeholder X may be needed when a code requires a seventh character but has fewer than six characters before that extension.

The coder should verify index leads in the Tabular List and follow all notes at the category, subcategory, and code levels.

Last updated: April 2026

ICD-10-CM is the diagnosis code set used in the United States to report why a patient received care and what conditions, symptoms, findings, injuries, or health factors were documented. For CBCS purposes, ICD-10-CM supports medical necessity, claim processing, reporting, and sequencing. The exam does not allow or require coding manuals as of 2024-09-24, and questions include needed coding information. Still, the candidate must understand how ICD-10-CM works because many questions test application of conventions rather than manual lookup. ICD-10-CM codes are alphanumeric.

Key Concepts

The first character is a letter, the second is a number, and later characters may be letters or numbers. A three-character category is the base. Additional characters add detail such as etiology, anatomic site, severity, laterality, episode of care, manifestation, or complication. Some valid codes have three characters. Others require four, five, six, or seven characters. A code is not complete unless it contains the required number of characters and follows the instructions for that category.

A decimal is placed after the third character when more characters are used, but the decimal is formatting, not a separate character.

The Alphabetic Index is used to locate a starting point by main term, subterm, and modifying term. However, the coder must verify the code in the Tabular List. The Tabular List contains the final instructions, exclusions, inclusion terms, sequencing notes, and specificity requirements. In exam questions, this may be represented by a code excerpt or a note that tells the candidate what is required. A common error is to stop at an index-style lead without checking the tabular instruction.

Another error is ignoring notes that appear above the specific code, such as notes at the chapter, block, category, or subcategory level.

Those notes apply to codes beneath them unless the structure indicates otherwise. Inclusion terms show examples of conditions included in a code. They are not necessarily exhaustive. An Includes note may define the content of a category. An Excludes1 note generally means the two conditions should not be coded together because they are mutually exclusive or one is included in the other. An Excludes2 note means the excluded condition is not part of the code, so both codes may be used together if the patient has both conditions. Code first notes and use additional code notes direct sequencing and complete reporting.

Workflow and Documentation

For example, a condition caused by an underlying disease may require the underlying disease to be sequenced before the manifestation. A use additional code note may instruct the coder to add a code for exposure, organism, tobacco use, insulin use, stage, or another detail when documented. In diseases classified elsewhere categories, the manifestation code often cannot be first-listed because it depends on the underlying condition. NEC and NOS are also important conventions.

NEC means not elsewhere classifiable and is used when the documentation provides detail but ICD-10-CM does not offer a more specific code for that detail.

NOS means not otherwise specified and is used when the documentation lacks detail needed for a more specific code. A CBCS candidate should understand that unspecified is not automatically wrong. It may be correct when the record truly lacks specificity and clarification is not available. However, unsupported unspecified coding can cause denials or reduce data quality when the documentation contains more detail. Placeholder X is used in some codes to hold character positions so a seventh character can be placed correctly.

This is common in injury and external cause codes. The placeholder is not optional when required.

Exam Application

Seventh characters often identify the episode of care, such as initial encounter, subsequent encounter, or sequela, but the meaning varies by chapter and category. The coder must apply the seventh character instructions supplied for that code family. Punctuation and terms matter. Parentheses contain nonessential modifiers, meaning the code may apply whether or not those words appear. Brackets may identify synonyms, alternative wording, or manifestation codes depending on context. The word and in code descriptions can mean and/or under ICD-10-CM conventions.

With can sometimes indicate a presumed causal relationship in specific index contexts or guideline areas, especially certain chronic disease combinations, but the coder must follow current guidelines and documentation. The practical CBCS method is: identify the documented condition or reason, locate the likely code, verify the complete code and required characters, read all notes, apply excludes and sequencing instructions, add required additional codes, and confirm the diagnosis supports the billed service.

High-Yield Checkpoints

ICD-10-CM is used to report diagnoses, reasons for encounters, symptoms, abnormal findings, injuries, external causes, status, and other health factors.

Codes are alphanumeric and may require three to seven characters depending on category instructions and specificity.

The Tabular List, Alphabetic Index, instructional notes, inclusion terms, Excludes notes, code first notes, and use additional code notes guide code assignment.

A placeholder X may be needed when a code requires a seventh character but has fewer than six characters before that extension.

The coder should verify index leads in the Tabular List and follow all notes at the category, subcategory, and code levels.