Tier Coding & Capture Guide

Master the step-by-step methodology for accurate comorbidity tier assignment

Understanding Comorbidity Tiers

Comorbidity tiers are a critical component of the IRF Case-Mix Group (CMG) payment system. The tier assignment directly impacts reimbursement by reflecting the additional resources required to treat patients with multiple active medical conditions. Accurate tier coding can increase payment by 15-25% while ensuring compliance with CMS requirements.

Three Tier Levels:

  • • Tier 1: Presence of ANY ONE Tier 1 qualifying comorbidity (e.g., renal dialysis, tracheostomy, vocal cord paralysis)
  • • Tier 2: Presence of ANY ONE Tier 2 qualifying comorbidity (e.g., dysphagia, C. difficile, pseudomonas infection)
  • • Tier 3: Presence of ANY ONE Tier 3 qualifying comorbidity (e.g., diabetes with complications, morbid obesity, CHF, acute kidney failure)

⚠️ Critical Rules:

1. Only comorbidities that are ACTIVELY TREATED during the IRF stay can be coded. "History of" diagnoses or inactive conditions do NOT qualify.
2. Tier assignment is based on SPECIFIC qualifying comorbidities, not just the total count. One qualifying comorbidity at any tier level is sufficient for that tier assignment.
3. If a patient has qualifying comorbidities at multiple tiers, assign the HIGHEST tier.

Step-by-Step Tier Coding Methodology

Step 1
Review Medical Record for Active Conditions

Identify all active medical conditions documented in the medical record that required ongoing treatment during the IRF stay.

Sources to Review:

  • • Admission History & Physical (H&P)
  • • Physician orders for medications and treatments
  • • Medication Administration Records (MARs)
  • • Lab results and diagnostic testing
  • • Nursing flow sheets showing monitoring
  • • Progress notes documenting ongoing management
  • • Specialist consultation notes

Active Condition Example:

CHF: Daily weights ordered, Furosemide 40mg BID administered, BNP lab drawn, progress note states "Continue CHF management"

Inactive Condition Example:

History of MI: H&P states "MI 5 years ago," no cardiac medications ordered, no monitoring, no progress note documentation

Step 2
Verify Each Condition Meets "Actively Treated" Criteria

For EACH identified condition, verify it meets ALL THREE criteria for "actively treated":

Three Required Criteria:

1

Physician Orders

Specific orders for treatment, monitoring, or management of the condition

2

Active Intervention

Medications administered, treatments provided, or monitoring performed

3

Clinical Documentation

Progress notes or nursing documentation showing ongoing management

Example Verification:

Condition: Type 2 Diabetes Mellitus with complications (E11.65)

✓ Physician Orders: Blood glucose monitoring QID, sliding scale insulin

✓ Active Intervention: Insulin administered per sliding scale, glucose logs show daily monitoring

✓ Clinical Documentation: Progress note 10/15: "Continue diabetes management, glucose control improving"

→ QUALIFIES as actively treated comorbidity

Step 3
Assign Correct ICD-10 Codes

Code each actively treated comorbidity with the most specific ICD-10 code supported by documentation.

Coding Best Practices:

  • • Use the MOST SPECIFIC code available (e.g., E11.65 not E11.9 if diabetic complications documented)
  • • Match acute hospital discharge diagnosis when possible
  • • Code to the highest level of specificity supported by documentation
  • • Include laterality (right/left) when applicable
  • • Use 7th character extensions for fractures and injuries

✓ Correct Coding:

CHF with systolic dysfunction:
I50.21 (Acute systolic heart failure)
Supported by: Echo shows EF 30%, BNP 450

✗ Incorrect Coding:

CHF with systolic dysfunction:
I50.9 (Heart failure, unspecified)
Too vague when specific type documented

Step 4
Count Qualifying Comorbidities

Count the total number of actively treated comorbidities that meet ALL criteria from Steps 1-3.

Counting Rules:

  • • Each DISTINCT condition counts as ONE comorbidity
  • • Multiple codes for the SAME condition count as ONE (e.g., I10 + I11.0 both for hypertension = 1 comorbidity)
  • • Acute manifestations of chronic conditions count as ONE (e.g., acute exacerbation of COPD = 1 comorbidity)
  • • Do NOT count the primary rehabilitation diagnosis
  • • Do NOT count complications that arose DURING the IRF stay

Example Comorbidity Count:

1

CHF (I50.21) - actively treated with diuretics, daily weights

2

COPD (J44.1) - actively treated with bronchodilators, O2 therapy

3

Diabetes with complications (E11.65) - actively treated with insulin, glucose monitoring

4

CKD Stage 4 (N18.4) - actively treated with renal diet, phosphate binders

—

Hypertension (I10) - NO active treatment, no BP meds ordered → Does NOT count

→ TOTAL: 4 qualifying comorbidities

Step 5
Apply Tier Assignment Logic

Use the comorbidity count and specific high-impact conditions to determine the correct tier.

📊 Visual Tier Assignment Decision Tree

START: Count Qualifying Comorbidities

↓

How many comorbidities?

0-1 comorbidities

↓

TIER 1

No/Minimal Comorbidity

1-2 comorbidities
OR
High-impact condition

↓

TIER 2

Moderate Comorbidity

3+ comorbidities

↓

TIER 3

High Comorbidity

⚠️ High-Impact Conditions (Auto-Tier 2):

• Hemiplegia/hemiparesis (G81.x)

• Paraplegia (G82.2x)

• Quadriplegia (G82.5x)

• Obesity BMI ≥40 (E66.01)

• Morbid obesity w/ hypoventilation (E66.2)

Tier Assignment Rules Summary:

Tier 1 (No Comorbidity)

• Zero qualifying comorbidities, OR

• Only ONE non-complex comorbidity

Tier 2 (Moderate Comorbidity)

• 1-2 qualifying comorbidities, OR

• Specific high-impact conditions:

  • - Hemiplegia/hemiparesis (G81.x)
  • - Paraplegia (G82.2x)
  • - Quadriplegia (G82.5x)
  • - Obesity (BMI ≥40) (E66.01)
  • - Morbid obesity with alveolar hypoventilation (E66.2)

Tier 3 (High Comorbidity)

• 3 or more qualifying comorbidities requiring intensive medical management

Example from Step 4:

Patient has 4 qualifying comorbidities (CHF, COPD, Diabetes, CKD Stage 4)

Decision: 4 comorbidities = 3 or more

→ TIER 3 (High Comorbidity)

Step 6
Document Tier Assignment Rationale

Create a written rationale documenting how the tier was determined. This is CRITICAL for audit defense.

Documentation Requirements:

  • • List all comorbidities considered
  • • Note which comorbidities qualified (and why)
  • • Note which comorbidities did NOT qualify (and why)
  • • State the final comorbidity count
  • • State the tier assignment
  • • Reference supporting documentation (orders, labs, progress notes)

Sample Tier Assignment Rationale:

Patient: Sarah Martinez | Admission Date: 10/01/2025 | Primary Dx: Stroke (I63.512)

Comorbidity Review:

  • 1. CHF (I50.21): QUALIFIES - Daily weights ordered, Furosemide 40mg BID administered, BNP 450, progress notes document ongoing management
  • 2. COPD (J44.1): QUALIFIES - O2 2L NC continuous, albuterol nebs QID, respiratory therapy notes daily
  • 3. Diabetes (E11.65): QUALIFIES - Insulin sliding scale ordered and administered, glucose monitoring QID, endocrine consult obtained
  • 4. CKD Stage 4 (N18.4): QUALIFIES - Renal diet ordered, Sevelamer 800mg TID administered, weekly BMP monitoring, nephrology following
  • 5. Hypertension (I10): DOES NOT QUALIFY - No antihypertensive medications ordered, no BP monitoring beyond routine vitals, no active management

Tier Assignment:

Total Qualifying Comorbidities: 4 (CHF, COPD, Diabetes, CKD)

Tier Assigned: Tier 3 (High Comorbidity) - Patient has 3+ comorbidities requiring intensive medical management

Documented by: J. Smith, RN, IRF-PAI Coordinator | Date: 10/04/2025

Interactive Tier Calculator
Select patient comorbidities to receive a suggested tier assignment with detailed rationale

Note: Custom conditions will be listed but not counted in automatic tier calculation

Common Tier Coding Errors to Avoid

Quick Reference: Tier Coding Checklist

Before Coding:

  • ☐ Review complete medical record
  • ☐ Identify all active conditions
  • ☐ Verify physician orders for each condition
  • ☐ Confirm medications were administered
  • ☐ Check for lab/monitoring documentation
  • ☐ Review progress notes for ongoing management

During Coding:

  • ☐ Use most specific ICD-10 code available
  • ☐ Count only DISTINCT conditions
  • ☐ Exclude primary rehabilitation diagnosis
  • ☐ Exclude complications arising during stay
  • ☐ Apply tier assignment logic correctly
  • ☐ Document tier assignment rationale

Tier Assignment Formula:

• 0-1 comorbidities = Tier 1

• 1-2 comorbidities OR high-impact condition = Tier 2

• 3+ comorbidities = Tier 3