ICD-10-CM provides significant improvements through greater diagnosis coding detail and the ability to expand the diagnosis using ICD-10 codes. ICD-10-CM diagnosis codes are composed of codes with 3, 4, 5, 6, or 7 characters. A three-character code is to be used only if it is not further subdivided. A code is invalid if it has not been coded to the full number of characters required for that code, including the 7th character if applicable, which provide greater detail. Diagnosis codes are to be used and reported at their highest number of characters available.

One area of expanded detail is in the encounter codes. ICD-10 Z codes represent reasons for encounters. A corresponding procedure code must accompany a Z code if a procedure is performed. Categories Z00-Z99 are provided for occasions when circumstances other than a disease, injury, or external cause classifiable to categories A00-Y99 are recorded as “diagnoses" or “problems." An encounter for administrative examination is represented by diagnosis category code range Z02.

Z02 encounter for administrative examination diagnosis code range

*Requires 4th digit

**Requires 5th digit

If administrative examinations are performed without relationship to treatment or diagnosis of an illness or symptom or at the request of third parties such as employers or schools, these services would not be covered. If the purpose of the outpatient encounter is solely for an administrative purpose, the appropriate encounter diagnosis code should be coded in the first or principle diagnosis position on the claim to ensure claims are adjudicated appropriately.