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Terminology Challenge: 214 Dx–” Don’t Make These 3 Lipoma Coding Errors
Use the listed code – every time.

Q. When is a skin specimen not a skin specimen? A. When it’s a lipoma. Truth is, you can insert just about any tissue type into the preceding question and you’ll have the same answer.

Making a lipoma coding error can cost your pathologist appropriate pay – or set you up to reimburse for overpayment. Use the following three tips to optimize your lipoma coding know-how:

Lipoma is the Exception, Not the Rule

A lipoma, which can occur just about anywhere in the body, is a benign neoplasm composed of mature fat cells. But that’s where your medical terminology knowledge can lead you astray.

ICD-9 segregates lipoma: According to ICD-9 code definitions and neoplasm table, you’ll list most benign neoplasms with a code based on the tumor location (such as 217, Benign neoplasm of breast). But ICD-9 has separate codes for lipoma (214.x, Lipoma …) that you must use instead of the “location” benign neoplasm codes.

CPT® distinguishes lipoma, too: CPT® often differentiates surgical pathology codes 88302-88309 (Surgical pathology,gross and microscopic examination) based on specimen location/tissue type. For instance, you would report a breast biopsy as 88305 (Level IV – … breast biopsy, not requiring microscopic evaluation of surgical margins). But if the pathologist diagnoses the specimen as a lipoma, not breast tissue (whether benign or malignant), you can’t use 88305.

CPT® has a different code for lipoma: 88304 (Level III – … soft tissue, lipoma). “This can be very confusing for coders,” says Tina Burkhalter, billing manager with SouthEastern Pathology in Rome, Ga. “If the pathology report indicates the specimen received from surgery is a breast biopsy, but the final diagnosis is lipoma, what should you do?”

Avoid Upcoding Blunder

In the preceding example of a breast biopsy that the pathologist diagnoses as a lipoma, you’d be overcharging if you bill 88305 instead of 88304 for the case. The Medicare physician fee schedule national facility amount is $106.01 for 88305, but only $62.52 for 88304 (conversion factor 33.9764). That’s $43.49 you’d have to pay back on an audit.

Follow ICD-9 guidelines: Once the physician (the pathologist, in this case) has assigned a final diagnosis, you should “code any confirmed or definitive diagnosis(es)” according to the ICD-9-CM Official Guidelines for Coding and Reporting, which you can read at

And once you’ve assigned an ICD-9 code, that information must support the procedure code. If the surgeon’s description contradicts the pathologist’s definitive diagnosis, you should use the pathology findings to define the specimen. In this example, the specimen is a lipoma, not a breast biopsy.

Follow CPT® rules: “If the specimen is listed in CPT®, such as lipoma, you have to use the most specific code,” says R.M. Stainton Jr., MD, president of Doctors’ Anatomic Pathology Services in Jonesboro, Ark.

Using the same logic, if the surgeon identifies the tissue as a skin biopsy (88305 … skin, other than cyst/tag/debridement/ plastic repair) but the pathologist diagnoses a lipoma, you’d need to report the case as 88304.

Grab Upcoding Opportunity

Sometimes the lipoma distinction works in your favor, and you’ll want to be sure to capture the payment you deserve. For example, lipomas of the spermatic cord can cause hernia-type symptoms in the absence of a true hernia, or associated with an inguinal hernia.

Case study: The surgeon performs a herniorrhaphy for an inguinal hernia. The pathologist examines the submitted specimen and diagnoses a spermatic cord lipoma. In this case, you should report 88304 rather than 88302 (Level II – … Hernia sac, any location).

Bottom line: Whatever the intended specimen, when the pathologist determines that the submitted tissue is a lipoma, you should report the procedure code accordingly as 88304.