TL;DR
Chapter 23 of the Medicare Claims Processing Manual sets the coding conventions every Medicare claim must follow and describes the fee schedules contractors load. It covers ICD-10-CM and ICD-10-PCS reporting, HCPCS codes and modifiers, the National Correct Coding Initiative procedure-to-procedure and medically unlikely edits, the Physician Fee Schedule database, and the laboratory, DMEPOS, parenteral and enteral nutrition and competitive bidding pricing files.
Chapter 23 at a glance
- Current revision
- Rev. 13701
- Issued June 16, 2026
- Effective
- July 16, 2026
- Implemented July 16, 2026
- Sections
- 85
- 10 top-level sections
- Transmittals in history
- 86
- Listed at the end of the chapter
- Monthly searches
- 90
- Google Ads, US, October 2026
What chapter 23 governs for billing
The first half of the chapter is about codes. Section 10 sets the diagnosis rules: every provider and contractor follows the Official ICD-10-CM Coding Guidelines, an inpatient claim reports the principal diagnosis (the condition established after study to be chiefly responsible for the admission) and up to 24 additional diagnoses that drive the MS-DRG, and ICD-10-PCS procedure codes are required only on inpatient hospital Part A claims while every other claim type reports procedures with HCPCS. Section 20 describes HCPCS: Level I codes are the AMA's CPT, Level II codes are maintained by CMS, codes and modifiers are accepted only when valid for the date of service, and the quarterly HCPCS update file carries the coverage and payment indicators contractors apply.
Section 20.9 is the National Correct Coding Initiative. Procedure-to-procedure edits stop code pairs that should not be paid together for the same beneficiary, provider and date of service, and each pair carries a correct coding modifier indicator: 0 means no modifier can bypass the edit, 1 means an NCCI-associated modifier can when the documentation supports it, and 9 marks a pair deleted on the day it took effect. Medically unlikely edits cap the units of service a provider would report for one beneficiary on one date of service. The section also explains how MACs handle appeals of these edits and how quarterly NCCI updates reach the claims systems.
The rest of the chapter describes how the fee schedules themselves are built and distributed. Section 30 covers the Medicare Physician Fee Schedule database and its record layout, section 40 the clinical laboratory fee schedule and gap-filled fees for new tests, section 50 the files used for institutional claims (including the payment policy indicator file in 50.6), section 60 the DMEPOS fee schedule with its quarterly updates and gap-filling, section 70 parenteral and enteral nutrition, sections 80 and 90 the older reasonable-charge and inherent reasonableness methods, and section 100 the single payment amounts from DMEPOS competitive bidding.
Sections billing teams use most
Section numbers and headings are CMS's; the notes are ours. Each section number opens the official chapter 23 PDF at the page where that section starts.
| Section | CMS heading | Why it matters |
|---|---|---|
| 10.2 | Inpatient Claim Diagnosis Reporting | Inpatient diagnosis reporting: the principal diagnosis and up to 24 additional diagnoses that drive the MS-DRG. |
| 10.4 | ICD Procedure Code | ICD-10-PCS procedure codes are required only on inpatient hospital Part A claims; other claims use HCPCS. |
| 20.3 | Use and Acceptance of HCPCS Codes and Modifiers | When HCPCS codes and modifiers are accepted, and what happens to invalid or deleted codes. |
| 20.9 | National Correct Coding Initiative (NCCI) | The NCCI program: procedure-to-procedure edits, MUEs, add-on code edits and the Correspondence Language Manual. |
| 20.9.3 | Appeals | Appeals of NCCI denials: a coding denial is not a medical necessity denial, and an ABN cannot shift liability for it. |
| 30.2 | MPFSDB Record Layout | The Physician Fee Schedule database record layout, including the indicators that drive payment adjustments. |
| 60.3 | Gap-filling DMEPOS Fees | Gap-filling DMEPOS fees for new codes that have no fee schedule amount. |
How chapter 23 shows up on claims and denials
When a line fails a medically unlikely edit the whole line is denied, not just the units above the limit, and the manual tells MACs to use reason code 151 with group code CO and Medicare Summary Notice message 15.6. Procedure-to-procedure denials are assigned reason code 236 with group code CO and Medicare Summary Notice message 16.8. Because both are coding decisions, the beneficiary cannot be billed for the denied service even with an Advance Beneficiary Notice on file.
The appeal path follows the modifier indicator. With an indicator of 0 there is no circumstance in which both codes are paid. With an indicator of 1, the reviewer checks whether a modifier such as 59 or an X modifier was supported by the record; a modifier left off the original claim can be considered on review. For MUE denials on codes with an adjudication indicator of 1 or 3, the MAC may pay units above the limit when the records show they were correctly coded, actually furnished and medically necessary.
Codes you are likely to see on the remittance when a claim runs into this chapter's rules. The code pages explain each code's meaning, root causes and the usual fix.
| Code | Type | When it appears |
|---|---|---|
| 151 | Claim adjustment reason code | Units exceed the medically unlikely edit; chapter 23 names this code with group code CO. |
| 236 | Claim adjustment reason code | Code pair fails an NCCI procedure-to-procedure edit; chapter 23 names this code with group code CO. |
| N362 | Remark code | Days or units of service exceed the acceptable maximum. |
| 16 | Claim adjustment reason code | Missing or invalid coding information, such as a code not valid for the date of service. |
Current revision and recent transmittals
The chapter PDF posted on cms.gov is current through Rev. 13701, issued June 16, 2026, effective July 16, 2026, implemented July 16, 2026 (change request 14428). That revision changed sections 20.9 (National Correct Coding Initiative (NCCI)), 20.9.3.1 (Procedure-to-Procedure (PTP) Edits), 20.9.3.2 (Medically Unlikely (MUEs) Edits). Its subject line reads: “Update to Several Sections of the Internet-Only Manual (IOM) Publication (Pub.) 100-04, Medicare Claims Processing Manual, Chapter 23 - Fee Schedule Administration and Coding Requirements”.
The newest rows of the transmittal history printed at the end of the chapter (86 revisions in all). Rows whose subject could not be read reliably from the PDF table are left out; the PDF has the complete list.
| Revision | Issued | Subject | CR |
|---|---|---|---|
| R13701CP | June 16, 2026 | Update to Several Sections of the Internet-Only Manual (IOM) Publication (Pub.) 100-04, Medicare Claims Processing Manual, Chapter 23 - Fee Schedule Administration and Coding Requirements | 14428 |
| R13610CP | January 30, 2026 | Calendar Year 2026 Update for Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule | 14326 |
| R13216CP | May 9, 2025 | Update to Several Sections of the Internet-Only Manual (IOM) Publication (Pub.) 100-04, Medicare Claims Processing Manual, Chapter 23 - Fee Schedule Administration and Coding Requirements | 14048 |
| R13150CP | April 11, 2025 | Internet Only Manual (IOM) Update to 100-04 Chapter 13, Section 90.3 - Transportation Component (HCPCS Codes R0070 - R0075) and Chapter 23, Section 30.5 - Payment Amounts for Portable X-Ray Transportation Services | 13909 |
| R12991CP | December 13, 2024 | Calendar Year 2025 Update for Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule | 13888 |
| R12823CP | September 5, 2024 | Update to Internet-Only Manual Publication (Pub.) 100-04, Chapters 12 and 23, to Update Place of Service (POS) Code Descriptions to Match the POS Descriptions Found in Pub. 100-04, Chapter 26 | 13744 |
Sections ordered by the date in the revision note printed under each heading.
| Section | Heading | Revision |
|---|---|---|
| 20.9 | National Correct Coding Initiative (NCCI) | Rev. 13701, June 16, 2026; effective July 16, 2026 |
| 20.9.3.1 | Procedure-to-Procedure (PTP) Edits | Rev. 13701, June 16, 2026; effective July 16, 2026 |
| 20.9.3.2 | Medically Unlikely (MUEs) Edits | Rev. 13701, June 16, 2026; effective July 16, 2026 |
| 60.3 | Gap-filling DMEPOS Fees | Rev. 13610, January 30, 2026; effective January 1, 2026 |
| 20.9.1.1 | Instructions for Codes With Modifiers (A/B MACs (B) Only) | Rev. 13216, May 9, 2025; effective June 3, 2025 |
| 20.9.3 | Appeals | Rev. 13216, May 9, 2025; effective June 3, 2025 |
| 60.1 | Record Layout for DMEPOS Fee Schedule | Rev. 12991, December 13, 2024; effective January 1, 2025 |
| 50.6 | Physician Fee Schedule Payment Policy Indicator File Record Layout | Rev. 12326, October 26, 2023; effective January 29, 2024 |
Section index
Every section in the chapter's table of contents, grouped under its top-level heading, with the PDF page where it starts. Open a heading to see its subsections.
10 Reporting ICD Diagnosis and Procedure Codes · p. 4 · 6 subsections
- Open section 10 in the PDF
- 10.1 General Rules for Diagnosis Codes · p. 4
- 10.2 Inpatient Claim Diagnosis Reporting · p. 4
- 10.3 Outpatient Claim Diagnosis Reporting · p. 5
- 10.4 ICD Procedure Code · p. 5
- 10.5 Coding for Outpatient Services and Physician Offices · p. 5
- 10.6 Relationship of Diagnosis Codes and Date of Service · p. 6
20 Description of Healthcare Common Procedure Coding System (HCPCS) · p. 6 · 20 subsections
- Open section 20 in the PDF
- 20.1 Use and Maintenance of CPT-4 in HCPCS · p. 6
- 20.2 RESERVED · p. 8
- 20.3 Use and Acceptance of HCPCS Codes and Modifiers · p. 8
- 20.4 Deleted HCPCS Codes/Modifiers · p. 9
- 20.5 The HCPCS Codes Training · p. 9
- 20.6 Professional/Public Relations for HCPCS · p. 10
- 20.7 Use of the American Medical Association's (AMA's) Physicians' Current Procedural Terminology (CPT) Fourth Edition Codes, and Use of the Americian Dental Associations's (ADA) Current Dental Terminology-Fourth Edition (CDT) Codes on A/B MACs (A)'s, (B)'s, (HHH)'s, and DME MACs' Web Sites and Other Electronic Media
- 20.8 Payment, Utilization Review (UR), and Coverage Information on CMS Quarterly HCPCS Codes Update File · p. 11
- 20.9 National Correct Coding Initiative (NCCI) · p. 12
- 20.9.1 Correct Coding Modifier Indicators (CCMI) and HCPCS Codes Modifiers · p. 12
- 20.9.1.1 Instructions for Codes With Modifiers (A/B MACs (B) Only) · p. 13
- 20.9.2 Limiting Charge and CCI Edits · p. 15
- 20.9.3 Appeals · p. 15
- 20.9.3.1 Procedure-to-Procedure (PTP) Edits · p. 17
- 20.9.3.2 Medically Unlikely (MUEs) Edits · p. 18
- 20.9.4 Savings Report · p. 20
- 20.9.4.1 Savings Record Format · p. 20
- 20.9.5 Adjustments · p. 20
- 20.9.6 Correct Coding Edit (CCE) File Record Format · p. 20
- 20.9.7 National Correct Coding Initiative (NCCI) Edits Quarterly Updates · p. 21
30 Services Paid Under the Medicare Physician's Fee Schedule · p. 21 · 10 subsections
- Open section 30 in the PDF
- 30.1 Maintenance Process for the Medicare Physician Fee Schedule Database (MPFSDB) · p. 24
- 30.2 MPFSDB Record Layout · p. 24
- 30.2.1 Payment Concerns While Updating Codes · p. 25
- 30.2.2 MPFSDB Status Indicators · p. 25
- 30.3 Furnishing Pricing Files · p. 27
- 30.3.1 RESERVED · p. 27
- 30.3.2 A/B MAC (A), (B), or (HHH) Furnishing Physician Fee Schedule Data for National Codes · p. 27
- 30.3.3 Furnishing Other Fee Schedule, Prevailing Charge, and Conversion Factor Data · p. 27
- 30.3.4 Responsibility to Obtain and Implement Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Fee Schedules · p. 28
- 30.3.5 File Specifications · p. 28
40 Clinical Diagnostic Laboratory Fee Schedule · p. 31 · 5 subsections
- Open section 40 in the PDF
- 40.1 Access to Clinical Diagnostic Lab Fee Schedule Files · p. 32
- 40.2 A/B MAC (B) Record Layout for Clinical Laboratory Fee Schedule · p. 33
- 40.3 Institutional Claim Record Layout for Clinical Laboratory Fee Schedule · p. 33
- 40.4 Gap-Filled Fees Submitted to CMS by A/B MACs (B) · p. 35
- 40.4.1 A/B MACs (B) Forward HCPCS Gap Fill Amounts to A/B MACs (A) and (HHH) · p. 37
50 Fee Schedules Used by Medicare A/B MACs (A) and (HHH) Processing Institutional Claims · p. 37 · 8 subsections
- Open section 50 in the PDF
- 50.1 Institutional Claim Record Layout for Hospice, Radiology and Other Diagnostic Prices and Local HCPCS Codes · p. 38
- 50.2 Institutional Claim Record Layout for the Durable Medical Equipment, Prosthetic, Orthotic and Supply Fee Schedule · p. 39
- 50.3 Institutional Claim Record Layout for the Outpatient Rehabilitation and CORF Services Fee Schedule · p. 40
- 50.4 Institutional Claim Record Layout for the Skilled Nursing Facility Fee Schedule · p. 41
- 50.5 RESERVED · p. 43
- 50.6 Physician Fee Schedule Payment Policy Indicator File Record Layout · p. 43
- 50.7 Institutional Claim Record Layout for the Mammography Fee Schedule · p. 55
- 50.8 Institutional Claim Record Layout for the Ambulance Fee Schedule · p. 56
60 Durable Medical Equipment Prosthetics, Orthotics and Supplies (DMEPOS) Fee Schedule · p. 57 · 6 subsections
- Open section 60 in the PDF
- 60.1 Record Layout for DMEPOS Fee Schedule · p. 58
- 60.2 Quarterly Update Schedule for DMEPOS Fee Schedule · p. 61
- 60.3 Gap-filling DMEPOS Fees · p. 62
- 60.3.1 Payment Concerns While Updating Codes · p. 69
- 60.4 Process for Submitting Revisions to DMEPOS Fee Schedule to CMS · p. 69
- 60.5 Rural ZIP Code Claim Record Layout for Medicare Contractors Processing Rural DMEPOS Fee Schedule Claims · p. 71
70 Parenteral and Enteral Nutrition (PEN) Fee Schedule · 1 subsections
- Open section 70 in the PDF
- 70.1 Record Layout for PEN Fee Schedule · p. 72
80 Reasonable Charges as Basis for A/B MAC (B)/DME MAC Payments · p. 73 · 14 subsections
- Open section 80 in the PDF
- 80.1 Criteria for Determining Reasonable Charge · p. 74
- 80.2 Updating Customary and Prevailing Charges · p. 75
- 80.3 The Customary Charge · p. 75
- 80.3.1 Calculating Customary Charge · p. 76
- 80.3.1.1 Equity Adjustments in Customary Charge Screens · p. 77
- 80.3.2 Customary Charge Profile · p. 78
- 80.4 Prevailing Charge · p. 79
- 80.4.1 Rounding of Reasonable Charge Calculation · p. 81
- 80.5 Filling Gaps in A/B MAC (B) Reasonable Charge Screens · p. 81
- 80.5.1 Use of Relative Value Scale and Conversion Factors for Reasonable Charge Gap-Filling · p. 82
- 80.6 Inflation Indexed Charge (IIC) for Nonphysician Services · p. 85
- 80.7 Determination of Comparable Circumstances · p. 85
- 80.8 Applying Criteria for Reasonable Charge Determinations · p. 86
- 80.8.1 Waiver of Deductible and Coinsurance · p. 87
90 Inherent Reasonableness Used for Payment of Nonphysician Services · p. 87
100 Competitive Bidding Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Single Payment Amounts · p. 87 · 5 subsections
- Open section 100 in the PDF
- 100.1 Record Layout for Competitive Bidding HCPCS Category File · p. 88
- 100.2 Record Layout for Competitive Bidding Pricing File · p. 91
- 100.3 Record Layout for Competitive Bidding ZIP Code Files · p. 94
- 100.4 Record Layout for Competitive Bidding Contract Supplier File · p. 96
- 100.5 Adjustments to the Single Payment Amounts to Reflect Changes in HCPCS Codes · p. 98
Using this chapter in a denial or appeal
Start with the remittance. The claim adjustment reason code says what happened to the line, the remark code narrows it, and the group code says who is liable. Match that to the section of the chapter that sets the rule, then read the section in the official PDF rather than a summary: the wording that matters, such as a time limit, a modifier requirement or a documentation element, is usually a single sentence. Check the revision note under the section heading, because a rule that changed after the date of service may not apply to the claim, and an effective date earlier than the issue date can make a new rule reach back.
When the chapter supports the claim, cite it precisely in the redetermination request: the publication number, chapter, section and revision. When it does not, the fix is usually a corrected claim or better documentation rather than an appeal, and a coding or format rejection is corrected and resubmitted because it carries no appeal rights. Manual instructions bind the Medicare Administrative Contractor, so they settle most first-level disputes; at the hearing level, administrative law judges give them substantial deference without being bound by them. If the issue turns on whether a service is covered at all, read the matching Benefit Policy Manual chapter and any national coverage determination or local coverage determination as well, because coverage and billing rules are written in different places.
How QuickIntell works with Claims Processing Manual chapter 23
QuickRCM covers eligibility, claim readiness, denials, posting and A/R with configurable automation and human review, which is where the billing rules in this chapter are checked before a claim goes out. QuickCode supports qualified coder review of the coding and modifier questions the chapter answers.
Frequently asked questions: chapter 23
Where are NCCI and MUE rules in the Medicare Claims Processing Manual?
Chapter 23, section 20.9. It explains the purpose of procedure-to-procedure edits and medically unlikely edits, defines the correct coding modifier indicators, and sets out how MACs process appeals of NCCI denials. The detailed coding rationale is in the separate Medicare NCCI Policy Manual.
Can I use an ABN for a service denied by an MUE?
No. Chapter 23 says a denial based on an MUE or a procedure-to-procedure edit is a coding denial, not a medical necessity denial, so an Advance Beneficiary Notice does not shift liability and the provider may not bill the beneficiary for the denied units.
Does chapter 23 list Physician Fee Schedule payment amounts?
No. It describes how the fee schedule database is maintained and what its record layout contains. The amounts themselves are published in the quarterly PFS relative value files and the Physician Fee Schedule look-up tool.
Sources
Every figure on this page is taken from the CMS publications below, as released by the Centers for Medicare & Medicaid Services. Projection built 2026-10-10. Verify against the primary file before billing or contracting decisions. The reference methodology explains how each figure is computed from these files.
- Medicare Claims Processing Manual, Chapter 23: Fee Schedule Administration and Coding RequirementsVersion Rev. 13701, issued 2026-06-16 · effective 2026-07-16 · file clm104c23.pdfSHA-256 f6410f29928a35d5…
- Medicare Claims Processing Manual (Pub. 100-04)Version 39 chapter PDFs; newest revision Rev. 13836 (chapter 14), issued 2026-06-24 · effective 2026-09-27 · file 100-04-claims-processing-manual/*.pdf (39 chapters; SHA-256 of their sha256sum listing)SHA-256 f87bc3bcd9d1570d…
Disclaimer
This guide summarizes a CMS manual chapter in our own words for billing teams; section headings and transmittal subjects are quoted from the chapter PDF. The chapter itself is the authority, and it changes by transmittal. Not legal, clinical or billing advice.
Found a figure that does not match the CMS file? Report a data correction with the CMS file and the value you expected; the request reaches the editorial team through the contact form.