CPC Pathway Editorial Team · Coding · 2026-11-10
Executive Summary // 2026 Coding Conventions
In ICD-10-CM, Excludes1 signifies pure mutual exclusivity ("NOT CODED HERE"), instructing that two conditions cannot logically exist in the same encounter—unless the official 2015/2026 CMS exception applies for clinically unrelated conditions. In contrast, Excludes2 signifies "NOT INCLUDED HERE," indicating that while the excluded condition is not part of the primary diagnosis, both conditions may be reported together if substantiated by clinical documentation.
Official ICD-10-CM Coding Guidelines (Sections I.A.12.a and I.A.12.b) establish instructional conventions that govern how diagnoses can be combined on medical claims. These conventions take precedence over general coding guidelines. Understanding the legal and operational differences between an Excludes1 and Excludes2 note is essential for medical coders, billing specialists, and candidates preparing for the AAPC CPC® examination.
Clearinghouses and payer claim scrubbers program these notes as rigid edits. Submitting mutually exclusive codes without understanding the regulatory exceptions results in automated claim denials, delayed revenue cycles, and prospective audits under federal compliance programs.
An Excludes1 note is a pure negative instruction. It indicates that the code being referenced should never be billed concurrently with the code listed in the note for the same anatomical site or encounter:
AAPC Exam Alert: The Block-Level Hierarchy Trap
Excludes1 notes do not only appear under single 4-digit or 5-digit codes. When an Excludes1 note is placed at the three-character category header (e.g., under block M80 for Osteoporosis with current pathological fracture), that instruction applies to every single subcategory and seven-character code within that entire block! Always scan upwards in your ICD-10-CM codebook to the root category before finalizing your code selection.
Shortly after the United States transitioned to ICD-10 in October 2015, clinical specialty societies identified a major flaw in strict automated Excludes1 claim rejection: in complex clinical encounters, patients frequently presented with two distinct conditions that technically fell under an Excludes1 instruction, yet were completely unrelated.
CMS and the CDC issued a permanent, authoritative guideline clarification that remains fully active in 2026:
Official Guideline Excerpt (ICD-10-CM Guideline I.A.12.a): "An exception to the Excludes1 definition is the circumstance when the two conditions are unrelated to each other. If it is documented that the two conditions are unrelated, both codes may be reported despite the presence of an Excludes1 note."
Clinical Scenario: Category F45.8 (Other somatoform disorders) carries an Excludes1 note for sleep-related teeth grinding / bruxism (G47.63). If a patient presents for treatment of documented psychological psychogenic body dysmorphia and also receives treatment from an oral sleep specialist for nocturnal bruxism, the two disorders are clinically independent. Both codes may be legitimately billed on the claim. Documentation must clearly substantiate that the conditions represent distinct clinical presentations.
An Excludes2 note signifies "NOT INCLUDED HERE." It instructs the coder that the condition excluded is not part of the condition represented by the code, but a patient may have both conditions at the same time:
| Instructional Convention | Meaning in Tabular | Dual Billing Allowed? | Sequencing Restriction |
|---|---|---|---|
| Excludes1 | "NOT CODED HERE" (Mutual exclusivity) | NO (Unless clinically unrelated) | N/A (Mutually exclusive) |
| Excludes2 | "NOT INCLUDED HERE" | YES (If supported by chart) | Flexible (Reason for encounter first) |
| Code First / Use Additional | Etiology & Manifestation pairing | MANDATORY dual coding | STRICT: Underlying cause 1st, manifestation 2nd |
| Code Also | Informational reminder of co-morbidity | YES (When present) | Flexible (Chief complaint sequenced first) |
Many candidates confuse "Code First" with "Code Also" notes. This confusion costs vital points on the CPC exam:
Generally no, because Excludes1 means "NOT CODED HERE." However, under the official CMS and CDC guideline exception, if the physician documentation clearly proves that the two conditions are clinically unrelated to each other (or affect completely different anatomical locations), both codes may be reported together.
Review the progress notes. If the encounter involved two separate, clinically independent conditions, appeal the claim by citing Official ICD-10-CM Guideline I.A.12.a and attach medical records substantiating that the conditions are unrelated. If they are related or duplicate manifestations, adjust the claim to remove the excluded code.
No. An Excludes2 note means you can report both codes if the patient actually has both conditions and they are documented in the chart. If the patient only has the primary condition, bill only the primary code.
AAPC exam questions test "Code Also" by creating distractor options that reverse sequencing or claim that dual coding is prohibited. Remember that "Code Also" allows both codes to be billed and leaves sequencing order dependent on which condition was the primary reason for the encounter.
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