Every October the diagnosis code set changes, and every October a share of claims with dates of service in the first two weeks of the month get rejected for an invalid diagnosis. The FY2026 ICD-10-CM update took effect on October 1, 2025. It adds 487 new codes, revises 38 and deletes 28, and the FY2026 Official Guidelines for Coding and Reporting were posted alongside it. The set applies to encounters from October 1, 2025 through September 30, 2026.
A billing lead in a multispecialty group told us last week that her clearinghouse rejection report had doubled on October 3. Almost all of it was one thing: providers picking a code from a favorites list that had been expanded into more specific children and was no longer valid at its old level. That is the pattern we see every year, and it is fixable in a day. The harder problems, payer edits that lag the code set and coders who default to unspecified codes because the new ones are unfamiliar, take the rest of the month.
Key takeaways
- The FY2026 set (487 new, 38 revised, 28 deleted codes) applies by date of service for professional claims. A September 30 visit uses FY2025 codes even if it is coded in October.
- The biggest blocks of change are site-specific codes for non-pressure chronic ulcers, new injury and pain codes for the flank region, and new social determinants and remission codes such as E11.A.
- Most October rejections come from stale favorites lists and charge templates, not from coders. Refresh them against the deleted and expanded code lists first.
- Payers load the new set on their own schedule. A valid new code that denies in October is a payer lag to track, not a coding error to fix.
What changed, by the numbers
The FY2026 update is smaller than the FY2023 update (which brought more than 1,100 new codes) but larger than FY2025, and the changes cluster in a few places. Chapter 12 (diseases of the skin) gets more than a hundred new codes for non-pressure chronic ulcers, now classified by anatomical site in more detail than the old L97 and L98 families allowed. Wound care, podiatry, vascular and primary care practices that manage diabetic and venous ulcers will use these constantly, and payers that build medical necessity edits around ulcer codes will update those edits at their own pace.
The flank gets an anatomical home it never had. Sixteen new R codes add specificity for pain and tenderness of the pelvic, perineal, subpubic, abdominal and flank regions, with R10.2 (pelvic and perineal pain) converting to a parent code, and several cutaneous abscess and furuncle codes were revised to exclude the flank so that the new codes can be used instead. Urgent care, emergency and primary care practices will see these on the first day.
Other additions that office practices will notice:
- E11.A, type 2 diabetes mellitus without complications, in remission. This is the first code to describe diabetes remission, and it matters for quality reporting and risk adjustment as much as for the claim.
- Z59.86-, financial insecurity, becomes a parent with three new children for specific and unspecified situations, continuing the expansion of social determinants of health codes that began in FY2023.
- Z77.3-, three new codes for contact with and suspected exposure to a war theater.
- Revised descriptions across the set that change what a code means without changing its number. These are the ones nobody notices until a payer does.
The rule that trips people up: date of service, not claim date
The code set that applies is determined by the date of service for professional claims, and by the discharge date for inpatient facility claims. A visit on September 30 coded with a new FY2026 code will reject. A visit on October 2 coded with a deleted FY2025 code will reject. Practices that batch charge entry a week behind get both errors at once in the first week of October. The fix is a hard edit in the practice management system: FY2025 codes are valid only through September 30, FY2026 codes only from October 1. Most systems support effective and end dates on the code table; make sure someone actually entered them.
The same rule answers the recurring question about late charges. A hospital follow-up from September 29 that the provider signs on October 6 is a September encounter and uses the FY2025 set. If the coder cannot find the code because the system already hid it, that is a configuration problem, not a reason to pick the nearest new code.
Five workflow mistakes and how to avoid them
- Favorites lists were not refreshed. Providers pick from a personal list of 30 to 50 codes. When a code becomes a parent (as Z59.86 and R10.2 did), the old code is no longer billable and the list keeps offering it. Have someone review every provider's favorites against the deleted and revised lists. This takes an hour per provider and eliminates most of the October rejections.
- The EHR updated but the clearinghouse or scrubber did not. Vendors load the new set on different dates. Send a small test batch on the first business day and read the 999 and 277CA acknowledgements before releasing the week's claims.
- Coders defaulted to unspecified codes. With new site-specific ulcer and flank codes available, an unspecified code the provider documented around is the code payers will now question. Query the provider for site and laterality instead of settling.
- Payer edits lag the code set. Some commercial payers and Medicaid programs take weeks to load the new codes into their medical necessity and coverage edits. A valid new code can deny as "diagnosis not covered" in October and pay on the same claim resubmitted in November. Track these separately so they are not treated as coding errors.
- Nobody read the guideline changes. The Official Guidelines change every year in small ways that affect sequencing and when a code may be assigned. Assign one coder to read the change summary and brief the team. Twenty minutes in a Monday huddle covers it.
A worked example
A 58-year-old patient with type 2 diabetes has a chronic ulcer of the right heel. Before October 1, the coder reported E11.621 (type 2 diabetes with foot ulcer) plus an L97.41- code for the right heel and midfoot at the documented depth. From October 1, the Chapter 12 expansion offers more specific site codes, and the coder should report the most specific site the provider documented, with the depth character. If the note says only "foot ulcer", that is a provider query, not a coding decision. The diabetes code is unchanged unless the patient meets the documentation for remission, in which case E11.A applies and the ulcer is coded as a separate condition rather than as a diabetic complication.
Now run the same patient through the payer. The claim goes to a regional commercial plan on October 8 with the new ulcer code. It denies on October 20 with CO-11 (diagnosis inconsistent with the procedure) because the plan's debridement edit still lists the old L97 codes. The coder's first instinct is to change the code back. Do not. The old code is invalid for the date of service and the claim will reject at the clearinghouse. Log the denial as payer lag, call the plan for the date its edits update, and resubmit after that date with the reference number in the notes. In our experience most plans catch up within four to six weeks.
What to watch in your reports
| Report | What to look for in October | Target |
|---|---|---|
| Clearinghouse rejections | Invalid or deleted diagnosis code messages | Back to the September baseline within two weeks |
| Denials by CARC | Payer edit denials on valid new codes (often CO-11 or CO-50) | Logged as payer lag, resubmitted after the payer loads the set |
| Unspecified code rate | Share of claims with an unspecified primary diagnosis, by provider | Falling, not rising, after the update |
| Charge lag | Days from visit to claim | Unchanged; if it rises, coders are stuck on the new set |
| Provider query volume | Queries for site, laterality and depth | A short spike in October, then back to normal as templates catch up |
A ten-provider practice we would consider healthy sends about 4,000 claims a month with a clearinghouse rejection rate under two percent. In the first week of October that rate can hit five or six percent without anyone doing anything wrong, and it should be back under two by the third week. If it is not, the favorites lists were not fixed.
Questions we hear
Can we report the new codes for a September visit that we are coding late?
No. The date of service governs. A September 29 visit uses the FY2025 set even if it is coded in October. If your system has already hidden the old code, ask the vendor to show end-dated codes for encounters before October 1.
Our payer is denying a valid new code. Is that our error?
Usually not. Confirm the code is valid on the CMS or CDC list for FY2026, then call the payer and ask when their edits were updated. Note the reference number and resubmit after the date they give you. If they refuse, appeal with the code set effective date and the CMS release as your exhibit.
Do the new social determinants codes change payment?
Not directly on a fee-for-service claim, but they feed risk adjustment, quality programs and PCMH reporting, and they document why a care plan looks the way it does. We encourage practices to report them when the documentation supports it, and to make sure the person collecting the information is allowed to: the guidelines permit assignment of these codes from documentation by any clinician involved in the patient's care, not only the billing provider.
What to do this month
- Pull the deleted and revised code lists and search every favorites list, charge template and order set for them. One hour per provider.
- Confirm the effective and end dates on the diagnosis code table in the practice management system, and test a September and an October claim through the scrubber.
- Read the FY2026 guideline changes and brief the coding team in one huddle.
- Add a "payer lag" reason to your denial log and start using it for valid new codes that deny in October.
- Review the unspecified code rate by provider at the end of the month and schedule documentation coaching for anyone whose rate rose.
Our live RCM training courses include a session on each annual code update, and practices on our medical coding service get the favorites-list review as part of the October cycle.
