Excludes 1 in Medical Coding: What to Know and How to Use It

ICD-10-CM accuracy depends on more than selecting a diagnosis that seems to fit the encounter. The classification includes conventions, notes, and reporting rules that shape how codes should be assigned. One of the most important of these is the Excludes 1 note. It may look small in the Tabular List, but it can change whether two codes can be reported together, when documentation needs a second review, and how clearly a claim reflects the patient’s condition.¹²

The FY 2026 ICD-10-CM Official Guidelines for Coding and Reporting define an Excludes1 note as a pure excludes note, meaning “not coded here.” In general, the excluded code should not be used at the same time as the code above the note. The guidelines add that Excludes1 is used when two conditions cannot occur together, such as a congenital form and an acquired form of the same condition.¹

At first glance, that sounds straightforward. In practice, it creates confusion because patient records do not always read in a way that makes the relationship between two diagnoses obvious. The same FY 2026 guidelines also state that there is an exception when the two conditions are unrelated to each other, and when that relationship is unclear, the provider should be queried.¹ That exception is a big reason Excludes 1 deserves close attention.

This article explains what excludes 1 means, how it differs from Excludes2, where mistakes happen, and how organizations can apply the rule with more consistency.

What Excludes 1 Means in ICD-10-CM

ICD-10-CM conventions and instructional notes are part of the classification itself. The official guidelines state that these instructions take precedence over the guidelines, and coders are directed to locate the code in the Alphabetic Index and then verify it in the Tabular List.¹ That verification step matters because the Tabular List is where Excludes1 notes appear.

An excludes 1 note tells the coder that the excluded condition is not coded at that location. In general, the two codes should not be reported together. CMS training materials describe Excludes1 as “NOT CODED HERE,” reinforcing that the classification treats the conditions as mutually exclusive in that context.²

A common example is the distinction between congenital and acquired forms of a condition. If the Tabular List places an Excludes1 note between those code families, the coder is being told that both should not be reported together to describe the same clinical issue.¹²

That point matters beyond code assignment. Excludes1 affects claim accuracy, internal auditing, denial risk, and the usefulness of diagnosis-based reporting. When these notes are missed, a claim may show a diagnosis combination that the classification does not support.¹³

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How Excludes 1 Differs From Excludes2

A frequent source of confusion is the difference between Excludes 1 and Excludes2. The notes look similar, but they mean different things.

An Excludes1 note means the excluded code generally should not be used at the same time as the code above the note. An Excludes2 note means “not included here.” In that case, the excluded condition is not part of the code above the note, but the patient may have both conditions at the same time, so both codes may be assigned when supported by the record.¹²

This distinction changes the coding decision. With Excludes2, the coder often decides whether both conditions are present and documented. With excludes 1, the coder is deciding whether the two diagnoses describe the same condition in a mutually exclusive way, or whether the guideline’s exception for unrelated conditions may apply.¹

A simple way to remember it is this: Excludes1 usually means do not report both together, while Excludes2 means both may be reported together when appropriate.¹² This difference is basic ICD-10-CM logic, but it still causes errors when teams move too quickly through code verification or rely too heavily on encoder prompts.

The Excludes 1 Exception in the FY 2026 Guidelines

One of the most important parts of the FY 2026 guidance is the stated exception to the Excludes1 definition. The guidelines say that when the two conditions are unrelated to each other, both codes may be assigned. If it is not clear whether the conditions are related, the provider should be queried.¹

This is important because some people still treat excludes 1 as an absolute prohibition in every circumstance. The official guidance does not support that reading. Instead, it allows both codes when the documentation shows the conditions are unrelated.¹

The guidelines provide a useful example involving F45.8 Other somatoform disorders, which carries an Excludes1 note for sleep-related teeth grinding (G47.63). When both codes refer to the same issue of teeth grinding, only one should be assigned. But when the patient has psychogenic dysmenorrhea and sleep-related teeth grinding, both codes may be assigned because the conditions are unrelated.¹

This example helps explain why Excludes1 cannot be handled as a simple “never code both” rule without reading the record closely. It also shows why provider queries still matter. If the documentation does not make the relationship between the diagnoses clear, coding staff need clarification before making a final assignment.¹

Why Excludes 1 Errors Happen

Many excludes 1 mistakes come from workflow habits rather than lack of effort. Teams may rely on the Alphabetic Index, an encoder suggestion, a problem list, or a prior encounter instead of verifying the code in the Tabular List. Since Excludes1 notes appear in the Tabular List, that shortcut can lead to missed instructions.¹²

Another problem is documentation that uses broad or overlapping terms without defining the clinical relationship between conditions. When the record does not show whether a diagnosis is congenital, acquired, current, historical, related, or unrelated, the coder may not have enough information to apply the note correctly. The FY 2026 guidelines address this directly by stating that a provider should be queried when the relationship is unclear.¹

Training gaps can add to the issue. Annual code updates often get most of the attention, while coding conventions receive less review. Yet conventions are the rules that shape how the code set works. CMS and CDC resources continue to teach Excludes1 and Excludes2 because these notes remain central to proper ICD-10-CM use.²³

From an operational standpoint, these errors can affect more than one claim. Unsupported diagnosis combinations can show up in denials, audit findings, and data quality issues that reach reporting and benchmarking work.¹³

An Example of Excludes 1 in Practice

A common teaching example appears in CMS ICD-10-CM reference material: Q03 Congenital hydrocephalus includes an Excludes1 note for acquired hydrocephalus (G91.-).² This aligns with the official guideline language describing congenital and acquired forms of a condition as a common Excludes1 pattern.¹

In practice, that means the coder should determine which diagnosis the documentation supports rather than reporting both as if they describe the same condition in the same way. If the hydrocephalus is congenital, the code path is different than if it is acquired.¹²

Examples like this help reinforce that Excludes1 is about code logic built into the classification. It is not just a payer preference or an internal edit. It is a reporting rule that comes from the code set itself.¹²

Steps to Apply Excludes 1 More Consistently

A stronger internal process begins with a simple habit: always verify the code in the Tabular List. That is the step where Excludes1 notes are visible, and it is often where coding errors can be stopped before claim submission.¹

It also helps to standardize a few review questions during coding and auditing:

Is there an Excludes1 note at this code?

Do the two diagnoses describe the same issue, or are they unrelated?

Does the record support that distinction clearly?

If not, is a provider query needed?¹

These checks are useful in daily production and in education sessions. They also give auditors a clear framework for explaining why a code combination was accepted or corrected.

Organizations can take this a step further by tracking patterns. If Excludes1 issues keep appearing in the same service lines, diagnosis groups, or documentation scenarios, that points to a targeted education opportunity. CMS and CDC materials are helpful for this kind of training because they explain the note in the context of ICD-10-CM conventions rather than as a stand-alone rule.²³

Provider education can stay simple. Clinicians do not need a full coding course to improve documentation. In many cases, clearer wording around whether a condition is congenital or acquired, or whether two diagnoses are related or unrelated, can make coding decisions much easier.¹

Why Excludes 1 Matters for Coding Quality

Understanding excludes 1 supports cleaner coding, better claim accuracy, and stronger alignment between the medical record and the codes submitted. ICD-10-CM conventions exist to make coded data more consistent across settings, and Excludes1 is part of that structure.¹²³

For organizations balancing compliance, reimbursement, and reporting demands, this is a reminder that small notes in the classification can have a broad impact. A reliable process for reviewing Excludes1 notes helps reduce unsupported code combinations, supports more defensible reporting, and gives coding teams a clearer path when documentation is incomplete.¹

Excludes 1 is one of the clearest examples of why ICD-10-CM coding is about more than selecting a diagnosis label. The note means “not coded here,” and in general, the excluded code should not be reported with the code above it. The FY 2026 guidelines also make clear that both codes may be assigned when the conditions are unrelated, with a provider query when that relationship is not clear.¹

For teams working to improve coding quality and reduce preventable claim issues, this is a rule worth revisiting often. Consistent review of Tabular List notes, paired with clear documentation and sound query practices, can support more accurate diagnosis reporting and fewer downstream problems.¹²³

References

1. CMS. FY 2026 ICD-10-CM Official Guidelines for Coding and Reporting. https://www.cms.gov/files/document/fy-2026-icd-10-cm-coding-guidelines.pdf

2. CMS. Quick Reference Information: ICD-10-CM Classification System. https://www.cms.gov/files/document/032310icd10quickreferencepdf

3. CDC/NCHS. ICD-10-CM Files. https://www.cdc.gov/nchs/icd/icd-10-cm/files.html

4. CMS. Diagnosis Coding: Using the ICD-10-CM Web-Based Training. https://www.cms.gov/files/document/icd10textonly508002pdf