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Chapter 6, Procedural Coding

Alternative billing codes

ABCs, A code system for integrative health care products and services consisting of five-character alphabetic symbols with appended two-character practitioner type


When coding surgical procedures, this term refers to both sides of the body.

bundled codes

Codes designating procedures or services that are grouped together and paid for as one procedure or service.

comprehensive code

A single procedural code that describes or covers two or more CPT component codes that are bundled together as one unit

Conversion factor

The dollars and cents amount that is established for one unit as applied to a procedure or service rendered. This unit is then used to convert various procedures into fee-schedule payment amounts by multiplying the relative value unit by the conversion factor.

Current Procedural Terminology

lists descriptive terms and identifying codes for reporting medical services and procedures performed by physicians and non-physician practitioners. Provides a language that designates medical, surgical, and diagnostic services and accurately and effectively provides a mean of reliable, nationwide communication among health care practitioners, clients, and third parties.

customary fee

The fee that is in the range of usual fees charged by physicians of similar training and experience for the same services within the same specific and limited socioeconomic area.


When claims are submitted with outdated, deleted, or nonexistent CPT codes, and the payer assigns a substitute code it thinks best fits the service performed, resultin in a decreased payment. Also results when E/M service levels don't match the diagnostic code.

fee schedule

Simply a listing of accepted charges or established allowances for specific medical procedures. A medical practice CAN HAVE MORE THAN ONE FEE SCHEDULE UNLESS SPECIFIC STATE LAWS RESTRICT THIS PRACTICE. Charges refer to regular rates established by the provider for services rendered to both Medicare beneficiaries and to other paying patients. a document that specifies the amount the provider bills for provided services

global surgery policy

A Medicare policy relating to surgical procedures in which preoperative and postoperative visits (24 hours before major and day of minor), usual, intraoperative services, and complications not requiring additional trips to the operating room are included in one fee

Healthcare Common Procedure Coding System

HCPCS, A three-tier national uniform coding system developed by the Centers for Medicare and Medicaid Services, formerly HCFA, used for reporting physician or supplier services and procedures under the Medicare program. Level I codes are national CPT codes. Level II codes are HCPCS national codes used to report items not covered under CPT. Level III codes are HCPCS regional or local codes used to identify new procedures or items for which there is no national code, Pronounced "hick-picks".


added to codes to supply more specific information about the services provided

never event

surgical procedures that are performed on the wrong side, wrong site, wrong body part or wrong person

procedure code numbers

Five-digit numeric codes that describe each service the physician renders to a patient.

professional component

term used in describing physician's services in radiology or pathology

reasonable fee

A charge is considered reasonable if it is deemed acceptable after peer review even though it does not meet the customary or prevailing criteria. This includes unusual circumstances or complications requiring additional time, skill, or experience in connection with a particular service or procedure. In Medicare, the amount on which payment is based for participating physicians.

relative value studies

RVS, A list of procedure codes for professional services and procedures that are assigned unit values that indicate the relative value of one procedure over another

relative value unit

RVU, A monetary value assigned to each service based on the amount of physician work, practice expenses, and the cost of professional liability insurance. These three RVUs are then adjusted according to geographic area and used in a formula to determine Medicare fees.

resource-based relative value scale

Developed by Harvard School of Public Health, approach to fees developed to redistribute Medicare dollars more equitably among physicians and to control escalating fees that were out of control using the UCR system. Basis for physicians payments nationwide for a 5-year phase in beginning Jan. 1, 1992.

A payment method utilized by medicare and other government programs to provide reimbursement for physician and some outpatient services.

The RBRVS system consists of a fee schedule of approved amounts calculated based on relative values assigned to each procedure.

Formula for Relative value units involves computing 3 components: a RVU for the service, a geographic adjustment factor (GAF) and a monetary conversion factor (CF).

surgical package

bundling together of time, effort, and services for a specific procedure into one code instead of reporting each component separately

technical component

term used in describing the services provided by the facility


reducing the bundle of services that comes with the basic product, assigning multiple CPT codes when one CPT code would fully describe the service or procedure


Deliberate manipulation of CPT codes for increased payment

usual, customary, and reasonable

a reimbursement method whereby payment is determined by reviewing three fees:
(1) the usual fee-the fee usually submitted by the provider of a service or item;
(2) the customary fee-the fee that providers of the same specialty in the same geographic area charge for a service or item; and
(3) the reasonable fee-the fee that is considered reasonable


Alternative Billing Codes


American Hospital Association


conversion factor


Current Procedural Terminology


Durable medical equipment




Emergency Department or Emergency Room

E/M services

Evaluation / Management services


Emergency Medical Treatment and Active Labor Act


Explanation of benefits


Federal Trade Commission, challenged the CRVS system as a form of price fixing in violation of anti-trust laws. . Still used in some states for Worker's compensation claims.


geographic adjustment factor


geographic practice cost indices


Healthcare Common Procedure Coding System

NCCI edits

National Correct Code Initiative edits


professional component


relative value studies, a sophisticated system for coding and billing of professional services. First published in 1956. as California Relative Value Studies (CRVS),


relative value unit


resource -based relative value scale


technical component


usual, customary and reasonable
A complex system in which 3 fees are considered in calculating payment. Used mostly in reference to fee-for-service reimbursement. (see pp 166)

usual fee- physician usually charges (submitted fee) for a given service to a private patient.

customary fee - a fee in the range of usual fees charged by providers of similar training and experience in a geographical area.

Reasonable fee fee that meets the aforementioned criteria or is, in the opinion of medical review committee, justifiable considering special circumstances of the case.


Integrative health care

Health are that incorporates the best approaches from conventional and complementary and alternative medicine.

ABCs specialty areas

acupuncturist, Ayurveda medicine, body work, botanical medicine, chiropractic, clinical nutrition, conventional nursing, holistic dentists and physicians, homeopathy, indigenous medicine, massage therapy, mental health care, midwifery, minority health care, naturopathic medicine, oriental medicine, osteopathic medicine, physical medicine, somatic education, spiritual and prayer based healing.

Alternative Links

The original developer of the ABC codes

ABC codes

"A terminology created by Alternative Link that describes alternative medicine, nursing and other integrative healthcare interventions"


Health Care Financing Administration, which later became CMS (centers for Medicare & Medicaid Services)

HCPCS level I coding

AMA CPT codes and modifers (national Codes)

HCPCS Level II coding

CMS - designated codes and alpha modifiers (national cod

HCPCS unlisted procedures terminology

unlisted, not otherwise classified (NOC), unspecified, unclassified, other, miscellaneous (see also, Table 2 of Appendix B in workbook)

Procedure code guidelines

Level I HCPCS CPT code describes physician or provider services (PPS)

Level II HCPCS (national codes)
describes: ambulance, medical & surgical supplies, enteral and parenteral therapy, outpatient PPS, dental procedures, durable medical equipment, procedures / professional services, alcohol & drug abuse treatment services, drugs aministered other than oral, orthotic procedures, prostehtic procedures, other medical services, pathology and laboratory services, casting & splinting supplies, diagnostic radiology services, temporary non-medical codes, T codes for State Medicaid agencies, visit and hearing services.

HCPCS Level II procedure codes

used by some private insurance co., most commercial insurance companies, some Tricare states.

HCPCS updates

by Jan 1 yearly, and updates through year as needed.

When case can be coded in 2 ways, guidelines:

CPT code should be used when both a CPT and LEvel II code have some descriptions. Level II code used if descriptions are not identical (e.g.) CPT code generic, HCPCS Level II code more specific)

Procedure codes

standardized method used to precisely describe the services provided by physicians and allied health care professionals.

AHA Central Office

offical clearinghouse for information on proper use of ICD-9-CM codes, Level I HCPCS codes (CPT-4 codes) for hospita providers and certain Level II HCPCS codes for hospitals, physicians and other health care professionals.

Methods of payment (federal, state programs, private insurance companies:

1. fee schedules
2. usual, customary and reasonable (UCR)
3. relative value scales or schedules

Fee Schedule situations that occur:

1. providers participating in the Medicare program would typically be paid by the fiscal agent an amount from a fee schedule for Medicare patients.
2. Providers not particiapting in the Medicare program would be paid by the fiscal agent an amount based on limiting charges for each service set by the Mediare program.
3. Providers having a contractural arrangement with a manged health care plan (e.g., HMO, IPA, , PPO, would be paid on basis of the fee schedule written into the negotiated contract.
4. Providers rendering services to those who have sustained industrial injuries use a separate workers' compensation fee schedule.

Fee Schedule violations, (social security act)

A physician may risk exclusion or suspension from Medicare program if Medicare charges are substantially in excess of such individual's or entity's usual charges.

Multiple Fee Schedules

A provider may risk charging federal or s tate health programs a fee that might be construed as more than the providers "usual" charge.

Fee schedule violation (prevention)

Provider assigns one fee for each procedure code when establish a fee schedule. Fee should be billed to all 3-rd party payers and to self-pay patients.

By establishing 1 fee for each procedure, instead of multiple fees, the provider helps establish the Usual and customary fee for that geographical area.

Fees schedule continued

Fees should be above the maximums paid by 3rd party payers to whom the practice generally bills.

Fee schedule - use of one schedule

using one fee schedule for all patients with provisions for financial hardships cases, is usually safest course for health care providers.

UCR payment method

chosen by insurance company and not the provider.

UCR discontinued for RBRVS in some cases

Plans are beginning to discontinue UCR system and are adopting the Medicare RBRVS method for physician reimbrusement.

Relative Value Scale

Refers either to relative value studies or scale, is a coded listing of procedure codes with unit values that indicate the relative value of the various services performed, taking into account the tim, skill and overhead cost necessary for each service.

Relative Value Scale units

based on median charges of all physicians during the time period in which the RVS was published. A conversion factor is used to translate the abstract units in the scale to dollar fees for each service.


help when determining cost accounting because they take into account the practice expense, malpractice expense, work effort, and cost of living.

RVU crosswalk

A cross walk is an effective way way to see how the practice may be affected by an RBRVS contract. To develop one, make several columns using spreadsheet. Column A, list common procedure codes, Column B, code description and Column C the RBRVS RVUs.
Leave colum D blank to insert convesrion factor.
Colume E, present fee for service rate. Divide fee in Column E by Colum C to get the conversion factor. Leave blank Colum F to insert a conversion factor for the contract. List the manage care contract payment in Colum G. Divide colum G by Colum C to get the conversion Factor for Colum F. Then divide the plan's contract fee for the physican's fee for Column H to work out the percentage being paid at the contract rate.

Medicare Adminstrative Contractor

MAC, sends to physicians in area/region listing 3 colums of figures:
participating amount
nonparticiapting amount
limiting charge for each procedure code number

CPT format and content

3 categories, I, II, III, ssytematic listing of 5 digit code numbers with no decimals. CPT is divided into six code sections with categories and subcategories. CPT content as follows (see pg. 169)

Each main section divided into categories and subcategories according to anatomic body systems, procedure, condition, description, and specialty.

Reference Appendix C of the CPT to become familarized with comse common case scenarios that might occur for the codes that appear in the E/M section of the CPT.

Recommend personally customizing CPT procedure book.

CPT-4 and CPT-5

3 categories
Category I
existing code sets

Category II
codes describe clinical components that may be typically included in E/M services or clinical services and do not have a relative value associated with them. Also describe Lab or X-ray rests and other procedures & ID processes intended to address patient safety or compooliance with state or federal laws.

Category III
tempoary set of tracking codes used to code emerging technologies that do not yet have any procedure codes Intended to expedite data collection and assessment of new services and procedures to substantiate widespread use and clincial effectiveness.

CPT code book symbols (see p 171)

1. arrow: reference material available for this code from specific AMA publicatoin
2. bullet: new procedure code number for this edition of CPT
3. Triangle: code revision resulted in substainally altered procedure description
4. facing triangles: new or revised text other than the procedure description.
5. plus sign: add-on code can be listed after the primary or parent code is listed.
6. null zero or universal no code: modifier -51 cannot be used with this code.
7. circled bullet: moderate (conscious) sedation included with this code.
8. flash: code shows FDA approval for vaccine pending
9. number sign #: resequenced code (out of numerical order)
10. recycled/reinstated code:

E/M section (see pg. 172)

Divided into:
office visits, hospital visits, and consultations, and these codes describe physician's services involving the E/M of a patients problem.
2 Office visit subcategories exist:
new patient/ established patient

2 Hospital visit subcategories exit:
initial / subsequent each subcategory has levels of E/M services identified by specific codes.

3 year rule

new versus established patient ruling

Format for levels of E/M service

1. under new or established patient code number is listed.
2. place and/or type of service is listed
3. content of service is defined (e.g., comprehensive history, and comprehensive examination)
4. the nature of the present problem usually associated with the level described.
5. the time typically needed to give the service is tstated

Elements to selecting an E/M code

1. history,
2. examine,
3. medical deicison making,
4. nature of present problem,
5. counseling,
6. coordination of care,
7. time


see pg. 173 (outpatient and /or inpatient consultant guidelines)
Jan. 1, 2010 issued a policy that eliminated the use of all consultation codes (ranges 99241 - 99245 and 99251 - 99255 ????

Critical Care

Ciritical care is the direct delivery of medical care by a p hysician for a critically ill or injured person. Illness/Injury impairs one or more vital organ systems and makes imminent or life threatening deterioration in the patients condition highly probably. EX. CNS failure, circulatory failure; shock; and renal, hepatic, metabolic, or respiratory failure.

critcal care requires interpretation of multiple physiologic parameters , cc may be provided in life-threatening situations when these elements are not prsent. CC may be provided on multiple days, even if no changes are made in treatment rendered, as long patient's condition continues to require it.

Usually in CCU, ICU, PICU, RCU, or Emergency care facility. it could occur in patient's room or in ER.

Services for patient not critically ill but in CCU/ICU & etc. must use other CPT E/M codes.

see pp 173-175

Pediatric and Neonatal critical care

see pg 175- 179
Impatient critical care for Neonates/Infants 29 days - 24 mos, are reported with Pedicatric Critical care codes 99468-99476, below 28 days or younger 99468-99469 as long as infant/child qualifies for that care. Reporting based on time and or type of unit

Surgery section

coding from operative report , see pp. 179-181
Suggest coder make copy of operative report that she can highlight words that could indicate procedure performed may be alterd by specific circumstances and to remind you that a code modifier may be necessary.

1) Assign postoperative dx code shown at beginning of operative report.
2) Search for additional diagnoses in body of report that can be added as secondary dx codes to support medical necessity, especially if case was complex.
3) If complex surgical procedure not accordately described in procedure code nomenclaure, include an operative report and list "attachment" in Block 19 of insurance claim form.
4) Code numbers should describe body part treated render high reimbursement, depending on location.
(suturing face pays higher than arm laceration)
5) Code the procedures that actually were documented in report. (nor bundled into another code)
6) Do not code using only procedure name from operative report heading. Always read report thoroughly to see whether additional procedures were performed. If so, were they part of the main procedure or performed independently or unrelated.
a) use right surgical position /approach code
b) usually codes included surgical approach & closure
c) See also modifier -51.
d) # of surgeons involved, and roles
e) reread report to make sure all procedural and dx codes are ID. Verbal not acceptable, must be documented.
f) if complications, "extensive complications" are in the report if there are complications.
g) look for "special instruments used", " unusually long or complex procedures, rare approach techniques, reoperation, or extensive scarring encountered. These conditions may need one or more modifiers appended to the code.
h) Surgical code descriptions may define a correct coding relationship wherein one code is part of another based on the language used in the description.
i) confirm report findings agree with the procedure codes on the claim.

Surgical package for Non-Medicare cases

SURGICAL PACKAGE: is billing encounter phrase. Usually includes following:
a. The operation.
b. Local infiltration; topical anestheia or metacarpal, metatarsal, or digital block.
c. After the surgery decision billed, surgical package includes:
E/M encounter on the date immediately before or on the date of procedure (including H&P). See the later section on -57 Decision for Surgery.
d. Immediate postoperative care, including dictating operative notes and talking with the family and other physicians.
e. Writing orders
f. Evaluating the patient in the postanesthesia recovery area.
g. Typical postoperative follow-up care (hospital visits, discharge, or follow-up office visits)

Medicare global surgery package (GSP)

Medicare has a global surgery policy for major operations that is similar to the surgical package concept.
Single fee for all necessary services normally furnished by surgeron before, during and after the procedure.

Eff. Jan. 1, 1992. CMS issued policy eliminating the use of all consultation codes 99241-99245, 99251-99255 for inpatient and office/outpatient settings.

Includes following:
Preopeartive visits (1 day before or day of); intraoperative services that are usually and necessary part of surgical procedure;
complications after surgery that do not require additional trips to the operating room (medical /surgical services); Postoperative visits, including hospital visits, discharge, and office visits, for variable postoperative periods (0-10,30, or 90 days)

writing orders;
Evaluating the patient in the recovery room;
normal postoperative pain management;

Transfer to another facility

If Medicare patient is discharged from one hospital facility, and admitted to a different hospital or facility on same day, a provider may get paid for both, depending on circumstances of the case. Low-level admission code used for second hospital admission. see pg. 183

Follow-up (Postoperative ) Days

see pg. 183
Number of FU postoperative days that are included in surgical package varies. CPT book does not specify, an additional reference manual is necessary. Most use RVS for worker's compensation cases.
See also Federal Register. Appendix B

Medicare lists 30- or 90-day global period for all major procedures and 10 days for minor procedures.

see page 184 use #99024 no charge CPT code?
used for tracking purposes. No Medicare guideline for this code. A bill should be submitted for all visits after the surgical package period expires.

If patient seen beyond the normal PO period, reason must be documented in patient's medical record and an applicable procedure code and fee for this service should be indicated on claim form.

If provider did not perform surgery but is performing post operative care, the provider can charge for visits but must use appropriate modifer (-55) to explain charge.

Never Event

see pg. 183 Medicare will not cover certain surgical never events and some insurance company's have stopped payment to hospitals for never events. A never event is an occurrence related to a surgical procedure that is performed on the wrong side, wrong site, wrong body part, or wrong person, retention fo a foreign object in a patient after a procedure; patient death or disability associated with the use of contaminated drugs, devices, or biologic provided by the health care facility; patient death or serious disability associated with a medication error; stage 3 or 4 pressure ulcers acquired after admission to a health care facility.

Repair of lacerations

see pg. 184
If multiple lacerations are repaired with same technique and are in same anatomic category, the insurance billing specialist should ADD UP TOTAL LENGTH OF ALL LACERATIONS and report one code to obtain maximum reinbursement.

If patient had 3 repairs and each was listed with a different code, the second and third are downcoded (by 3rd party payer so that a smaller payment is generated.

Multiple Lesions

see page. 184/185


see page 185
When billing for office surgery and supplies used, checklists for the terms used on the sterile tray and for determining complete and incomplete records should be used. THese terms can only be charged for if the surgery required use of additional items notnormally used for this type of surgery.

Minor operating room instrument tray supply checklist would then be kept with patient's medical record.

Incident-to Services

see pg 185
Physicians can bill for services provided by allied health professions who are members of their practice, such as physician assistants, therapists, nurses and nurse practitioners, as long as the services relate to the professional services that the physician provides and direct supervision occurs. A PHYSCIAN AVAILABL BY TELEPHONE DOES NOT COUNT.

ex.: checking a patient for conjunctivitis
checking blood pressure for a patient who is being treated for high blood pressure
checking a wound beyond the global period
reading a TB test result
recheck for issuing a return to work certificate.
document date, reason, medical necessity, patient encoun ter information, signature of practictioner.
add place for physician to countersign.

Prolonged Services, Detention, or Standby

see pp. 185
time should be documented health record to justify use of these codes (99354 - 99359 prolonged service with face-to-face patient contact)

Pediatrican on standby during high risk cesarean setion performed on a pregnant woman ?

Unlisted Procedures

pg. 186, hen an unusual service is rendered, an unlisted code should be used rather than bguessing or using an incorrect code. Supporting documentation (letter and copy of operative report) should be sent explaining the service)

31599 unlisted procedure, larynx example
unlisted codes may or may not end in -99. found at end of each secdtion or subsection.

Guidelines for submitting unlisted procedures:
Always send or transmit supporting documentation with the claim to clearly identify the procedure performed and medical necessity, using paper claim if that is best way to submit supporting documentation.



Coding guidelines for code edits "CODE SCREENING"

see pg. 186
1996 Medicare Program inplemented NCCI.
Code editing system consistent with Medicare policies.
Eliminates inappropriate reporting of CPT codes. Code editing is a computer software function that performs online checking of codes on an insurance claim to detect unbundling, splitting of codes, and other improper coding.

Comprehensive and component edits

see pg. 186/187
component code is a lesser procedure and is considered part of the major procedure.
1. code combinations that are specified as "separate procedures" by CPT.
2. Codes that are included as part of a more extensive procedure.
3. Code combinations that are restricted by the guidelines outlined in CPT.
4. Component codes that are used incorrecxtly with the comprehensive code.

Mutually exclusive code denials

see pg. 187
Mutually exclusive code edits relate to procedures that meet any of the following criteria:
1. COde cominations that are restricted by the guidelines outlined in CPT.
2. Procedures that represent two methods of performing the same services.
3. Procedures that cannot resonably be done during the same session.
4. Procedures that represent medically impossible or improbably code combinations.

Bundled codes means to group related codes together.

see pg. 187
Benefits have been combined.

Unbundlinh coding

see pg. 188, also know as exploding, or a la carte medicine. Considered fraud if intentionally done.
Types of unbundling:
fragmenting one service into component parts an dcoding each part as if it were separate service

reporting separate codes for related services when one comprehensive code includes all related services

coding bilateral (both sides of body) procedures as two codes when one code is proper

Separating a surgical approach form a major surgical service that includes the same approach.


pp 188-189, make sure the doumentation from the provider supports the code that is being submitted to prevent downcoding.

CLaims examiner converts CPT code submited to a RVS code used by payer. ex. workers compensation claims.
Will always use lowest paying code.


ANYTIME the code that was submitted is changed, appeal the change immediately


see pp 189
Used to describe deliberate manipulation of CPT codes for increased payment. Payers screen for this abuse and it opens door to audits.
Join free list service (listserv) to keep current, make national coding contacts, and post questions to others who may know answer to a current coding or billing dilemna.

Code monitoring

focus on maximize reimbursement from all third-party payers.
see pg. 189/

Helpful hints in coding:
office visit, drugs & injections, adjunct Codes, basic life or disability evaluation services

see pg. 190 / 191

Modifiers COdes

see pg. 191 Permits the physic8an to indicate curcumstances in which aprocedure as perfomred differs in some way from that described by its usual five-digit code. May be necessary when using a modifer to include reports of operation, pathology, xpray etc.

Correct use of Common CPT modifers

pg. 191

Modifier code -22 increased procedural services

pg. 191 this is ued when service provided is substanially greater than that typically repquired for the listed procedure. If added, the documentation in the health record must support the substantial additional work.

Modifier code -25 Signifcant , separately identifiable evaluation and mangement service

see explanation fo midifier -57.

modifier code - 26 Professional component

see pg. 191

Modifier Code tables

see pg 192-201

Modifier Code - 51 mutliple procedures

pg. 202

modifier Code - 52 reduce services

pg. 205

modifier code - 57 decision for surgery

pg. 205

modifier code - 25 Signicant separately identifiable E/M Service

pg 205

modifier code - 58 Staged or related procedure

see pg. 206

modifier code - 62, 66, 80-81,-82, more than one surgeon

see pg. 206

modifier code - 99 mulitple modifiers

see pg. 207

HCPCS LEvel ! and Level II modifers are used for MEdicare and may be used by some commercial payers.

Use HCPCS modifiers whenever they are necessary. see pg. 207

modifier CODES comprehensive list

see pg. 207

Determine conversion factors

see pg. 208 procedure 6-1

Locate correct level II HCPCS Codes for Professional services

see pg. 208 procedure 6-2

Choose correct procedural codes for professional services

see pg. 208-211 Procedure 6-3

Critical Care services in CC codes

when physician provides critical care


Visits not rleated to the original surgery and complications of the surgery (infection of the wound) are billable using modifier-24.
Preoperative services, such as consultations, office visits, and initial hospital care, are often billed separately.
An appropriate E/M 5 digit code should be selected for these type services.

INSURANCE / HMO/PPO vary in what is included in surgical package fee. Most follow MEDICARE guidelines, some do not.

local infiltration anestheisa

infiltration anesthesia local anesthesia produced by injection of the anesthetic solution in the area of terminal nerve endings.

regional intravenous digital nerve block

regional intravenous digital nerve block
local anesthesia procured by ligaturing the digit and injecting the local anesthetic. The anesthetic is left confined to the digit for the duration of the ligaturing. A preferred technique for cattle digital surgery.

Level of Service

one of four types:
SF HC high complexity, lC low complexity, MC moderate complexity, HC high complexity

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