ICD-10 Excludes1 vs Excludes2: Complete Coding Guide for the CPC Exam

Here’s the honest answer: these two notes look nearly identical on the page, and that’s exactly why the CPC exam uses them as traps. Get the logic wrong on Excludes1 and you code a pair that should never appear on the same claim. Get it wrong on Excludes2 and you miss a valid secondary diagnosis. The distinction is not complicated once you see it clearly.

For the full context on ICD-10 diagnosis coding strategy, see the CPC Exam Complete Guide. Excludes notes interact closely with sequencing decisions covered in the ICD-10 diagnosis sequencing guide.

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What Is an Excludes1 Note? (Hard Exclusion)

Official Definition (CMS)

According to the CMS ICD-10-CM Official Guidelines for Coding and Reporting, an Excludes1 note is defined as: “A pure excludes note. It means ‘NOT CODED HERE.’ An Excludes1 note indicates that the code excluded should never be used at the same time as the code above the Excludes1 note.”

The operative phrase is “never be used at the same time.” This is a hard stop.

When It Applies

An Excludes1 note appears when two conditions are mutually exclusive by definition. The typical reason is that one condition already includes the other, or the two cannot logically coexist. If you see an Excludes1 note, you must choose one code or the other : not both.

On a CPC exam question, if the scenario places two codes that have an Excludes1 relationship together on the same claim, that answer is wrong. Every time.

The One Exception: Same Condition, Different Anatomical Sites

CMS includes a narrow exception. If a patient truly has both conditions : but they occur at different anatomical sites : coding both may be appropriate. The Guidelines state: “An exception to the Excludes1 definition is the circumstance when the two conditions are unrelated to each other. If it is not possible to use a code for the type of the condition, it is acceptable to use both the Excludes1 code and the excluded code together, when the medical record documentation indicates that they are unrelated conditions.”

This exception is rare. In practice, treat Excludes1 as a hard exclusion unless the documentation explicitly supports unrelated, site-distinct conditions.

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What Is an Excludes2 Note? (Soft Exclusion)

Official Definition

Per the CMS Guidelines, an Excludes2 note means: “The excluded condition is not included in this code, but the patient may have both conditions at the same time and, if so, it would be acceptable to use both the code and the Excludes2 note code together, when appropriate.”

Excludes2 is not a prohibition. It is a clarification. It tells you: this specific condition is not captured by this code. If the patient has that condition too, add a separate code for it.

When You Can Code Both

You can code both when the physician has documented both conditions as clinically present and actively managed. The key word is “documented.” If the record supports both diagnoses, both codes are appropriate. An Excludes2 note does not stop you : it tells you to go get the additional code.

When You Should Not Code Both

Do not add the Excludes2-listed code just because a patient has a history of that condition or as a general catch-all. Coding guidelines require documentation of a current, active condition. If only one condition is documented and treated, code only that one. The Excludes2 note permits coding both; it does not require it.

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Side-by-Side Comparison Table

	Excludes1	Excludes2
What it means	These two codes can never be used together	This condition is not part of this code, but may coexist
Can you code both?	No (with rare exception for unrelated sites)	Yes, when both are documented and clinically present
CMS label	”NOT CODED HERE"	"Not included here”
Exam risk if ignored	Incorrect code pair : question wrong	Missing a valid additional code
Real-world risk	Claim denial	Under-coding / incomplete record
Memory hook	Excludes1 = NEVER	Excludes2 = CAN (when documented)

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Decision Flowchart

Use this logic on every exam question that involves two codes with an excludes relationship.

Start: Two codes flagged for the same claim

Step 1: Is there an Excludes note?
  No → Code both if both are documented
  Yes → Go to Step 2

Step 2: Is it Excludes1 or Excludes2?

  Excludes1 →
    Step 3: Are both conditions documented at different anatomical sites with no clinical connection?
      Yes → Rare exception applies. Code both, with clear documentation support.
      No  → Code only ONE. Never code both.

  Excludes2 →
    Step 3: Are both conditions documented as clinically present and actively managed?
      Yes → Code both. The Excludes2 note permits it.
      No  → Code only the confirmed condition.

That is the full decision path. On a timed exam, you can run through this in under 30 seconds once it is internalized.

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10 Real ICD-10 Coding Examples

Examples 1-5: Excludes1 (Never Code Together)

Example 1: Type 1 vs. Type 2 Diabetes

Type 1 diabetes (E10.xx) carries an Excludes1 note for Type 2 diabetes (E11.xx). A patient cannot have both types simultaneously by definition : the underlying mechanisms are distinct. If you see a scenario with both E10.xx and E11.xx codes, that is an automatic violation. Select the type that matches the physician’s documentation.

Example 2: Acute Appendicitis With vs. Without Peritonitis

Acute appendicitis with peritonitis (K35.2x) has an Excludes1 note for acute appendicitis without abscess (K35.80). The presence or absence of peritonitis is what distinguishes these codes. They describe the same acute episode at different severity levels : you cannot have it both ways in the same encounter. Pick one based on the documented clinical picture.

Example 3: Skull Fracture and Certain Traumatic Intracranial Injuries

Codes in the S02.xx range (fracture of skull) carry Excludes1 notes for certain traumatic intracranial injuries. The coding context : specifically, whether the intracranial injury is already captured within the skull fracture code : determines which code to use. Read the notes in your ICD-10-CM manual carefully for the specific subcategory.

Example 4: Pregnancy Codes and Their Postpartum Equivalents

Many codes in Chapter 15 (O00-O9A : Pregnancy, Childbirth, and the Puerperium) carry Excludes1 notes for their postpartum equivalents. Active pregnancy codes are not appropriate for postpartum encounters. Once a patient has delivered, the correct codes come from the postpartum range. Using an active pregnancy code postpartum violates the Excludes1 instruction and will affect claim adjudication.

Example 5: Initial vs. Subsequent Myocardial Infarction

Acute myocardial infarction codes (I21.xx) carry an Excludes1 note for subsequent MI codes (I22.xx). The rule: I22 applies when a new MI occurs within 4 weeks of a prior one. After the 4-week window, use I21 for any new event. You cannot code both I21 and I22 simultaneously : they are mutually exclusive by time frame.

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Examples 6-10: Excludes2 (Can Code Together)

Example 6: Irritable Bowel Syndrome and Functional Diarrhea

Irritable bowel syndrome (K58.xx) has an Excludes2 note for functional diarrhea (K59.1). These are clinically distinct conditions that can coexist in the same patient. If the physician documents both, both codes are appropriate on the same claim. The Excludes2 note is simply clarifying that K58.xx does not capture functional diarrhea on its own.

Example 7: Sleep Apnea and Sleep Deprivation

Sleep apnea (G47.3x) has an Excludes2 note for sleep deprivation (Z72.820). A patient can have both : and frequently does. If the record documents sleep deprivation as a separate concern, code it separately alongside the sleep apnea code. This is a common scenario in sleep medicine coding.

Example 8: Hypothyroidism and Iodine Deficiency Thyroid Conditions

Hypothyroidism (E03.9) carries an Excludes2 note for certain iodine deficiency-related thyroid conditions. If a patient has both conditions documented : for example, autoimmune hypothyroidism alongside documented iodine deficiency : both codes are reportable. The Excludes2 note signals that iodine deficiency thyroid conditions are coded elsewhere, not that they are prohibited when coexisting.

Example 9: Obesity and Overweight

Obesity (E66.x) has an Excludes2 note for overweight (E66.3). If the physician explicitly documents both obesity and overweight as distinct diagnoses : which does occur when a provider is monitoring weight status across two thresholds : both codes can be used. In practice, this scenario is less common, but it is technically permissible when both are documented.

Example 10: Allergic Rhinitis and Vasomotor Rhinitis

Allergic rhinitis (J30.xx) carries an Excludes2 note for vasomotor rhinitis (J30.0). These are two distinct pathophysiologic processes that can coexist. Vasomotor rhinitis is triggered by non-allergic stimuli (temperature, humidity, irritants), while allergic rhinitis is IgE-mediated. If both are documented, both are reportable. Code them separately.

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How CPC Exam Questions Test Excludes Notes

The CPC exam does not usually ask “what does Excludes1 mean?” directly. Instead, questions present a clinical scenario with two diagnoses and ask you to select the correct code set. The trap is that one of the answer choices will include a valid-looking pair that violates an Excludes1 note.

The most common question structures:

1. Patient with two documented diagnoses. One answer choice codes both : but they have an Excludes1 relationship. That answer is always wrong.
2. Patient with two documented diagnoses. The correct answer codes both : because the relationship is Excludes2, not Excludes1. Candidates who panic and exclude the second code get this wrong.
3. Scenario involving comorbidities in specific chapters (Chapter 15 pregnancy, Chapter 4 endocrine, Chapter 9 circulatory). These chapters have the highest density of Excludes notes on the exam.

Practical exam strategy:

When you see two diagnosis codes on the same claim in an answer choice, look up the Excludes notes in your ICD-10-CM manual. Do not assume. The notes are right there : open the book. On a real exam, this is a 30-second lookup that separates a correct answer from a wrong one.

For bundling rules on the CPT side, see the guide on NCCI bundling and modifier 59.

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For skin and procedure-level bundling rules, the CPT excision guidelines show how code structure affects which secondary codes can be reported alongside an excision.

Test your ICD-10 rules: try a free 5-question diagnosis coding drill.

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Sources

• CMS ICD-10-CM Official Guidelines for Coding and Reporting
• AAPC Blog: Use ICD-10-CM Excludes Notes
• ACDIS: Clarifying inclusion and exclusion notes
• CMA Docs: Coding Corner: Excludes1 and Excludes2

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