How to Prepare for ICD-10 Coding, Software Revisions

The implementation of ICD-10 will transform the practice of medicine itself.

The first major alteration to the International Classification of Diseases in decades is arriving.   Or, more accurately, it arrived in 1994, but only now is it about to arrive in the United States.  By law, on October 1, 2013, the billing and payment system of every healthcare provider and healthcare payer organization  in the United States must use the new ICD-10 codes.  The requirement applies to every provider and payer who is subject to the requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

This transformation from the current code to the new one is no small undertaking, but it is necessary if you want to bill and receive payments.  To be prepared, all diagnosis and procedural code systems need to be analyzed and updated, and employees trained. 

Unlike earlier changes in the Code, this one requires thorough and fundamental rewrite for implementation of the software systems used for billing and payment.  These changes are so significant that the government has established a temporary transition format for use during conversion to ICD-10. 

Indeed, because the current version of the Electronic Data Interchange data software, EDI 4010, cannot accommodate the ICD-10 system, the Department of Health and Human Services (HHS) is requiring the providers and payors to upgrade to the new EDI version, 5010, by January 1, 2012.

But the purpose of the change is not merely to upgrade to the latest information technology.  It is to revolutionize the Code itself in a way that will enhance the very practice of medicine, not just improve the efficiency of billing and payment procedures. 

The current Code has approximately 17,000 classifications of medical tests, diagnoses and procedures.  ICD-10, by contrast, has roughly 155,000, enabling—no, requiring—the provider to identify, with precision, the medical care provided, the result, and the expected care, if any, that will follow. 

If used to its full potential, it will serve as a quality-control mechanism, ensuring that the medical care being provided is within the norms for the circumstances.  The effect should be the significant reduction of medical oversights, errors in treatment, and unneeded tests and treatments. 

Or so it is hoped and expected.

The law itself will require only that providers and payers implement the system for purposes of billing. But the new system can and should be used to spur innovation not only in efficiency in billing and payment procedures but also in medical treatments.

It can detect problematic drugs and medical devices and can indicate necessary follow-up research or investigation, generally or specific to that patient. And it can assist medical researchers. A big advantage of ICD-10 is that nations all over the world are implementing it—some already have, and several more are on schedule to complete their transformation before the United States does—so providers, payors and researchers in most of the industrialized world will be able to review data. (The data will not identify the patient to anyone outside the access circle currently allowed under HIPAA, so there will be no impact on patient privacy.)

Implementation cannot be done within a few months. Nor is it expected that the deadlines will be extended again. They already were, by two years. It is critical that providers and payors that have not begun the transition do so now.

The Centers for Medicare and Medicaid Services (CMS) estimates that it will take the average organization between 18 and 36 months to make the transition from ICD-9. In early 2009 a four-year window for compliance was provided—a window that has now shrunk to little more than two years.

The systems requiring upgrade or replacement include claims payment, adjudication, and decision support systems; systems for the presentation of clinical content for the support of plans of care; reporting programs; and external interfaces.

Health and Human Services (HHS) estimates that implementing this change will cost providers $3 Billion, with costs running into 2017. The health insurance trade organization America’s Health Insurance Programs (AHIP) estimates that the implementation costs to payors will range from $38 million for small health plans (less than one million members) to $11 million for large plans (more than 5 million members). AHIP estimates that the total system-wide cost for insurers is likely to be in the $2-3 billion range.

The necessary training to use the system also is extensive. CMS has said that coders, code users and physicians will require varying levels of training. All coders will have to learn a program called ICD-10-CM, but hospital-inpatient coders will have to learn an additional program called IDC-10-PCS.

But this government-mandated expenditure is justified because the long-term benefits of the transition, in monetary savings and in improved patient care and medical research, will be substantial, in improvements in disease management, better understanding of health conditions and healthcare outcomes, and harmonization of disease and treatment monitoring and reporting worldwide--as well as more accurate and appropriate payments, fewer improper claims and fewer improperly-rejected claims. These are no small rewards.

But first the system must be implemented. Because of its complexity and technical operational requirements, completion before the January 1, 2012 and October 1, 2013 deadlines demands a substantial expenditure of money. And of time and forethought.

Increased “granulation” of information is a term used often to describe the effect and benefits of ICD-10, but even that term does not do justice to the nature of the changes.

It is clear that because the new code categories are so much more precise and the options so much more numerous than in the old generic code system, translation from old to new regarding any particular diagnosis, treatment or procedure will require the input of human analysis. It is a mistake to think it will be possible to use a software system to translate an old code into the new. The utility of translation software will be limited.

In sum, conversion to ICD-10 will provide a more precise billing and payment system and also serve as a mechanism by which to gain more in-depth insight into patient care and improve medical treatment. But implement as required by law is a major undertaking.

The sooner implementation begins the better the outcome will be, and cannot be delayed much longer. Time is running out for assessment, planning and implementation in order to complete the process by the new deadlines.

Marybeth Regan,  PhD, is an expert in disease and care management as they apply for Health  Information Management. She has written numerous articles on strategies for  care and disease management. She may be reached at Drmarybethregan@aol.com.

Beverly Mann is a  freelance editor.  She can be reached at BeverlyMann2@yahoo.com.