HHS sets date for switch to ICD-10

In a move that heralds sweeping change in how medical bills are coded, the Department of Health and Human Services has announced a proposal to begin using ICD-10 code sets effective Oct. 1, 2011.

The new coding version, used in most nations, would replace the ICD-9, which has been used in the United States for about 30 years.

HHS published the proposal in the Federal Register last month and will take comments on the proposed shift until October 21.

“They have a lot of specifics in the rule that they’re seeking comments on,” said Sue Bowman, director of coding policy and compliance for the American Health Information Management Association.

Health and Human Services Secretary Michael Leavitt said ICD-10 codes are key to supporting an electronic healthcare system.

"We are taking a giant step forward toward developing a healthcare system that focuses on quality and affordability through the implementation of health information technology," he said. "The greatly expanded ICD-10 code sets will enable HHS to fully support quality reporting, pay-for-performance, bio-surveillance and other critical activities. Conversion to ICD-10 is essential to development of a nationwide electronic health information environment, and the updated X12 transaction standards are a critical step in the implementation of these new codes."

HHS also has proposed adopting the updated X12 standard, Version 5010, and the National Council for Prescription Drug Programs standard, Version D.0, for electronic transactions such as healthcare claims. Version 5010 is essential to the ICD-10 codes.

Many experts view ICD-9 as outdated because of its limited ability to accommodate new procedures and diagnoses. ICD-9 contains 17,000 codes and is expected to start running out of available codes next year.

The ICD-10 code sets contain more than 155,000 codes and accommodate a host of new diagnoses and procedures. The additional codes will help in the implementation of electronic health records because they will provide more detail in the electronic transactions, proponents say. This granularity will also help to identify specific health conditions.

“Now is the right time to move forward with the transition from ICD-9 to ICD-10,” said Centers for Medicare and Medicaid Services Acting Administrator Kerry Weems. “We recognize that the transition to ICD-10 will require some upfront costs, but each year of delay would create additional costs, both because of the limitations of ICD-9 and because of the need to employ the greater precision that ICD-10 codes provide to support value-based purchasing of healthcare and other initiatives.”

Not all industry groups favor the shift to ICD-10. In the past, groups as diverse as the Blue Cross and Blue Shield Association and the Medical Group Management Association have voiced concerns over the transition to the new code set.

The workload for implementation will fall disproportionately within the industry, said Brenda L. Gleason, president of M2 Health Care Consulting in Washington.

“The changeover of systems by public and private payers accounts for the greatest portion of the cost of the new rule, but the brunt of the pain of switching will be borne by those who have more patient interaction – physicians and billing administrators,” she said.

A 2004 RAND study suggested that the cost of moving to ICD-10 could create a one-time charge of $225 million to $700 million, although most large organizations have already factored costs into their planning, Gleason said.

“Even if a completed revamped system is in place and running smoothly, it will take some time to retrain physicians and coders who know their ICD-9s like the back of their hands,” she said. “However, the ICD-10 codes can save hundreds of millions of dollars if the codes are used and used correctly.”

New forms, such as superbills and screening questionnaires, also will have to be revised to accommodate the new code set, said Robert Borchert, coding expert and business process improvement expert for Altarum, a Washington-based research organization. And at least at the start, providers will depend on insurance companies and Medicare for proper reimbursement for services.

The ICD-10 code sets proposed rule would concurrently adopt the International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) for diagnosis coding, and the International Classification of Diseases, Tenth Revision, Procedure Coding System (ICD-10-PCS) for inpatient hospital procedure coding. The new codes would replace the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) Volumes 1 and 2, and the International Classification of Diseases, Ninth Revision, Clinical Modification (CM) Volume 3 for diagnosis and procedure codes, respectively.

Updated versions of current HIPAA electronic transaction standards require the use of the ICD-10 code sets for claims, remittance advice, eligibility inquiries, referral authorization and other widely used transactions.

Under the updated transaction standards proposed rule, compliance with Version 5010 (healthcare transactions) and Version D. 0 (pharmacy claims) would be required by April 1, 2010.

Bernie Monegain also contributed to this story