The New ICD -10 Coding System - Implementation to be Delayed One Year

The HHS (Department of Health and Human Services) has recently announced a proposed rule that mainly aims at the adoption of a Standard for a Unique Health Plan Identifier (HPID). The rule will implement a number of administrative simplifications of the Affordable Care Act. It also brings in a change to the compliance date for ICD-10-CM and ICD-10-PCS medical data code sets.

According to HHS Secretary Kathleen Sebelius, “We are committing to work with the provider community to re-examine the pace at which HHS and the nation implement these important improvements to our healthcare system."

Reasons for the Change in Implementation Date

The HHS had published a final rule (74 FR 3328) on January 16, 2009 wherein the ICD-10-CM and ICD-10-PCS (ICD-10) code sets were adopted to replace the previous ICD-9-CM codes. The change from ICD-9 to ICD-10 code sets will increase the number of diagnosis codes from about 14,000 to 69,000.

The compliance date was set to be October 1, 2013. However, many provider groups had since then constantly expressed their concerns regarding their ability to meet this compliance date. A CMS survey had revealed that up to one quarter of healthcare providers were of the view that they would not be ready for the transition. They were worried that serious claim payment issues might arise in case they fail to be ready for the ICD-10 transition. The major problem faced by most providers was the difficulty they have had meeting HHS’ compliance deadline for the ASC (Associated Standard Committee)’s X12 Version 5010 standards for electronic health care transactions. For a smooth transition to the new medical code sets, all covered entities had to comply with Version 5010 and ICD-10. Failure to do so could most likely result in payment delays and returned claims. The HHS hopes that the deferment of the compliance date for ICD-10 would help providers as well as other covered entities to be fully prepared for the transition.

The Regulatory Impact Analysis (RIA) of the proposed rule estimates a cost avoidance of around $3.6 to nearly $8 billion. This cost avoidance is made possible by evading two consequences that may result if the compliance date remains at October 1, 2013.

• Healthcare providers and payers that are not prepared for the transition will have to process the submitted claims manually.
• Smaller providers will have to take loans or find other sources of income to continue providing services when payments are delayed.

Now, smaller practices will get more time to implement a plausible plan, improve their documentation and make sure that they get duly paid for their services.

Delay Likely to be Detrimental to Larger Service Providers

However, larger service providers such as hospitals and larger healthcare plans are more prepared to meet the ICD-10 requirements compared to smaller providers. This change in compliance date is rather frustrating to those entities that have strived hard to prepare for the transition. Many even think that the delay is more likely to be harmful than helpful. Hospitals that had already invested considerable resources and money for the impending transition are likely to suffer because they have to continue doing so for another year at the minimum. The one year delay is likely to add 10 to 30% to the total amount these healthcare entities have already invested in view of the transition. According to the HHS, this could result in an additional cost of $1 to $6.4 billion for these providers. Moreover, the uncertainty created by the delay could also result in the coding professionals and other staff losing sight of the importance of the proposed transition.