Medical Economics - January 2009
Tex Med . 2009;105(1):39-42.
By Ken Ortolon
Medicare officials are on a fast track to adopt a massively expanded set of diagnostic and procedure codes they say will accommodate a host of new diagnoses and procedures, provide greater detail on electronic transactions, and support quality reporting and other activities.
But just about everybody who will have to use the new codes says the U.S. Centers for Medicare & Medicaid Services (CMS) needs to slow down.
Physicians, health insurance companies, claims clearinghouses, and other stakeholders all support the transition from the current ICD-9 code set, which includes 17,000 codes, to ICD-10, which has some 155,000 codes. But they all warn that pushing to implement the new codes by a proposed October 2011 deadline could lead to chaos.
"If people thought that Y2K was going to be a big systems problem, this is going to blow it out of the water," said Houston ophthalmologist Keith Bourgeois, MD, chair of Texas Medical Association's Council on Socioeconomics. "All of our practice software is going to have to be revamped."
"This is a massive administrative undertaking for physicians and must be implemented in a time frame that allows for physician education, software vendor updates, coder training, and testing with payers - steps that cannot be rushed and are needed for a smooth transition," added Joseph Heyman, MD, chair of the American Medical Association Board of Trustees.
The switch could cost physicians thousands. A recent survey (see "ICD-10 Expensive, New Study Shows") pegs the implementation price tag at $83,290 for a three-physician practice and more than $2.7 million for a large, 100-physician practice.
Some health plan executives say the country could face the "prospect of total mayhem" if CMS does not allow adequate time for all stakeholders to prepare.
"If it's not done the right way, it's going to be inevitable that payments are going to get delayed, there are going to be some missed payments, there's going to be the opportunity for fraud," said Ross Blackstone, director of media and public relations for Health Care Service Corp., the parent company of Blue Cross and Blue Shield of Texas.
Tossing the Obsolete
In late August, CMS proposed full implementation of the International Classification of Diseases, Tenth Revision (ICD-10) codes by October 2011. In a separate rule, the agency also proposed that the health care industry adopt the newest Health Insurance Portability and Accounting Act (HIPAA) electronic transaction form - the ANSI X12 standard, Version 5010 - by April 2010.
CMS says transition to ICD-10 is necessary because the ICD-9, used since 1979, is obsolete. ICD-9 cannot accommodate additional codes for new diagnoses and procedures and does not provide the amount of detailed information needed to support "value-based" health care purchasing and other initiatives, officials say.
CMS says the increased detail and specificity of ICD-10 will significantly improve coding of primary care encounters, external causes of injury, mental health disorders, and preventive health. ICD-10 also provides more detail on socioeconomic issues, family relationships, ambulatory care conditions, problems related to lifestyle, and the results of screening tests. It has more space to accommodate future expansions due to advances in medicine and medical technology and allows the coder to specify which organ or part of the body is involved when the location could be on the right, on the left, or bilateral.
Finally, CMS says ICD-10 will better support reporting of quality data, ensure more accurate payments for new procedures, improve disease management, and allow the United States to compare its data with international data on the spread of disease and treatment outcomes. Most World Health Organization member nations have used ICD-10 codes since the mid-1990s.
The reaction to the accelerated time line for adoption was immediate and negative.
"CMS's efforts to go full-steam ahead on the transition to the ICD-10 coding system without first pilot-testing the newest HIPAA electronic transaction form that will be needed to process claims boggle the mind," Dr. Heyman said in August. He added that the "timetable of just three years for simultaneous implementation of these two new major systems is woefully inadequate, and CMS is setting the stage for major implementation problems."
In a report to the TMA House of Delegates in May, the TMA Council on Socioeconomics recommended supporting ICD-10 adoption but only after implementation of the 5010 formats. The council also recommended waiting at least three years between implementation of 5010 and ICD-10.
Those recommendations, however, were returned to the council after Mansfield neurologist Robert McMichael, MD, argued that the report did not adequately address implementation problems.
"Implementation has not been addressed, not at our level, not at the clearinghouse level, not at the insurance company level, and not at the federal level," Dr. McMichael said. "In order to make this work, we have to deal with the old claims and the new claims. That means we have to be able to deal on our software simultaneously with ICD-9 and ICD-10 codes. The clearinghouses have to be able to handle both, the insurance companies handle both, and Medicare handle both simultaneously on Day 1."
TMA joined AMA and other medical groups in sending a letter to Health and Human Services (HHS) Secretary Michael O. Leavitt asking that HHS:
- Provide at least 36 months to adopt and implement 5010 from the date of publication of the 5010 final rule to accommodate all levels of testing; and
- Require ICD-10 adoption no sooner than 60 months following publication of the 5010 final rule and after 5010 industry readiness levels have reached at least 95 percent.
"Given HHS's failure to fully consider the nature and extent of the ICD-10 transition, we strongly recommend that HHS support the recommendations and stakeholder input provided by NCVHS [National Committee on Vital and Health Statistics] and others on the implementation process and time line needed for transitioning to 5010 and ICD-10," the letter said.
Nancy Reed, director of clearinghouse solutions for claims clearinghouse Availity LLC, says the short time line for implementing both ICD-10 and the 5010 transaction form makes little sense when the health care industry is still trying to deal with issues arising from the national provider identifier.
"These are two very substantial legislative requirements, and they will have significant impact to all of the users," Ms. Reed said. "Instead of rushing in, we feel like we need to take some time and make sure that we do it correctly and thoroughly."
Ms. Reed says CMS did not include any development time for payers and clearinghouses to update the tools they've created to make claims submission easier.
"A lot of vendors and clearinghouses have created user-friendly screens that physicians can go to on our portal and be able to enter the information and then it generates the transaction on the backside," she said. "So anytime a version changes, or there are changes to the data content requirements, we have to evaluate every one of our screens to see if we need to add things, subtract things, make things larger, or make them smaller."
Getting Up to Speed
Other stakeholders say they need more time to train physicians and coders in using the new codes and for software vendors to update their software to accommodate the ICD-10 codes, which have seven digits instead of the five-digit ICD-9 codes.
The Medical Group Management Association (MGMA) estimates that 95 percent of medical practices will have to purchase software upgrades for their practice management systems or buy all new software. A survey conducted by the MGMA Legislative and Executive Advocacy Response Network also found that 63.5 percent of practices would have to purchase code-selection software, while 83.5 percent of respondents said they did not think public or private health plans would be ready to accept claims with ICD-10 codes by October 2011.
"As we have seen with the protracted implementation of other requirements of HIPAA, such massive system and workflow changes necessitate coordinated actions among medical groups and their vendors, clearinghouses, and health plans," said William F. Jessee, MD, FACMPE, president and chief executive officer of MGMA. "CMS should have instituted pilot-testing in a broad array of clinical settings before publishing the rule to fully ascertain the impact of ICD-10 on the health care system. It is a recipe for disaster to force such a change without pilot-testing and allowing sufficient time for implementation."
NCVHS, CMS's own advisory panel, has recommended at least two years for implementing the 5010 transaction standard, with three more years after that for ICD-10 implementation.
While the time line is a major concern for all stakeholders, AMA and TMA officials say the high price tag for ICD-10 implementation also is a concern for physicians.
"It's going to cost physicians and hospitals huge amounts of money because all of the billing software runs on the former language of the ICD-9," said Dr. Bourgeois.
Temple cardiologist Jim Rohack, MD, AMA president-elect, says the cost of new software and physician and staff training will be a big hit for physicians who are just "trying to make it from day to day" to maintain the financial viability of their practices.
The RAND Corp. has estimated that ICD-10 implementation will cost between $425 million and $1.15 billion in one-time costs for system changes and training for physicians, other providers, payers, and vendors, plus between $5 million and $40 million per year in lost productivity.
The public comment period on the proposed rules for both ICD-10 and the 5010 standard closed on Oct. 21. A CMS spokesman says the agency hopes to issue final rules on ICD-10 and 5010 implementation before the Bush administration leaves office in January.
Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email at Ken Ortolon.
ICD-10 Expensive, New Study Shows
Adopting the ICD-10 code set by 2011 would dramatically increase costs for physician practices and clinical laboratories, according to a study released in October by a broad group of physicians and other health care organizations.
They urge federal officials to reassess their plan to rapidly adopt ICD-10 and extend the implementation time. Their study concluded that the costs associated with implementing ICD-10 in such a short time frame "are markedly higher" than what the Centers for Medicare & Medicaid Services (CMS) estimates and "will place a major burden on providers, taking valuable time away from their patients and straining other resources needed to invest in health information technology."
CMS has estimated that implementation of ICD-10 will cost $1.64 billion during the period from 2009 through 2023. That total includes $137.2 million in system changes for providers, $10.98 million in lost productivity in physician practices, and $82.2 million for physician training.
The study, conducted by Nachimson Advisors, estimates the typical 10-physician group practice would spend $285,240 implementing the new mandate. These expenses include:
- Training, $4,745;
- New claim form (superbill) software, $9,990;
- Business process analysis, $12,000;
- Practice management and billing system software upgrades, $15,000;
- Increases in claim inquiries and reduction in cash flow, $65,000; and
- Increased documentation costs, $178,500.
For a small, three-physician practice, the total cost to implement ICD-10 is estimated to be $83,290, and for a large, 100-physican practice, more than $2.7 million.
In the study, Nachimson Advisors said a large national laboratory estimated its up-front cost of implementing ICD-10-CM to be approximately $40 million, including information technology and education costs. This laboratory expects the implementation to take three to four years after implementation of the 5010 version of the HIPAA standard transactions are complete. However, Nachimson says, implementing ICD-10-CM will permanently increase operational costs for large clinical laboratories due to the ongoing personnel expense associated with hiring hundreds of dedicated, certified translators.
Organizations that sponsored the study include the American Medical Association, Medical Group Management Association, American Clinical Laboratory Association, American Academy of Dermatology, American Academy of Professional Coders, American Association of Neurological Surgeons, American Association of Orthopaedic Surgeons, American Optometric Association, American Physical Therapy Association, and American Society of Anesthesiologists.
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