Talking in code: will a mandate to update the national medical coding system help health-care providers and minimize the coder shortage--or add significant costs for insurers and providers without benefits?

While the United States explores the possibility of updating its current medical coding system, those who use the codes debate the effects of the change. Some say moving from ICD-9-CM to ICD-10-CM for diagnosis codes and ICD-10-PCS for procedure codes is an inevitable change that the health-care industry can't do without, but others say the revised standard has no proven benefits and would be more costly for insurers and providers than preparing systems for the Year 2000 conversion.

"We won't disagree that there would be some cost to making the change, but we don't have a choice as a country," said Sue Bowman, director of coding policy and compliance for the American Health Information Management Association, a nonprofit association of more than 46,000 members that manage patient health records and databases for providers, health plans, governments and provider organizations. Bowman was one of five industry experts who participated in a Best's Review roundtable discussion of ICD-10, the 10th revision of the International Statistical Classification of Diseases and Related Health Problems.

"We don't see the benefit of it and aren't hearing from our users that it's necessary," said Debbie Kennedy, director of product management for Availity LLC, a Florida-based health-care information exchange and recipient of the 2003 A.M. Best E-Fusion Award.

ICD, as developed by the World Health Organization, is designed to promote international comparability in collecting, processing, classifying and presenting mortality statistics. ICD-10 was released officially by WHO in 1993 and has been implemented in many European countries. In 1999, ICD-10 was implemented officially in the United States for reporting the cause of death on death certificates, but it hasn't been implemented to submit insurance claims.

ICD-10-CM is the U.S. "clinical modification" to ICD-10 to facilitate its use for morbidity data. ICD-10-PCS--procedure classification system--was developed by 3M Corp. under contract to the U.S. Department of Health and Human Services.

In November 2003, the National Committee on Vital and Health Statistics, the public advisory body to the secretary of Health and Human Services, recommended the department move forward with rule making to adopt ICD-10-CM/ICD-10-PCS as standards under the Health Insurance Portability and Accountability Act of 1996 to replace the current uses of ICD-9-CM. If adopted, ICD-10-CM/ICD-10-PCS would have to be used on all HIPAA-compliant transactions, including insurance claims.

A Costly Result?

The Blue Cross Blue Shield Association fears that the insurance industry could bear the brunt from the transition to a new national code-set standard. The association, along with management consulting firm Robert E. Nolan Co., recently conducted a cost/benefit analysis of the transition. The analysis determined that moving to ICD-10-CM/ICD-10-PCS would have no proven benefits and would cost the industry between $6 billion and $14 billion to migrate systems. Nolan projected the per-entity cost for multiregional health plans could bc $10 million to $20 million, and for larger hospitals, between $1.5 million and $5 million. The analysis, which includes the impact on both payers and providers, examines costs of implementing systems; lost productivity; training; reworking and errors; renegotiating agreements to reflect changes in the definition of clinical services; and long-term loss of productivity observed in international experience.

Professional organizations, such as the American Hospital Association, the Federation of American Hospitals and the American Health Information Management Association, are pushing for the mandate. AHIMA's Bowman said the push is coming from the bottom up within health-care communities working with "outdated and obsolete coding systems."

Last year, AHIMA called upon Health and Human Services--the code-set maintenance organization for the United States--and the health-care industry to expedite the adoption and implementation of ICD-10-CM and ICD-10-PCS code sets, rules and guidelines. The association said that continued use of ICD-9-CM as a medical code-set standard threatens to jeopardize the ability of the U.S. health-care industry to effectively collect and use accurate, detailed health-care information for the betterment of domestic and global health care.

AHIMA also argues ICD-9 doesn't meet the requirements for code set standards stipulated by HIPAA or the characteristics of a procedural coding system outlined by the National Committee on Vital and Health Statistics.

Other organizations are raising their eyebrows, however, about the value ICD-10-CM/ICD-10-PCS would bring to the U.S. health-care system. Merit Smith, vice president of health-care practice for Nolan, believes the proposed change isn't even publicly recognized. "At the state and national levels, many professional organizations and their membership aren't even aware of it, aren't following it, don't have a position on it and don't have staff assigned to it," Smith said. Instead, he deems the updated code set as a more political "Beltway issue."

ICD-10 differs from ICD-9 in several ways. In addition to some fairly minor changes that have been made in the coding rules for mortality, ICD-10 has seven-digit alphanumeric codes rather than the current three- to five-digit numeric code; some chapters have been rearranged; some titles have changed and conditions regrouped; and it has almost twice as many categories as ICD-9, according to the U.S. Centers for Disease Control and Prevention. The CDC said ICD-10-CM features improvements in content and format over ICD-9-CM and ICD-10, including the addition of information relevant to ambulatory and managed-care encounters; expanded injury codes; the creation of combination diagnosis/symptom codes to reduce the number of codes needed to fully describe a condition; the addition of a sixth character; incorporation of common fourth- and fifth-digit subclassifications; laterality (a classification specifying left and right sides of the brain and body); and greater specificity in code assignment.

Many people agree that ICD-10-CM/ICD-10-PCS allows for greater specificity, but the issue is whether providers actually would report that level of specificity and whether it really is necessary, said Theresa Doyle, legislative director of policy for the Blues Association. The number of coding categories in the proposed new system would increase significantly. The 13,000 codes now under ICD-9-CM for diagnosis would grow to 120,000 codes in ICD-10-CM, and the 4,000 codes of ICD-9-CM procedures would increase to 200,000 with ICD-10-PCS.

Technology Implications

In addition to added costs, the Nolan assessment of ICD-10 found that a change to the coding system would likely result in backlogs and delayed payments because of the increased time coders would need to properly code claims. Delayed payments would cause enormous cash-flow problems and gaps in data for payers, according to the Blues study. Other consequences of such a slowdown would be increased inquiries from patients and providers, short-term borrowing costs and potential under- and overpayments.

ICD-10-CM/ICD-10-PCS may bring other technological challenges as well. "One of the things we see as an immediate red flag is that the new code set, which can be up to seven characters, isn't supported in NSF [National Standard Format]," said Availity's Kennedy. Availity, she said, continues to accept and enrich NSF from many of its users, creating compliant X12 HIPAA transactions. X12 is a standard for defining electronic data interchange transactions from the American National Standards Institute.

"We're concerned about what the new system does to NSF and that it will be modified in the same time line," Kennedy said. "Also, unless there's significant effort around mapping between 9 and 10, it will cause everyone to have ICD-9 available for historical reporting and maintain ICD-10 for their updates going forward." Mapping is the process of finding an equivalent code between two classifications, enabling interpretation of one classification in terms of another, according to the Australian National Coding Centre.

AHIMA's Bowman said a robust mapping from ICD-9-CM to ICD-10-CM/ICD-10-PCS would be provided by the federal government as part of the transition to a new coding system.

First Things First

The first step for this country is to develop an information technology road map to determine where the system is going and how to get there in the most cost-effective and efficient way, said Doyle of the Blues Association. "We need to evaluate the cost and benefits of ICD-10-CM/ICD-10-PCS in conjunction with the road map and other demands on the industry," she said. "At this point, we really don't understand what the full ramifications are of moving to this wholesale replacement of the current coding system, such as who the winners and losers are, because none of this has even been tested."

Jim Daley, HIPAA program director for Blue Cross & Blue Shield of South Carolina, said the industry also must concentrate efforts first around other implementations, such as HIPAA, before looking to revise the national coding system. "One of the things we need to accomplish after spending several years and tens of billions of dollars is to just get back to where we were before HIPAA, which is having a good percentage of transactions sent via EDI," he said. "We've upset the industry and spent a lot of money with no tangible return."

But AHIMA's Bowman said the proposed coding system issue is one the country can't ignore. "When we think of all the things that have changed in the practice of medicine and our health-care systems in the last 30 years, it is really no wonder that ICD-9-CM has become obsolete and outdated as a coding system to support where we are in health care today," she said. Bowman also said that putting the change on hold would result in additional costs, particularly if those costs are added onto the anticipated costs of proposed electronic health-record initiatives. "The more systems and electronically sophisticated applications you have, the most costly it will be to incorporate ICD-10," she said.

Some experts also believe there may be a correlation between ICD-10-CM/ICD-10-PCS and how local physicians operate. For instance, Bowman said ICD would help eliminate the significant amount of time it now takes to send medical-record documentation to support claims. In addition, she said the move to ICD-10-CM/ICD-10-PCS may help nullify the current national coder shortage. "It's very difficult to code in ICD-9 because there are many variable conditions being lumped into the same code, so coders have to scratch their heads about which of the bad choices is the best bad choice," she said. AHIMA's recent field testing results of ICD-10-CM, which included responses from physician office practices, shows that the level of detail actually improves coders' productivity, because codes are detailed enough that at least they can figure out whether they're in the right place, which currently isn't true in ICD-9, she said.

Nolan's Smith said he doesn't believe the industry is in dire need of a solution to send supporting medical records. "Only about 1% to 2% of medical records are actually requested by insurers, and in many cases they're requested for underwriting purposes for individual insurance policies during the contestability phase," he said. "In fact, it really doesn't have to do with coding, but rather with underwriting and risk-management characteristics of a product." Therefore, to justify a massive expenditure for something that happens in only a small number of transactions is another example of a benefit that isn't put into context or into a numerical relationship where it makes sense to do so, he added. "There is justification but it captures that lack of quantification of benefit that continues to be a huge red flag."

Is adoption of ICD-10-CM/ICD-10-PCS eventual? Not necessarily, said Daley. "There is need at some point to have some extra codes for new technologies and things of that nature, but not necessarily related to ICD-10," he said. "We have to look at our priorities. Would you adopt something you think will be in an electronic health record before you know what the EHR looks like?" The industry has to examine the whole process of care delivery and how that relates to the billing and reimbursement process in an integrated fashion to determine what is the most appropriate way to proceed, he said. Then it should build a road map, have a workable plan and prioritize what steps should come first.

Some observers think ICD-10-CM/ICD-10-PCS is an unnecessary step because the industry has yet to unleash the true value of ICD-9. "I don't think ICD-9 is being fully enforced to the level of detail available. We're seeing the people typically doing coding in physicians' offices aren't really struggling with ICD-9 unless they are in an overcomplicated field," said Availity's Kennedy. Availity is looking at ways to expedite a mechanism for attachments to be sent with originating claims--something Kennedy says is even more important than switching the code set.

Participants

Sue Bowman

Director of Coding Policy and Compliance, American Health Information Management Association

"When we think of all the things that have changed in the practice of medicine and our health-care systems in the last 30 years, it is really no wonder that ICD-9-CM has become obsolete and outdated."

Jim Daley

HIPAA Program Director, Blue Cross & Blue Shield of South Carolina

"There is need at some point to have some extra codes for new technologies and things of that nature, but not necessarily related to ICD-10."

Theresa Doyle

Director of Legislative Policy, Blue Cross Blue Shield Association

"At this point, we really don't understand what the full ramifications are of moving to his wholesale replacement of the current coding system, such as who the winners and losers are, because none of this has even been tested."

Moderator

Debbie Kennedy

Director of Product Management, Availity. Availity was the recipient of the 2003 E-Fusion Award

"I don't think ICD-9 is being fully enforced to the level of detail available."

Merit Smith

Vice President of Health-care Practice, Robert E. Nolan Co.

"At the state and national levels, many professional organizations and their membership aren't even aware of it [proposed change to revised coding system], aren't following it, don't have a position on it and don't have staff assigned to it."

Paul C, Tinnirello

Executive Vice President/Chief Information Officer and E-Fusion Conference Chairman A.M. Best Co.