CEO SUMMARY: Even though the transition from ICD-9 to ICD-10 will not be required until 2011, laboratories and pathology groups should have a transition plan in place. ICD-10’s 155,000 seven-digit codes will replace the 17,000 five-digit codes of ICD-9. Because of major changes in the design of ICD-10, extensive training of laboratory coders will be necessary to ensure a smooth implementation. Referring physicians and their staff must also be trained and ready for ICD-10 if labs are to minimize denied claims.
THIS SUMMER, the Department of Health and Human Services (HHS) proposed to make the International Classification of Diseases, Tenth Revision (ICD-10) code sets (ICD-10) effective on October 1, 2011.
This proposal was met with considerable opposition by the payer community. Effective lobbying may lead to a further delay in implementation of ICD-10. But that does not change the fact that laboratory administrators and pathologists should have ICD-10 implementation on their radar screen. There are powerful forces at play that encourage U.S. adoption of ICD-10.
For example, since ICD-10 was finalized in 1992, most developed nations already use it. That puts the United States behind in producing the type of healthcare data that is useful in advancing evidence-based medicine (EBM) and other important health data sets.
Also, work is progressing on ICD-11. As early as next year, the first draft of the ICD- 11 system may be released. Expectations are that ICD-11 will be published by 2015. As a side note, the World Health Organization has already announced that Web 2.0 principles and capabilities will be incorporated into ICD-11.
These facts illustrate why health policy-makers are under pressure to introduce ICD-10 in the United States. This country is as much as 15 years behind other countries in its use of ICD-10. And, every year that it delays implementing ICD-10, the United States faces the possibility that it could be two generations behind, once ICD-11 is ready for adoption.
“Labs can expect a variety of complications when implementing the systems required to comply with ICD-10,” noted Lâle White, Founder and Executive Chairman of XIFIN, Inc., a company in San Diego, California, that specializes in laboratory accounts receivable and financial management operations. “We fully expect to see a wave of claims rejections when the new system goes into effect.
“Lab administrators and pathologists must address this issue in three dimensions,” continued White. “One, every laboratory’s information systems must be changed to account for the new format (3 to 7 characters) and associated editing functionality for medical necessity, CCIs, and OCEs. Two, coding staff will need training in how to use the new ICD-10 codes. Three, labs must help referring physicians prepare for ICD-10 implementation. Physicians and their staffs will require training in how to use the new code sets and how to comply with updated medical necessity rules.
“One caution about the new ICD-10 system,” observed White. “It is designed to be a richer set of data. That means carriers will have more tools for monitoring fraud, because the system allows for better edits for diagnosis/CPT code combination errors. Also, because much more information is associated with each code, ICD-10 coding can be used to implement pay-for-performance criteria.
Initial Problems For Labs?
“Although there is much discussion about better, cleaner, and faster reimbursement because of ICD-10, I see more problems for labs in the initial phases of implementation because more claims are likely to be rejected,” she commented. “As medical necessity and coding edits become more complex, the number of rejections increases. That means laboratories will have to work harder to clean up rejected claims and to do more physician training.
“In the past, when coding changes were implemented, the level of denials increased. Further, labs have struggled for years to lower the denial rate from missing and incomplete diagnoses provided by physicians,” White warned. “That is why moving to ICD-10 could be a perfect storm for some period of time. Payers currently use more edits. Because IDCl-10 makes it possible for enhanced edits, and because ICD-10 requires more complicated diagnosis information, these factors are likely to result in more denials of laboratory claims.
“With ICD-10, labs will also be challenged to ensure that both laboratory staff and referring physicians are prepared for the new codes,” added White. “Labs will need to determine if they have sufficient data to accurately translate physicians’ nar- rative diagnosis descriptions into the proper ICD-10 code. The complexity and increased specificity of the new codes will not facilitate effective coding by lab staff and will likely require software solutions at the source of the information.
A Challenge for Labs
“Implementation of ICD-10 codes is scheduled to go live in 2011,” noted White. “Today, this seems like plenty of time. However, these things seldom go as planned. Plus, human nature is to wait until the last minute to prepare. We know from experience that the system always encounters problems. For example, during the transition to the new National Provider Identification (NPI) numbers that took place earlier this year, most labs experienced plenty of problems getting accurate, timely payment for claims they submitted.”
White observed that the Medicare program has a significant amount of work to do before it is ready to implement ICD-10. “For its part, the federal Centers for Medicare & Medicaid Services (CMS) needs to make a number of changes before ICD-10 can be successfully implemented,” she said. “For a starter, CMS will need to revise its national coverage determinations (NCDs) just as local Medicare carriers will need to revise their local coverage determinations (LCDs).
“Next, CMS must update its outpatient code edits. These identify inconsistencies between the gender of a patient and a diagnosis to accommodate the new diagnoses and new more specific codes contained in ICD-10,” explained White. “The Correct Coding Initiative (CCI) also will need revisions.”
New HIPAA Standards
“Another important issue is the serious systems changes required to accommodate ICD-10 codes under the Health Insurance Portability and Accountability Act (HIPAA),” she stated. “Under HIPAA standards, we will move from what are called the HIPAA 4010 transaction standards to HIPAA 5010.
“Federal officials have worked for some time on the transition to HIPAA 5010, yet it is still not fully ready,” observed White. “At the same time, some payers have yet to implement all of the 4010 transaction standards, despite regulatory compliance requirements. Many payors still do not provide a fully compliant electronic 835 remittance file, claims status files, or standard eligibility transactions.
“For all these reasons, our healthcare system has plenty of work to do before a successful implementation of ICD-10 can take place,” said White. “This holds true for laboratories and pathology groups. Therefore, it makes sense that labs should join other providers in requesting that the implementation date be pushed back into 2012.”
THE DARK REPORT observes that, while October 1, 2010 is more than 36 months away, the work required to ensure a smooth transition is extensive. Not only must labs train staff on the details and nuances of ICD-10 coding, But labs must also ensure that all referring physicians have the requisite systems, a thorough understanding of the new code sets, and training in how to use them properly.
Transition from ICD-9 to ICD-10 Will Require Extensive Preparation by Labs and Path Groups
REGARDLESS OF WHETHER THE IMPLEMENTATION DATE for the new ICD-10 codes remains 2011 or is moved back to 2012, laboratories and pathology groups have plenty of work ahead.
“ICD-10 codes will bring plenty of benefits once implementation is achieved,” predicted Lâle White, Founder and Executive Chairman of XIFIN, Inc., based in San Diego, California. “But it will take much preparation and training for laboratories to make a successful transition from ICD-9 to ICD-10.”
“ICD-10 codes offer more precision,” she said. “There are 17,000 codes in ICD-9. By contrast, ICD-10 contains more than 155,000 codes. These new codes are seven digits, rather than the current five digits.
“This enriched set of 155,000 codes will initially complicate coding for physicians, despite the insistence by some observers that coding will be easier,” White advised. “It also explains why re-education is required for everyone who does coding—from the ordering physician’s office all the way to the coders within a lab.
“Currently labs don’t actually code the disease states,” she explained. “They translate verbiage provided by an ordering physician into an ICD-9 code. Once ICD-10 is implemented, doing that translation will be more difficult because a more extensive amount of narrative will be needed for a lab to do the proper translation.
“In fact, moving to ICD-10 may end the practicality of their being able to do this translation,” she added. “Because of this complexity, it may turn out that the onus on providing the right diagnosis code will be on the referring physician.
“Since it will be more difficult to do these translations, lab coders will have to be more knowledgeable about anatomy, disease states, and diagnoses than they are today because ICD-10 is more complex,” she said.
“The complexity and the increased number of codes available in ICD-10 means that both physicians’ offices and labs will need to rely more heavily on electronic tools to do diagnosis translations instead of looking up codes in manuals as they do now,” she predicted. “That is a likely outcome and, of course, using electronic tools will make this work easier for some people and over time it should contribute to coding that is more accurate and more consistent.”