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It’s Official: ICD-10 Implementation Begins October 1, 2015

ICD-10 Implementation is Here(August 14, 2014):  On August 4, 2013, the Department of Health and Human Services (HHS) published a final rule that makes October 1, 2015 the official ICD-10 implementation compliance date for the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) for diagnosis coding, and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) for inpatient hospital procedure coding.   As the final rule specifically provides:

“This final rule implements section 212 of the Protecting Access to Medicare Act of 2014 by changing the compliance date for the International Classification of Diseases, 10th Revision, Clinical Modification (ICD– 10–CM) for diagnosis coding, including the Official ICD–10–CM Guidelines for Coding and Reporting, and the International Classification of Diseases, 10th Revision, Procedure Coding  System (ICD–10–PCS) for inpatient hospital procedure coding, including the Official ICD–10–PCS Guidelines for Coding and Reporting, from October 1, 2014 to October 1, 2015. It also requires the continued use of the International Classification of Diseases, 9th Revision, Clinical Modification, Volumes 1 and 2 (diagnoses), and 3 (procedures) (ICD–9–CM), including the Official ICD–9–CM Guidelines for Coding and Reporting, through September 30, 2015. DATES: These regulations are effective on September 3, 2014.”

I.  ICD-10 Implementation Has Been Marked by Repeated Delays:

On January 16, 2009, HHS announced that all “covered entities”[1], i.e., those subject to the Health Insurance Portability and Accountability Act (HIPAA), must transition from ICD-9 to ICD-10 for medical coding.  The implementation date for this move was October 1, 2013.  But this date was already two years behind the prior proposal of October 1, 2011.

In late 2011 and early 2012, three issues emerged that led the Secretary HHS to reconsider that initial compliance date for ICD-10.  First, the industry’s transition to the version 5010 electronic operating system necessary to accommodate ICD-10 was not proceeding as expected.  Second, health care providers expressed concerns that other statutory initiatives were stretching their resources.  Last, it became apparent that many in the industry simply were not ready for the ICD-10 transition.

Due to the lack of resources and readiness, HHS announced in August 2012 a delay of the implementation date for ICD-10.  This new compliance date was set for October 1, 2014.  As expressed in the final rule announcing the delay, this postponement was  “intended to give covered healthcare providers and other covered entities more time to prepare and fully test their systems to ensure a smooth and coordinated transition by all covered entities.”

However, ICD-10 implementation was delayed once again.  On April 1, 2014, the Protecting Access to Medicare Act of 2014[2] (PAMA) was enacted, which stated that the Secretary of HHS could not adopt ICD-10 prior to October 1, 2015.  Depending on which health care group you talk to, this latest delay may come as a relief or as another burden.

II.  Mixed Opinion on ICD-10:

ICD-10 sharply increases the number of codes used to define various illnesses, conditions and procedures to 155,000.  This is nearly 10 times as many codes as are currently in use under ICD-9.  The Centers for Medicare and Medicaid Services (CMS), the Federal agency in charge of maintaining medical codes, contends that ICD-10 will allow doctors to include more details in a patient’s medical record.  However, opinion on implementation has been varied from the start.

Hospital systems, commercial health plans, and large physician practices are largely in favor of the idea.  They contend that the new codes will make it easier to describe advanced surgeries and procedures that generally lead to higher reimbursement rates.  Furthermore, they have had the ability to invest time and financial resources in system upgrades, testing, training, and undertaking necessary changes to workflow processes.

As a result, delays in implementing ICD-10 has caused frustration among these proponents.  The American Health Information Management Association (AHIMA), a longtime advocate of ICD-10 transition, noted that the initial one-year delay in 2012 would cost the health care industry anywhere from $1 billion to $6.6 billion.

Health care providers and medical associations, on the other hand, have led the opposition.  They worry about the costs and complexity of implementing the new codes.  For example, many physician groups led the charge in opposition to the 2014 deadline, citing a host of potential problems. Those included the inability of many vendors of electronic health-record and practice-management systems to have their ICD-10 updated systems delivered in enough time for physicians and their staffs to have them installed; train themselves on how to use them; and have the claims generated by them adequately tested against the systems and rules of their health plans and claims clearinghouses.  Notably, the Centers for Medicare and Medicaid Services (CMS) warned from the beginning that the new coding system could cost the medical system $1.64 billion over fifteen years.

While the delays have caused the health care industry to remain in a constant state of limbo, it is largely agreed that providers of all types must be ready to utilize ICD-10.  Otherwise, the costs associated with the lack of preparedness could be excessive.  In fact, HHS acknowledged that there would be a cost avoidance of approximately $3.6 billion to nearly $8 billion as a result of two costly consequences that would occur if the original compliance dates had been retained.  These include (1) both health care providers and health plans being forced to manually process health care claims in order to obtain reimbursement, and (2) small health care providers would have to take out loans or seek other lines of credit in to provide ongoing health care in the wake of delayed reimbursements.

III.  Final Remarks on ICD-10 Implementation:

Given the various delays in ICD-10 implementation, it remains to be seen whether this new compliance date will remain firm.  Proponents like the AHIMA are pleased that HHS has set a new, firm date for implementation.

“We know that the industry has already invested considerable time and money in implementation. We have long advocated for a coding system that offers flexibility and specificity, enables us to properly assess healthcare services, understand public health needs, and get the best rate of return from our national investment in EHRs and meaningful use,” said AHIMA officials in a press release. “All along, AHIMA has urged our members to ‘stay the course’ of preparing for implementation.”

Yet, critics remain wary.  Steven J. Stack, President-elect of The American Medical Association, a longtime critic of ICD-10 implementation, had a different response.  “While the AMA appreciates that physicians have additional time to comply with ICD-10, we continue to have fundamental concerns about ICD-10 and its implementation, which will not be resolved by the extra time. The AMA has long considered ICD-10 to be a massive unfunded mandate that comes at a time when physicians are trying to meet several other federal technology requirements and risk penalties if they fail to do so.”

It is difficult to speculate whether this firm date is going to remain solid.  Nevertheless, given the substantial backing by HHS, CMS, and many big time players in the health care industry, even small providers should recognize that full implementation is inevitable.  As a result, you should have a solid plan in place to assist your practice in transitioning from ICD-9 to ICD-10.  Once this new system is in place, health care providers are likely to see future audits on behalf of the federal and state government, as well as third-party providers.  These audits will likely coincide with reimbursements to ensure that providers are following the proper protocols and procedures on coding.  A failure to transition will likely see many providers – most notably, those smaller practices – see their reimbursements diminished or even ceased.

If you have any questions on ICD-10 and transitioning your practice to the new system, and how it and future audits may affect your reimbursements, please feel free to call us today.  We would be more than happy to assist you with your health care compliance and audit needs.

Robert Liles Healthcare Attorney Robert W. Liles, M.B.A., M.S., J.D., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Liles Parker is a boutique health law firm, with offices in Washington, DC, Houston, TX, San Antonio, TX and the District of Columbia.  Our attorneys have decades of experience working on health law matters and cases.  We represent health care providers and suppliers around the country in connection with Medicare audits by ZPICs and other CMS-engaged specialty contractors.  The firm also represents health care providers in HIPAA Omnibus Rule risk assessments, privacy breach matters, State Medical Board inquiries and regulatory compliance reviews.  For a free consultation, call Robert at:  1 (800) 475-1906

[1] “Covered Entities” are defined in the HIPAA rules as (1) health plans, (2) health care clearing houses, and (3) health care providers who electronically transmit any health information in connection with transactions for which HHS has adopted  standards.

[2] Pub. L. No. 113-93.

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