Argenta Advisors has contributed a number of articles to the MedTech Intelligence.(www.medtechintelligence.com). The article below appears as first published by MedTech Intelligence

Transition to ICD-10: Potential Challenges & Benefits for U.S. Payers

​At this point, many people in the industry are familiar with the current ICD-9 code set and are aware that it is no longer considered viable for today’s treatment, reporting and payment processes, as it does not accurately reflect advances in medical technology and knowledge. Although the United States’ conversion to the ICD-10 code set is not without its challenges for the stakeholders involved in the process, there are opportunities to be gained through the use of this new code set for improvements in critical areas of medicine such as the capturing, reporting and analysis of more accurate clinical information for the benefit of individual patients as well as entire patient populations.

Most of the information I have seen in the lead up to the ICD-10 conversion has focused on the process that healthcare providers must go through in preparation for the October 1, 2015 conversion deadline. And this is understandable, since there is considerable work and expense involved in the transition for most of the provider community. However, I thought it would be interesting to take a brief look at some of the issues for payer organizations in the conversion to ICD-10.

First, the requisite cursory overview of the International Classification of Diseases (ICD) code set. At a high level, the International Classification of Diseases is a system developed by the World Health Organization (WHO) that uses a common coding language to report, accumulate and compare health care information within organizations, countries or across nations. On a more basic level, the ICD-10 code set (the 10th revision of the code set) will perform the functions of the current ICD-9 (9th revision), which was developed more than three decades ago to support medical necessity for services performed and establish payment for inpatient services. These functions are accomplished through ICD-10-CM codes, used in documenting diagnoses, and ICD-10-PCS codes, used to code hospital inpatient admissions. However, the ICD-10 code set expands these codes significantly and will allow for patient diagnoses as well as surgical and nonsurgical procedures performed on an inpatient basis to be identified at a much more granular level.

As mentioned, the WHO developed the ICD system, which includes the diagnosis code set. However, the U.S. National Center for Health Statistics (NCHS) altered this system specifically for the U.S. (known as ICD-10-CM). The U.S. Government also created the ICD-10-PCS system for capturing inpatient procedures, and the Centers for Medicare and Medicaid Services (CMS) are tasked with the development and ongoing maintenance of the ICD-10-PCS code set.

The ICD-10 code set was mandated under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) for all providers, payers and healthcare organizations covered by HIPAA. Originally, the Department of Health and Human Services (HHS) sought to transition the U.S. healthcare system to ICD-10 in October 2011, but this was postponed due to “grave concerns” expressed by the American Medical Association (AMA) and more than 100 professional physician societies related to the lengthy, complex and costly process required for stakeholders to make the transition.

And the conversion process has been lengthy, complex and costly for nearly all stakeholders involved. This is due to the fact that the diagnosis code set is designed to capture more specific disease etiology, anatomic site and severity—taking the number of available diagnosis codes from approximately 14,000 to 68,000. Likewise, the greatly expanded inpatient procedure code set, designed to identify body system, body part, procedure and products/devices used to perform a procedure, will take the current procedure code set from roughly 4,000 to 87,000 possible codes.

As we near the implementation date for the ICD-10 conversion, payers have had a great deal of work to perform in their attempt to address all possible issues from the very high level systemic program and policy issues, to the very low level including specific issues that can and will arise at the individual patient claim level. Challenges for the payer community require a great deal of planning and strategy in order for the transition to be the most efficient and least disruptive to the payer’s organization, but also to the providers (individuals and institutions) in the payer’s network and the patients those providers serve.

One challenging aspect of the conversion requires payers to coordinate with hardware and software vendors to ensure that all infrastructure issues are being addressed. Information systems of such partners as billing services, claims clearinghouses and medical providers need to be able to communicate with and respond accordingly to the payer’s updated system as ICD-10 information is loaded into the health plan system within the time frame that is acceptable to the payer and that will support the implementation of the new code set.

Another important component of the ICD-10 conversion comprises the need for payer policies to be reviewed and updated to include General Equivalence Mappings (GEMS) and reimbursement crosswalks. Many payers operate using a system of separate clinical coverage policies and reimbursement policies. The conversion to ICD-10 requires that both sets of policies be considered, since there are significant coding, coverage and payment implications within each set of policies.

Payers often explicitly include diagnosis codes (ICD-9-CM) and procedure codes (e.g., ICD-9-PCS and CPT codes) that they believe support the medical necessity for a provider to perform a procedure or use a particular product. In order for payers to complete the ICD-10 conversion, they must determine which ICD-10 codes will be part of the updated policy. Because the ICD-10 code sets are significantly more granular, payers have to decide if they are going to accept all diagnoses within an ICD-10 coding family or restrict coverage/payment to only certain ICD-10 codes within a more general category of codes. This can be a difficult task since this generally requires consideration as to the medical appropriateness of the expanded codes within the new code sets and to tie ICD-10 codes to accepted clinical criteria within the existing policy. And, since there can be dozens of codes in a single payer policy, the reviewer would have to look at the expanded codes that pertain to each code listed. This can add a significant burden to a system that already requires regular review of coverage policies.

Outside of policy review, the conversion to ICD-10 requires payers to commit resources to the training of employees to perform the various other job functions impacted by the use of the new code sets. This could include such functions as claims processors, who would need a clear understanding of the new coding scenarios in order to properly adjudicate claims submitted from providers (e.g., physicians and institutions), so that claims are not held up in the review process unnecessarily or denied erroneously. This could also include health plan employees tasked with provider network relations work, who may need to explain the appropriate use of the ICD-10 codes in relation to the payer’s coverage and/or reimbursement policies.

In addition to challenges, the ICD-10 conversion may have potential benefits for payer organizations. The new ICD-10 coding system could give payers the opportunity to parse out coverage for certain clinical indications more than the ICD-9 system allows. This would mean that if a payer wanted to restrict coverage for a particular procedure or product and only cover a subpopulation of patients with a certain condition, the ICD-10 code set would allow them to do that in a way that the ICD-9 codes would not have supported. Using ICD-9 codes, payers often have to audit claims and patient charts to determine whether a provider is adhering to the established clinical criteria for coverage. Now, with the ICD-10 code set, that audit process could be more streamlined through the use of the considerably more specific codes.

An additional benefit for payers is that the ICD-10 code set could allow payers to identify and require more precise clinical evidence for more specific uses of a product or procedure. The ability of the ICD-10 code set to allow payers to delve deeper into patient diagnoses and resulting inpatient services could afford payer organizations the opportunity to establish standards of clinical evidence (e.g., peer-reviewed published literature) that correspond to more specialized uses of a technology.

In summary, the ICD-9 code set is more than 30 years old and has become outdated. It is no longer considered useful for today’s treatment, reporting and payment processes. It does not reflect advances in medical technology and knowledge. In addition, the format limits the ability to expand the code set. Therefore, the new ICD-10 coding system will be implemented to account for the shortcomings of the current system. The conversion has not been and will not be without its challenges, although it is reasonable to expect positive outcomes in addition to the growing pains that stakeholders experience. The United States’ adoption of the 10th version of this code set in October 2015 is a natural progression within the country’s healthcare system and will afford policymakers, payers and providers the time to address the challenges inherent in such a massive conversion and provide the opportunity to prepare for the next iteration. The 11th version of the ICD code set (ICD-11) is scheduled to be released in 2018.

About the Author:

Jessica Holmes is executive director of reimbursement for Argenta Advisors Inc., a reimbursement consulting firm that is a recognized leader in the field of health policy and reimbursement for the life science industry. Argenta provides a comprehensive range of healthcare and reimbursement consulting services throughout the medical technology lifecycle, from policy to practice. Reach her at JHolmes@ArgentaAdvisors.com.

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