While health reform consumes the majority of the C-suite and the board's time and energy, another potential threat waits in the wings. It entails a change so big that it will shake the foundation of hospitals' daily operations.

The long-awaited final rule on replacing the 30-year-old ICD-9-CM clinical code set with ICD-10-CM and ICD-10-PCS was released last year, and the compliance date for the two classification sets is Oct. 1, 2013. While this seems like a long way off, hospital executives and their boards should begin preparations now to ensure a successful implementation.

ICD-9-CM is a numbering system used to collect information and report on patients' illnesses, injuries or other medical complaints, and inpatient procedures. This information is called administrative claims data. It tells others about the hospital's patients and services in a medical language that can be analyzed and aggregated by computer.

Administrative claims data increasingly is used to make decisions about hospital reimbursement and value-based purchasing, to evaluate the quality of the care provided, and to conduct biosurveillance and public health research. However, ICD-9-CM lacks the level of detail required for these emerging needs. As the next generation of ICD-9-CM, ICD-10 offers a greater level of clinical detail. The upgrade is expected to bring coded and reported data in line with the improvements in medical technology today and into the future.

Failure to implement ICD-10 successfully will disrupt revenue cycles, create coding and billing backlogs, cause cash flow delays, increase claims rejections and denials and improperly paid claims, cause unintended shifts in payment, put providers at risk of losing payer contracts and market share due to poor quality ratings or high costs, and result in faulty decisions based on distorted, inaccurate or misinterpreted data. Doing just enough to achieve minimal compliance with the new system will lead to significant costs and few benefits.

ICD-10-CM/PCS codes have the potential to reveal much more about quality of care, which will help clinicians better understand complications, better design clinically robust algorithms, and better track the outcomes of care. The ability to more finely differentiate diseases may help analysts spot unusual patterns that otherwise would be lost in the broader categories.

ICD-10-CM allows the reporting of underdosing, a new concept that may be helpful in identifying situations in which a patient is discharged and readmitted to the hospital after failing to follow up on the medications ordered on discharge. In addition, ICD-10 codes can provide information on common reasons why a patient may not have been able to comply with the doctor's orders, such as financial hardship or age-related debility. This data can help the hospital develop outreach programs tomonitor patients after discharge and assist them with medication management or filing for financial assistance with their medications.

The implementation of ICD-10 is not just a coding issue or even an IT matter. A successful transition to ICD-10-CM and ICD-10-PCS will require careful planning and coordination of resources across the entire hospital. Every application and business process in which diagnosis or procedure codes are captured, stored, analyzed or reported will be affected—and this can range from a handful to hundreds of applications depending on the size and complexity of the organization.

The transition to the new code sets requires executive leadership across a wide range of functional areas, including finance, information services, decision support, compliance and the medical staff. Health care organizations should have a carefully designed, integrated transition plan to address the new system's implications for timely reimbursement, information technology, decision support, quality and compliance reporting, staffing and training.

The conversion will require a re-evaluation of business processes, information flow, physician documentation practices, and intensive communication and collaboration with payers, vendors and other business partners. Executive sponsorship is crucial for the conversion's success. The impact of ICD-10 on strategic goals needs to be considered and coordinated at a high level to ensure resources are appropriately managed in conjunction with strategic goals around the electronic health record and other IT plans for quality and performance.

As hospital leaders plan for ICD-10 implementation, they will have to choose between simply complying with the new coding system or maximizing its benefits. For example:

  • Providers can comply by updating their systems by the deadline so that claims are processed smoothly with no disruption in cash flow, or they can analyze and capitalize on the opportunities that the more detailed classification system can provide, such as improved documentation and data collection to support clinical and financial decision-making and coding audits.
  • Providers can create staff awareness, develop budgets and build timelines, or they can develop an organizationwide vision to strategically evaluate the opportunities for improved workflow in the clinical, financial and operational areas.
  • Providers can hold discussions with payers regarding claims processing and testing to make sure systems are ready on the go-live date and payments are not disrupted, or they can review existing contractual agreements with payers and determine how the more granular ICD-10-CM/PCS codes will affect their bottom line.

Boards should consider the challenges and risks associated with implementation of ICD-10 as they guide their hospitals through strategic planning and capital investment decisions for the future. It will be hard work, but it also can be an opportunity to improve quality and reimbursement.

Nelly Leon-Chisen, RHIA (nleon@aha.org), is director of coding and classification for the American Hospital Association, Chicago, and a member of Health Forum's Forum Faculty Speaker Service.