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Starting Oct. 1, hospitals and other providers, public and private payers, and clearinghouses will use the new ICD-10 coding system on health care claims. Hospitals that fail to comply will have their claims rejected by Medicare as well as other payers, and a decline in ICD-10 coding productivity that causes delays in submitting claims could lead to cash flow problems. While this upgrade is a major, organizationwide undertaking, careful preparation and board oversight will enable a hospital to navigate this transition.

Reimbursement, Quality Insights

ICD-10 is more formally known as the International Classification of Diseases standard, 10th edition. A clinical modification (CM) version for use in all U.S. health care settings and a new procedure coding system (PCS) for use in the hospital inpatient setting were developed. Both replace ICD-9-CM, a 30-year-old coding system that has outlived its usefulness and its ability to classify many of the new medical approaches and technologies.

Coding enables providers to exchange information with payers. It converts medical documentation into standard codes that describe patient conditions and services provided. Used by nearly every clinical and billing operation nationwide, the codes are used to justify medical necessity and are the foundation for most third-party payment models. In addition, the coded information is useful in public health policy, financial analysis, and quality and safety initiatives.

The Oct. 1 compliance date represents a one-year delay from the original deadline. In large part, the delay was Health & Human Services' response to the complexity associated with the transition. First, ICD-10 has 55,000 more diagnosis and procedure codes than ICD-9 to provide greater specificity and clarity. Second, because hospitals will use ICD-10 for coding patient diagnoses or problems, surgeries and procedures, changes to the coding process impact billing, electronic health record and quality reporting systems. And third, because the ICD-10 coding structure is different, coders and physicians need training to understand the coding concepts and the importance of documentation to support assignment of a code with greater granularity.

The transition also has benefits. The new codes have the potential to reveal much more about quality of care, which will help clinicians to understand complications and better track the outcomes of care. The ability to more finely differentiate diseases also may help analysts spot unusual patterns that otherwise would be lost within the broader categories. ICD-10 also will support improved payment accuracy by allowing better differentiation of patient severity.

In the Home Stretch

Most hospitals already have laid the groundwork for ICD-10. At this stage of implementation, hospitals should have completed their internal assessment of system changes, made the necessary changes, installed new vendor product updates for claims processing and completed internal testing of these system changes. Hospitals also should be working with their EHR vendors and health information exchange organizations to ensure that all parties are moving forward with ICD-10. Plans to start training coders, review areas for documentation improvements and provide outreach to physicians about ICD-10 codes and coding concepts should be under way.

In general, the medical records department is responsible for placing codes on claims. However, physicians need to learn about ICD-10 coding concepts and ensure that their documentation in the record provides all of the information needed by coders to develop the right code. For example, ICD-10 will allow surgeons to identify whether a surgical site is on the left or right side of the body. The surgeon will not need to know the codes for laterality, but he or she will need to specify left or right in the medical record. For the most part, physicians only need to learn about the subset of codes that reflect the care they provide. In return, the more specific ICD-10 codes can help to provide more detailed information back to physicians regarding their patients, and to identify differences in costs and clinical outcomes.

Board Oversight Needed

Trustees can play a pivotal role in the transition to ICD-10 and capitalizing on the benefits of more and better information. They should be supportive and closely monitor progress. At the same time, they should help to develop a long-term vision of how to leverage the knowledge gained through greater code specificity.

Board oversight will help the hospital to meet the specific ICD-10 readiness timelines and the compliance date. Trustees should consider having implementation updates included in their board agendas where hospital leaders provide progress reports from the ICD-10 project team. For example, the reports could track the progress, outline impediments that might delay progress and present options for corrective action. Then, the board can ensure that each milestone is articulated and completed, and provide input on the options for corrective action.

Employee engagement plans also are needed. The board should direct senior management to implement strategies to drive management buy-in, identify key individuals to oversee various implementation components and establish written communication plans. The hospital also may want to find ways to reward staff engagement and completion of implementation milestones. Additionally, the organization will need to address and allay physician concerns while emphasizing the centrality of physician cooperation to ensure that the medical record is complete and can support assignment of an ICD-10 code by the medical records department.

Trustees should encourage the hospital to define risk mitigation strategies that will keep it on track to meet the implementation date and to reduce the negative effects that might be associated with coders' and physicians' learning curves. This is important because both groups will need time to adjust to the routine use of ICD-10 coding and documentation concepts before they become as comfortable and efficient with them as they are with ICD-9 today. This drop in productivity could affect the hospital's revenue cycle. The board should ask hospital administrators to provide an assessment of staffing options to mitigate this problem during the transition phase. They should also assess whether existing financial resources are sufficient or whether additional resources are needed.

There is another dimension to consider: the post-implementation assessment. The Centers for Medicare & Medicaid Services have indicated that after accumulating one year of ICD-10 coding data, the agency will look at refining the DRG assignments, as it does now after new ICD-9-CM codes are introduced. Because ICD-10 provides greater detail, CMS will have the ability to look at the resources that typically are provided for the assigned ICD-10 code. Other payers likely will take a similar approach. The board should direct senior leaders to begin work for a post-implementation study that examines which new ICD-10 codes might face major payment changes. The results should determine how the hospital plans to counter any decreases to existing payment. Additionally, results should include an assessment of the opportunities to improve operations and outcomes, as well as improve the overall health status of the community.

Strategic Opportunities

Boards should take time to consider how their institutions can benefit from the upgraded coding system. Having a greater understanding of the care associated with the treatment of diseases and illness will be essential to success under new models of care delivery and payment. For example, ICD-10-CM is able to distinguish differences in severity for common chronic conditions along with their associated manifestations. The ICD-10 codes also can provide information on the 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 to develop and mobilize outreach programs to monitor patients after discharge and assist them with medication management, filing for financial assistance for their medications or better manage their diets.

The move to ICD-10 will bring challenges, but also benefits. A supportive board will engage leadership, monitor progress, ensure that risk mitigation strategies are available and help the hospital to focus on the strategic issues that are important to improving the health status of the communities they serve.

Gerry Lewis-Jenkins ( is executive vice president, Copic Insurance, Denver. She also is a member of the board of directors at Platte Valley Medical Center, Brighton, Colo., and board chair of the Colorado Regional Health Information Organization.

Sidebar - Key Questions: The ICD-10 Transition