How the switch to ICD-10 disease coding will impact the health care industry Featured

8:00pm EDT May 31, 2012
How the switch to ICD-10 disease coding will impact the health care industry

ICD-10, an international disease coding system, is mandated for adoption in the U.S. by Oct. 1, 2014, and will require health care organizations to switch from the soon-to-be outdated ICD-9.

Srividya Thyagarajan, head of Healthcare Center of Excellence for HTC Global Services, says the change will impact providers of health care services, insurance companies, billers that deal with health care claims, government agencies that report statistics on morbidity, disease outbreaks, and researchers who are looking to prevent diseases. The changes will allow for capture in greater detail about the disease diagnosed and the procedures performed. This additional detail will provide better tracking of outcomes of care, severity of disease and conditions and management of risk and health status.But first, organizations need to train their personnel to understand and interpret the additional detail.

“At the end of the day, all of this is to improve health care quality and lower costs,” Thyagarajan says. Smart Business spoke with Thyagarajan about what organizations in the health care field need to be doing ahead of the deadline.

What is ICD-10 and what changes will it bring?

ICD-10 is part of the International Classification of Diseases coding system, defined by the World Health Organization to normalize the standards by which diseases are coded throughout the world. This helps us better understand and manage morbidity, mortality and disease outbreaks around the globe. ICD-10 is the 10th revision of the code set.

The revision will offer more specific details that can help analyze and prevent diseases. As an example, in ICD-9, the current coding standard, you would classify any type of injury to the arm as a fracture of the arm. In the new code set, you would provide more detail, such as where on the arm the fracture is, which arm is it on, whether it is an open or closed fracture and whether this is the initial encounter or subsequent encounter.   Such additional detail will help in understanding the severity of the condition and the type of care provided. This will help better manage care, cost and outcomes.

What areas of payers’ business cycles will this impact?

Almost all areas of the Payer’s business cycle will be impacted, including strategic processes, operational processes and support processes. A big part of a payer’s operation is receiving and processing claims, all of which carry the disease/ diagnosis codes, as well as a description of the procedures used to remediate the disease. This part will be heavily impacted. It will also impact a Payer’s strategic processes like utilization management, network management, disease management  because ICD-10 has a lot more data that can help Payers make decisions on paying for performance and incentivizing positive and preventive health services.

ICD-10, through its more detailed descriptions, can help in Payer support processes such as Fraud detection. It allows more detailed reporting to the government agencies that collect data and statistics on areas such as immunizations, disease outbreaks etc.

However, while providing additional details could help in understanding the cause and location of the disease, it could also lead to a decrease in reimbursement. As in the previous example, if, in ICD-9, only ‘fracture of the arm’ could be listed to classify a number of injury diagnoses regarding the limb, in ICD-10, the greater detail would require you to specify if it was the first encounter or subsequent encounter in the Claim. The Claim may be reimbursed at different levels for the first encounter and subsequent encounters.

To help ease into the transition, many payers are pledging financial neutrality for the first two years that the new code is implemented. This will mean a continuation of the reimbursement levels paid through ICD-9 until the Provider contract is up for renewal.

Can the required changes to an organization’s information technology systems be handled internally?

If an organization has a large IT department, it could handle the changes internally, but because IT is not part of their core business, they should look at IT vendors and suppliers that have expertise in large application system migrations. Many in the industry are thinking of this simply as an IT problem, but IT is the least of the worries. The larger part of it is the business policy and process changes to accommodate and deal with the greater specificity.

Is there a penalty for not complying with ICD-10?

No, there have been no penalties announced by the Center for Medicare and Medicaid Studies, but that doesn’t mean there won’t be an announcement later. Moreover, whatever has been negotiated in existing Payer-Provider contracts will have to be respected. Not being in compliance could result in delayed reimbursements for Providers and administrative overheads for Payers.

How much time should organizations dedicate to preparing for these changes?

If you really want to position your organization from a strategic standpoint, invest in ICD-10, make it part of your future and embrace it now. Decide how you’re going to code and determine how it will affect your bottom line. While organizations should have started preparing in 2010, there is still time if you start now. The fact that the deadline has been moved from 2013 to 2014 should not make organizations use it as an excuse to procrastinate.

Many have been approaching the change as if it’s a small problem that will go away after October 2014 as long as they accept the codes. However, after ICD-10 is implemented, crutches such as mapping services -- which link claim language from one version of the code to another -- will have to be thrown away for a more permanent adoption of the new standards. You have to make policy, process and system changes to ensure you leverage the additional detail to your advantage.

ICD10 can improve quality of care and lower cost, but organizations need to accept the change and use the additional details intelligently to derive these benefits.

Srividya Thyagarajan is head of Healthcare Center of Excellence for HTC Global Services. Reach her at

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