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The Benefits of ICD-10 to Medical Practices

The Benefits of ICD-10 to Medical Practices

For all the doomsday predictions surrounding ICD-10, it's easy to forget that the complex new coding system slated to go live next year is designed to deliver, wait for it, benefits to all levels of the healthcare system — physicians included. Indeed, the much-maligned ICD-10 diagnostic and procedure codes will pave the way for more accurate payment of new procedures, better administrative performance, and improved patient care, says Michael Wilson, chief executive of Healthcare Information Management (HCIM), a healthcare software and consulting firm in Walnut Creek, Calif.

"It will allow for more granular coding, so, as we move toward electronic records being shared with other caregivers, we're going to start getting a clearer picture of what works best for successful patient outcomes," says Wilson. "It will also have a financial benefit to physicians by allowing them to bill for more complex treatments when dealing with high-risk, sicker patients."

After the initial growing pains subside, the added degree of specificity required for clinical documentation is also expected to result in fewer rejected claims. A 2004 study by nonprofit research group RAND Corp. for HHS, in fact, projects ICD-10 could save the industry anywhere from $200 million to $2.5 billion due to fewer rejected claims. "Much of those savings will result from dealing with less paperwork," says Martin Libicki, a senior management scientist for RAND. "Anytime you have to circle back and resubmit a claim to the insurance company it requires more resources to process."

That's not to dismiss the significant hurdles that lie ahead, of course. When the deadline date for ICD-10 implementation hits on Oct. 1, 2014, many healthcare industry advocates predict practices will face a short-term spike in delayed claims or denied claims stemming from insufficient documentation, coding errors, and heightened payer scrutiny of claims. Practices will no doubt also struggle with the cost of new software required to run the supercharged system, and a loss of productivity in the initial months — and possibly years — following implementation. Thus, as practices brace themselves for the bumpy road ahead, it helps to stay focused on the light at the end of the tunnel.


That includes fair payment. The new more granular coding system will allow physicians to more accurately report the complexity of care they provide, differentiating between chronic patients who come in for routine blood work and those who require an entirely new treatment regimen. Under the current ICD-9 system, that distinction is often lost. As a result, many procedures get billed as "unspecified," yielding a lower reimbursement value. HCIM found that under the major diagnostic category (MDC) system used in ICD-9, a "15" code reserved for "newborns and other neonates with conditions originating in perinatal period" would be coded as either a "795" or "794" under ICD-10, which packs a potential 638.7 percent increase in reimbursement.

The upside potential is most significant for new procedures, Wilson says, noting the current ICD-9 system is at capacity. There's no room left for new codes that reflect the cost of cutting-edge and often more pricey procedures. As a result, physicians who provide such services for their patients are often undercompensated today, or the treatments are left unreported. According to RAND Corp., the financial benefits of more accurate payment for new procedures will range between $100 million and $1.2 billion. Not all reimbursement levels will be higher, of course. HCMI found codes for diseases and disorders of the circulatory system could be either 41 percent lower for major cardiovascular procedures, or 84 percent higher for certain circulatory disorders.


On a macro level, the mountain of new data that will be generated by ICD-10 can also be mined for the greater good of public health, allowing the U.S. to track and respond to global health threats faster and compare best practices with the international community. Areas of injury research and trauma services evaluation, for example, could witness a marked improvement in accurately classifying the nature of injuries and correlating them with cause, treatment, and outcome, the American Health Information Management Association reports. Specifically, such data could be used to determine whether laparoscopic surgery or open surgery yields the better outcome for particular injuries, saving lives and billions of dollars.

Individual practices will benefit, too, from better metrics with which to measure their performance relative to their peers, contain costs, spot trends, and uncover opportunities for greater efficiency, says Peggy Honts, vice president of consulting services for healthcare information technology firm AXIOM Systems in Frederick, Md.  Similarly, ICD-10 data will help payers and providers identify patients in need of disease management, RAND points out. Diabetes alone has a six-fold expansion in the number of codes available under ICD-10, enabling physicians to funnel the right patients into the right programs, and better refine disease management for those already in a program. "The details in the new codes may provide the ability to trigger events or conditions in patients and allow physicians to perform outreach to these patients to deliver preventative care versus more serious and costly care when a condition becomes an emergency," says Honts. "This won't happen initially, as it's going to take time to accumulate this new data, but it's all about innovation."


Another potential positive of ICD-10 is that it will likely result in fewer fraudulent and exaggerated claims, which drive up the cost of medical care and health insurance premiums for all. The National Health Care Anti-Fraud Association estimates that the financial losses due to healthcare fraud are in the tens of billions of dollars each year.

Fraudulent claims, perpetrated by a small percentage of dishonest physicians, include billing for services that were not provided or for more expensive services than were actually provided, performing medically unnecessary services, and falsifying a patient's diagnosis to justify tests, surgery, or other procedures. After the transition period to ICD-10, the algorithms used by payers to detect fraud will be gradually refined to spot the patterns of legitimate billing, "The more detailed data will allow for more automatic triggers for investigation of potential fraud or medically unnecessary claims," says Honts, "which hurts everybody, including the honest physicians trying to do the right thing."

The conversion to ICD-10 will potentially result in better patient care and more accurate reimbursement for providers. The degree to which your practice will benefit, however, is contingent upon the ability of your doctors to document accurately and your billing staff to file clean claims. "ICD-10's benefits and positive impact start in the physician's office," says Wilson. "Physicians will need to evaluate and capture specificity while evaluating the patient and document within the patient's record to a much greater degree and clarity in order to reap the potential benefits."

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