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Wave Incoming: ICD-10

September 14, 2008
by Mark Hagland
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If the Centers for Medicare and Medicaid Services (CMS) ends up pushing through its proposed deadline for adoption of the ICD-10 diagnosis and procedure codes of October 1, 2011, it could cause a minor earthquake in healthcare. How many patient care organizations would be ready to switch over completely to ICD-10 by then? Close to zero, I’d hazard a guess.

ICD-10 has been talked about for several years now, and of course, several countries with healthcare systems comparable to ours—Germany, Australia, and Canada among them—have already switched over to some version of ICD-10. Experts concur that switching over to ICD-10 in the United States could prove to be a boon for improved data gathering and analysis, and certainly could help boost pay-for-performance initiatives, given the far greater sophistication and nuance in ICD-10 systems compared to our current ICD-9-based system. Some experts have also noted the potential for improving the specificity of clinical decision support at the point of care.

Still, the potential for disruption, confusion, and lost payments is tremendous, at least in the short term. Health information management (medical records) coding professionals nationwide would need to be retrained; and a huge number of applications and databases, both on the provider and payer sides, would need to be modified. On a practical level, things could be a mess for a while.

It will also be expensive. CMS is estimating that it will cost $1.64 billion industry-wide to make the switch, including $356 million in training costs, $572 million in lost productivity costs, and system change costs of $713 million. And the agency figures that it will cost vendors between $55 million and $137 million to adapt their products to the new requirements.

Is there anything concrete that CIOs can do at this point? Right now, reading up on ICD-10 and staying abreast of the news is probably the most they can do on a practical level. But gearing up, at least mentally, for this change with tremendous potential to impact many aspects of hospitals’ operations, is something CIOs need to begin doing now. And it’s yet another aspect demonstrating that CIOs’ success in managing change will be central to their organizations’ success going forward.



Mark, Thanks for sharing your perspective and continuing the dialogue on ICD-10.

For readers interested in this topic, Reece Hirsch, asked the sobering 'value' question in a recent blog here.  The dialogue that followed elaborated some relevant related questions, a list of resources, and a summary of the 'Value' assessment from the Federal Register.  So, per your recommendations, readers will find this succinct and useful.

In a powerful article, "Realizing the Promise of Personalized Medicine"  by Mara G. Aspinall and Richard G. Hamermesh, in Harvard Business Review, October 2007, an issue closely related to ICD-10 is elaborated. 

The ICD evolution question is, "how do we evolve the procedure codes into ICD-10 and what will be the impact on reimbursement."  Although the excellent article is about Personalized Medicine, the authors address that 'accurate diagnosis' is in tension with 'pay-for-procedure,' in the US Healthcare system.  Since, as previously reviewed in the HCI Blogs (see prior comment above) ICD-10 is aimed at improving diagnostic codes, there is an economic impact about the switch to ICD-10, as Aspinall and Hamermesh elaborate here, in their own words (below in green, highlighting and insertion of new-lines I did for readablility and to direct focus):

Understanding the Barriers


Eighty percent of all U.S. health care bills are paid by Medicare, Medicaid, or employer-provided insurance. Sadly, the reimbursement system controlled by these institutions pays for—and thus encourages—the performance of procedures rather than accurate diagnosis.

Today’s pay-for-procedure approach is rooted in a current procedural terminology (CPT) code system, which the American Medical Association developed for the Centers for Medicare & Medicaid Services (CMS) in 1966. The CPT-approval process is controlled by an AMA committee and its advisory boards of more than 90 physicians nominated by national medical specialty societies. The diagnostics industry is not represented on the committee or its boards. Since the priority of physicians on the committee and boards is the level of reimbursement for treatment in their specialties and because the process for adding, deleting, or changing codes is long and laborious, the CPT codes and fees associated with diagnostic testing are rarely updated.

Pricing has been increased for inflation only twice in the past 15 years, but that’s hardly the biggest problem. If a new technique that reduces the number of needed laboratory activities from, say, eight to six is developed, the payment is cut accordingly. When a new diagnostic test requires a new lab activity for which no CPT code exists, the lab performing the test has three unattractive choices: accept no reimbursement for the activity, try to make a case for why the new activity should be reimbursed according to an existing code that doesn’t match the activity, or start the long process of creating a new code. Even if the lab succeeds in obtaining a new CPT code, that’s no guarantee that the CMS will pay for the test.

In summary, the "Incoming Wave of ICD-10" and the "Incoming Wave of Personalized Medicine" appear to share some common barriers.

Am I understanding this correctly, Mark, relative to the challenges you articulated?

Joe Bormel,
I agree completely with you on your read of the tensions involved in the anticipated upcoming transition to ICD-10. The hope is for more accurate diagnosis and documentation, and down the road, analysis, of procedures and treatments performed. But certainly, the initial concern for providers will be reimbursement.

Will the path forward be difficult for everyone? Most definitely.

Thank you for the references and citations, too, Dr. Bormel!