Codes a complication for healthcare industry

Healthcare lobbying groups are working to slow down the federal government’s push to replace an outdated set of billing codes used throughout the medical system.

Though all but invisible to patients, these billing codes have a profound effect on the business of healthcare. Every diagnosis, treatment, invoice and claim filed uses these codes in the United States and the rest of the developed world.

The Bush administration and other proponents argue that a more detailed and up-to-date set of codes will facilitate more accurate medical records and more precise payments by government programs and private insurers and ease the adoption of more sophisticated information technology in the healthcare system.

“We are taking a giant step forward toward developing a healthcare system that focuses on quality and affordability through the implementation of health information technology,” Health and Human Services (HHS) Secretary Mike Leavitt said last month when he announced the plan. The proposed update would replace the 30-year-old billing codes by October 2011 with a newer standard that was developed in the early 1990s.

Called the International Classification of Diseases (ICD) and written by the World Health Organization (WHO), most of the world uses the most recent version, known as ICD-10, while the United States still uses ICD-9.

Though technical in nature and bureaucratic in practice, the new code set would have major implications for the U.S. healthcare system. ICD-10 consists of 155,000 codes identifying medical diagnoses and procedures, compared with the 17,000 codes that make up ICD-9.

The current set of codes has limitations that demand its replacement, the administration argues. Because there are so relatively few of them, it is difficult to account for newly developed treatments, for example. Moreover, the administration maintains, ICD-9 is simply running out of codes to assign.

Though the hospital industry and other healthcare sectors support the administration’s plan, some physician groups and health insurance companies believe the government is moving too hastily.

Opponents of the administration’s plan do not disagree with the potential benefits of the transition. They do, however, strenuously argue that three years is not enough time to prepare for a sea change in recordkeeping, paperwork and billing. They also complain that the upfront costs for new equipment and training are too burdensome.

“The proposed regulation simply does not give the industry the time necessary to implement ICD-10,” William Jessee, president and CEO of the Medical Group Management Association, said in a statement.

Blue Cross Blue Shield Association President and CEO Scott Serota predicted mayhem.

“Rushing the process will result in a major meltdown in the healthcare industry, including — unavoidably — inaccurate and delayed payments to providers and consumers, an inability to detect fraud and abuse, and unnecessarily higher total costs of implementation due to the accelerated timeline,” he said in a statement.

“We recognize that the transition to ICD-10 will require some upfront costs, but each year of delay would create additional costs,” acting Centers for Medicare and Medicaid Services (CMS) Administrator Kerry Weems said.

The groups calling for more time point to a recommendation by an HHS advisory panel that healthcare entities be given five years to transition to ICD-10.

A similar dispute helped derail a health IT bill moving through Congress in 2006. Though the measure, which set a deadline of October 2010, passed the House, it stalled in the Senate partly because of criticism from physician societies. The health IT bill currently before Congress does not address ICD-10.

Last month, CMS unveiled the plan, under which all healthcare providers and insurers would have to scrap the old codes for the new ones by Oct. 1, 2011.

“The greatly expanded ICD-10 code sets will enable HHS to fully support quality reporting, pay-for-performance, bio-surveillance and other critical activities,” Leavitt said.

The healthcare sector is divided on the issue, with lobbying groups such as the American Hospital Association and the Advanced Medical Technology Association supporting the administration’s timeline.

“We think it’s probably workable,” Federation of American Hospitals President Chip Kahn said, though he stressed the group was still reviewing the administration’s plan.

“For ICD-10, some groups suggested an implementation date as early as 2009; others as far out as 2020,” Tony Trenkle, director of CMS’s Office of e-Health Standards and Services, said in a statement.

Under the CMS proposal, the transition would occur in two phases, starting with the implementation of new technical standards for certain electronic transactions, originally established by the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

The Blue Cross Blue Shield Association and likeminded groups maintain that the first step alone should take two years, with an additional three to actually update the billing codes, a stance in line with the recommendations of the National Committee for Vital and Health Statistics, which advises HHS.

CMS acknowledges the panel’s conclusions but does not agree, an official said. “We believe the industry has sufficient experience with implementation issues associated with the HIPAA standards” to complete the process by October 2011, Trenkle said.

CMS also maintains that the two phases are not concurrent, as the industry groups state, because the transaction standards would have to be in place by April 10, 2010, a year and a half before the new codes take effect. The agency is accepting comments on its proposal until Oct. 21 and will consider changes to the timeline based on those comments, Trenkle said.