Don't Let Docs Get Bitten by ICD-10, AMA Tells HHS

February 12, 2014

The American Medical Association (AMA) today sent an SOS to the federal government: Please soften the financial pain that the new ICD-10 diagnostic codes will inflict on physicians when they take effect October 1.

In a letter to Kathleen Sebelius, secretary of the US Department of Health & Human Services (HHS), the AMA estimated that the new diagnostic codes, more numerous and complex than the ones they're replacing, could cost small practices anywhere from $56,639 to $226,105, significantly higher than previous estimates. Roughly half this amount will reflect disrupted cash flow and lost productivity during the implementation process, according to the AMA. Other expenses include training, testing, and software upgrades.

"Continuing to force physicians down the ICD-10 path will result in significant financial burdens," said James Madara, MD, the AMA's chief executive officer and executive vice president, in the letter to Sebelius.

The AMA House of Delegates wants the ICD-10 codes repealed, contending they won't improve patient care but instead will make it harder for physicians to invest in electronic health record (EHR) systems and new models of delivering care. Short of outright repeal, today's letter from Dr. Madara urged HHS to take several steps to shield physicians from ICD-10 fallout.

Topping the AMA's list of recommendations is testing to see whether Medicare claims that bear the new codes are not only received by Medicare, but also paid. In the process, physicians would find out whether they picked the right code. Test results, said Dr. Madara, might make the Centers for Medicare & Medicaid Services (CMS) in HHS think twice about sticking to the October 1 deadline for implementation.

The AMA's Dr. Madara also recommended that Medicare reimburse physicians in the form of an "advance payment" when they treat a patient only to have ICD-10 problems gum up claims processing. Doing this, said Dr. Madara, would require CMS to loosen its advance payment policies.

Another way CMS could ease ICD-10 pain, said Dr. Madara, would be to give physicians a 2-year grace period to implement the new codes. During that time, Medicare would not be permitted to deny payment on a claim nor recoup payment "based on the specificity of the ICD-10 code," which can run as long as 7 characters. In addition, CMS would tell physicians what they're doing right and wrong.

Dr. Madara ended his letter by asking Sebelius to "reconsider the ICD-10 mandate." However, the AMA put things more bluntly today when it announced the launch of a new Twitter hashtag: #StopICD10.

ICD-10 Deadline Has Already Been Delayed Once

ICD-10 is short for International Statistical Classification of Diseases and Related Health Problems, 10th Revision. CMS is requiring the switch from ICD-9 to ICD-10 under the Health Insurance Portability and Accountability Act, or HIPAA. Both code sets were created by the World Health Organization.

ICD-10 includes billing as well as diagnostic codes, but CMS isn't requiring that the former be adopted. There are 68,000 diagnostic codes, roughly 5 times the number in ICD-9, and they run to a maximum of 7 characters compared with 5 for the older codes.

CMS and other ICD-10 supporters say the new codes will improve patient care because they are better able than their predecessors to accommodate new diagnoses and procedures in medicine. In addition, they allow physicians to indicate the location of a wound, tumor, or condition.

The hyperspecificity of ICD-10 has made it the butt of jokes. Physicians treating a head injury can choose W2202XA — walked into lamppost, initial encounter — if that fits the bill. Speaking of bills, an initial duck bite warrants W6161XA. Did the patient survive the first bite of a killer whale? Select W5621XA, and use plenty of stitches.

The AMA and other medical societies have been dead serious, however, in their efforts to derail ICD-10. They succeeded in persuading HHS to delay the implementation date from October 1, 2013, to October 1, 2014. The AMA is now saying that ICD-10 poses a greater financial threat to medical practices than first believed, based on a new cost analysis from a firm called Nachimson Advisors.

In 2008, Nachimson Advisors issued a study putting the cost of ICD-10 compliance at $83,290 for 3-physician practices (small), $281,195 for 10-physician practices (medium), and $2.7 million for groups 100 physicians strong (large).

This month Nachimson Advisors has released updated cost figures that are much higher than those in 2008. The company chalks up the increase to "real world experience" in documenting the cost of ICD-10 implementation and the introduction of the government's EHR meaningful-use program in 2011. The need to buy new or upgraded EHR systems incorporating the new diagnostic codes and satisfying meaningful-use requirements introduces an expense not found in the 2008 study, the company stated in its AMA-funded report.

Accordingly, Nachimson Advisors now estimates that ICD-10 compliance will cost between $56,639 and $226,105 for small practices, between $213,364 and $824,735 for medium practices, and between $2 million and $8 million for large ones. In each category, about two thirds of the practices will be closer to the high end of the range on account of needed upgrades to their EHR systems, not to mention their billing and scheduling software, or both.

Dr. Madara said that forcing these expenses on physicians will leave them less able to automate and reorganize their practices to participate in pay-for-performance programs, all of which costs money. "Many physicians are small business owners and, thus, their operating margins are already thin," he noted.


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