A Tale of New Standards

The US healthcare system is going through a wrenching change as it nears the deadline for implementing ICD-10, the latest version of its standard classification for medical diagnoses. This story illustrates the difficulties of establishing industry standards even when they have enormous long-term benefits. Officially known as the International Classification of Diseases, earlier versions have been in use since the 1960s, but ICD-10 represents a quantum leap in comprehensiveness and complexity. The current version (ICD-9) contains approximately 13,000 codes, whereas the new version contains more than five times as many codes. For inpatient hospital procedures, there will be 87,000 codes as compared to just 4,000 under the current system. A single disease or injury may now carry different elements to describe more detail, such as cause, severity, or anatomic site of the problem.

The changeover is a major headache for physicians, hospitals and anyone else who bills insurance companies or government payers, such as Medicare and Medicaid. Most other industrialized countries have already implemented the standard, but in the US, the government delayed the original 2013 implementation deadline several times. The balkanized structure of US healthcare has been one of the main impediments. Hundreds of millions of dollars have been spent bringing billing systems up to date and more importantly, retraining personnel on how to code medical bills under the new schema. Among other things, the new system requires that coders know more human anatomy. For example, a condition previously coded simply as “broken forearm” must now be coded more precisely as “fracture of lower end of radius.” Bills that are miscoded may get rejected by insurance companies, so physicians and hospitals worry that such delays will cause delays in payment, driving some to obtain lines of credit to tide them over. For patients, miscoded paperwork could delay their insurance companies’ approval of treatment.

Against these challenges are the long-term benefits of new standards. Industries that implement standards gain opportunities for more transparency and new insights from applying analytics to a richer database. In this case, payers, such as insurance companies and Medicare/Medicaid, will be able to get a much more precise understanding of what they are actually paying for. Similarly, hospitals and healthcare networks will gain a new tool for understanding the economics of treating patients. The impact of the ICD-10 goes beyond the codes themselves. The government is requiring that the coding scheme be applied to virtually all patients, whereas ICD-9 applied just to Medicare and Medicaid patients, only about one-tenth of patients. The resulting database of patient illnesses and injuries will provide a broader and more representative picture of healthcare in our country.

About Lee Greenhouse

Longtime strategy consultant focused on the business of information content, applications, and services.
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