Good morning. My name is Jim Daley and I am the HIPAA Program Director for Blue Cross Blue Shield of South Carolina (BCBSSC), speaking on behalf of the Blue Cross and Blue Shield Association (BCBSA). The Blue Cross and Blue Shield Association comprises 42 independent, locally operated Blue Cross and Blue Shield companies that collectively provide healthcare coverage for 84.4 million -- nearly 30 percent of all Americans. BCBSSC provides innovative health benefit plans, dental and vision benefits, pharmacy benefits, life insurance and workers’ compensation benefit management. We also are the nation’s largest Medicare and TRICARE administrator and we provide Medicaid services to the State of South Carolina, and a subsidiary offers software products and clearinghouse services to providers.
Because of our span of interests, we view the requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) from a variety of perspectives. On behalf of the Association, I would like to thank you for the opportunity to offer our comments on the possible replacement of ICD-9-CM with ICD-10-CM and ICD-10-PCS.
A. Implications for Current HIPAA Compliance Efforts
It is important to note that the challenges of mandating a conversion to ICD-10 codes can not be separated from the industry’s current efforts to comply with HIPAA. The current and anticipated HIPAA initiatives, including transactions and code sets, privacy, security, and the employer, provider, and health plan identifiers, call for a substantial dedication of resources for the healthcare industry. A wholesale change to ICD-10 codes should not be imposed through government mandates before the dust settles on the implementation of these initial HIPAA standards.
B. Need to Assess Impacts Across the Entire Healthcare Industry
This subcommittee should take a careful and studied approach to assess the benefits and costs of the proposed conversion to ICD-10 codes, so that the impacts are understood before the industry proceeds to implement the changes. A thorough assessment of the benefits and costs of mandating new code sets is required by the HIPAA statute, which states that any standard adopted must be “consistent with the objective of reducing the administrative costs of providing and paying for health care.” 42. U.S.C. 1172(b). Moreover, the common criteria adopted by HHS’ HIPAA implementation teams to evaluate new standards require, among other things, that standard code sets should “have low additional development and implementation costs relative to the benefits,” and they should “keep data collection and paperwork burdens on members of the healthcare industry as low as possible.” Preamble to Final Rule on Standards for Electronic Transactions, 65 FR 50312, 50342-43 (August 17, 2000).
The full impact of a proposed migration to ICD-10-CM and ICD-10-PCS has not been assessed on an industry-wide basis yet. In our view, credible industry impact assessments and cost-benefit analyses should be an integral part of any recommendation for additional mandated standards. Before making a recommendations that HHS propose a rule to adopt ICD-10 codes, this subcommittee should assess thoroughly whether it adds value for the health care industry as a whole. Any future HIPAA standard should have documented anticipated improvements before the industry is required to implement it. Any proposed standard that cannot meet these criteria should not be adopted as a HIPAA standard. A change of this magnitude would impact essentially all healthcare settings and would need to be evaluated across these settings.
We believe that the effects of changing these codes in all settings need to be assessed. Other possible impacts include the potential for fraud, coding inaccuracies and patient cost-sharing considerations. This industry-wide evaluation should address the overall benefits and costs of such a migration as well as consideration of the impact of not making a change.
My remarks are organized into three sections:
The healthcare industry continues to focus on the need to improve the quality and availability of healthcare within the U.S. while controlling the ever-increasing cost of these services. The new national standards for healthcare transactions and code sets were adopted to simplify benefits administration, and to introduce greater savings and fewer hassles for consumers, health plans and healthcare providers. BCBSA fully supports these goals.
As payers, we are primarily concerned with providing consumers with the best health care products and services at a reasonable cost. Given the healthcare industry’s vast expenditure of resources on current HIPAA compliance efforts, a thorough cost-benefit analysis of the proposed change to ICD-10 codes would assure all segments of the industry – payers, institutional and professional providers, vendors, etc. – that the change would provide a true return on investment and reduce administrative burdens. We appreciate the opportunity to share with you our preliminary thoughts regarding the possible effects on the industry, and ultimately on the consumer, of a change to ICD-10 codes.
The cornerstones of healthcare administrative systems are the diagnosis and procedure codes. While the current Transactions and Code Sets rule could be viewed as the equivalent of resurfacing the exterior of a building, a move from ICD-9 to ICD-10 diagnosis and procedure coding would constitute a change equivalent to replacing the internal framework within that building. Such a wholesale change needs to be approached cautiously so that the potential impact can be evaluated and the code changes do not result in unintended adverse consequences.
In a report to WEDI prepared in 2000 by a special task group, migration to ICD-10 was described as the “most significant overhaul of the medical coding system since the advent of computers.” Similarly, in August 2002 a report prepared by the General Accounting Office (GAO) for the House Committee on Ways and Means, developed some helpful information on this while looking at the use of dual code sets for reporting medical procedures:
“. . . [T]he design and logic of ICD-10-PCS raises concerns about potential challenges in its implementation, including coding accuracy and the availability of useful data. In addition, the existing health care administrative system would need to be changed significantly to accommodate 10-PCS, imposing additional financial burdens on members of the health care industry, such as providers and payers, who are currently undertaking changes to comply with HIPAA.”(1)
While many agree that ICD-9-CM Vol. 3 is inadequate, no impact analysis supporting a change to ICD-10 has been done at this time at this time. GAO also noted that “. . . the costs associated with replacing [ICD-9-CM Vol. 3 procedure codes] for the myriad of users within the health care system – updating computer software, coding manuals, and claims and remittance forms and training coding professionals and other health care professionals – will ultimately be “high.”(2)
These findings support our view that a thorough industry-wide analysis on the potential impacts of such a change needs to be undertaken in order to make an informed decision on changing these code sets.
Diagnosis and procedure codes are used throughout the healthcare industry to classify symptoms, classify treatments or services, perform reimbursement functions, and to conduct statistical analysis for healthcare trending or rating purposes. Since clinical codes are the underpinning of virtually everything in the healthcare system, a change to ICD-10 would impact payment, medical policies, quality improvement programs, benefit design and fraud and abuse detection, among other things. Due to the vast differences between ICD-10-CM, ICD-10-PCS and the current HIPAA mandated code sets, the implementation of ICD-10 code sets would present tremendous changes in the healthcare community. Impacts would be of two varieties – first, the direct impacts associated with being able to use the new codes, and second, the impact associated with transitioning from one coding scheme to the other.
For any such change to the diagnosis and procedure codes, impacted entities obviously include “covered entities” under the HIPAA rules – providers, health plans (including health insurers, and healthcare clearinghouses.
Other entities are likely to be affected as well:
The impacts could include the following:
A. Upgrading software for in-house applications, including revising corporate data warehouses to accommodate new codes, normalizing new data, mapping new codes to DRGs.
B. Revising purchased applications and rolling these out to supported sites
C. Incorporating code changes into electronic transaction standards
D. Modifying procedures
E. Redesigning paper forms – e.g., patient encounter forms, provider requisition forms.
F. Modifying and renegotiating reimbursement schedules
G. Lost or distorted statistics, reports affected including data warehouse updates.
H. Adjusting care management policies
I.Training
J. Underwriting and actuarial impacts
K. Accommodating changes over a transitional period
In addition, diagnostic related groupings (DRG’s) would have to be mapped to any new coding system. DRG’s are classifications of diagnoses that are used to determine inpatient payment amounts and the groupings are based on ICD coding. It is unclear if the DRG structure would require change, but certainly the grouping process will need to take into account the new ICD structure.
Of course, any significant change to information systems and processes would require adequate testing. Changes such as these will require an extra measure of testing, since they impact the most critical information used in claim adjudication and payment.
Transition to new codes will not be successful unless HHS provides a suitable crosswalk between the ICD-9 codes and the ICD-10 codes. Otherwise, affected entities will not be able to make use of their in-house software applications that are built on current diagnosis and procedure codes.
Thus, applications built in-house that use ICD-9 codes will require an adequate map to ICD-10 in order to support changes that reflect the different size, structure, and meaning of ICD-10. These changes could include the following:
There would likely be significant logic changes associated with the move to ICD-10 for applications that directly interrogate the value of the codes. Such logic has been gradually incorporated into many automated systems over the last few decades.
Overall, it appears that a move to ICD-10-CM and ICD-10-PCS would have a similar or even greater impact than that of the initial Transactions and Code Sets rules, since such changes would have a “ripple effect” throughout virtually every aspect of providers’ and health plans’ systems and procedures.
Payers and providers use a variety of purchased applications. For example, many payers use these applications to perform tasks such as examining historical claim data to identify duplicate claims and fraudulent billing. Significant cost savings are realized through these processes. A change to ICD-10 would necessitate upgrades to these applications.
DRG groupers are updated each year. The grouper is retained from previous years to accommodate older claims. The interface from systems to the grouper would need to be changed to accommodate ICD-10. This could conflict with older versions of the grouper unless both old and new field formats were present in old and new groupers. Selection of the format to be used by the grouper would also be an issue – even if the grouper can handle either format, the grouper logic needs to recognize which format is being used.
Software may be used by providers for appointments and billing or to submit transactions to payers for inquiry purposes or for reimbursement. This software may need to be upgraded, since any disruption to these functions could hinder the day-to-day delivery of health care or delay payment.
Purchased software may require the same types of changes to screens, reports, databases, etc., as described above for software built in-house. In addition there are other concerns for software vendors.
Transaction formats need to have the correct field lengths to accommodate ICD-10. Even if a provider uses a clearinghouse to format HIPAA transactions, it is likely that the provider would need to modify current transaction formats to transmit the correct ICD-10 information to the clearinghouse. It is unclear how paper claim submission would be accommodated. Clearinghouses would need to handle dual formats to accommodate providers, since it is improbable that all would convert to new transaction formats simultaneously, and providers may need to continue to use ICD-9-CM coding for a period of time in order to process claims for services rendered prior to a change in the standard codes.
Coding procedures may need to be enhanced to capture the additional data needed to use the new ICD-10 codes. Health Information Management professionals will need to become familiar with the coding systems and any new guidelines that have been developed. Because the ICD-10 systems code to a greater degree of specificity, documentation must be examined to ensure that it is comprehensive enough to assign a code accurately. Correct coding is essential to the quality of the data used in reimbursement and statistical analysis
Medicare providers may have up to fifteen months to file a claim. Medicare rules require claims to be paid and appeals to be addressed within a year. Therefore, clear guidelines may need to be developed to address changes in coding over this period.
Provider procedures and medical policies may be based on diagnosis. These policies and procedures would need to be updated to account for the new coding. Underwriting procedures would need review.
The edits to ensure proper payment of services would need to be revised to accommodate the expanded and redefined alphanumeric codes. With the numerous variations the ICD-10 code contains, the error ratio would certainly increase and possibly require manual intervention by a processor who would need special training to determine the validity of the code. For example, GAO noted in its recent report that there are some cases where ICD-10’s specificity creates a significantly greater number of codes, and it is unknown what effects, if any, this increased volume of codes will have on coding accuracy or the availability of useful data.(3) For example, GAO found that ICD-10-PCS could generate up to 180 different procedure codes that correspond to a single ICD-9-CM Vol. 3 code for a coronary vessel aneurysm repair.(4) “With more codes available for use,” GAO concluded, “there are more opportunities for coding errors with inaccurate codes used in describing the procedure provided, particularly if the description of procedures on the medical codes do not capture all the dimensions of the procedure needed to complete a code.”(5)
If a new coding scheme were implemented, there would be increased opportunity for fraud in the beginning, when people are less familiar with the new codes. It might be more difficult to detect potential duplicates or upcoding of procedures during the transition when two versions of code sets could be in effect.
While the HIPAA transactions and codes sets rules allow covered entities to accommodate nonstandard transactions in paper formats, in this instance, the industry cannot support two different coding structures, one for paper and one for electronic transactions. Consequently, a number of paper forms used in the health industry, including provider visit sheets and paper claim forms will need to redesigned to accommodate the new code values and length. For example, provider visit sheets may have commonly used codes pre-printed along with a check box to indicate the appropriate code for that visit. Due to the increased specificity of the ICD-10 codes, there could be an increased need for detailed documentation in order to assign the correct code to a diagnosis and procedure.
In the U. S., reimbursement is based on diagnosis and procedure information. Many employer group health plans base their benefit structure on DRG fee schedules that are used to determine reimbursement for in-patient claims. State or federal government payers may dictate the amounts in the fee schedule. These schedules would need review and possible modification. In addition, without an adequate historical pricing model, it would be difficult to determine appropriate pricing under a new coding scheme.
For outpatient reimbursement, CMS began using Ambulatory Payment Classification (APC) starting July 2000. A combination of the diagnosis and procedure codes (ICD-9 and HCPCS) is used to determine the APC and therefore the resulting payment. This process may need revision to accommodate ICD-10.
Institutional reimbursement is determined by DRG for inpatient settings. Each hospital can have a separate reimbursement schedule. Although some may use a per diem rate instead, these rates are based on DRG information. At this time it is unclear how a wholesale change to ICD-10 codes would impact the resulting DRG.
Professional reimbursement is via line by line pricing by procedure. Professional reimbursement would likely be impacted less by a change to ICD-10 if the current CPT-4 coding for professional procedures and services were retained.
Payers may have separate contracts with each institution and provider. There may be separate contracts for each network in which the provider is a member. Each contract has an associated fee schedule. These fee schedules may need to be renegotiated if ICD-10 codes are adopted.
Hospital contract negotiations are very lengthy. Re-negotiation costs are incurred on the payer and on the provider side. Hospitals and physicians could need to review reimbursement contracts with their payers. There are over 6,000 hospitals in this country and at least 2,000 payers. As an example, Blue Cross Blue Shield of South Carolina, a medium sized payer, has contracts with about 65 to 70 in-state hospitals and 6,000 physicians. Using these numbers, we estimate that approximately 140,000 hospital contracts would need to be revisited. Similarly, nationwide figures for the year 2000 put the number of practicing physicians involved in patient care at that time at 647,430(6). A 1996 report found a mean number of 13 contracts among physicians in practices with contracts.(7) Using these numbers, approximately 8,416,590 physician contracts could require review. This would be a time-consuming and resource intensive endeavor. Once contracts are finalized there would be costs to revise and distribute provider materials.
Diagnosis is also used to determine whether a payer might be secondary in certain instances, such as injury or illness resulting from external factors. These determinations would need to be revisited to assure proper payment resulted.
Because ICD-10 coding is so different from ICD-9 it will be difficult to relate data coded under ICD-9 to data coded under ICD-10. This could impact reports that compile statistical data for trend analysis. Such reports are used for quality studies, evaluating effectiveness of care (e.g. HEDIS reports), provider profiling, actuarial studies, and many other purposes.
Modeling between two coding systems requires an accurate crosswalk. Utilization review, quality review, and network management depend on the accuracy of coding data used in models. In addition, due to the complexities of moving to the new coding scheme, there could be many inaccuracies in coding that would corrupt the integrity of information.
Some reporting uses vendor software to compile statistics. It is possible that two versions of a vendor package would be required simultaneously to process data coded under both ICD-9 and ICD-10. Moreover, some treatment data is designed to capture treatment delivered throughout the course of an episode of illness or injury. A change to ICD-10 codes may require development of a policy to determine how reports would capture data relating to episodes that span the implementation period for a new code set.
Health care providers and payers use many ad hoc queries and reports to track utilization review, immunizations, maternity, transplants, disease management, cost savings, special customer requests and many other purposes. These ad hoc reports are usually based on data stored within master files or databases. The ad hoc reporting process and the data storage used would require review and possible modification to support a change in coding schemes. A comprehensive mapping scheme would have to be developed to relate data from reports based on ICD-9 data to reports based on ICD-10.
The National Committee on Quality Assurance (NCQA) uses year to year comparisons of claims experience to evaluate the effectiveness of healthcare programs. This reporting process would need to be reviewed and may require an update to accommodate a new coding system.
Researchers may find that statistics compiled under ICD-9 are no longer useful under the new coding and we would lose valuable information gathered over the last several decades.
Provider care management systems may include diagnosis and procedure information. These would need to be modified to accommodate ICD-10 codes. Providers would need to be familiar with the new coding to effectively use these tools and procedures.
Payer guidelines and policies on treatment that reference diagnosis may also need review and modification.
There is general consensus among the organizations that have studied a proposal to adopt ICD-10 codes that training is a major issue. We note that training would need to encompass not only what the new codes mean, but also how procedures and policies have changed as a result of the adoption of the new codes. Code users include not only medical coders, but also operational management, supervisors, administrative staff, claims processors, medical review teams, actuaries, auditors, information systems personnel and others. The cost and effort of training all those who currently use diagnosis and procedure codes would be substantial.
Depending on contract, there may be additional costs associated with updating materials such as training manuals and publication of procedures to reflect changes in the codes.
Underwriting and actuarial functions that project costs based on diagnosis and procedure codes would be affected by a change to ICD-10 codes. For example, reports generated for modeling based on ICD-9 diagnosis and procedure codes. A major change in the code set could result in reduced ability to compare data and to price products accurately.
It appears evident that payers and providers would need systems and processes to manage both the ICD-9 and the ICD-10 code structures during the transition. Even with a suitable crosswalk, maintaining dual coding structures would be, at best, cumbersome. The ability to capture historical data or review utilization information would be difficult. The ability to perform retrospective audits and other reviews relies on a comparison between historical claims and current claims. In particular, payers need accurate utilization data in order to determine rates for their customer accounts.
There are many concerns that need to be resolved to facilitate transition:
Based on the significant and widespread impacts of moving to ICD-10, it is our view that it is premature to propose adoption of ICD-10 into HIPAA electronic transaction and code set standards at this time.
Any recommendation to adopt ICD-10-CM and ICD-10-PCS should be postponed until the current set of HIPAA initiatives have been successfully implemented and a cost-benefit assessment and industry impact analysis has been done.
Alternatives to full-scale adoption of ICD-10-CM and ICD-10-PCS should be assessed.
We further recommend that before such a coding scheme could be adopted, a thorough study should be conducted and formal implementation guidelines and an industry-approved transition strategy must be set forth and accepted by providers, payers and other parties well in advance of any scheduled implementation date. To this end, we recommend that a multidisciplinary industry team be established to analyze the implementation considerations and impacts associated with ICD-10. BCBSA stands ready to assist you in this analysis.
Thank you for the opportunity to testify.
(1) HIPAA Standards: Dual Code Sets are Acceptable for Reporting Medical Procedures, Report to the Chairman, Subcommittee on Health, Committee on Ways and Means, House of Representatives, GAO Report 02-796, at p.16.
(6) American Medical Association, PCD 2002-2003 Edition, page 8.
(7) American Medical Association, Physician Marketplace Statistics, 1996 Edition, p. 146.