Why non-covered entities will want to vigorously implement ICD-10 coding

Carl Natale
by Carl Natale

If there's no vigorous opposition, all of healthcare will be using ICD-10-CM/PCS codes after Oct. 1, 2013. Sort of.

It's more accurate to say all covered entities must use the ICD-10 coding system. The Centers for Medicare & Medicaid Services (CMS) explains it this way:

"All Health Insurance Portability and Accountability Act (HIPAA) of 1996 covered entities MUST implement the new code sets with dates of service, or date of discharge for inpatients, that occur on or after October 1, 2013."

That means just about every healthcare provider and payer is a covered entity. But there are non-covered entities that are not required to switch. Entities such as worker's compensation, disability and auto insurers that do reimburse healthcare providers. HIPAA defines non-covered activities as:

"... coverage for accident, or disability income insurance, or any combination thereof; coverage issued as a supplement toliability insurance; liability insurance, including general liability insurance and automotive liability insurance; workers’ compensation or similar insurance; automobile medical payment insurance; credit only insurance; coverage for on-site medical clinics; other similar insurance coverage,specified in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits. See 42 U.S.C. 300gg-91(c)(1)."

If the non-covered entities don't want to switch to ICD-10 coding, they don't have to and can require healthcare providers to submit medical claims with ICD-9 codes. Which will create complications and headaches for providers.

[See also: Week in Review: How much injury can worker's compensation cause?]

The CMS recognizes this problems this can cause and has addressed it with this statement in the handout "ICD-10 Myths and Facts":

"Because ICD-9-CM will no longer be maintained after ICD-10-CM/PCS is implemented, it is in noncovered entities’ best interest to use the new coding system. The increased detail in ICD-10-CM/PCS is of significant value to noncovered entities. The Centers for Medicare & Medicaid Services (CMS) will work with noncovered entities to encourage their use of ICD-10-CM/PCS."

In another handout, "The ICD-10 Transition: Focus on Non-Covered Entities," the CMS defines best interest as:

  • "Expanded detail in injury codes, which will help automobile insurance  and worker’s compensation program"
  • "ICD-9 CM codes will no longer be maintained once ICD-10 has been implemented. The ICD-9 CM code  set will become less useful and resources will be continually harder to obtain"
  • "Not adopting to ICD-10 coding could lead to undue hardship for non-covered entities’ provider"

Seems to me that insurers run on statistics. And the kind of granularity and specificity that ICD-10 opponents like to deride will generate the stats that insurers will use to set rates. For example, there are ICD-10 codes for injuries caused by just about every kind of sporting good. Why would it be important to know many head injuries are caused by hockey pucks or baseballs? Because schools with sports teams need to buy insurance. And those insurers will want to know how much they may have to pay for each sport.

Non-covered entities have too much to gain by using ICD-10 codes. That should be good news for healthcare providers. I don't see auto insurance and worker's compensation entities requiring ICD-9 codes when they can be capitalizing on the extra data found in ICD-10 codes.