Will all payers use ICD-10 codes even if they aren't required?

Carl Natale
by Carl Natale

It seems like a major oversight but not all payers are going to have to accept ICD-10 codes on Oct. 1, 2014.

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.

Back in 2011, Sue Irwin at Physician's Practice worried that worker’s compensation carriers, MVA insurance carriers and some of the smaller TPAs weren't going to make any effort to accept ICD-10 coding. This could mean practices need dual coding systems and go through some trial and error figuring out who is on the ICD-10 wagon.

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"

I'm not sure these publications are striking fear into the hearts of non-covered entities. (Hey, is there an ICD-10 code for that?) There needs to more incentive.

John Sarich, vice president of strategy at VUE Software, warns that creating dual coding burdens for healthcare payers could force them out of the system. The cost and effort spent on the ICD-10 transition would be offset by a more efficient reimbursement process. "According to a Rand Corporation cost saving study, ICD-10 conversion will result in more accurate payments for new procedures and fewer miscoded, rejected and improper reimbursement claims."

The International Association of Industrial Accident Boards and Commissions "stakeholders will certainly identify ways to use this information in new and powerful ways:"

  • "Allow for much greater specificity and accuracy in diagnosis."
  • "Aid in the development of fee schedules and pricing schemes."
  • "Help in managing the utilization review process."
  • "Provide an opportunity for greater measurement of the quality and efficacy of medical care."

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.