Ch. 04

Issues and Concerns

With every change to the coding standard there are positives and negatives. Here are nine major issues that providers, vendors and payers are debating about. For each concern, there is an explanation to provide more insight into the complexities of the transition.

Upgrading to ICD-10-CM/PCS will be expensive and will require systems changes and training and result in initial losses in productivity.

Many are concerned over the mounting costs that will be associated with establishing ICD-10-CM/PCS. A number of significant changes will have to be made in order to implement the new coding systems. Inevitably, this change must be realized through financial means. First, new hardware and software will be necessary for the updated systems. Systems in place will have to be integrated for both ICD-10-CM and ICD-10-PCS, resulting in extra costs. Even if hardware is adequately up-to-date, new software is unavoidable. RAND Science and Technology Policy Institute’s “The Costs and Benefits of Moving to the ICD-10 Code Sets” estimates that conversion to updated systems will cost between $225 million and $700 million over a ten year period. Medical coders and physicians must also be trained in ICD-10-CM and ICD-10-PCS. Costs for training part-time coders, full-time coders, other code users and physicians are expected to be between $200 million to $450 million altogether. Additionally, losses in productivity due to ICD-10-CM/PCS are expected to be between $50 million and $400 over the ten years following implementation.  Another study conducted by Blue Cross and Blue Shield suggested that conversion costs may be as high as $5.5 to $13.5 billion, including contract negotiations and re-working. Even in the best case scenarios, implementation will be expensive.


  • The CMS offers its findings on the current state and likely development of National Health Expenditure in its “National Health Expenditure Projections 2009-2019.”

Despite the costs that result from initializing new systems, ICD-10-CM/PCS are expected to save substantial amounts of money over time.

Streamlined processes and accurate health care data will minimize the amount of money spent by providers. The accuracy of the new seven decimal alphanumeric diagnostic codes will minimize frivolous or unnecessary testing. Even the codes’ ability to distinguish right from left will prove an important feature in streamlining operations; in cases where patients have suffered injury to an eye or lung, knowledge of that injury’s laterality will expedite treatment and billing. Operations will be more accurate due to the specificity of ICD-10-CM/PCS.

On a more logistical level, the improvements to payment may well make up for initial losses. ICD-9-CM lacks room for new codes, meaning that new procedures would not have their own codes. Often, these procedures are more expensive, but are not fully reimbursed or performed for Medicare/Medicaid patients.  Potentially, having consistent codes for new procedures could save health care providers between $100 million and $1.2 billion over the course of ten years. Furthermore, ICD-10-CM/PCS will likely result in fewer incorrect and rejected claims. The highly logical organization of codes will result in accurate, detailed billing.


Smaller practices that do not update to ICD-10-CM/PCS on time may go out of business.

An inability to comply with implementation will result in massive fines and rejected claims. Though rejected claims may mean a large administrative headache for some, smaller businesses or practices may be forced out of operation by such policies. If they lack the surplus to stay in business, not adhering to ICD-10-CM/PCS and HIPAA 5010 could be a business ending policy.

Improved accuracy in billing will result in less fraud, saving billions of dollars.

Nationwide, billions of dollars are lost to fraud and exaggerated claims every year. In 2009, the Medicare Trust Fund and the federal government recouped a total of $4.13 billion dollars, but overall estimates for fraud are much higher. With some groups such as the National Health Care Anti-Fraud Association estimating an annual loss of $68 billion due to fraudulent activity (though some put that number as high as 10%, or about $226 billion), improved measures are needed. In addition to having more accurate data, the specificity of ICD-10-CM/PCS will be able to detect fraudulent patterns. The Federal Bureau of Investigation’s 2009 Financial Crimes Report further reveals the need for action against fraudulent activities in health care. Establishing that health care expenditures are rising at twice the rate of inflation, the FBI’s involvement in fighting against health care fraud is necessary for the success of the program.

Even though targeted efforts against fraud such as the Health Care Fraud Prevention and Enforcement Action Team (HEAT) have already been created to address the issue, the large-scale systemic change brought about by ICD-10-CM/PCS will undoubtedly help reduce exaggerated claims. Directly, the increased billing accuracy of ICD-10-CM/PCS will limit fraud, and indirectly, organizations dedicated to the prevention of fraud (as well as providers) will see less strain. Less ambiguity in billing means that payers and providers will pay and be reimbursed more appropriately, substantially limiting the possibility of health care fraud.


New workflows and processes will have to be introduced

The introduction of ICD-10-CM/PCS will likely result in a loss of productivity. Learning how to best utilize the new systems and implement appropriate workflows will take time, possibly years. Re-working technical and hierarchical processes is an involved and complicated task. This is an initial hurdle that must be overcome. Once effective workflows are established, the benefits of ICD-10-CM/PCS will be observable.

With over 140,000 codes, ICD-10-CM/PCS has too many to use. How do we know ICD-10-CM will work?

The dramatic increase in the number of codes may mean more complexity and confusion in some cases. ICD-9-CM only has 13,000 codes, which makes it easier for coders, billers, and physicians to more quickly document procedures. ICD-10-CM has 69,000 codes and ICD-10-PCS has 71,000 codes making for a total of 140,000 codes. Despite the massive increase, professionals maintain that the new systems will not be as complicated as it seems. Further, the systems will still operate similarly to ICD-9-CM. The primary reason for an increase in codes is the addition of laterality; a large number of the new codes are descriptive of organ orientation. Improved logical organization will make coding in ICD-10-CM/PCS more intuitive than in ICD-9-CM.

In order to verify that ICD-10-CM will perform well, AHIMA and AHA administered a field testing project. The field test found that 64.5% of participants considered the guidelines, notes and instructions clear and comprehensive and 76.3% considered ICD-10-CM to be an improvement over ICD-9-CM. It is also important to note that a majority of respondents felt that sixteen or less hours of training prior to implementation would be sufficient for comfortable day-to-day use.


  • AHIMA and AHA’s ICD-10-CM Field Testing Project Summary Report provides insight into how well the new systems are expected to work. Participants in the field study allowed researchers to see the viability, efficiency and operational benefits of the proposed coding systems.
  • The Looming Problem in Healthcare EDI – Shahid N. Shah, the CEO of Netspective, examines some of the problems with the change from ICD-9-CM to ICD-10-CM/PCS. He argues that such a change is too radical and will have far-reaching implications that have gone unconsidered.

Will the newly implemented ICD-10 become outdated with the introduction of ICD-11? Why not just wait and update to ICD-11?

Currently, WHO is drafting ICD-11, which it hopes to endorse by 2015. Unlike previous developments, the WHO is utilizing Web 2.0 principles to construct the document via a multi-author drafting platform.  Progress is already being made; the alpha draft was made available online in July 2011. Such development may seem promising, but despite the introduction of ICD-11, the implementation of ICD-10-CM/PCS will make many important updates to the code systems.  Ultimately, the updates that result from the introduction of ICD-10-CM/PCS will make for an easier transition to ICD-11. The gap between ICD-9 and ICD-11 is certainly greater than the gap between ICD-10 and ICD-11. Therefore, many of the costs that would go into upgrading directly to ICD-11 will be surpassed by first implementing ICD-10-CM/PCS.

The problem with waiting for ICD-11 is that there is no set implementation date or clear timeframe. Lacking a clear timeframe, the health industry would be forced to delay transitioning indefinitely. Forcing those involved to maintain dual systems (ICD-9-CM and ICD-10-CM/PCS) would be costly and would require extra resources and management. It is also likely that ICD-11 would require additional modifications in order to be effectively implemented. Not only would providers be forced to delay transitions that are already underway for ICD-10-CM/PCS, they would have to juggle multiple conflicting coding systems for an extended period of time.

A loophole in ICD-10-CM/PCS could cost providers lots of money and time and diminish the quality of care.

Like ICD-9-CM, nearly every code set in ICD-10-CM/PCS contains an “unspecified” code. If misused, this unspecified code set could result in significant billing problems. In cases where determining a code for a procedure using ICD-10-CM/PCS is difficult, many in the industry may be tempted to simply use the unspecified code. Overuse will nullify many of the benefits of the new systems and effectively prevent their potential granularity. One of the greatest benefits of ICD-10-CM/PCS is the ability to provide data regarding effective treatment and trends in health. If inaccurate codes are applied, information that is important to understanding health issues and implementing efficient procedures are lost. This is an especially serious concern, as the unspecified code would allow providers to continue operating, but at a diminished capacity.

Some health plans have already anticipated this potential loophole. Many policies may refuse to pay claims for an unspecified code when a more specific code exists. Such plans will likely limit an over-reliance on the unspecified code, as many providers would lose money by continuing to practice such behavior. Providers would also lose money due to negatively affected severity and risk scores; the use of unspecified codes obfuscates data that could help justify greater reimbursement.

The combination of the likelihood of providers using the unspecified code as well as the likelihood of health plans to refuse to pay for such classifications may result in an excess of rejected claims. The administrative strain resulting from a large number of rejected claims would compromise health care efficiency. In addition to having to deal with the negative administrative implications, a wealth of knowledge about health outcomes and trends would be lost. The potential abuse of unspecified codes is one of the largest issues facing the new systems and could be detrimental to its success.

Smaller practices that do not update to ICD-10-CM/PCS on time may go out of business

An inability to comply with implementation will result in massive fines and rejected claims. Though rejected claims may mean a large administrative headache for some, smaller businesses or practices may be forced out of operation by such policies. If they lack the surplus to stay in business, not adhering to ICD-10-CM/PCS and HIPAA 5010 could be a business ending policy.

Additional Resources

Further information regarding concerns with the implementation of ICD-10-CM can be found in the following resources. Studies conducted by national health organizations provide detailed information that explains benefits and costs that will likely result from implementation.

Medical Billing and Coding Online