Massive diagnosis code shift gives hospitals billing headaches

A major U.S. medical billing standards change seems to be causing some problems for hospitals, but the effects on overall financial performance have been limited.

Analysts at Crowe Horwath LLP, a Chicago-based accounting firm, have given that assessment in a report based on the performance of 597 hospitals in the company's hospital performance database.

The Centers for Medicare & Medicaid Services began requiring all health care providers covered by the Health Insurance Portability and Accountability Act of 1996 to shift to use of the ICD-10-CM diagnostic code set Oct. 1, 2015.

Complaints from insurers about the diagnostic codes on inpatient hospital bills spiked in late 2015, after providers switched to the new code set, from the old ICD-9-CM code set, but the code problem rate fell back down close to the 2015 level in January, according to Crowe Horwath data.

Insurer claim denial rates have been a little lower since Oct. 1 than they were before the ICD-10-CM switch data, the analysts say.

But the analysts say the average number of days an inpatient hospital bill spent in "discharged and not final-billed status" was about 6.2 percent higher in February and March this year than it was in February and March in 2015.

In March, inpatient hospital bills were spending an average of about 7.5 days in not-final-billed status, the analysts say.

Code shift

The analysts did not look at how the diagnostic code shift has affected physicians or other nonhospital providers.

U.S. health care providers began using the old ICD-9-CM diagnostic code set — the U.S clinical modification of the ninth revision of the World Health Organization's International Statistical Classification of Diseases and Related Health Problems — in 1979.

WHO members approved the ICD-10 diagnostic code set in 1992, and the United States began developing its own ICD-10-CM version of the WHO code set starting in the late 1990s.

Anita Hazlewood, a health information specialist, says in an article on the American Health Information Management Association website that AHIMA has had representatives testifying in Congress about an urgent need to shift to the ICD-10-CM system since at least 2002.

The American Medical Association and other physician groups argued that switching to the ICD-10-CM code set would be hard on physicians, because the ICD-10-CM code set includes many more codes than the ICD-9-CM code set.

Instead of being able to put down one code for "tension headache," for example, a physician who wants to bill an insurer using an ICD-10-CM code must choose from a list of six different types of tension headaches.

A physician who wants to report treating the effects of a shooting must choose from a long list of firearm-related diagnoses.

Advocates of the shift to the ICD-10-CM say the new code set will improve the state of health care and health finance data, by giving government agencies, researchers, insurers and others more detailed information about patients' health.

Related:

Doctors seek ICD-10 shift help

Actuary: PPACA drags insurers into diagnosis code war

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