HIPAA Administrative Simplification: Modification to Medical Data Code Set Standards to Adopt ICD-10-CM and ICD-10-PCS- Proposed Rule (Federal Register; August 22, 2008)

A. Summary of the NPRM

HSS has FINALLY issued an NPRM (Proposed Rule) published in the Federal Register on August 22, 2008 that proposes the adoption of ICD-10 effective October 1, 2011. Should this rule be made final all covered healthcare entities- health care providers, healthcare plans, and healthcare clearinghouses who must comply with HIPAA regulations……ICD-10-CM will be the standard code set for reporting and coding diseases, injuries, impairments, other health problems and their manifestations, to replace ICD-9-CM Volumes 1 and 2.

Additionally, ICD-10-PCS would replace ICD-9-CM Volume 3, including the official coding guidelines, for the following procedures or other actions taken for diseases, injuries, and impairments on hospital inpatients reported by hospitals: prevention, diagnosis, treatment, and management.

All HIPAA covered entities would be required to use these codes when diagnoses and hospital inpatient procedures need to be coded in HIPAA transactions. Because ICD-10-PCS codes are only used for inpatient hospital procedures, the ICD-10-PCS codes would not be used in outpatient transactions.

An ICD-10-CM/PCS Coordination and Maintenance Committee would be established. This committee will follow the same procedures currently used by the ICD-9-CM Coordination and Maintenance Committee to consider new codes and revisions to existing codes.

October 1, 2011 is proposed as the compliance date for ICD-10-CM and ICD-10-PCS code sets for all covered entities. It is important to note that the compliance date must occur on October 1 in order to coincide with the effective date of annual Medicare inpatient PPS updates. Projected compliance dates for other health IT initiatives have been sequenced in a manner that will allow covered entities to concentrate their efforts on ICD-10 implementation (including the implementation of the 5010 transactions) during the relevant period. The proposed compliance date is also sufficiently far in the future to provide all sectors of the industry, including small health plans, adequate time to implement the code sets.

Upon publication of the proposed rule in the Federal Register, both the industry and CMS will/should actively initiate and/or complete planning for implementation of ICD-10.

Once the ICD-10 and Version 5010/NCPDP Version D.0 (electronic transaction standards) final rules are published, CMS estimates that both CMS and the industry will begin documenting the requirements for both ICD-10 and Version 5010 system changes, initiate and/or complete any gap analyses, and then undertake design and system changes. Version 5010 progressing first, based on the need to have this transaction standard in place prior to ICD-10 implementation to accommodate the increase in the size of the fields for the ICD-10 code sets.

B. Background
The ICD-10 was adopted by the World Health Assembly in 1990. Currently, the United States is the only G7 nation (the other G7 nations are Canada, France, Germany, Great Britain, Italy and Japan) continuing to use ICD-9 for morbidity reporting. Furthermore, Great Britain, Denmark, Finland, Iceland, Norway, Sweden, France, Australia, Belgium, Germany, and Canada use a clinical modification of ICD-10 for reimbursement and/or administrative purposes.

The Congress addressed the need for a consistent framework for electronic transactions and other administrative simplification issues in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) which became part of Social Security Act titled "Administrative Simplification."

The Administrative Simplification sections 1171 through 1179 requires any standard adopted by the Secretary of the Department of Health and Human Services (including the standard code sets):

• to be developed, adopted, or modified by a standard setting organization
• to adopt code standards applicable to:(1) health plans; (2) health care clearinghouses; and (3) health care providers who transmit any health information in electronic form
• to adopt transaction standards and data elements for the electronic exchange of health information for certain health care transactions
• to ensure that procedures exist for the routine maintenance, testing, enhancement, and expansion of code sets
• to set a compliance date not later than 24 months after the date on which an initial standard or implementation specification is adopted for all covered entities except small health plans

The Transactions and Code Sets Final Rule 2000 adopted a number of standard medical data code sets for use in those transactions, including:

• ICD-9-CM Volumes 1 and 2 for coding and reporting of diseases, injuries, impairments, other health problems and their manifestations, and causes of injury, disease, impairment, or other health problems.
• ICD-9-CM Volume 3 for the following procedures reported by hospitals: prevention, diagnosis, treatment, and management
• CPT for physician services and all other healthcare services
• HCPCS for other substances, equipment, supplies, and other items used in healthcare

The rule also included adoption of a procedure for maintaining existing standards, for adopting modifications to existing standards, and for adopting new standards.

The The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 included a requirement for updating ICD-9-CM codes twice a year, instead of a single update on October 1 of each year to facilitate reporting of new technology and emergent diseases.

The compliance date for the provisions of this proposed rule for all covered entities, including small health plans, would be October 1, 2011.

Comments will be considered if receive by DHHS no later than 5 p.m. on October 21, 2008.

Note: A simultaneously issued Insurance Reform; Modifications to the Health Insurance Portability and Accountability Act (HIPAA) Electronic Transaction Standards-Proposed Rule would updated versions of the standards for electronic transactions originally adopted in the regulations. Version 5010 of the X12 electronic data transaction standards anticipates the eventual use of ICD-10 diagnosis codes and adds a qualifier as well as the space needed to report the number of characters that would permit reporting of ICD-10 diagnosis codes on professional claims.

Versions 5010 and D.0, health plans, including small health plans, health care clearinghouses and covered health care providers, will be required to be compliant on and after April 1, 2010.

1. Space Limitations
   Additional need for new codes for reporting new and changing medical advancements (newly identified disease entities, new technologies and devices) has exhausted the functionality of the classification system
2. Impact of Workarounds on Structural Hierarchy
   Some chapters can no longer accommodate new codes, with the result that any additional codes must be assigned to other topically unrelated chapters.
3. Lack of Detail
   Emerging health care technologies, new and advanced terminologies, and the need for interoperability in electronic health records (EHRs) and personal health records (PHRs), support for pay-for-performance programs (aka value-based purchasing or competitive purchasing), development of rapid interventions for emerging diseases affecting international populations, utilization review, disease management, and research-all required code specificity into available in ICD-9-CM.
4. Mortality Reporting and Biosurveillance
   138 countries have adopted ICD-10 for coding and reporting mortality data, and 99 countries have adopted ICD-10 or a clinical modification for coding and reporting morbidity data; as a global community, it is vital that our health care data represent current medical conditions and technologies using codes compatible with the international version.

The Transactions and Code Sets final rule (65 FR 50312) published in 2000 implemented several requirements of the Administrative Simplification provisions with in HIPAA (Public Law 104-191, 1996). HHS has fully complied with the following provisions:

• Reducing the administrative costs of providing and paying for healthcare
  • with several healthcare initiative such as value-based purchasing and quality performance initiative, HHS’ goal is to reduce healthcare cost through improved practice standards, quality measures, outcomes measure, utilization review, disease management, and research and efficient means of evaluating services provided to beneficiaries, thereby accomplishing value-base purchasing greater specificity in diagnosis and procedure coding is required by these initiatives.
  • with improved electronic transaction processes as well as improved data element specificity administrative cost will be reduced.
  • improved data collection improves and provides for better equity in reimbursement for services while maintaining budget neutrality.
  • projected compliance dates for other health IT initiatives have been sequenced in a manner that will allow covered entities to concentrate their efforts on ICD-10 implementation during the relevant period.
• Development of standards must be accomplished by standard setting organization (SSO), or if no SSO has done so the Secretary of HHS has the authority or is required to develop, adopt, or modify a standard.
  • SNOMED-CT® developed by the College of Pathologists (CAP), which has limited accreditation scope by ANSI is designed to function as a standard terminology for primary documentation (electronic health record applications) and not designed for other health care transaction requirements) does not fully qualify as a standard developed by an SSO.
  • SNOMED-CT® is not a classification system, as ICD-10-CM/PCS are. A classification system has the ability to arrange/group like entities for secondary data purposes such as designing healthcare delivery, setting reimbursement policy (ex. DRG), tracking public heath, and utilization resources.
  • no other standard code set designed specifically for health care transaction requirements has been presented.
• Consultation with members of the Designated Standard Maintenance Organizations (DSMO) Steering Committee is required by either HHS or a SSO before adopting any standard. DSMO members: NUBC, NUCC, WEDI, ADA.
  • Jan 2003 the DSMO Steering Committee approved a request by the CDC to modification of the set code standard and recommended ICD-10-CM/PCS for implementation
  • In addition CMS has consulted with WEDI and in 2006 WEDI submitted a summary of the discussion at two ICD-10-CM/PCS informational forums intended to identify issues surrounding adoption of ICD-10-CM/PCS.
• The Secretary must consult with NCVHS and must rely on their recommendation.
  • The NCVHS (National Center for Vital health Statistics) conducted 8 days of hearings with providers, health plans, clearinghouses, vendors, and interested stakeholders on the adoption of ICD-10-CM and ICD-10-PCS in place of ICD-9-CM as the HIPAA adopted standard for reporting diagnoses and hospital inpatient services in standard transactions.
  • In a letter dated November 5, 2003, the NCVHS submitted to the Secretary of HHS its recommendation to adopt ICD-10-CM and ICD-10-PCS.
  • NCVHS received input for the following organizations that represent providers, health plans, clearing houses, vendors…major stakeholders in health care transactions: AHIMA, AMA, BCBSA, MGMA, HIMSS and AHIP.

The HSS also has considered input from Federal and State agencies and private organizations regarding the adoption and implementation of ICD-10-CM and ICD-10-PCS, and has received input from a number of professional organizations and other industry stakeholders.

HHS and industry health information technology initiatives include interoperability specifications, certification criteria, and standards developed under HIPAA and the Medicare Modernization Act have been met according to this timeline:

September 2006 (and annually thereafter) — Delivery of Healthcare Information Technology Standards Panel (HITSP) interoperability specifications.

• Training costs:
  • training commences in 2010 and continuing through 2012
  • adjustments to training costs based upon coder/user setting
  • includes training providers and suppliers
  • total costs, all settings: $355.7 MM
• Productivity losses:
  
  cost include coder productivity all settings and returned claims
  total cost all settings: $571.7 MM
• System changes:
  • includes providers, software vendors, payers and government systems
  • total cost all settings: $712.9 MM
• Benefits:
• more accurate payment for new procedures
• fewer rejected claims
• fewer improper claims
• better understanding of new procedures
• improved disease management
• better healthcare outcomes
• harmonization of disease monitoring and reporting world-wide
• total benefits all settings: $3.95 B
• Net gain $2.31 over period 2009-2023 with cumulative benefits over-riding the cost point coming in year 2018.