Could New ICD-10 Medical Codes Put the Health Industry in Sick Bay?

By Bruce

From health insurers to large hospital operators, the long-awaited rollout of more than 140,000 new government-mandated ICD-10 codes used for describing diseases and medical procedures in the billing process is being closely monitored for any interruption to cash flow between providers and payers.

The transition this month to the International Classification of Diseases, Tenth Revision, known as ICD-10, could have repercussions on payments to hospitals and doctor practices from insurers, amid reports that providers aren't all ready for the conversion.Mismatched codes could cause patient claims to be denied and payments to be delayed.

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And that's something for investors to watch, because it could affect the stocks of health insurers such as UnitedHealth Group , Aetna, Anthem, Cigna,and Humana , but also large providers such as HCA Holdingsand Tenet Healthcare.

"This a complex conversion that could initially lead to disruptions across the medical field," says Aon Hewitt Senior Vice President Chris Miles, who works in the employee benefits consultancy's health group.

The conversion, which had previously been delayed twice,is now required by the Centers for Medicare & Medicaid Services in orderto provide more specificity to the medical coding system. The approximately 14,000 old ICD-9 codes that are being phased out have limited information about medical conditions and procedures, while the new ICD-10 code sets are considered more specific and therefore should lead to more accurate diagnoses and higher quality of care.

ICD-10 conversion has been a large contributor to health insurers' capital expenses in the past two years. Though insurers say they are pleased with the early rollout of ICD-10, they acknowledge that claims have just now started coming in under the new system.

"We are not dancing in the end zone yet," Ross Lippincott, vice president of UnitedHealth's regulatory implementation office, told a panel before hundreds of doctors at the Medical Group Management Association's annual meeting in Nashville on Oct. 12. "We are happy with where we are but still have a road to go."

Billions of dollars flow through medical codes and claimsIn the first two weeks since ICD-10 implementation, UnitedHealth Group's Lippincott said its call volume from providers was "normal," though there was reportedly a "slight uptick" in claim denials that could be related to ICD-10 issues.

Humana said during the same MGMA panel that calls received in the first week that were specific to ICD-10 amounted to "only 0.03% of all calls from providers regarding benefits, claim status, spanning date of service, and authorization."

But Humana had only seen about 50% of its claims coming in from medical providers, and studies have shown that up to one in four doctor practices wasn't ready for the conversion.

Thus, health insurers are bracing for potential issues.

The Workgroup for Electronic Data Interchange, or WEDI, said this summer that only about "20% of physician practices have started or completed external testing and less than 50% responded that they were ready or would be ready for Oct. 1."

Doctors are distractedEven as insurers report few problems, doctor practices say the conversion has been a challenge, and getting it implemented is distracting the day-to-day operation of their practice.

Sermo, a social-media network for doctors, reported that 86% of doctors it surveyed following the ICD-10 conversion said the "transition is taking time away from patient care," according to a poll of 200 physicians.

Though health insurers say there could be delays when patients seek insurance company authorization for certain tests and procedures if doctors aren't adequately coding the services, both healthcare providers and those picking up the tab for care should benefit in the long run once all the kinks are worked out, given that the new codes are more specific and up-to-date.

"Transferring to the new medical claim codes will allow key industry stakeholders to better track and manage diseases, measure the quality of care, and evaluate patient outcomes -- all of which support the shift toward value-based payment plans," Aon Hewitt's Miles said.

Ultimately, more accurate coding will lead to better data within the industry, which should be a boon to insurers, providers, and also healthcare IT companies.

But for now, stakeholders are holding their breath.

The article Could New ICD-10 Medical Codes Put the Health Industry in Sick Bay? originally appeared on

Bruce Japsen has no position in any stocks mentioned. The Motley Fool recommends Anthem and UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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