News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

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News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Bigger challenge will be adoption of ICD-10 across entire U.S. healthcare system in 2013

Two disruptive events in the world of coding, billing, and claims reimbursement are about to engage the full attention of clinical laboratories and pathology groups. First is implementation of HIPAA 5010 forms for claims submission by all types of healthcare providers. This is scheduled to occur on January 1, 2012—just seven months away!

Second is implementation of ICD-10 codes. Federal law currently requires all payers and providers to begin using ICD-10 on October 1, 2013. On that date, the existing ICD-9 codes will no longer be used.

Consultants in medical laboratory billing, coding, and reimbursement predict that implementation of the ASC X12 Version 5010 transaction standards, commonly referred to as the HIPAA 5010 form, will be easier on clinical laboratories than implementation of the full ICD-10 code sets in 2013.

However, even with HIPAA 5010, clinical laboratories and pathology groups may be unpleasantly surprised if there is disruption to their claims submissions and flow of reimbursement. And the problem is not likely to be that the medical laboratory failed to properly implement the HIPAA 5010 form requirements.

Rather, the problem will be that some health insurance plans and payers did not fully prepare for the transition. Thus, their computer systems and their claims processing staff became overloaded as all classes of payers begin using the new HIPAA 5010 forms.

But the requirements of implementing the 5010 forms are relatively small compared to the major effort that will be required of all providers and payers to transition from ICD-9 to ICD-10.

ICD-9 versus ICD-10 for Clinical Laboratory Claims Submission

The International Classification of Diseases (ICD)-10 is not just an update to the ICD-9 code set. ICD-10’s structure is based on entirely different concepts. For example, if a patient presents with an injury to a leg, ICD-9 does not specify which leg. Therefore, if the patient presents again with the same injury, but on a different leg, there is no way for the physician to indicate through ICD-9 codes that this is a new injury.

ICD-10 will correct these types of situations by including additional code characters that enable physicians to specify such things as right versus left leg, and whether this is an initial encounter or a follow-up visit. ICD-10 also allows for additional clinical data to be included by the use of codes that, currently under ICD-9, would require an attachment file.

The increased complexity of ICD-10 allows physicians to be much more detailed in their billing. Experts say that this has the benefit of reducing reimbursement denials. But ICD-10 is not just an expansion of the ICD-9 code set. It features structural changes that make implementation of 5010 transaction standards an imperative.

For Example:


  1. 3-5 characters long
  2. 17,000 codes
  3. 1st digit can be alpha or numeric
  4. Digits 2-5 must be numeric
  5. Adding new codes is limited
  6. Very little detail
  7. No laterality
  8. Alpha characters case sensitive
  9. Does not allow combination codes

  1. 3-7 characters long
  2. 155,000 codes
  3. 1st digit must be alpha
  4. Digits 2-3 numeric, 4-7 alpha or numeric
  5. Adding new codes is flexible
  6. Highly detailed
  7. Laterality included (right vs. left, etc.)
  8. Alpha characters not case sensitive
  9. Combination codes allowed

Payers and Providers Are Dragging Both Feet

According to a recent survey conducted by HIMSS on hospital readiness to adopt ICD-10/5010, only half of the healthcare providers polled had an implementation plan in place by December of 2010. And more than 30% stated that they had no plan in place for testing, or that they are holding off testing until the 4th quarter of 2011, just days in front of the January 1, 2012, 5010 transaction standards implementation deadline.

“Although there is understandably quite a bit of competition for healthcare providers’ resources and attention, addressing 5010 compliance must be a priority,” said Joe Miller in a HIMSS press release. Miller is the former Chair of the HIMSS Medical Banking and Financial Systems Committee, and a primary author of the HIMSS survey. “Healthcare providers would do best to avoid the fourth quarter for testing, when payer and clearinghouse resources will be taxed to the limit. The result could delay or negate their receiving payment,” he concluded.

Respondents to the survey listed the following as preventing the implementation of testing:

  1. 67% said their payers were not ready,
  2. 53% cited competition for resources,
  3. 50% said their vendors were not ready,
  4. 47% said their clearinghouses were not ready,
  5. 66% cited implementation of meaningful use of EHRs as the reason they were not ready.

The excuses abound, however, the deadline will not change and it draws ever nearer with each passing day.

Industrywide Procrastination

“I fail to understand this industry,” said Stanley Nachimson, Principal at health IT consultancy Nachimson Advisors in a Modern Healthcare article. Nachimson is also a former senior technical adviser for health IT activities at the Centers for Medicare and Medicaid Services (CMS). “A lot of entities don’t seem to learn the lesson of being prepared early.”

“If you don’t get this right, you might not get paid,” he continued. “If you don’t do the appropriate analysis and preparation, you won’t generate the right ICD-10 codes, you won’t get the right amount. If your revenue drops even 1%, that’s a serious drop to a hospital. If you’re a plan, what happens if your payouts are 3% to 4% higher? That’s a serious loss of money,” Nachimson concluded.

According to a recent Medical Group Management Association (MGMA) survey of its members, physician’s practices are behind in their implementation of 5010 because vendors have yet to provide the necessary upgrades.

“Let me tell you, ICD-10 is 100 times more challenging (than 5010),” said Robert Tennant in the same Modern Healthcare article. Tennant is a senior policy advisor for MGMA. “If we can’t get 5010, there’s no chance we can get ICD-10 right. If everything goes well with 5010 with vendor upgrades, testing and the plans, if they’re able to flip the switch, then ICD-10 has a shot.”

Clinical laboratory managers and pathologists have an opportunity to assess their organization’s implementation plans for HIPAA 5010 forms and ICD-10 by joining the upcoming audio conference titled “Anticipating the Disruption from HIPAA 5010 Forms and ICD-10: Essential Action Steps to Maintain Your Lab’s Cash Flow”. This audio conference will take place TODAY – Tuesday, May 24th at, 1 p.m. EDT.

You’ll have the opportunity to learn about the essential steps your laboratory organization should take to ensure a successful implementation of the 5010 form. Lâle White, CEO of Xifin, Inc., will provide practical knowledge about the right way to work with payers to guarantee that when 5010 happens on January 1, 2012, your laboratory enjoys smooth claims settlement and ongoing reimbursement from payers for your lab test claims.

Joining White as a presenter is Lee Ann Nichols, Chief Business Officer at West Pacific Medical Laboratory in Santa Fe Springs, California. Nichols is prepared to share the lessons learned at her laboratory as it prepares for 5010 implementation, followed by the effort to transition to ICD-10.


Here’s how to register:

DATE: Tuesday, May 24, 2011 (TODAY!)

TIME: 1 p.m. EDT; 12 p.m. CDT; 11 a.m. MDT; 10 a.m. PDT

COST: $245 per dial-in site (unlimited attendance per site)

TO REGISTER NOW: Click here or call 1-800-560-6363 toll-free

—Michael McBride


Related Information:

Closer than it Appears (Modern Healthcare)

AMA Fact Sheet: The Differences Between ICD-9 and ICD-10

Version 5010 HIPAA Upgrade: Presentation to NCVHS Subcommittee on Standards and Security July 30, 2007

One-third of Healthcare Providers Unprepared for Crucial 5010 Compliance Deadline (HIMSS Press Release)

Findings of the HIMSS Survey on ICD-10 and 5010 Industry Readiness April/May 2010