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Clinical Laboratories and Pathology Groups

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Pathologists and medical laboratory managers have only nine months to prepare their labs for ICD-10 implementation

Most clinical laboratory managers and pathologists know that October 1, 2014, is the date for implementation of ICD-10. After that date, each Medicare claim submitted by a medical laboratory must include the ICD-10 code provided by the referring physician.

This is a unique reason why clinical laboratories and pathology groups have keen interest in a smooth transition from ICD-9 to ICD-10. Medicare will reject clinical laboratory test claims that either don’t have an ICD-10 code or have an incorrect ICD-10 code. Thus, labs hope that their client physicians make a smooth transition from ICD-9 to ICD-10.

Nine Months Remain before Launch of ICD-10 in the United States

With just nine months remaining before the October 1, 2014, the date of implementation, many providers have not yet begun the rigorous training needed to prepare physicians, clinical staff, and medical coders to use ICD-10. That is equally true for information technology departments (IT). With less than a year left before implementation, provider IT departments are working furiously to prepare for the launch, noted a report published by Modern Healthcare.

Implementation of ICD-10 poses gargantuan challenges for providers. That’s because ICD-10CM (clinical modification) has 68,000 codes, which is five times as many codes as ICD-9CM. ICD-10PCS (procedural coding system) is even more complex, with 87,000 new codes, 29 times more ICD procedural codes currently used by hospitals.

Hospitals Need to Train Physicians and Staff

Consequently, hospital IT departments must train physicians—most of whom are independent, community-based practitioners—to capture what hospitals and physicians do and translate that information into discrete diagnoses, procedures and billable events pointed out Charlene Webber-Schuss, CIO at Community Hospital of the Monterey Peninsula in Monterey, California, who was quoted in the Modern Healthcare report. “We are concerned about a lot of the community practices,” she said. “If the doctors do not provide adequate documentation, both doctors and hospital will suffer lost revenue,” she explained. Webber-Schuss’ department has already spent eight months and $900,000 in IT resources to prepare for ICD-10 rollout.

Charlene Webber-Schuss

Charlene Webber-Schuss (pictured), CIO at Community Hospital of the Monterey Peninsula, is currently engaged in preparing physicians for the ICD-10 transition. She noted that if physicians are not trained to accurately code documentation, both physicians and hospitals will lose revenue. (Photo by


The extent of code changes will vary by physician specialty. Gail Eminhizer, Practice Administrator for Digestive Health Associates in Traverse City, Michigan, noted that her six-physician gastroenterology practice only has 30 new codes to deal with. But other specialties, such as family practitioners, rheumatologist and orthopedic surgeons, will see daunting expansion in the number of codes.

Proponents of ICD-10 contend that it will allow providers to better track patient care and aggregate data to perform quality-improvement analysis. The newer ICD version also provides hospital administrators and physicians with improved tools to analyze the impact of new procedures and manage population health.

But the high cost of converting to ICD-10 has been a difficult pill to swallow for most hospitals and physicians. This is particularly because their IT departments are under pressure to improve performance on many fronts, noted the Modern Healthcare article. At the same time, IT departments are tasked with meeting meaningful use standards of operability for electronic health records (EHRs) and generating numerous reports that help quality and safety officials improve performance and avoid government penalties.

What Will the ICD-10 Transition Cost? Who Will Pay?

Additionally, upon implementation, the more complex ICD-10 coding system may also trigger financial consequences. These can range from lost revenue due to delays in imputing data to rejected claims from improper coding or malfunctioning IT systems.

Hospital financial officers are concerned about the impact the new coding system will have on reimbursement, even though most ICD experts contend its impact will be revenue neutral. ICD-10 is supposed to make payment more precise—that is if hospitals and physicians fully and accurately document services.

The federal Centers for Medicare & Medicaid Services (CMS) estimated that the transition will cost $1.64 billion over 15 years, with IT costs accounting for 43% of that amount. IT costs will be spread across multiple participants, including the federal government ($315 million), payers ($164 million), providers ($137 million) and software developers ($96 million). Providers will be the hardest hit, however, with the remaining 57% of the $1.54 billion going for training ($356 million) and anticipated loss in productivity ($571 million).

As much as $4 billion in benefits is predicted by the government. The benefits include more accurate payments for new procedures, fewer rejected claims, and improved disease management, along with a better understanding of health conditions and outcomes, reported Modern Healthcare.

The Argument for Delaying Rollout of ICD-10

Christopher G. Chute, M.D., Dr. P.H., is a veteran physician informatics specialist and professor at Mayo Clinic. He was among the medical IT heavyweights who last year authored an article in the journal Health Affairs that called for a one-year delay in ICD-10 implementation. The authors argued that the conversion will be “expensive, arduous, disruptive, and of limited direct clinical benefit.”

Christopher Chute, M.D

Christopher Chute, M.D., (pictured above) is a specialist in physician informatics and professor at Mayo Clinic. He joined with other biomedical Informatics heavyweights to publish an article in the journal Health Affairs, calling for a one-year delay in implementing ICD-10. (Photo copyright Christopher Chute, M.D.)

A survey by the American Medical Association, which supports delaying ICD-10 rollout, found that 94% of 785 hospitals who participated are moderately or very confident they will be ready for the launch next October. However, about 75% of surveyed hospitals are concerned that Medicare won’t be ready to test its ICD-10 submissions. (See Dark Daily, “HHS Proposes One-Year Delay for ICD-10 Implementation: Is This Good News for Clinical Pathology Laboratories?”)

Who Will Test ICD-10 IT Systems?

To avoid problems, National Government Services, a CMS Medicare Administrative Contractors (MACs), recommended that CMS perform external, “end-to-end” ICD-10 testing of all participants in the healthcare claim stream, including providers, claims clearinghouses and payers, noted the Modern Healthcare report.

But Cathy Carter, Director of the CMS Information Office, Business Applications Management Group, said MACs will perform rigorous in-house testing of the system before the October 1, 2014 deadline. At the same time, she also admitted “There is no money or process or time” for Medicare contractors to do external end-to-end testing.

ACLA Recommendations to Medical Laboratories to Prepare for ICD-10

Since clinical laboratories are indirect providers, they will need to rely on physician clients to provide accurate ICD-10 codes on requisitions for medical laboratory tests. Therefore, the importance of ICD-10 coding education and training for ordering clinicians and their office cannot be overstated, noted an article published on the American Clinical Laboratory Association (ACLA) Website.

ACLA also recommended forward mapping from ICD-9CM to ICD-10CM for claim submission purposes. This would be done in those instances where an ICD-9CM code is received from an ordering provider, but an ICD-10CM code is required for payment by the Medicare program.

Of course, there will be a cost to medical laboratories to help in this training of physicians. One nationwide clinical laboratory has estimated that the transition will cost it $40 million. (See Dark Daily, “Labs Likely to Face Expensive Conversion Costs for ICD-10” Laboratories and Physicians expect higher costs for ICD-10.)

—By Patricia Kirk

Related Information:

Expensive. Confusing. Time consuming: Looming shift to more complex ICD-10 coding system has hospitals and physicians scrambling


HHS Proposes One-Year Delay for ICD-10 Implementation: Is This Good News for Clinical Pathology Laboratories?

Anticipating the Disruption from HIPAA 5010 Forms and ICD-10: Essential Action Steps to Maintain Your Lab’s Cash Flow

HHS Delays Implementation Deadline

Labs Likely to Face Expensive Conversion Costs for ICD-1