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Medical laboratories and anatomic pathology groups could face payment delays if physicians fail to code lab test claims properly using ICD-10 codes

Just weeks remain before the implementation to ICD-10 begins. This will be a delicate time for clinical laboratories and anatomic pathology groups, since labs must rely on physicians to provide accurate ICD codes that labs must submit on test claims in order to be reimbursed by payers.

The much-delayed shift from ICD-9 to ICD-10 diagnosis codes will take place on Thursday, Oct. 1. When clocks strike midnight, years of debate over whether the conversion will create a financial hardship on physicians—and in turn disrupt payments to clinical laboratories and anatomic pathology groups—will begin to be answered.

The Medicare program requires appropriate ICD codes on medical laboratory test claims for Medicare patients. That is one reason why clinical laboratories and anatomic pathology are financially vested in a smooth conversion process. All Medicare Part B claims for medical laboratory tests must be submitted with an appropriate International Classification of Diseases (ICD) code provided by the physician who ordered the lab tests. The Medicare program will not reimburse lab test claims without an appropriate ICD code.

Backlash Leads to Multiple Implementation Delays

The American Medical Association (AMA)  waged a long fight against ICD-10 implementation, arguing that conversion costs would create a financial burden for many physician practices and lead to chaos once the deadline hits if reimbursements are delayed or denied by Medicare and private health insurers due to coding errors.

Given the backlash from the AMA and other physician groups, Congress forced the U.S. Department of Health and Human Services (HHS) to twice extend the original deadline for ICD-10 implementation from Oct. 1, 2013, to Oct. 1, 2014, and then to Oct. 1, 2015. Attempts this summer in Congress to further delay ICD-10 implementation, or require a transition period, failed to gain traction, particularly after the AMA and Centers for Medicare & Medicaid Services (CMS) came to an agreement in July on modifications aimed at easing the transition process for providers.

In response to continuing objections to ICD-10 implementation, the CMS announced guidance related to four changes:

• For the first year of ICD-10 implementation, “Medicare review contractors will not deny physician or other practitioner claims billed under the Part B physician fee schedule . . . based solely on the specificity of the ICD-10 diagnosis code as long as the physician/practitioner used a valid code from the right family.”

• Similar to claim denials, CMS will not subject physicians to penalties under the Physician Quality Reporting System, the value-based payment modifier or meaningful use as long as the diagnosis codes used are from the appropriate family of ICD-10 codes.

• CMS will authorize advance payments to physicians if Medicare contractors are unable to process claims due to ICD-10 coding problems.

• CMS is appointing an ICD-10 ombudsman to “triage and answer questions about the submission of claims” and will work out of a new ICD-10 Communications and Coordination Center.

Calling the new provisions “significant,” AMA President Steven Stack, M.D. praised the CMS for “making several critical changes to the transition period so that physicians can continue to provide high-quality patient care without risking their livelihood.”

“These provisions are a culmination of vigorous efforts to convince the agency of the need for a transition period to avoid financial disruptions during this time of tremendous change,” he wrote in a blog post on the AMA website. “These provisions are a testament to the power of organized medicine and what we can achieve when we band together for the good of our patients and our profession.”

The American Academy of Family Physicians (AAFP) echoed the AMA’s praise for the payment flexibility and transition assistance.

AAFP President Robert Wergin, M.D., told MedPage Today his organization had asked for a one-year grace period for coding errors, “So [now] if you code ICD-10 with the right intent, if there’s some technicality, you’ll still be paid.”


AMA Steven Stack, M.D

American Medical Association (AMA) President Steven Stack, M.D., praises the Centers for Medicare & Medicaid Services’ (CMS) decision to add flexibility to the claims audit and quality reporting process during the first 12 months of ICD-10 implementation, which begins Oct.1. The CMS also is setting up an ICD-10 Communications and Coordination Center.  (Photo copyright Emergency Physicians Monthly.)

Many Practices Report They Will Not Be Ready

CMS’s newfound flexibility, however, only goes so far. The agency reiterated in its news release that Medicare claims processing systems will not have the capability to accept ICD-9 codes for dates of services after Sept. 30, 2015, nor will they be able to accept claims for both ICD-9 and ICD-10 codes.

Bleak preparation levels among physicians continue to be reported, with 65% of physicians surveyed in July by the Texas Medical Association saying they have “little to no confidence” their practice will be ready when the ICD-10 deadline hits.

John O’Shea, M.D., a Senior Fellow for Health Policy Studies at the Heritage Foundation, does not expect the CMS’ announcement to eliminate problems ICD-10 implementation will create for physicians practices that have failed to prepare for the Oct. 1 deadline.

“I don’t think [this announcement] solves the problem,” he said to MedPage Today. “My understanding is that there are a significant number of practices that are not ready to go—not ready—meaning they haven’t purchased the [ICD-10] software yet. I don’t know if being a little more lenient about errors in coding is really going to help those practices.”

He also questioned the CMS’s plans to be lenient on coding errors. “Where do you draw the line on if the codes are right or wrong?” Shea asked. “If you’re a little bit wrong, you’ll get paid, if they’re more wrong, you won’t get paid? And this isn’t a 5% [cut]—it’s 100% you don’t get paid. It’s potentially devastating for a small practice.”

John O’Shea, M.D

John O’Shea, M.D., Senior Fellow for Health Policy Studies at the Heritage Foundation, doubts the changes jointly announced by the American Medical Association (AMA) and CMS aimed at reducing ICD-10 coding errors and providing payment flexibility will eliminate problems for physician practices that are unprepared for the Oct. 1 deadline. (Photo copyright The Heritage Foundation.)

Large Health Systems Expected to Transition on Schedule

As the go-live deadline approaches, insurance providers are anticipating the transition to ICD-10 will be smoother for large healthcare systems than individual providers.

“The large health systems will be fine—they may experience some anomalies, but they will submit their claims without incident,” George Vancore, Senior Manager-Delivery Systems with Florida Blue, told Healthcare Finance News (HF News). “The individual physicians have a different situation: Their financial risk is non-existent in this space because the individual practices bill with HCPCS (Healthcare Common Procedure Coding System) codes [and] aren’t changing with ICD-10. But the rub is that the diagnosis codes are ICD-10, so they need to know those.”

Vancore recommends physicians not be intimated by ICD-10’s more than 170,000 codes and instead focus on the much smaller number of new codes that will be most commonly used in their practice.

“They have to determine how many they will actually use,” he told HF News. “If you are a specialist, learn the codes that relate to your specialty. If you are a family practitioner, concentrate on the ones that most accurately represent the codes you use today.”

Free ICD-10 education and implementation tips are available for providers from CMS at “Road to 10” and the AMA Wire.

—Andrea Downing Peck

Related Information:

CMS and AMA Announce Efforts to Help Providers Get Ready for ICD-10

CMS to Make ICD-10 Transition Less Disruptive for Physicians

CMS Will Set Up Ombudsman and Be Flexible About Accepting Claims

CMA and AMA Announce Efforts to Help Providers Get Ready for ICD-10: Frequently Asked Questions

TMA ICD-10 Survey

ICD-10 Countdown Begins

Alert! ICD-10 Conversion Is Now 56 Days Away and Could Put Financial Squeeze on Clinical Laboratories and Pathology Groups

Providers, Payers and CMS Gear Up for ICD-10 Implementation, But Will They Be Prepared for Launch by October 1, 2014?

Congress Delays Implementation of ICD-10 for Another Year to Placate Physicians; Delay Could Cost Healthcare Industry Up to $6.6 Billion

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

Clinical Laboratories Beware: Many Payers May Not Be Ready for HIPAA 5010 on January 1, 2012

Labs Likely to Face Expensive Conversion Costs for ICD-10

Good News for Labs: HHS Delays Implementation Deadline for ICD-10 to 2013