A Primer on How ICD10 Impacts Revenue Cycle

Procedure billing has been much more effective since the introduction of the Current Procedural Terminology (CPT) coding system.  The CPT system was created by the American Medical Association (AMA) and intended to standardize and facilitate medical billing.  CPT consists of a collection of alpha-numerical codes which describe the services and treatments medical groups perform.  They codes are used by medical billing systems for purposes of billing insurance companies including commercial carriers as well as Medicare and Medicaid.  Many benefits have been realized through the use of the system and all parties are better at tracking financial records and receipts since the introduction of the system.

How CPT Works

In the healthcare world for the most part, the billing of medical services is handled by professionals that have been trained for that purpose.   Professional coders and billers convert the clinical and procedural data in the patient’s record into the standardized five digit CPT codes that represent the service or treatment provided.  The scope of CPT covers hospital visits, physician visits, labs, x-rays and more.  Where professional coders require more detailed information than an existing code provides on its own a special set of modifiers can be added to the code to provide a more specific explanation of the treatment.

It is critical that coders and billers select the appropriate code to document the services patients receive.  Incorrectly coded claims will cause insurance companies to refuse paying for the services provided until correct codification has been received.   Virtually all insurance companies and government agencies including Medicare and Medicaid utilize codes for their billing processes.  The use of the CPT coding system enhances the billing process, enabling doctors and medical facilities to receive their payment with greater speed and accuracy.

The Origin of the ICD-9 Billing Codes System

The World Health Organization (WHO) introduced the ICD-9 (International Classification of Diseases-Ninth Edition with U.S. Clinical Modification – CM) coding system in 1977 to help codify mortality and morbidity data for different diseases around the world.  Healthcare organization were better able to categorize the various services administered to patient by giving diseases, injuries and medical conditions a specific code and thus better justify the expenses billed on insurance claims.  In 1979 the ICD-9 system was modified for use in the US and became known as ICD-9-CM and replaced all others used by American Hospitals.  By 1998, all U.S. physicians were required to use the ICD-9-CM codes to submit their medical claims.

The ICD-9 coding system has helped to standardize the recording of diagnoses and treatments received by patients in the U.S. and abroad. It consists of two volumes of diagnoses codes and one of procedural codes.  Over time, ICD-9 has produced many benefits to the medical profession including:

  • A more consistent method of recording medical diagnoses and treatments
  • Improving hospital and physician billing procedures
  • Facilitating payment of doctor and hospital bills by insurance providers and Medicare/Medicaid services
  • Facilitating medical research and educational programs and more.

Enter the ICD-10 System

The WHO developed the ICD-10 coding system in 1993 and it is a significant upgrade from ICD-9.  ICD-10 was readily accepted by most countries around the word at the time it was introduced.  The US has been the exception with its continued use of the ICD-9 model.

At this writing the ICD-10 classification system (with code sets ICD-10-CM and ICD-10-PCS) is set to go into effect in the US in October of 2015.  It is more comprehensive and advanced than its predecessor, and requires that doctors be much more specific in their documentation of treatments in order for coders and billers to issue the correct codes in the billing process.

ICD-10 is going to have a tremendous impact on how documentation is handled by both medical professionals and the coding and billing profession.  Right now, the responsibility of finding the appropriate diagnostic and procedural codes for billing purposes falls on the shoulders of medical coding and billing professionals.  The changes wrought by ICD-10 will require that coders and billers upgrade their methods and tools to continue to provide the high level of performance required for their profession.

And because coding is intimately connected to reimbursement in all areas the impact of ICD-10 will be wide-ranging and must be considered one of top priorities for every healthcare organization going forward.

– James