You got to love when a complex industry is forced to become even more complex.
Government regulators are expected soon to overhaul the aging coding
system that doctors and hospitals use to bill insurers. The new system, known as ICD-10,
would sharply increase the number of codes used to define various
ailments and procedures to 155,000, nearly 10 times as many codes as
are currently in use.
The new system of 155,000 codes includes 68,000 codes describing
diagnoses, up from 13,000 currently, and 87,000 codes for different
medical procedures, compared with 3,000 in the current system.
How about a couple examples.
Today, for example, there's just one code — 39.50 — for angioplasty,
a procedure used to widen blocked blood vessels; under the new system,
medical practitioners can choose among 1,170 coded descriptions that
pinpoint such factors as the location and the device involved for each
The current system has five codes describing a sprained ankle, but the
new system has 45 codes, describing which part of the ankle joint was
injured, whether it's the left or right ankle, and whether it's a
It will be costly.
CMS estimates additional costs to the medical industry of adopting the new coding system of $1.64 billion over 15 years.
And the potential for additional errors is huge.
Some medical-industry officials also are concerned that consumers
could see, at least initially, an increase in billing errors. That can
lead, for example, to overcharging of patients, or an insurer denying
payment for a claim because it was submitted with an incorrect code.
Some officials also expect an increase in billing fraud and more delays
in payments to doctors and consumers.
boost by as much as 10% the number of claims returned because of coding
errors. But a study by the Blue Cross and Blue Shield Association of
insurers predicts billing errors are likely to rise between 10% and 25%
in the first year.
So why is this even being considered? Well, some revision to the code list is probably necessary.
CMS, the federal agency charged with maintaining the medical codes,
says the new system will allow doctors to include more details on
patients' medical records. This could give a boost to efforts by
government and industry to encourage the adoption of a nationwide
electronic medical-information system. The coding changes also will
make it easier to track outbreaks of new diseases, federal officials
CMS says the current system of numbered codes has run out of room to
expand. That has led to some new treatments being grouped with
unrelated diseases. For example, in the rapidly developing field of
heart treatments and procedures, some codes are stuck in with eye
treatments — a section that still has spaces to add new numbers.
Ok, changes are needed. But of this magnitude? With these costs and potential consequences? This is really reminding me of lean accounting, where one of the pillars is the reduction of transaction burden. In the old days (current days for most of you) of absorption-based or activity-based cost accounting, every little activity had to be tracked to the penny and applied to a job or product. With lean accounting decisions are made to aggregate some costs as the burden to track and reconcile those costs isn't worth the potential benefit of detailed analyses.
Do we really need the data on 45 different variations of a sprained ankle or 1,170 nuances of angioplasty? What will we really gain? What decisions will be made based on the data? With more granularity do you lose statistical specificity?
There must be a better way to expand the current list of codes. But one thing I do know: medical insurance adjusters and analysts will be experiencing some hot job growth.