Life Science Compliance Update

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April 27, 2012

ICD-10 Implementation Delay Announced for One Year to October 1, 2014

Kick The Can
The Department of Health & Human Services (HHS) officially proposed delaying the ICD-10 deadline by an extra year to Oct. 1, 2014 this past week.  ICD-10 is an update and expansion of diagnosis and procedure codes that are widely used in medical billing, as well as for research and other purposes.  

The ICD-10 compliance date change is part of a proposed rule that would adopt a standard for a unique health plan identifier (HPID), adopt a data element that would serve as an “other entity” identifier (OEID), and add a National Provider Identifier (NPI) requirement.  The 10th iteration of the disease-classification system will expand the number of codes in use from around 18,000 in the current ICD-9 code set to about 140,000. 

HHS also released a proposed rule establishing a unique health plan identifier with a standard length and format under the Health Insurance Portability and Accountability Act (HIPAA) that would make it easier for doctors, hospitals and health insurance companies to identify patients and issue payments for treatment.  By standardizing the length and format of the health plan identifier, healthcare provider offices will be able to automate and simplify their processes, particularly when managing bills and other transactions. 

Currently, health plans and third-party administrators, such as bill providers, are identified using a wide range of different identifiers that do not have a standard length or format.  The variety of formats causes a time-consuming problems, such as misrouting of transactions or even the rejection of bills by payers due to ID errors.  With the new identifier, insurers could avoid multiple identification codes they currently use to identify themselves, including taxpayer identification numbers, employer identification numbers and proprietary codes, reported LifeHealthPro

“The new health care law is cutting red tape, making our health care system more efficient and saving money,” Sebelius said.  “These important simplifications will mean doctors can spend less time filling out forms and more time seeing patients.”  

The proposed rule was developed by the Office of E-Health Standards and Services (OESS) as part of its ongoing role, delegated by HHS, to establish adopt standards for electronic health care transactions under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).  OESS is part of the Centers for Medicare & Medicaid Services (CMS).  Public comments are due in thirty days, and should include the docket reference CMS-0040-P. 

With the proposed rule, HHS follows through on its promise in February to delay the ICD-10 compliance deadline.  The agency said that postponing the deadline allows providers and insurers additional time to prepare and test their systems “to ensure a smooth and coordinated transition among all industry segments,” reported Computer World

The delay is “an attempt to give people some ability to reprioritize,” because providers and insurers also must comply with multiple reform law requirements such as implementation of electronic health records, Kaveh Safavi, an Accenture managing director, told The Wall Street Journal Health Blog

HHS Secretary Kathleen Sebelius said the identifier rule would cut "red tape" and save the industry $4.6 billion over the next 10 years. 


On January 16, 2009, HHS published a final rule to adopt ICD-10 as the HIPAA standard code sets to replace the previously adopted ICD–9–codes for diagnosis and procedure codes (see HIPAA Administrative Simplification;  Modifications to Medical Data Code Set Standards to Adopt ICD-10-CM and ICD-10-PCS,  74 FR 3328). The compliance date set by the final rule was October 1, 2013. 

Implementation of ICD-10 will accommodate new procedures and diagnoses unaccounted for in the ICD-9 code set and allow for greater specificity of diagnosis-related groups and preventive services.  This transition will lead to improved accuracy in reimbursement for medical services, fraud detection, and historical claims and diagnoses analysis for the health care system.  Many researchers have published articles on the far-reaching positive effects of ICD-10 on quality issues, including use of specific reasons for patient non-compliance and detailed procedure information by degree of difficulty, among other benefits. 

Some provider groups have expressed serious concerns about their ability to meet the October 1, 2013 compliance date.  Their concerns about the ICD-10 compliance date are based, in part, on implementation issues they have experienced meeting HHS’ compliance deadline for the Associated Standard Committee's (ASC) X12 Version 5010 standards (Version 5010) for electronic health care transactions.  Compliance with Version 5010 is necessary prior to implementation of ICD-10. 

All covered entities must transition to ICD-10 at the same time to ensure a smooth transition to the updated medical data code sets.  Failure of any one industry segment to achieve compliance with ICD-10 would negatively impact all other industry segments and result in rejected claims and provider payment delays.  HHS believes the change in the compliance date for ICD-10, as proposed in this rule, would give providers and other covered entities more time to prepare and fully test their systems to ensure a smooth and coordinated transition among all industry segments.  

Delaying ICD-10 compliance has elicited a mix bag of reactions.  Insurers are woefully unprepared to meet the previous deadline, which was set for this October, but some experts have predicted that a one-year delay would be costly and do nothing to improve readiness for the implementation.  American Health Information Management Association CEO Lynne Thomas Gordon has opposed the ICD-10 deadline delay. “I'm scared there will be lost momentum,” she told InformationWeek Healthcare.

In addition to this announcement, CMS last month extended the March 30, 2012 deadline for eligible professionals (EPs) to file their "eligibility" appeals under the electronic health record (EHR) incentive program.  The deadline is now April 30, 2012

“An eligibility appeal allows a provider to show that all the requirements for the Medicare EHR Incentive Program were met and that he or she should have received a payment but could not because of circumstances outside of the provider's control," CMS said in its April 3 announcement. CMS didn't divulge why it opted to extend this deadline. 

The deadline extension only applies to eligibility appeals.  It does not affect "Meaningful Use" and "incentive payment" appeals, for which the deadlines differ based upon when the provider receives notice regarding a payment or attestation issue from CMS.

CMS has selected Provider Resources, Inc. of Eire, Pa., to hear administrative appeals, with support to be provided by CMS' Office of Clinical Standards and Quality (OCSQ). Opinions of appeals will be posted on OCSQ's website. 

CMS affords providers with a two-level appeal process: an informal review and a request for reconsideration. Within the two-level appeal process, there are three types of appeals that can be filed in the Medicare EHR Incentive Program: (1) eligibility, (2) meaningful use, and (3) incentive payment appeals.  

Detailed guidance on the appeals process and additional information on all of the appeal types are available on the OCSQ website.


This is perhaps the first of several delay’s we will see in implantation.  According to one expert on electronic medical records and health systems, there could be at least two to three one year delays before ICD-10 is finally implemented.    ICD-11 is expected to be released sometime in the next couple of years, so this could easily morph before we adopt a new coding system.

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