ICD-10 Switchover a "Meltdown" Or Just Costly?

(MoneyWatch)  Unbeknownst to most folks outside of lobbyists and healthcare-IT types, a significant showdown is looming over a federal mandate that would require health-insurance companies and hospitals to adopt a new set of billing codes by 2011. The new codes, known as ICD-10, would replace an outdated set known, aptly enough, as ICD-9. (ICD stands for International Classification of Diseases, and is written by the World Health Organization.)

As it turns out, most of the rest of the world has long since moved to ICD-10 -- perhaps less than a surprise, given that ICD-9 is more than 30 years old and that national healthcare systems have a lot less trouble adopting new standards than the fragmented U.S. system. ICD-10 features 155,000 codes for classifying medical diagnoses and procedures, making it considerably more flexible than ICD-9's relatively paltry 17,000 codes (which are supposedly running out, among other issues).

That doesn't mean the changeover will be painless, which of course is what the fuss is about. The Department of Health and Human Services announced the plan in August, and was met with an immediate firestorm of criticism. The heaviest pushback came from BlueCross BlueShield Association, whose president Scott Serota insisted that the HHS timetable would lead to a "major meltdown in the healthcare industry" such as late and incorrect payments and a greater incidence of fraud and abuse.

Of course, Serota also noted "higher total costs of implementation" due to the"accelerated" timetable. HHS figures the total cost of retooling IT systems across the U.S. healthcare landscape at $1.64 billion, although it's also cited a figure that benefits of the changeover could range as high as $7.7 billion. Anything that could stretch out the timetable would do wonders for the bottom lines of managed-care organizations, insurers and physician practices.