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Doctors, Health Plans Vs. Hospitals in ICD-10 Coding-System Battle

In the high-stakes battle over a new diagnosis and procedure coding system for the U.S. health care industry, hospitals are pitted against physicians, who are allied (gulp) with health insurers.

That's right! Despite the longstanding hostility between doctors and managed-care plans, 10 physician and medical practice societies, including the AMA and the Medical Group Management Association, are on the same side of this issue as the Blue Cross Blue Shield Association, which represents 39 Blues plans covering more than 100 million people.

According to the physician coalition, the switch to the ICD-10 coding system, which the government wants implemented by the end of 2011, will cost the average three-doctor group $83,290; a 10-doctor practice will have to fork over $285,195. The Department of Health and Human Services estimates it will cost much less, but it's not counting the extra time that doctors say it would take them to document patient visits if they had to use ICD-10 for billing purposes. The reason: ICD-10 includes about 10 times as many codes as the current system.

This also means that every billing and claims processing program would have to be rewritten -- a massive and costly undertaking. That's one reason why the insurers are reluctant to plunge forward with ICD-10 as quickly as the government would like. "The majority of the plans that have more than 500,000 covered lives, which are the Blues, have custom programs," Mark Anderson, a health IT expert based in Montgomery, Tex., told me. "They're going to have to rewrite all those programs, and it's going to cost them millions of dollars."

Hospitals, too, will have to invest large sums in software upgrades and training. So why do they support the aggressive HHS timetable? The American Hospital Association favors making the transition now partly because it will help hospitals improve the quality of care and judge which new medical technologies are financially worthwhile, George Arges, senior director of the AHA's Health Data Management Group, said in an interview.

He also points out that changes in the way Medicare pays hospitals make ICD-10 a good deal for them. Medicare is adding hundreds of new "diagnosis-related groups" and reweighting them to increase payments to facilities caring for sicker, more complicated patients. "Without the level of granularity that ICD-10 provides, it becomes increasingly more difficult to do that fairly," Argus says. Also, he notes, the new coding system will make it easier for hospitals to report quality data to Medicare and private pay-for-performance programs.

At bottom, the hospitals believe they'll see a return on investment from ICD-10, while the physician groups don't. Although the medical societies say they oppose only the ICD-10 timetable, not the transition itself, they have some serious doubts about it. "We don't know what the costs are going to be," Robert Tennant, senior policy advisor to the MGMA, told me. "We've tried to estimate those costs. We certainly don't know what the benefits are. So the first question is, is it the right thing to do?"

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