Could a new coding system hurt your doctor's practice?

Dr. Andrew Kleinman would rather spend his time with patients than dealing with billing. The New York plastic surgeon is worried that next fall, when he has to switch to a new medical coding system known as ICD-10, billing issues will overwhelm his practice

"At one of the training sessions, the consultant recommended that everybody who was there have a credit line that would cover three months' income, because you might not get paid if you don't do things 100 percent correctly," said Kleinman.

On Oct. 1, all U.S. medical and billing codes will migrate from the 30-year-old International Classifications for Diseases system known as ICD-9 to the new global standard ICD-10. For the health-care industry, it's a technology changeover on par with the so-called Y2K system upgrades in the late 1990s. The concern is that this upgrade won't go nearly as smoothly as the Y2K transition.

"ICD-10, on paper, looks like a good idea. We're going to have much better data-gathering capability. It's just in practice," explained Kleinman, who serves as president of the Medical Society of the State of New York, "small practices are very worried about it."

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But hospital administrators are worried, too. At Truman Medical Center in Kansas City, Missouri, hundreds of Medicare, Medicaid and private insurance claims are generated every day.

"We are worried about some of the payments getting delayed," said Mitzi Cardenas, a senior vice president at Truman, who is overseeing the ICD-10 transition. "We're also worried about some of the productivity impacts with our coders."

The federally mandated transition to ICD-10 will result in an eightfold increase in the number of diagnostic and procedure codes from 17,000 currently to more than 140,000. The new codes capture more detailed data on everything from pregnancy symptoms in different trimesters, to a leg break on the left side versus the right side. Doctors, nurses and coders are undergoing a lot of training to get the new billing process right.

"It's kind of like going from speaking and writing in English, to speaking and writing in a different language," Cardenas explained.

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The hospital coding staff has been undergoing system testing with their health IT vender, Cerner, to make sure they're ready for Oct. 1.

"So far, the tests are going well," said Cerner President Zane Burke.

For one week this winter, the company conducted end-to-end testing with more than 100 clients and the Centers for Medicare and Medicaid Services. For their hospital clients, the processing has been an eye opener.

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"So many things trigger off of that information and so many downstream processes can be impacted by that," said Burke. "What they're working on is what are those billing impacts, as well as the patient flow. "

Under ICD-10, it will be very important for doctors to document a patient's specific symptoms in order to get paid. For example, a code for simple pneumonia would not trigger any reimbursement for hospitalization, while the new code for granular pneumonia does include intensive care treatment. Without careful documentation, the wrong codes will trigger billing and payment problems.

Yet, with just six months to go until the changeover, the biggest concern for providers is how well the government and private insurance payment processing systems will work.

Lack of adequate testing was one of the key issues behind the botched rollout of the Obamacare website, HealthCare.gov, in 2013. Several rounds of ICD-10 end-to-end testing are scheduled between now and October. The first took place in February.

Of 15,000 Medicare claims submitted, nearly one in five was rejected. According to CMS, the vast majority of rejected claims contained mistakes not related to ICD-10 coding, such as inputting the wrong date of services. Coding-related errors were comparable to current Medicare claims processing.

Health officials have expressed confidence that testing will help work out those kinds of mistakes before October.

"There is still time for providers to take advantage of CMS' testing opportunities to ensure their systems are ready for ICD-10," said Aaron Albright, a spokesman for the agency.

Yet, in response to the testing results, the American Medical Association and other physician groups are calling on the agency to set up contingency plans to prevent long delays in payments.

"The likelihood that Medicare will reject nearly one in five of the millions of claims that go through our complex health-care system each day represents an intolerable and unnecessary disruption to physician practices," said Dr. Robert Wah, AMA president in a statement responding to CMS.

CMS' Albright said health officials are trying to provide both large and small providers with as much testing and training as they need over the next six months, adding "If stakeholders need additional assistance, we're ready to help."

The one thing doctors shouldn't count on is a delay in rolling out the new system. The ICD-10 changeover has been pushed back repeatedly since it was first proposed in 2008. The most recent delay was announced in spring 2014, after the Obama administration's botched rollout of the Obamacare website.

Insurers recently updated Congress on their ICD-10 readiness. The major carriers say their testing of the new coding system with providers has been successful, and they are committed to the Oct. 1 implementation.

"It is critically important for the health-care system to move forward with this new system," said Clare Krusing, spokesperson for the insurer lobby group, America's Health Insurance Plans.

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"Each delay brings significant costs and additional administrative challenges for health plans and providers that are ready for implementation, penalizing those who have invested the time and resources necessary to implement on time," she added.

Despite the great deal of time invested in staff training, Truman Medical Center is bracing for inevitable glitches, Cardenas said.

"The only thing I can say for sure is that we're going to work through it, and do the best we can to make sure the organization gets paid," she said, adding that the only thing she can control is "to make sure we do the best job we can do."

For individual doctors in small practices, a recent study put the cost of a new ICD-10 system and training at just over $3,400. But Kleinman thinks the final costs will be much higher when you factor in the time taken away from patients to attend to billing and coding problems.

Kleinman said that with each wave of new technology mandates, such as electronic prescribing for Medicare, and the migration to electronic records, it has made it harder for small practices like his. He's watched many of his colleagues close their office to join larger medical groups.

"In Westchester County, where once 75 percent of physicians were in private practice three years ago, now it's fewer than 50 percent of physicians. And within two years, I'll bet it's less than 30 percent of physicians," he said. "This is one of the things I think will help accelerate the end of the private practice as we used to know it."

(UPDATE: This story has been updated to add comment from CMS.)