Move to ICD-10 will Hurt Low-Margin Practices, Study Finds

Pediatricians and other low-margin practices could take a significant financial hit during the transition to ICD-10 procedural and diagnostic codes, according to a study in Pediatrics, the journal of the American Academy of Pediatrics.

The 68,000-code ICD-10 system is scheduled to replace the 14,000-code ICD-9 system Oct. 1, 2015. Researchers at the University of Illinois at Chicago used the CMS general equivalent mappings tool, or GEMs, to “translate” ICD-9 codes to their more granular ICD-10 counterparts. They calculated that, for pediatric patient encounters, payment and clinical data may get lost in about 8% of these translations.

One example of a mistranslation cited by the researchers described how the ICD-9 code for a stillborn twin mapped to the ICD-10 code for a live-born twin.

The UIC researchers identified 2,708 ICD-9 codes used statewide and matched them to 174,500 Medicaid pediatric primary-care patient encounters in 2010 at the University of Illinois Hospital and Health Sciences System in Chicago. These encounters amounted to almost $12.3 million in Medicaid payments. The number of encounters includes visits by U of I patients both inside and outside of the U of I system.

The researchers classified the translation process from the ICD-9 codes to ICD-10 into five categories ranging from direct equivalent to “convoluted.” In all, 26% of the translations were labeled as convoluted and they represented 23% of state Medicaid pediatric encounters and 16% of Medicaid reimbursements.

The potential for financial disruption exists in 8% of encounters because of the loss of data and overlapping or inconsistent diagnostic categories.

“Many pediatric practices, perhaps more than other medical fields, practice on narrow financial margin and are often reimbursed at lower rates than other specialties, particularly by Medicaid,” study co-author Dr. Rachel Caskey, UIC assistant pediatrics professor, said in a news release. “Any discrepancies that could even cause a small decrease in reimbursement—even 5%—could have a substantial impact on some pediatric practices.”

Despite the potential for initial financial disruption, Caskey and colleagues wrote that because of the increased level of clinical detail, the transition to ICD-10 is “likely to provide important benefits over time.”

Follow Andis Robeznieks on Twitter: @MHARobeznieks

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