ICD-10 based claims won’t be denied.  But read the fine print carefully.  CMS issued a Guidance Document today stating:

“… Medicare review contractors will not deny physician or other practitioner claims billed under the Part B physician fee scheduleHowever, a valid ICD-10 code will be required on all claims starting on October 1, 2015. It is possible a claim could be chosen for review for reasons other than the specificity of the ICD-10 code and the claim would continue to be reviewed for these reasons. This policy will be adopted by the Medicare Administrative Contractors, the Recovery Audit Contractors, the Zone Program Integrity Contractors, and the Supplemental Medical Review Contractor.”

According to the Kaiser Family foundation, Medicare Part B is a financially significant segment but not the largest.

  • Medicare “Part B, the Supplementary Medical Insurance (SMI) program, helps pay for physician, outpatient, some home health, and preventive services. Part B is funded by general revenues and beneficiary premiums.  An estimated 51 million people are enrolled in Part B in 2015.
  • Medicare Part A (55 million lives) [ includes hospitals using a DRG based system that is dependent on ICD-10]
  • Medicare Part C [also known as Medicare Advantage] includes 15.7 million lives
  • Medicare Part D for pharmaceuticals 42 million lives insured)

Our Take:

This is a big break for ambulatory E.H.R. and practice management software vendors as well as ambulatory care physicians and other providers, who get a break on the final implementation and support for ICD-10, but not for hospital inpatient based systems.  Essentially this means that CPT codes which have been the standard billing / procedure coding system for ambulatory remain the standard, and ICD-10 diagnosis codes only will be required.

However for ambulatory providers, there is no guarantee that audits will not increase if the ICD-10 CM diagnosis code isn’t used to document medical necessity.

Health plans are beginning to ask for more diagnosis information before approving claims for pharmaceuticals.  Expect some ripple effect of ICD-10 in the Medicare Part D and non-Medicare pharmaceutical reimbursement.

In conclusion, for  Medicare Part A there is no break on the mandated deadline.  Hospitals and the vendors of hospital based / inpatient systems do not get a reprieve and therefore still have the heavy lifting to do with ICD-10 CM, ICD-10 PCS procedure codes, and DRG based on the new coding system as mandatory requirements for compliance on October 1, 2015.   The largest portion of U.S. expenditures for healthcare still go to Medicare Part A and other inpatient hospital claims.  So, from an economic perspective, physicians who provide care in a hospital get no break and the largest portion of the healthcare economy does not get a break.



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