Medicare is the target of multiple federal healthcare reform efforts, all of which are designed to curb costs while improving quality. These efforts range from accountable care organizations to the meaningful use of electronic health records to reimbursement cuts for Medicare providers. Like those long-delayed cuts(Congress to world: This time we really mean it!) the United States is no longer putting off a central component of Medicare reimbursement reform: ICD-10 coding.

ICD stands for the International Statistical Classification of Diseases and Related Health Problems. ICD-10 was introduced in 1990 and fully adopted in the decade that followed by most WHO nations except the United States. While the U.S. did adopt ICD-10 to report mortality, it delayed implementation for codifying disease statistics.

So what's the big deal: three letters, two numbers with a dash thrown in for good measure. The big deal is that ICD-10 is the foundation of diagnosis-related groups (or DRGs), upon which the entire Medicare Inpatient Prospective Payment System is based.

Explained further, DRGs allowed Medicare to develop systematic reimbursements based on how much it should cost a hospital to treat a specific condition or disease. Let's say, for example, that you are a Medicare beneficiary and have a raging case of DRG385 (inflammatory bowel disease). Under the current ICD-9 system, one of four ICD codes would represent your official diagnosis and thus how your care would be reimbursed. If your DRG385 flares up in 2013, however the deadline for full transition from ICD-9 to ICD-10 one of 28 codes could represent your diagnosis.

Yikes.

The transition could be a relatively smooth one. The ICD-9-CM Coordination and Maintenance Committee studied the transition's impact on reimbursements and found it nominal 1 percent of 11 million discharges, according to one account.

That's still 110,000 discharges, or roughly the entire population of Flint, Mich. And at least some of these discharges will involve complex, costly medical conditions. The previous what-if scenario demonstrates one of the primary concerns that hospitals  have with the transition: there will be thousands of new ICD-10 codes that won't automatically map to the same DRGs as their ICD-9 counterparts.

While ICD-10 shows that there is clearly a special place in heaven for coders and programmers, other stakeholders have more trouble. The transition will take time, money and personnel all of which may be in short supply as hospitals, health plans and physicians grapple with the other mandates of federal healthcare reform.

So will ICD be another Y2K. Should hospitals start stocking water bottles, taking their money out of the bank and stuffing it under the mattresses of their unoccupied beds. It depends on how you look at it. If you see the water bottle as half full, you'll be comforted to know that 70 percent of providers report that they have either started or completed their ICD-10 impact assessments.  If your water bottle is half empty, that means roughly one in every three is behind.

In any case, readiness is the key. And we haven't even touched on how ICD-10 will impact accountable care organizations, the meaningful use of EHRs and HIPPA privacy changes.

OMG.

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