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CMS Issues Report on Claims Rejected During First Month of ICD-9 to ICD-10 Transition

October 1st, or “D-day” for health systems across the country transitioning to the 10th revision of the International Classification of Diseases (ICD-10), has come and gone. CMS recently issued a report on denial of claims for this first thirty-day period. The transition from ICD-9 to ICD-10 procedure codes was intended to enable providers to capture more details about their patients’ health status, to improve patient care and public health surveillance.

All claims must now contain valid ICD-10 code sets, which will replace the ICD-9 sets. CMS’ Office of Technology Solutions has begun referencing the internal tables that store ICD-10 billing codes to validate, edit, and authorize payments to Medicare fee-for-service providers when claims data indicate a service date of October 1, 2015 (the ICD-10 start date), or later.

CMS Remains Flexible During First Stages of ICD-9 to ICD-10 Transition

The differences between ICD-9 and ICD-10 are significant. While ICD-9 has approximately 15,000 diagnosis codes, ICD-10 has approximately 70,000. Given this significant change, CMS recognizes that it must permit some flexibility to providers during the first 12 months of implementation. However, in this first report, CMS has monitored the transition and found that claims are processing normally with a 10 percent denial rate. The following is a summary of this first report:

  • Out of 4.6 million total claims submitted per day, 2 percent were rejected due to either incomplete or invalid information.
  • Total number of claims rejected in association with invalid ICD-10 codes was reportedly 0.09 percent.
  • 11 percent of total claims submitted were rejected due to invalid ICD-9 codes.
  • Total number of claims denied is just over 10 percent.

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Although this initial report appears fairly encouraging, a final conclusion as to the success of the transition is still premature. November data will shed more light on the subject as more information and metrics emerge. Traditionally, Medicare claims take several days to be processed. Once processed, Medicare must – by law – wait two weeks before issuing a payment. Medicaid claims can take up to 30 days for states to submit and process. As a result, more information on the ICD-10 transition will be available in November. Given this timeframe, CMS is “continuing its vigilant monitoring process of the ICD-10 transition.”

OIG to Review Management of ICD-10 Implementation

The OIG’s 2016 Work Plan states that OIG will review CMS’s early management of ICD-10 implementation in Medicare Parts A and B. The results of the OIG report are expected to generate considerable interest. The OIG further intends to review CMS and MAC assistance and guidance to hospitals and physicians in assessing how the ICD-10 transition affects claims processing. The OIG will also assess the application of ICD-10 diagnosis codes to selected CMS payment rules and safeguards. The OIG intends to issue a report on this initiative in FY 2017.

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