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ICD-10-PCS Overview and Implementation Issues

History of ICD-9-CM
Inpatient hospital services are coded using the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM). The World Health Organization (WHO) created ICD-9, which included only diagnosis codes. The United States produced a clinical modification by adding more specificity to the diagnosis codes. The US also developed its own procedure coding system to use with ICD-9-CM since the WHO had not produced a procedure coding system. The ninth revision of ICD was implemented in the United States in 1979. Although this system worked relatively well for its designated purposes of coding data for clinical research, it has not always been as useful for other activities such as health care reimbursement. When the inpatient prospective payment system was implemented in 1983, ICD-9-CM was used as the basis for assigning cases to the DRGs. All diagnostic and procedural information was captured using ICD-9-CM. Since there had been radical changes and advances in health care since the implementation of ICD-9-CM, there quickly arose a need to update and revise the system. This was particularly true for the procedure codes of the system.

Maintenance of ICD-9-CM
The Department of Health and Human Services (DHHS) responded to this need for a process to update ICD-9-CM in 1985 when it created the ICD-9-CM Coordination and Maintenance Committee. This Committee serves as a forum for receiving public comments on proposed revisions to ICD-9-CM. The Committee meets twice a year and is open to the public. Proposed revisions to ICD-9-CM are discussed and the public offers their suggestions at the meeting and in writing after the meeting. The agenda and summary reports are posted on the internet for others to review. The public is given the opportunity to provide written comments after reviewing the summary reports. The Committee has been extremely successful in providing an open process for maintaining this national coding system. Copies of the agenda and summary reports for the procedure part of the Committee meetings can be found at:

Coding standards under Health Insurance Portability and Accountability Act of 1996 (HIPAA)
ICD-9-CM has been the official coding system used for coding inpatient hospital health care data. However, there was no national process for establishing standards for coding systems until Congress issued HIPAA, Public Law 104-191. This law was enacted on August 21, 1996. Through subtitle F of title II of that law, the Congress added to title XI of the Social Security Act a new part C, entitled “Administrative Simplification.” The purpose of this part of the Act was to improve the Medicare program under title XVIII of the Social Security Act and the Medicaid program under title XIX of the Act. Specifically, the goal was to improve the efficiency and effectiveness of the health care system by encouraging the development of a health information system through the establishment of standards and requirements to enable the electronic exchange of certain health care information. The first section, section 1171 of the Act, established definitions for purposes of part C of title XI for a number of terms including code sets. Paragraphs (c) through (f) of section 1173 of the Act require the Secretary to adopt standards for code sets.

On August 17, 2000 The Health Insurance Reform: Standards for Electronic Transactions; Announcement of Designated Standard Maintenance Organizations; Final Rule and Note was published. This rule adopted standards for eight electronic transactions and for code sets to be used in those transactions. The coding system chosen as the national standard for inpatient hospital reporting of diagnoses and procedures was ICD-9-CM. As described in the proposed and final notice, ICD-9-CM was chosen since it was the current system in use in the United States.

Problems with ICD-9-CM
ICD-9-CM has become increasingly outdated because of its limited structure. ICD-9-CM was developed in the 1970s and implemented in 1979. Dramatic advances have occurred in medicine since that time. Although the ICD-9-CM Coordination and Maintenance Committee process has performed an excellent job in making coding modifications to capture new technology, it is not always able to achieve the results it desires.

ICD-9-CM procedure codes are made up of four digits. There are only 10 codes available within each category (fourth digits 0-9). Once a category is full, one must either combine types of procedures under one code, or find room in another section of the code book to place a new code. The benefit of such a system is that one can easily collapse the codes into categories when doing research to capture a wide range of similar procedures. When one puts a similar code in a separate part of the book, coders and researchers may not easily find it. There can be gross errors when trying to identify particular types of cases or make projections of numbers of procedures performed when codes are not carefully placed within a system such as the current ICD-9-CM.

A specific example of a generic problem with ICD-9-CM is that there is not a consistent identification of the procedure approach. While the approach may not have been an important issue during the 1970s, there have been considerable advances in surgery since that time. With a coding system that is 23 years old, not only is the technology bound to be outdated, the premises on which the coding system was established are outdated. There are a number approaches and techniques used for procedures such as lasers and the use of scopes that were not anticipated when the structure of ICD-9-CM was developed. Therefore the basic categories were established on technology that is currently outdated. Updating this system has been quite difficult and involves making compromises. For this reason, HCFA began work on a new system in 1990.

Short term solutions for ICD-9-CM, procedures
To more fully respond to industry requests for new codes, ICD-9-CM was examined to identify an open series of codes that could be used for new procedures and technologies. There are currently 16 chapters of procedure codes. Two hundred unused codes were found within ICD-9-CM (17.00 - 17.99 and 00.00 - 00.99). To fully utilize this new series of codes, one could simply assign new procedures to the next available code. Maintaining some type of category grouping as exists in ICD-9-CM would limit the number of new codes available.

Development of ICD-10-PCS; a long term solution
While acknowledging the flaws with ICD-9-CM, the public in general agreed to the selection of ICD-9-CM as the national standard for HIPAA's first set of standards. At that time the replacement system being developed to replace ICD-9-CM was not yet completed. ICD-10 was being modified to replace the diagnosis part of ICD-9-CM. ICD-10-Procedure Coding System (ICD-10-PCS) was being developed to replace ICD-9-CM procedures. Therefore, while ICD-9-CM was named as the first national standard for inpatient coding, the public was advised that there would be a need in the near future to replace this outdated coding system with something that could better capture today’s health care information. ICD-10-PCS was stated to have great promise as a future replacement system for ICD-9-CM.

ICD-10-PCS was developed by 3M Health Information Systems under contract with the HCFA. The first contract was awarded in 1991 for a preliminary design. Criteria for the development of a new procedure coding system were established by the National Committee on Vital and Health Statistics (NCVHS). The criteria included the following:

  1. Completeness - all substantially different procedures have a unique code.
  2. Expandability - the structure of the system allows incorporation of new procedures and technologies as unique codes.
  3. Standardized terminology - the coding system includes definitions of the terminology used. While the meaning of the specific words can vary in common usage, the coding scheme does not include multiple meanings for the same term. Each term is assigned a specific meaning.
  4. Multiaxial - the system has a multiaxial structure with each code character having the same meaning within the specific procedure section and across procedure sections to the extent possible.
  5. Diagnostic information is not included in the procedure description.

The development of ICD-10-PCS adhered to the criteria established by NCVHS. ICD-10-PCS is made up of seven alpha-numeric characters. This system provides exponentially greater code capacity, where all substantially different procedures can have a unique code. Whereas ICD-9-CM procedure contains less than 4,000 codes, the current draft of ICD-10-PCS contains 197,769 codes(1). There is also significant room for easy expansion as new technologies are developed.

When the preliminary design was met with positive reviews by the public, an additional contract was awarded in 1995 to complete the entire system. The first draft was completed in 1998. During 1998 - 2000 there were multiple field tests of the system by members of the American Health Information Management Association and by the Clinical Data Abstraction Centers (CDACs), contractors of HCFA. A final draft was released in November 2000 which incorporated the results of the field testing.

ICD-10-PCS was developed using an open process. A Technical Advisory Panel provided review and comment throughout the development. Members on this panel included: AHIMA, AHA, the American Medical Association, managed care industry representative(2), medical informatics, and other federal agencies. There were frequent updates presented at meetings of the ICD-9-CM Coordination and Maintenance Committee.

As part of the development process, a training manual for ICD-10-PCS was developed. This also underwent extensive testing and revisions. The complete ICD-10-PCS system along with the training manual is available on HCFA's homepage. Also available is a crosswalk between ICD-9-CM procedure codes and ICD-10-PCS as well as a paper that describes the system and the development process.

Testing of ICD-10-PCS
In October 1996, a test of the first draft was performed by seventy health information professionals identified by AHIMA. After receiving half a day of training, they coded a sample of records from their institutions using ICD-10-PCS. They reported suggestions and problems to the ICD-10-PCS project staff.

HCFA conducted a formal test of ICD-10-PCS in order to determine if it would be a practical replacement for the current ICD-9-CM procedures. HCFA used their two contractors, the Clinical Data Abstraction Centers (CDACs). As part of a contract awarded in 1994, the primary task of the CDACs has been to collect clinical data from about 1.5 million medical records over their first five years. The primary end product of the CDAC contracts was the development of accurate and reliable clinical data in quantities sufficient to support the analytical efforts of the PROs as they carry out the Health Care Quality Improvement Program. Since the CDACs had a ready supply of current medical records and extensive experience in reviewing, abstracting and coding medical records, they were selected to test ICD-10-PCS.

Using the ICD-10-PCS training manual, the CDACS were trained for two days on the medical/surgical part of the system. A separate one-day session was held for the remaining sections (nuclear medicine, radiation, oncology, osteopathic, etc). The CDACs then spent several weeks coding with ICD-10-PCS to gain experience. Conference calls were held to answer questions prior to the start of the formal testing. The first phase of testing involved a sample of 5,000 medical records. The CDACs coded the cases and noted any questions or concerns. These issues were forwarded to the project staff on an ongoing basis. As a result of this interaction, a list of revisions to the final draft was made. This included terms that needed clarification and omissions in the tabular list or index sections. In addition, areas where the training manual could be improved were identified.

In the second phase of the test, a subset of 100 medical records was recoded blindly using both ICD-9-CM and ICD-10-PCS. The systems were compared on issues such as ease of use, time needed to identify codes, number of codes required, problems identifying codes, strengths and weaknesses of each system, and other issues identified by the coding personnel.

After an initial learning curve, the CDAC coders were able to use ICD-10-PCS easily, with a few challenges. Because of the added detail in ICD-10-PCS, it was occasionally necessary for the coders to utilize a medical dictionary or an anatomy textbook. The coders required a greater understanding of anatomy and surgical terms to use ICD-10-PCS than is required for ICD-9-CM.

A side-by-side comparison of ICD-10-PCS and ICD-9-CM was performed when the coders became proficient with the use of the new system. One CDAC reported that the staff did not detect a significant time difference in using ICD-10-PCS as compared to ICD-9-CM. The other CDAC found that ICD-10-PCS coding took somewhat longer. ICD-10-PCS sometimes required a greater number of codes than ICD-9-CM. This was due in part to the use in ICD-9-CM of more combination codes than in ICD-10-PCS. However, it was felt that the precision of ICD-10-PCS resulted in greater detail about the nature of the procedure and was therefore worthwhile. It was suggested that once coders became familiar with the greater detail and precision of ICD-10-PCS, the result would be improved accuracy and efficiency of coding.

Both CDACs found ICD-10-PCS to be an improvement over ICD-9-CM as it provided greater specificity in coding for use in research, statistical analysis, and administrative areas. A major strength of the system was its detailed structure, which allowed users to recognize and report more precisely the procedures that were performed. Because ICD-9-CM lacks clear definitions and many substantially different procedures are coded with the same code, the identification of the correct code requires extensive knowledge of coding advice found in the AHA’s Coding Clinic for ICD-9-CM and other coding guidelines. Becoming completely familiar with all the conventions associated with ICD-9-CM requires extensive effort and as a result, the process of becoming highly proficient in ICD-9-CM can require a long learning curve.

Public hearing on implementing ICD-10-PCS
A public meeting on whether ICD-10-PCS should be names as a replacement for ICD-9-CM, procedures was held on May 17, 2001 in the HCFA Auditorium in Baltimore, Maryland. Information on this meeting can be found in the Summary Report of the November 2000 meeting of the ICD-9-CM Coordination and Maintenance Committee at: Written comments from a variety of organizations are included in this Summary Report.

Current Status of ICD-10-PCS
In June 1998 CMS posted the final draft report of ICD-10-PCS on its web page at Updates to the system were posted on November 2000 based on continuing comments received from testing and comments from the public. According to the HIPAA process (Public Law 104-191), the next step in the process is for the National Committee for Vital and Health Statistics (NCVHS) to conduct hearings on whether ICD-10-PCS should be named as a national standard. The Subcommittee on Standards and Security, NCVHS is holding its first such hearings on April 9, 2002. NCVHS must make a recommendation on whether or not ICD-10-PCS should be named as a national standard to the Secretary, DHHS. Only after this recommendation is received, would the Department consider initiating the process of proposing ICD-10-PCS as a national standard. This would be accomplished through a proposed and final rule.

Implementation Issues

1. Make ICD-10-PCS available to publishing and software industry.

CMS has posted draft versions of ICD-10-PCS on its homepage at various stages during development and testing. The most recent draft is posted at: This version includes updates added in November 2000. The system does not have a copyright, so vendors and software developers could freely use it.

2. Develop a crosswalk between ICD-9-CM and ICD-10-PCS

A crosswalk is available on CMS' homepage along with the final version of ICD-10-PCS. This crosswalk could be used by the public in following trend data or to analyze impacts of the new system.

3. Map ICD-10-PCS into the DRG system.

CMS awarded a contract to 3M to maintain the Grouper software which assigns DRGs. As part of this contract, 3M is to update ICD-10-PCS while decisions are being made as to whether it will be implemented. The contract also requires 3M to map ICD-10-PCS into the current DRG structure should ICD-10-PCS be named as a national standard. Therefore, CMS has already awarded a contract to undertake any DRG conversion activites that would be required should ICD-10-PCS be named as a national standard. Information on a conversion and it's incorporation into the DRG system would be made available as part of the annual inpatient prospective payment system proposed and final rule process.

4. Educate the coding industry in the use of ICD-10-PCS

Training Manual
CMS developed a training manual for the use of ICD-10-PCS. This was used in training its contractors who tested the system. Based on comments received during the process, the manual was modified and updated. The final draft of this training manual is available on CMS' homepage. This training manual does not have a copyright. Therefore the health care industry is free to us it or modify it for their own use.

PowerPoint Speaker Slides
At the request of the industry, CMS posted an extensive series of PowerPoint slides that could be used by speakers interested in making presentations on ICD-10-PCS. These slides describe the structure, nomenclature, and use of the coding system.

Presentations to coders at AHIMA meetings
CMS' contractors, 3M, have made presentations at meetings sponsored by AHIMA on the use of ICD-10-PCS. This was done to facilitate informal testing of ICD-10-PCS. A similar process could be used to "train the trainers" should ICD-10-PCS be names as a national standard.

Implementation questions

Prior to changing to any new coding system, two important questions must be answered.

What is the cost of staying with the current system?


What is the cost of moving to a new system?

What is the cost of staying with the current system?
While it may seem that there is no cost in staying with the current system, one must consider the negative impact that an antiquated system has on our health care system. Being unable to uniquely capture new technologies and services severely restricts data on national health care. It may also restrict the ability to analyze the services provided to patients and whether or not they are equitably reimbursed. Lack of data on outcomes may have a significant impact on health care delivery decisions. Those who provide, reimburse, and utilize health care services must reach a mutual decision on whether the costs saved of staying with the current system override the potential problems from not having accurate health care data.

What is the cost of moving to a new system?
Change of any type is expensive. While HIPAA requires providers be ready to receive any new coding system that may have up to 7 digits, there will still be a cost when this conversion actually takes place. The health care industry will have to obtain software with the new coding system and coding books and instructions manuals. Hospital coders would have to be trained in the use of the new system. There will be concern that the new system might lead to unexpected changes in case mix under the DRG system. The conversion tables and DRG mappings would have to be closely scrutinized. While many within the industry would celebrate an increased ability to recognize and tract new technology, others may believe that this will lead increasing demands to pay higher rates for specific services. While the short term cost of the actual conversion may be high, an analysis must also consider the benefits achieved over the long term in the use of an improved coding system.

CMS looks forward to participating in the discussions as to whether or not ICD-10-PCS should be named as a national standard in place of ICD-9-CM, procedures. Implementation issues should be a key part of any such discussions.

Doc: icd-10-p.doc
Disk: Brooks19
Date: 3-27-02