November 5, 2003

The Honorable Tommy G. Thompson
U.S. Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201

Dear Secretary Thompson:

As part of its responsibilities under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the National Committee on Vital and Health Statistics (NCVHS) monitors the continued effectiveness of the health data standards adopted pursuant to the requirements of HIPAA’s administrative simplification provisions.

During the past several years, NCVHS’ Subcommittee on Standards and Security has focused considerable attention on the feasibility and desirability of replacing the current diagnosis and inpatient procedure classification system, ICD-9-CM, volumes 1, 2, and 3, with a newer and expanded version, ICD-10-CM and ICD-10-PCS.  ICD-9-CM, volumes 1 and 2, was adopted as the HIPAA standard for diagnoses in all settings and ICD-9-CM,

volume 3, as the standard for inpatient procedures reported by hospitals.  At issue are the one-to-one replacement as HIPAA codes sets of ICD-9-CM volumes 1 and 2, with ICD-10-CM for diagnoses in all settings, and ICD-9-CM volume 3, with ICD-10-PCS for inpatient procedures reported by hospitals. This would not affect the usage of other code sets under HIPAA, such as CPT-4 and Level II HCPCS (Healthcare Common Procedure Coding System).

The ICD-9-CM was developed in the 1970s.  Despite an annual update process, ICD-9-CM volumes 1, 2 and 3, have structure and space limitations that increasingly constrain their ability to accommodate advances in medical knowledge and technology.  ICD-10-CM is recognized as the logical successor code set to ICD-9-CM for diagnoses.  In fact, ICD-10 already has been used for mortality classification in the United States since 1999 and has been implemented for that purpose throughout much of the rest of the world since the mid-1990s.  Many of these countries also have adopted ICD-10, or a clinical modification of it, for reporting diagnoses in health care settings.  ICD-10-PCS was developed by the Centers for Medicare & Medicaid Services (CMS) as a successor to ICD-9-CM, volume 3.

More than eight days of hearings have been held by NCVHS since 1997, and letters and oral and written testimonies have been provided by more than 80 public- and private-sector groups representing the healthcare industry, the Federal and State governments, the public health and research communities, insurers, and providers.  A chronology of the development of ICD-10-CM and ICD-10-PCS (attachment 1) and a synopsis of testimonies and letters are enclosed.  (attachment 2) Also enclosed is a complete listing of groups that have provided input. (attachment 3)

The issues surrounding the migration to a replacement diagnosis and inpatient procedure classification system in the United States are complex.  For example, there are concerns within the health care community that ICD-9-CM is an antiquated system that cannot meet the current and emerging needs of payers and providers in today’s fast-paced, highly specialized, and technologically sophisticated environment.  There also are concerns that ICD-9-CM is increasingly unable to address the needs for accurate data for healthcare billing, quality assurance, public health reporting, and health services research.  This has been well documented in the testimonies and letters provided to the Committee over the past several years.

At the same time, the Committee has heard concerns from the health care community about the costs, the magnitude of potential benefits, and implementation issues associated with transitioning to ICD-10-CM and ICD-10-PCS.  Given the widespread use of ICD-9-CM, there could be significant implementation costs in terms of hardware and software changes, lost productivity, and training, among others.

Benefits are harder to quantify, but appear to outweigh the costs.  They include facilitating improvements to the quality of care and patient safety, fewer rejected claims, improved information for disease management, and more accurate reimbursement rates for emerging technologies. These costs and benefits and related issues also have been substantially documented in testimony before the Subcommittee, as well as in a cost/benefit study by The RAND Corporation (RAND) that was specially commissioned by NCVHS.   A copy of the RAND [] study is enclosed.

In addition, many in the public and private sectors are concerned about the additional administrative and resource burdens posed by this implementation, since they would follow on the heels of HIPAA’s other mandated requirements.  Along with testimony about the timing and cost concerns, the Subcommittee received considerable input about the timeframes that would be needed to effect a successful transition to ICD-10-CM and ICD-10-PCS. NCVHS heard in testimony that the industry would need a minimum of two years for implementation; however, such timing could be further clarified and refined through the regulatory process.

While taking into account the diversity of input and lack of industry-wide consensus, NCVHS concludes it is in the best interests of the country as a whole that ICD-10-CM and ICD-10-PCS be adopted as HIPAA standards for national implementation as replacements for current uses of ICD-9-CM volumes 1, 2, and 3.  As a result, the Committee recommends that the Department of Health and Human Services initiate the regulatory process for the concurrent adoption of ICD-10-CM and ICD-10-PCS. The Committee further recommends an implementation period of at least two years following issuance of a final rule. By issuing a Notice of Proposed Rule Making (NPRM), the Department would provide a structured environment in which critical implementation issues may be addressed. We further recommend that the NPRM specifically invite comments on the key issues presented in testimonies and letters before the Committee:

  • What could be done to minimize the costs of a transition to ICD-10-CM and ICD-10-PCS?
  • What could be done to maximize the benefits of implementing ICD-10-CM and ICD-10-PCS?
  • What are potential unintended consequences of such a migration, and how could they be mitigated?
  • What timeframes would be adequate for implementation?
  • What additional steps would be required to ensure a realistic and smooth migration?

NCVHS wishes to thank you for the opportunity to submit these recommendations.



John Lumpkin, M.D., M.P.H.
Chair, National Committee on Vital and Health Statistics

Cc:  HHS Data Council Co-Chairs

Enclosures (under separate cover)

Attachment 1

Attachment 2

Attachment 3