Practice Economics

Get Ready for Transition to ICD-10 Medical Coding


Dr. Nelson

By now, I’m sure you’re knowledgeable about things like healthcare exchanges and other parts of the Accountable Care Act, the increasing number of metrics within hospital value-based purchasing, the physician value-based payment modifier, the physician quality reporting system (PQRS), how to use your hospital’s new EHR efficiently, the new “two-midnight rule” to determine inpatient vs. observation status, and so on.

You’re to be commended if you’re staying on top of all these things and have effective plans in place to ensure good performance on each. And if you haven’t already, you should add at least one more important issue to this list—the transition to ICD-10 coding on Oct. 1, 2014.

An Overview

ICD stands for International Classification of Diseases, and the U.S. has been using the 9th revision (ICD-9) since 1978. ICD-9 is now significantly out of step with current medical knowledge and has run out of codes in some disease sections (“chapters”). This might mean, for example, that new codes for heart diseases would be assigned to the chapter for eye disease, because the former is full.

ICD-10 provides a way to fix these problems and, through more specific coding of diseases, should be able to yield more useful “big data” to measure things like safety and efficacy of care and more accurately identify diagnosis trends and epidemics. And, in theory, it could reduce the number of rejected billing claims, though I’m waiting to see if that happens. I worry that even after fixing all the initial bugs related to the ICD-10 transition, we will see more claim rejections than we experience today.

ICD codes can be thought of as diagnosis codes. CPT codes (Current Procedural Terminology) are an entirely separate set of codes that we use to report the work we do for the purposes of billing. We need to be familiar with both, but it is the ICD codes that are changing.

ICD-10 Basics and Trivia

The World Health Organization issued the ICD-10 in 1994, and it is already in use in many countries. Like some other countries, the U.S. made modifications to the WHO’s original code set, so we refer to ICD-10-CM (Clinical Modification), which contains diagnosis codes. The National Center for Health Statistics, a department of the CDC, is responsible for these modifications.

The WHO version of ICD-10 doesn’t have any procedure codes, so CMS developed ICD-10-PCS (Procedure Coding System) to report procedures, such as surgeries, done in U.S. hospitals. Most hospitalists won’t use these procedure codes often.

Comparing the diagnosis code sets Dr. Nelson

Table 1. Comparing the diagnosis code sets

Table 1 (left) compares ICD-10-CM to ICD-9-CM. Most of the additional codes in the new version simply add information regarding whether the diagnosis is on the left or right of the body, acute or chronic, or an initial or subsequent visit for the condition. But the standard structure for each code had to be modified significantly to capture this additional information. Some highlights of the seven-character code structure are:

  • Characters 1–3: category; first digit always a letter, second digit always a number, all other digits can be either; not case sensitive;
  • Characters 4–6: etiology, anatomic site, severity, or other clinical detail; for example, 1=right, 2=left, 3-bilateral, and 0 or 9=unspecified; and
  • Character 7: extension (i.e., A=initial encounter, D=subsequent encounter, S=sequelae).
  • A placeholder “x” is used as needed to fill in empty characters to ensure that the seventh character stays in the seventh position. For example, T79.1xxA equates to “fat embolism, initial encounter.” (Note that the “dummy” characters could create problems for some IT systems.)

An example of more information contained in additional characters:

  • S52=fracture of forearm.
  • S52.5=fracture of lower end of radius.
  • S52.52=torus fracture of lower end of radius.
  • S52.521=torus fracture of lower end of right radius.
  • S52.521A=torus fracture of lower end of right radius, initial encounter for closed fracture.

Compared to its predecessor, ICD-10 expands use of combination codes. These are single codes that can be used to classify either two diagnoses, a diagnosis with an associated secondary process, or a diagnosis with an associated complication. For example, rather than reporting acute cor pulmonale and septic pulmonary embolism separately, ICD-10 allows use of the code I26.01: septic pulmonary embolism with acute cor pulmonale.

...because we use a universe of diagnosis codes that is much larger than many specialties, I wonder if hospitalists may need additional training.


In addition to resources on the SHM website, both the American Medical Association (, search “ICD-10”) and the Centers for Medicare and Medicaid Services ( have very informative microsites offering detailed ICD-10 information. Much of the information in this column, including the examples above, comes from those sites.

What to Expect

Your hospital and your employer are probably already working in earnest to prepare for the change. In some cases, hospitalists are actively involved in these preparations, but in most cases they will simply wait for an organization to notify them that they should begin training to understand the new coding system. Experts say that most physicians will need two to four hours of training on ICD-10, but because we use a universe of diagnosis codes that is much larger than many specialties, I wonder if hospitalists may need additional training.

Like nearly all the programs I listed at the beginning, the transition to ICD-10 has me concerned. Managing it poorly could mean significant loss in hospital and physician professional fee revenue, as well as lots of tedious and time-consuming work. So, doing it right is important. But, it is also important to do well on all the programs I listed at the beginning of this column, and many others, and there is a limit to just how much we can do effectively as individuals.

Collectively, these programs risk taking too much time and too many brain cells away from keeping up with clinical medicine. So, I wonder if, for many of us, ICD-10 will serve as a tipping point that results in physicians hiring professional coders to choose our diagnosis codes and CPT codes rather than doing it ourselves.

As with EHRs, ICD-10 is said to have many benefits. But the introduction of EHRs in many hospitals had the unintended effect of significantly reducing the number of doctors who were willing to serve as admitting and attending physicians; instead, many chose to refer to hospitalists. In a similar way, ICD-10 might lead many organizations to relieve physicians of the responsibility of looking up and entering codes for each patient, leaving them with more time and energy to be clinicians. We’ll have to wait and see.

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at [email protected].

Next Article:

   Comments ()