Changes to the ICD-9 Clinical Modification system

By Alice Anne Andress

The ICD-9 Clinical Modification (CM) system currently used in the U.S. for medical billing purposes became a little more complex with this year’s updating. The ICD-9 system introduced 173 new codes, as well as 28 revised and 14 deleted codes, which are effective October 1, 2006. An addendum of ICD-9 codes is available at the Centers for Medicare and Medicaid Services (CMS) web site:

As background, the ICD-9-CM in its entirety contains three “volumes” of information. Volume 1 contains the diagnosis codes that every provider needs for billing. Volume 2 is an alphabetical index of Volume 1 that is useful only where computerized searches are not available. Volume 3 contains procedure codes, which are used for billing inpatient hospital stays in the diagnosis related group (DRG) system.

For the federal fiscal year beginning October 1, 2005, there are 22 new ICD-9 CM codes involving obstetrics and fertility, ten new codes involving vaccinations, seven new codes dealing with stages of chronic kidney disease, five new codes involving diabetes and the eye, and 18 new codes for reporting overweight according to body mass index – until now, obesity codes were the only codes available to report such conditions. Of the 28 revised codes, half (18) are hypertensive codes and another seven are used to report sleep disorders and conditions. The 14 deleted codes cover areas such as chronic renal failure (585), diseases of the respiratory system (V12.6) and chemotherapy (V58.1), to name several. Additionally, a series of new “V” codes are added to modify either purposes or conditions associated with other codes. For providers of medical care, such changes add not only to complexity in the system, but also to financial and legal exposures as the providers of the care.

Changes in the numbers of such codes, however, should not be allowed to over-shadow what is a changing compliance landscape. Diagnosis coding is a critical component in the medical coding and billing process, as it determines the medical necessity of providers’ services and, in turn, what payments are made. As such, proper provider billing of medical care based on the use of proper diagnosis code(s) is at the forefront of federal and state payer scrutiny, as well as other health care insurers. Diagnosis code(s) properly used by the medical provider will support both the level of service provided and the procedure performed. Inappropriate use of the diagnosis code, on the other hand, will result in either the provider under coding for services rendered, adversely affecting revenue to the medical operation; or over coding for the services rendered, exposing the medical provider and the provider organization to potential misconduct under a variety of federal and state laws and regulations.

Today, federal and state agencies are more sophisticated and systematic in their annual review and audit activities that are aimed at ensuring that proper payments are made to medical service providers. These activities are constantly refined in scope and in their ability to target possible problems through increasing use of electronic billing and payment media and sampling techniques. The annual work program released by the Office of Inspector General (OIG) of the Department of Health and Human Services is but one example, but one that is comprehensive in its reach.

Compliance programs should be basic to medical operations of all sizes. It is a practical management response to manage the business risk to the current health care delivery and financing system. Targeted enforcement and audit actions by federal and state governments and payers at large will continue for years to come. But, the sophistication, scope and effectiveness of such compliance programs and processes vary widely.

Physician organizations, particularly, may be ripe for some preventive medicine of their own when it comes to compliance activities since many may misinterpret discontinuance by CMS of its random prepayment review activities. The Comprehensive Error Rate Testing (CERT) program implemented by CMS to measure how well Medicare carriers are processing claims will affect physicians in new ways. While payments are no longer delayed as a result of CMS audits, a more systematic post-audit by private contractors to CMS will affect all Medicare providers, including physicians, hospitals, suppliers and home health agencies. The American College of Physicians indicates that, because E/M services account for 40 percent of what Medicare spends for physician services, E/M services will be a focus of the CERT program, and physicians will need to document and verify such audits, accordingly. These audits will no longer automatically trigger more comprehensive audits of the physicians’ offices, but the audits promise to hold CMS private contractors operating under market conditions more accountable, which in turn will broaden efforts to seek out behaviors of fraud and abuse. Compliance programs done well will change such potentially destructive behaviors over time, making it a business risk necessity.

The old saw is that the OIG is watching. The new reality is that a more sophisticated and comprehensive approach for identifying potential fraud and abuse is unfolding across the medical provider and payer landscape. This promises to catapult the need for more all-inclusive and mature compliance program processes by individual providers of medical care and the organizations that house and support such providers. Ignorance of the law was never an allowed defense and the unfolding environment today will make it even less so.

Alice Anne Andress, CCS-P, CCP is a Senior Manager at Parente Randolph, LLC, in Philadelphia, Pa., and the Director of Physician Services in their Health Care Consulting Division. The author acknowledges the contribution to this article of Lee H. Bowser, a Senior Operating/Healthcare Insurance Executive and Consultant, Fort Lauderdale, Florida.