Are You Prepared for the ICD-10 Changes?

Specialty Pharmacy TimesFebruary 2012
Volume 3
Issue 1

The International Classification of Diseases codes will undergo significant changes to address the limitations of coding hospital inpatient procedures and patient medical conditions. Here's what you'll need to know to stay abreast.

The International Classification of Diseases codes will undergo significant changes to address the limitations of coding hospital inpatient procedures and patient medical conditions. Here's what you'll need to know to stay abreast.

On October 1, 2013, significant changes to the International Classification of Diseases (ICD) codes will become effective. The current ICD-9 codes used to report inpatient procedures and diagnoses will be replaced by ICD-10 codes. To support this change transaction standards for electronic health care claims will be upgraded from Version 4010/4010A, to version 5010 by January 2012.

The transition to ICD-10 codes was primarily implemented to address the limitations with ICD-9 coding of hospital inpatient procedures and patient medical conditions. Most notably, ICD-9 coding contains outdated terms (30 years old) and is inconsistent with current medical practice. In addition, the ICD-9 categories have reached their intended capacity and therefore structurally limit the number of new codes that can be created.

The new ICD-10 consists of 2 parts:

1. ICD-10-PCS for inpatient procedure coding

For use in all inpatient US hospital settings. ICD-10 inpatient procedure codes utilize 7 alphanumeric digits instead of the 3 to 4 numeric digits used for ICD-9-CM coding. As a result, the ICD-10-PCS coding is more specific and substantially different from the ICD-9-CM coding.

2. ICD-10-CM for diagnosis coding

For use in all US health care settings, ICD-10 diagnosis cose utilize 3 to 7 digits instead of the 3 to 5 digits used for ICD-9-CM coding. The ICD-10-CM code set formats are similar to ICD-9-PCS coding.


The ICD-10 transition will not just affect those who submit Medicare or Medicaid claims, it will affect diagnosis and inpatient procedure coding for all covered entities governed by the Health Insurance Portability and Accountability Act (HIPAA).

Covered entities governed by HIPAA who transmit electronic claims must also abide by Version 5010 transaction standards. The change to ICD-10 does not affect CPT coding for outpatient procedures. Covered entities must be prepared to comply with the Version 5010 and ICD-10 transitions, which means:

  • Health care providers, payers, billing services, clearinghouses, and other organizations that conduct electronic transactions should have completed internal testing of Version 5010 systems in time to begin external testing with one another by January 1, 2012.
  • All electronic claims submitted on or after January 1, 2012, must use Version 5010 transaction standards. Electronic claims that do not use Version 5010 standards will not be paid.
  • ICD-10 diagnosis codes must be used for all health care services provided in the United States on or after October 1, 2013. ICD-10 procedure codes must be used for all hospital inpatient procedures performed on or after October 1, 2013. Claims with ICD-9 codes for services provided on or after October 1, 2013, will not be paid.


It is important that you prepare for the ICD-10 and Version 5010 transition as soon as possible. Here are some tasks to help you get started:

  • Payers need to review the new coding rules for ICD-10 for payment. Start by asking your software vendors about the timelines for product development, readiness plans, testing, training, and availability for ICD-10 and version 5010 transitions. It would also be prudent to develop a strategic plan as well as a budget dedicated to transition preparations.
  • Providers need to also prepare an implementation strategy that includes an assessment of the impact to their organization. Ensure that you are aware of and have accounted for all direct and indirect requirements associated with your clearinghouse, billing services, and practice management software vendors ICD-10 transition, plans. If you handle your own billing and software development, then you will need to create and implemente strategy and plan unique to your operations.
  • Software vendors, third party billing services, and clearinghouses should have development in place for services and products that will allow their clients (payers and providers) to fully implement Version 5010 transactions by January 1, 2010, and ICD-10 coding by October 1, 2013.
  • Similar to Y2K, organizations will need to proactively identify all ICD-9 codes currently present in each of their current systems in order to systematically determine the impact of the conversion. This will assist in defining the proper conversation mapping(s) necessary to support a successful conversion.
  • Organizations will need to assess the impact of conversion on historical records within each system. Special considerations include code conversion to support billing for adjustments on past claims, maintaining the code conversion records per transaction for balancing purposes, and the impact to current reporting requirements.
  • If claims are submitted via any paper forms, it may be necessary to support the impact of code conversion for paper claims transactions. Changes may include subtle formatting and spacing changes. Be careful!
  • Organizations should proactively verify the readiness of their partners. Data exchanges to and from pharmacies should be tested to ensure minimum impact to operations post conversion.


The Centers for Medicare & Medicaid Services (CMS) website is ( provides resources to help you prepare for Version 5010 and ICD-10. CMS will continue to add new tools and information to the site throughout the course of the transition, so be sure to check the site frequently for updated resources.

There are also several professional, clinical, and trade associations offering a wide variety of Version 5010 and ICD-10 educational resources, information, and checklists. Call or check websites of your associations and other industry groups to see what resources are available.

About the Authors

Quintin Jessee, PharmD, is director specialty pharmacy consulting for D2 Pharma Consulting LLC and has more than 10 years of senior management experience in specialty pharmacy operations.Jim Maguire is the chief executive officer of BioMed Intelligence, Inc, a firm specializing in health care information technology support solutions. With more than 20 years of experience, Mr. Maguire was formerly the chief information officer of a top pharmacy benefit manager and also led information technology operations at a top specialty pharmacy. Contact Mr. Maguire at (347)847-357; or

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