The HHS has issued a proposed rule calling for the replacement of the ICD-9 code sets with the expanded ICD-10 code sets, which were originally developed by the World Health Organization. Code sets are used by covered entities to submit claims electronically for reimbursement. In connection with implementing the new code sets, HHS proposed a separate rule to update HIPAA's existing electronic-transaction standards (known as Version 4010/4010A1), with Version 5010, which will accommodate the larger ICD-10 code sets.

Under the proposed rule, diagnosis coding will be known as ICD-10-CM and inpatient hospital procedures will be coded using the ICD-10-PCS. According to HHS, the benefits of the new ICD-10 code sets include:

  • more accurate payments for new procedures and reductions in the number of rejected claims;
  • improved disease management; harmonized disease monitoring and reporting worldwide; and
  • enabling the United States to compare its data with international data to track the spread of disease and treatment outcomes.

Additionally, the ICD-10 code sets will:

  • Allow Medicare to better detect fraud and abuse with more accurately defined diagnosis and treatment codes; and
  • Increase the accuracy of coding to support value-based purchasing, enabling CMS to spot "never events" for which Medicare will not provide reimbursement.

The deadline for commenting on the new ICD-10 code sets is October 21, 2008. The rules are scheduled to become effective October 1, 2011. To view the proposed regulations, please click here and here. You may also access the CMS Fact Sheets here and here.