International Classification of Diseases: CMS's Efforts to Prepare for the New Version of the Disease and Procedure Codes
Published: 2015-01-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In the United States, every claim submitted by health care providers to payers—including Medicare and Medicaid—for reimbursement includes ICD codes. On October 1, 2015, all covered entities will be required to transition to the 10th revision of the codes, requiring entities to develop, test, and implement updated information technology systems. Entities must also train staff in using the new codes, and may need to modify internal business processes. CMS has a role in preparing covered entities for the transition.
GAO was asked to review the transition to ICD-10 codes. GAO (1) evaluated the status of CMS's activities to support covered entities in the transition from ICD-9 to ICD-10 coding; and (2) described stakeholders' most significant concerns and recommendations regarding CMS's activities to prepare covered entities for the ICD-10 transition, and how CMS has addressed those concerns and recommendations. GAO reviewed CMS documentation, interviewed CMS officials, and analyzed information from a non-probability sample of 28 stakeholder organizations representing covered entities and their support vendors, which GAO selected because they participated in meetings CMS held in 2013 or met GAO's other selection criteria.
GAO provided a draft of this report to HHS. HHS concurred with GAO's findings and provided technical comments, which GAO has incorporated, as appropriate.
section_title: What GAO Found
paragraphs: The Centers for Medicare & Medicaid Services (CMS), within the Department of Health and Human Services (HHS), has undertaken a number of efforts to prepare for the October 1, 2015, transition to the 10th revision of the International Classification of Diseases (ICD-10) codes, which are used for documenting patient medical diagnoses and inpatient medical procedures. CMS has developed educational materials, such as checklists and timelines, for entities covered by the Health Insurance Portability and Accountability Act of 1996 (HIPAA)—that is, health care providers, clearinghouses, and health plans, which GAO refers to as “payers”—and their support vendors. In addition, CMS has conducted outreach to prepare covered entities for the transition by, for example, holding in-person training for small physician practices in some states. CMS officials have also monitored covered entity and vendor readiness through stakeholder collaboration meetings, focus group testing, and review of surveys conducted by the health care industry. CMS also reported modifying its Medicare systems and policies. For example, CMS documentation states that the agency completed all ICD-10-related changes to its Medicare fee-for-service (FFS) claims processing systems, which reflect the results of internal testing. At this time, it is not known what, if any, changes might be necessary based upon the agency's ongoing external testing activities. CMS has also provided technical assistance to Medicaid agencies and monitored their readiness for the transition. For example, all Medicaid agencies reported that they would be able to perform all of the activities that CMS has identified as critical by the transition deadline; however, as of November 2014, not all agencies have started to test their systems' abilities to accept and adjudicate claims containing ICD-10 codes.
Stakeholder organizations identified several areas of concern about the ICD-10 transition and made several recommendations, which CMS has taken steps to address. For example, stakeholders expressed concerns that CMS's testing activities have not been comprehensive. In addition, while all 28 stakeholders GAO contacted indicated that CMS's educational materials have been helpful to covered entities, stakeholders were concerned about the extent to which those entities were aware of and using those materials. In response, CMS officials said that the agency has scheduled end-to-end testing with 2,550 covered entities during three weeks in 2015 (in January, April, and July), and has promoted awareness of its educational materials by, for example, partnering with payers, providers, and others to direct users to available CMS and industry educational resources. Stakeholders also recommended that CMS expand its in-person training and develop additional specialty-specific materials. CMS officials said the agency has added in-person training in additional states with plans to also offer more video trainings, and planned to develop additional specialty-specific materials. Additionally, stakeholders recommended that CMS do more to engage covered entities through non-electronic methods and to make its Medicare FFS contingency plans public. CMS officials indicated that the agency employs various methods to engage covered entities—including bi-weekly stakeholder collaboration meetings and print advertisements—and also conducted a direct mail pilot project to primary care practices in four states, and plans to expand the pilot. CMS officials also indicated the information in the agency's contingency plans that are relevant to providers is currently publicly available.

section_title: Letter
paragraphs: In the United States—where health care spending was $2.8 trillion in  2012—every claim submitted by health care providers to health care  payers for reimbursement includes International Classification of  Diseases (ICD) codes. ICD codes are the standard code set used in the  United States, including in the Medicare and Medicaid programs, for  documenting patient medical diagnoses and inpatient medical  procedures. The Centers for Medicare & Medicaid Services (CMS),  within the Department of Health and Human Services (HHS), enforces the  use of ICD codes by entities covered by the Health Insurance Portability  and Accountability Act of 1996 (HIPAA)—that is, health care providers,  health care clearinghouses, and health plans, which we refer to as  “payers” in this report. On October 1, 2015, all HIPAA-covered entities  will be required to transition to the 10th revision of the ICD codes (ICD- 10). Compared to the 9th revision of the ICD codes (ICD-9) currently in  use, ICD-10 codes allow for greater specificity in describing patient  diagnoses and in classifying inpatient procedures. CMS has a role in  preparing covered entities for the transition to ICD-10 codes, and in  engaging stakeholder organizations in preparing their members for the  transition.
On January 16, 2009, HHS issued regulations that mandated the use of ICD-10 codes by  October 10, 2013. On September 5, 2012, HHS finalized regulations delaying the effective  date until October 1, 2014. The Secretary of HHS made this decision for the following  three reasons: (1) the industry transition to the revised set of HIPAA electronic transaction  standards, known as Version 5010, did not proceed as effectively as expected;   (2) providers became concerned that other statutory initiatives, such as the Electronic  Health Records Program and the Electronic Prescribing Program were stretching their  resources; and (3) there was a lack of readiness for the ICD-10 transition, as indicated by  industry surveys and polls. The Protecting Access to Medicare Act of 2014, enacted   April 1, 2014, delayed the transition further by requiring HHS to transition to the use of  ICD-10 codes no sooner than October 1, 2015. On August 4, 2014, HHS established  October 1, 2015, as the new compliance date by issuing a final rule. prepared for the earlier transition date.entities that were concerned that they would not be ready for an earlier  implementation date welcomed the delays.
You asked us to study the actions planned and taken by CMS to support  the transition of covered entities to ICD-10 codes by October 1, 2015. In  this report, we (1) evaluate the status of CMS’s activities to support  covered entities in the transition from ICD-9 to ICD-10 coding by that  date; and (2) describe stakeholders’ most significant concerns and  recommendations regarding CMS’s activities to prepare covered entities  for the ICD-10 transition, and how CMS has addressed those concerns  and recommendations.
To describe CMS’s role in supporting covered entities in the transition  from ICD-9 codes to ICD-10 codes by October 1, 2015, we analyzed  information and materials made publicly available through CMS’s ICD-10  websites, and reviewed other documentation provided by CMS, such as  planning documents outlining the agency’s strategy for preparing covered  entities for the transition. In addition, we interviewed CMS officials  responsible for overseeing the agency’s ICD-10 transition activities. To  provide information on areas where covered entities perceive that CMS’s  activities related to the ICD-10 transition have been helpful, we analyzed  information collected from a non-probability sample of 28 stakeholder  organizations we contacted. To do so, we first identified a non-probability  sample of 36 national stakeholder organizations to collect information that  is representative of the views of the covered entities they represent, as  well as the vendors that support those covered entities. Our criteria for  selecting these stakeholders were as follows: national organizations that  participated in one of CMS’s stakeholder collaboration meetings held in  2013; additional national organizations identified by CMS as a resource  on the agency’s ICD-10 website; organizations that, according to the  American Medical Association, represent medical professions that might  be particularly impacted by the transition or have unique insights; the  Healthcare Administrative Technology Association, a new organization  identified by CMS as important because it represents practice  management system vendors; and other organizations we identified to  ensure that we had representation from each of the broad categories of  non-federal affected covered entities identified by CMS in developing its  regulations. For example, CMS identified outpatient care centers as  covered entities impacted by the ICD-10 transition in conjunction with   Because those covered entities  issuing a final rule in January 2009.were not already represented by one of the previously identified national  organizations, we selected a national organization representing  ambulatory surgical centers, which are a type of outpatient care center.  This process identified a total of 36 stakeholders, which we contacted to  request information. We analyzed the responses of 28 of these  stakeholders, which we obtained either in an interview or in writing. We  did not include in our analysis the responses from 7 stakeholders that did  not provide substantive responses to some of our questions,1 organization declined to respond to our request for information. We  collected information from stakeholders from August 2014 through  October 2014.
To describe stakeholders’ concerns and recommendations regarding  CMS’s activities to prepare covered entities for the ICD-10 transition, we  analyzed information collected from the 28 stakeholders to identify the  actions those stakeholders suggested CMS could undertake. To describe  how CMS has addressed those concerns and recommendations identified  by stakeholders, we interviewed CMS officials and reviewed agency  documentation.
We conducted this performance audit from July 2014 to January 2015 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The transition to ICD-10 codes, which has widespread implications for  health care transactions and quality measurement in the United States,  offers the potential for several improvements over the current ICD-9 code  set. Medicare and Medicaid will incorporate the ICD-10 codes into  multiple program functions that currently use ICD-9 codes, including  payment systems and quality measurement programs.
subsections: section_title: ICD Code Overview
paragraphs: ICD-9 codes were initially adopted in the United States as the standard  for documenting morbidity and mortality information for statistical  purposes, but was expanded and adopted in 2000 through HIPAA as the  standard code set for use in all electronic transactions by covered  entities. Specifically, ICD-9 codes are used in all U.S. health care settings  to code diagnoses and are also used in all U.S. inpatient hospital settings  to code procedures. Beginning on October 1, 2015, all health care  transactions that include ICD codes must use ICD-10 codes for dates of  service that occur on or after that date. Transactions with dates of service  that occur prior to the transition date of October 1, 2015, must continue to  be coded with ICD-9 codes. The vendors whose goods or services health  care providers may utilize to help them code and process claims, such as  electronic health record vendors and practice management system  vendors, are not covered entities, but they must respond to HIPAA  standards in order to support their HIPAA-covered customers. Figure 1  illustrates the flow of health care transactions that include ICD codes from  the health care provider to payers, and identifies which types of  organizations are and are not covered entities.
The Centers for Disease Control and Prevention’s (CDC) National Center  for Health Statistics is responsible for developing the ICD-10 diagnosis  codes with input from medical specialty societies, and CMS is responsible  for developing the ICD-10 procedure codes. Representatives from CMS  and the National Center for Health Statistics comprise the Coordination  and Maintenance Committee, which is responsible for approving coding  changes and making modifications, based upon input from the public.  CDC and CMS, assisted by the American Hospital Association (AHA) and  the American Health Information Management Association (AHIMA)— collectively known as the Cooperating Parties—are responsible for  supporting covered entities’ transitions to ICD-10. The Cooperating  Parties’ responsibilities include developing and maintaining guidelines for  ICD-10 codes and developing ICD-10-related educational programs.
In addition to the Cooperating Parties, other organizations are helping to  prepare covered entities for the ICD-10 transition. For example, officials  with the Workgroup for Electronic Data Interchange (WEDI), a coalition of  covered entities, vendors, and other members of the health care industry,  hold regular meetings with industry members to discuss how to address  ICD-10 transition issues. Additionally, WEDI and other stakeholders have  made educational materials available on their websites.the Healthcare Information and Management Systems Society’s ICD-10  Playbook contains tools, guidelines, and information to help covered  entities prepare for the transition to ICD-10 codes. Stakeholders have  also held sessions on ICD-10 transition-related issues during their  member conferences.
There are several differences between ICD-9 and ICD-10 codes. For  example, ICD-10 codes can include up to seven alphanumeric digits,  while ICD-9 codes can only include up to five alphanumeric digits. The  additional digits in ICD-10 codes allow for the inclusion of more codes.  Specifically, there are approximately 15,000 ICD-9 diagnosis codes  compared to approximately 70,000 ICD-10 diagnosis codes, and  approximately 4,000 ICD-9 procedure codes compared to approximately  72,000 ICD-10 procedure codes. Despite the dramatic increase in the  number of ICD-10 codes, according to CMS and others, most physician  practices use a relatively small number of diagnosis codes that are  generally related to a specific type of specialty.
The additional number of ICD-10 codes enables providers and payers to  capture greater specificity and clinical information in medical claims. For  example, ICD-10 codes enable providers to report on the body part and  the side of the body subject to the evaluation or procedure. More  specifically, while there was 1 ICD-9 code for angioplasty—a procedure to  restore blood flow through an artery—there are 854 ICD-10 codes for  angioplasty, with codes including additional detail on the body part,  approach, and device used for the procedure. Another difference between  ICD-9 and ICD-10 codes is the terminology and disease classifications,  which have been updated so that they are consistent with new technology  and current clinical practice. For example, under ICD-9, there was a  single code to reflect tobacco use or dependence. Under ICD-10, there is  a category for nicotine dependence with subcategories to identify the  specific tobacco product and nicotine-induced disorder. The updated  disease classifications for nicotine disorders reflect the increased  knowledge of the effects of nicotine. Other differences between ICD-9  and ICD-10 codes include the addition of new concepts that did not exist  in ICD-9 diagnosis codes, such as the expansion of postoperative codes  to distinguish between intraoperative and post-procedural complications;  and the designation of trimester for pregnancy codes.
section_title: Usage of ICD Codes
paragraphs: The ICD codes are used in a variety of ways by payers, including  Medicare and Medicaid. For example, payers generally use ICD  diagnosis codes to determine whether the care provided by physicians is  medically necessary and, therefore, eligible for reimbursement.  Additionally, Medicare hospital inpatient payment rates are based on  Medicare-Severity Diagnosis-Related Groups (MS-DRG), a system that  classifies inpatient stays according to both patients’ diagnoses and the  procedures the patients receive, both of which are identified using ICD  codes. The MS-DRG signifies the average costliness of inpatient stays  assigned to one MS-DRG category relative to another MS-DRG category.  All payers will need to update all systems and processes that utilize ICD  codes by October 1, 2015, to ensure they are ICD-10 compliant.
In addition to claims processing, Medicare, Medicaid, and private payers  conduct a variety of quality measurement activities that use quality  measures, which will need to be updated to reflect the ICD-10 codes. For  example, Medicare providers collect and report quality measures to CMS  for the Hospital Inpatient Quality Reporting program, the Physician  Quality Reporting System, the Physician Value-based Payment Modifier  Program, and the Electronic Health Records program, and many private  payers measure their performance using Healthcare Effectiveness Data  and Information Set® (HEDIS) measures.
section_title: CMS Developed Transition Educational Materials, Modified Medicare Systems, and Assisted Medicaid Agencies
paragraphs: In preparation for the transition from ICD-9 to ICD-10 codes, CMS  developed various educational materials, conducted outreach, and  monitored the readiness of covered entities and the vendors that support  them for the transition. In addition, the agency reported modifying its  Medicare systems and policies. CMS also provided technical assistance  to Medicaid agencies and monitored their readiness for the ICD-10  transition.
subsections: section_title: CMS Developed Educational Materials, Conducted Outreach, and Assessed Covered Entity and Vendor Readiness
paragraphs: CMS developed a variety of educational materials for covered entities,  available on the agency’s ICD-10 website,transition to ICD-10 codes. Each of the 28 stakeholders we contacted  reported that the educational materials CMS made available have been  helpful to preparing for the ICD-10 transition. Some of the materials CMS  developed are specific to small and medium physician practices, large  practices, or small hospitals. CMS officials told us that the agency  developed these materials in response to feedback the agency received   to help them prepare for the  from stakeholders that indicated that these specific groups wanted  materials targeted to them. The educational materials include documents that provide information about ICD-10 codes, including  how they differ from ICD-9 codes, and explain why the transition is  occurring;  checklists and timelines that identify the steps necessary to prepare  for the transition, including the associated timeframes;  tip sheets on how providers should communicate with the vendors  that supply their practices with products that utilize ICD coding—such  as software vendors and billing services—and vice versa;  videos and webinars; and  links to stakeholder websites that also feature ICD-10 guidance and  training materials.
In addition, CMS officials told us that the agency partnered with  organizations to enable providers to obtain continuing medical education  credit for eight training modules as a way to incentivize providers to  prepare for the transition.
To help small practices prepare for the ICD-10 transition, and in response  to focus group feedback, CMS launched a new website in March 2014  called “Road to 10.” According to CMS documentation dated March  2013, industry feedback received by the agency indicated that small  physician practices lag behind other providers in preparing for the  transition. Seventeen of the 28 stakeholders we contacted noted that this  website was helpful in preparing covered entities for the transition. The  Road to 10 website, which can be accessed through CMS’s main ICD-10  website, provides additional training materials not available through  CMS’s main ICD-10 website, including training videos describing the  clinical documentation needs for the following specialties: cardiology,  family practice and internal medicine, obstetrics and gynecology,  orthopedics, and pediatrics. The website also provides a customizable  action plan based on several criteria: specialty; practice size; types of  vendors supporting the practice, such as an electronic health record  system vendor; payers to whom the clinician submits claims; and the level  of readiness for the ICD-10 transition.
Some of CMS’s educational materials are intended to help covered  entities determine which ICD-10 codes they may need to use.  Specifically, CMS and the other members of the Cooperating Parties  developed a tool called the General Equivalence Mappings to assist  covered entities in converting ICD-9 codes to ICD-10 codes. Covered  entities can use the General Equivalence Mappings tool to identify ICD-10  codes that might be most relevant to them—a practice that CMS  advocates in its checklists and action plans. Six of the 28 stakeholders  we contacted described this tool as being helpful to their preparatory  activities. CMS’s Road to 10 website also identifies common ICD-10  diagnosis codes associated with the following six physician specialties:  cardiology, family practice, internal medicine, obstetrics and gynecology,  orthopedics, and pediatrics.
CMS also conducted a number of outreach activities in order to inform  covered entities and others about the educational materials that are  available, educate and engage covered entities, obtain real-time feedback  on areas that may merit additional activities from CMS, and promote  collaboration among stakeholders. Twenty-two of the 28 stakeholders we  contacted reported that CMS’s outreach activities have been helpful in  preparing covered entities for the transition to ICD-10 codes. Examples of  the types of outreach CMS has conducted include the following.
Email lists, social media, and advertisements. CMS communicated  information related to the ICD-10 transition through several email lists,  the primary one being the ICD-10 email list, which CMS officials said  was distributed to 186,000 email addresses as of November 25, 2014.  The emails communicated information related to the ICD-10 transition  and generally directed recipients to CMS’s ICD-10 website, which  agency officials told us receives approximately 184,000 page views  per month. Our review of the emails sent from August 2013 to August  2014 indicated that CMS communicated a variety of information,  including available trainings and separate specialty-specific trainings;  best practices; and resources available to help covered entities  prepare for the transition. Other CMS email lists also communicated  information related to the ICD-10 transition, including eHealth and  Medicare Learning Network® (MLN) ConnectsTM. CMS officials told  us that other groups redistribute CMS’s emails to their members,  which helped the agency reach additional covered entities. For  example, officials said that approximately 140 national associations  distribute the information to their members, which represent over   3 million individuals, and that the Medicare Administrative Contractors  (MAC) forward these messages to their email lists, which include  about 600,000 addresses. CMS’s regional offices also distribute  materials through their local email lists, according to CMS officials. In  addition, CMS’s Twitter account provided information about the ICD- 10 transition, such as the date by which covered entities must use  ICD-10 codes, and provided links to educational materials and  information about upcoming presentations. CMS officials told us that  the agency has placed and plans to place additional advertisements  about the transition in both print and online resources, such as  journals and associations’ publications.
National broadcasts. CMS hosted teleconferences that provided an  overview of key transition issues, and an opportunity for participants  to ask questions. In addition, according to the publisher, in 2013,  CMS participated in four broadcasts of Talk 10 Tuesdays, a weekly  30-minute Internet radio broadcast directed to healthcare providers  transitioning to ICD-10, which has about 6,800 registered listeners.
Stakeholder collaboration. CMS has collaborated with stakeholders in  various ways. For example, in 2013, CMS held two meetings with  stakeholders that represented covered entities and vendors. In those  meetings, stakeholders noted several concerns related to the ICD-10  transition and made recommendations to CMS. In addition, CMS  officials reported holding 40 one-on-one meetings with 31 individual  stakeholders between January 2013 and March 2014. Topics of  stakeholder collaboration meetings included the effectiveness of  existing educational materials and how to communicate the benefits of  ICD-10 coding to the public. CMS officials also presented information  about the ICD-10 transition at conferences held by stakeholders. In  addition, CMS hosted two live events (in April 2011 and September  2014) where members of the American Academy of Professional  Coders answered questions about the ICD-10 codes. Fifteen of the   28 stakeholders we contacted mentioned that CMS’s outreach to or  collaboration with stakeholders has been helpful to preparing covered  entities for the transition. Officials with one of these stakeholders  noted that CMS’s participation in stakeholder meetings demonstrates  that CMS is listening to the health care industry’s concerns.
CMS has begun to conduct additional outreach to small primary care  physician practices. First, CMS started to conduct in-person training for  small physician practices in a number of states. According to CMS  officials, between February and December 2014, CMS held 90 1-to-  2 hour trainings in 29 states and the District of Columbia; in each one,  between 1 and 12 sessions were held. In January 2015, officials said  the agency will begin scheduling trainings that will occur in 2015. CMS  officials said that the content for these trainings was based on feedback  from physician focus groups about what physicians are most interested in  learning about during the sessions. In addition, CMS piloted a direct mail  project to small primary care practices in four states—Arizona, Maryland,  Ohio, and Texas—and CMS officials told us they planned to complete an  assessment of the pilot in early December 2014. In responding to a draft  of this report, CMS officials stated that the agency plans to expand the  pilot to rural communities. CMS officials stated that the agency is working  with stakeholders to identify specific practice locations to send direct mail,  an activity they plan to begin in March 2015 and conclude in May 2015;  however, CMS officials did not identify the number of practices the  agency plans to target for this effort.
In addition to developing educational materials and conducting outreach,  CMS conducted activities to assess the readiness of covered entities and  vendors. For example, to prepare for the original implementation date of  October 1, 2013, CMS’s contractors conducted an assessment of the  health care industry’s ICD-10 transition planning in 2009. Additionally, in  2011, CMS’s contractors interviewed 27 organizations representing  vendors, payers, and small physician practices, and surveyed almost 600  organizations regarding their awareness of and preparation for the  transition to ICD-10 codes. These activities revealed a number of things,  including that covered entities wanted additional guidance on how to  prepare for the transition, such as templates describing testing steps; that  providers were concerned about the time and costs associated with the  transition; and that 82 percent of providers, 88 percent of payers, and   75 percent of vendors contacted believed they would be ready to use  ICD-10 codes by the original October 1, 2013, transition date. More  recently, CMS has relied on its stakeholder collaboration meetings, focus  group testing, and review of surveys conducted by the health care  industry to gauge covered entities’ readiness for the transition, according  to agency officials. During the course of our work, we learned that CMS  planned to conduct a survey to assess current covered entity and vendor  readiness. However, in commenting on a draft of this report, HHS told us  that CMS had decided not to go forward with those plans, as CMS  determined that the agency’s limited resources would be better spent  continuing its outreach activities due to the rapidly approaching transition  deadline.
section_title: CMS Reported Having Begun Modifying Medicare Systems and Policies for the Transition
paragraphs: CMS reported that the agency has begun modifying Medicare’s systems  and policies in preparation for the ICD-10 transition. Examples of these  activities include the following:
Coverage policies. CMS and its MACs have updated National  Coverage Determination and Local Coverage Determination polices,  which identify the items and services that are covered by Medicare to  reflect the conversion to ICD-10 codes.
Medicare fee-for-service (FFS) claims processing systems. CMS  documentation states that the agency completed all ICD-10-related  changes to its Medicare FFS claims processing systems as of  October 1, 2014, and that the claims processing systems have been  updated in response to the results of internal testing, but it is not yet  known whether updates may be needed based upon the results of  external testing.
Internal testing. CMS has reported that its Medicare claims  processing systems reflect different types of internal testing  activities. For example, each MAC conducted testing to ensure  that claims using ICD-10 coding complied with the Local Coverage  Determination policies, and that the claims processing systems  appropriately accepted or rejected and processed claims.
External testing. CMS had not completed testing with external  parties, and agency officials acknowledged that the agency would  make additional changes to its systems if future testing identified  any issues. Specifically, CMS conducted “acknowledgment  testing”—that is, testing to determine whether claims submitted by  providers and suppliers that contain ICD-10 codes were accepted  or rejected—over two separate weeks in 2014 (one week in March  and one in November). CMS plans to hold two additional weeks of  acknowledgement testing in 2015 (one week in March and one in  June). In addition, CMS has plans to conduct such testing with  any covered entity that submits test claims on an ongoing basis  until October 1, 2015. During CMS’s first acknowledgement  testing week in March 2014, the agency reported that 2,600  covered entities submitted more than 127,000 claims—89 percent  of which were accepted, with some regional variation in  acceptance rates. During CMS’s second acknowledgement  testing week in November 2014, the agency reported that 500  covered entities submitted about 13,700 claims—76 percent of  which were accepted. CMS documentation indicates that testing  during the March and November 2014 acknowledgment testing  weeks did not identify any issues with the agency’s Medicare FFS  claims processing systems. Additionally, CMS plans to conduct  “end-to-end testing”—that is, testing to determine how claims  submitted by providers and suppliers that contain ICD-10 codes  would be adjudicated, and that accurate payments for these  claims will be calculated—during three weeks in 2015 (in January,  April, and July). CMS is planning to conduct end-to-end testing  with a total of 2,550 covered entities, or 850 covered entities in  each week-long testing period.
We did not independently assess the extent to which CMS’s Medicare  FFS claims processing systems have been updated or tested in  preparation for the ICD-10 transition because we have separate ongoing  work evaluating these activities.
Hospital reimbursement. According to CMS documentation, the  agency has converted MS-DRGs, which determine reimbursement  rates to hospitals for inpatient hospital stays by Medicare  beneficiaries, to reflect ICD-10 codes. CMS planned to continue  making adjustments to the MS-DRGs, as appropriate, based upon  input from the Coordination and Maintenance Committee and from  public comments.
The version of the MS-DRG that will be  implemented on October 1, 2015, is to be made available to the public  in the summer of 2015. CMS documentation suggests that until the  new version of the MS-DRG is provided, hospitals may use the  documentation and software CMS has already made available to  analyze the effect the conversion to ICD-10 codes will have on  hospital payments.
CMS has employed different strategies to communicate the changes it  has made to its systems and policies. The agency distributes educational  materials through the MLN. For example, CMS has issued articles that  instruct providers and suppliers (e.g., inpatient hospitals and home health  agencies) on how to code claims that span a period of time that crosses  the ICD-10 compliance date of October 1, 2015. In addition, the MACs  help educate and provide information to Medicare providers and  suppliers. For example, the MACs are to distribute information to  providers and suppliers about the acknowledgement testing weeks.
section_title: CMS Provided Technical Assistance and Monitors the Readiness of Medicaid Agencies
paragraphs: CMS provided technical assistance to Medicaid agencies in states and  the District of Columbia to help them prepare for the ICD-10 transition.  For example, CMS developed educational and guidance tools, such as an  implementation handbook, which identified five implementation phases:  (1) awareness, (2) assessment, (3) remediation, (4) testing, and   (5) transition. In addition, according to the CMS official leading these  technical assistance activities, CMS conducted about 60 onsite training  sessions with Medicaid agencies. By January 2015, CMS officials said  the agency will have conducted site visits to 12 Medicaid agencies that  need additional assistance to prepare for the transition, and will conduct  additional trainings as needed. CMS also provides technical assistance to  Medicaid agencies in other ways. For example, a CMS official noted that  the agency advised Medicaid agencies on their testing plans and worked  with them on their development of risk mitigation plans related to provider  readiness. In addition, CMS officials noted that the agency hosts bi- weekly meetings with Medicaid agencies, which include selected external  stakeholders, such as other payers and health care providers, during  which Medicaid agencies share information, lessons learned, and best  practices related to the ICD-10 transition.
CMS also monitors the readiness of Medicaid agencies for the ICD-10  transition. For example, CMS officials noted that the agency assesses the  readiness of Medicaid agencies quarterly and holds conference calls with  each one. According to CMS officials, as of October 2014, all states and  the District of Columbia reported that they would be able to perform all of  the activities that CMS has identified as critical to preparing for the ICD- 10 transition by the deadline. These critical success factors are the  ability to accept electronic claims with ICD-10 codes; adjudicate claims;  pay providers (institutional, professional, managed care); complete  coordination of benefits with other insurers; and create and send  Medicaid system reports to CMS. CMS officials stated that all Medicaid  agencies must test each of the critical success factors and report back to   However, as of November 26, 2014,  CMS no later than June 30, 2015.not all Medicaid agencies had started to test their systems’ abilities to  accept and adjudicate claims containing ICD-10 codes. Specifically, CMS  officials told us that 2 states had completed internal and external testing,  9 states and the District of Columbia had started internal testing activities,  and 16 states had started external testing activities. The remaining   23 states, according to the CMS officials, were in the process of updating  their policies and systems, which needs to occur before testing begins.  Therefore, Medicaid agencies may need to make system changes if  testing identifies issues.
section_title: Stakeholders Cited Testing Activities, Education, Outreach, and Provider Burden among Concerns; CMS Has Taken Steps to Address Concerns and Prepare for Transition
paragraphs: Stakeholders we contacted identified several areas of concern about the  ICD-10 transition, including that CMS needed to expand the number of  ICD-10 testing activities, with some of those stakeholders commenting  that CMS’s ICD-10 testing has not been sufficiently comprehensive.  Stakeholders we contacted also noted areas of concern and made  recommendations regarding CMS’s ICD-10 education and outreach  efforts, and requested that the agency mitigate any additional provider  burdens leading up to and following the ICD-10 transition.
Testing. Twenty of the 28 stakeholders we contacted identified concerns  or made recommendations related to CMS’s ICD-10 testing activities.  Their comments focused on CMS’s lack of comprehensive ICD-10  testing, as well as the need to communicate the future test results to  covered entities.
Lack of comprehensive testing. Seventeen stakeholders raised  concerns that CMS’s ICD-10 testing was not comprehensive.  Specifically, some of these stakeholders were concerned that CMS  has not yet conducted Medicare FFS end-to-end testing. Additionally,  some of these stakeholders were concerned that CMS would not  include enough covered entities in its testing. For example, one  stakeholder expressed concern that not all provider types, such as  small providers, would be represented in the planned testing. Another  stakeholder was concerned that the number of testing participants  may not be large enough to get a true sense of industry readiness or  the ability of CMS to properly process the full range of ICD-10 codes.
As previously noted, CMS officials said that the agency has scheduled  Medicare FFS end-to-end testing with a total of 2,550 covered entities  during three separate weeks in 2015, and identified staffing and  financial constraints as the reason for limiting the number of covered  entities participating in the scheduled testing. However, agency  officials indicated that the number of covered entities they plan to test  with will exceed the number requested by some industry groups. In  addition, CMS officials said they are committed to ensuring that the  testing participants are representative of the health care industry.
Communicate test results. Seven stakeholders we contacted  recommended CMS better communicate the agency’s readiness for  the ICD-10 transition, by, for example, improving communication of  test results. Two of these stakeholders indicated that doing a better  job communicating test results would not only increase confidence  that CMS will be prepared to process claims, but also would help  providers identify modifications needed in their own coding or billing  practices.
CMS officials noted that the agency intends to publicly release the  results of Medicare FFS end-to-end testing once the agency has  completed its analysis of each of the three scheduled testing periods.  Specifically, CMS’s communications plan indicates that the agency  intends to report on the results of each testing period within a month  of when the testing is completed. CMS officials told us that the report  will provide details about the types and numbers of testing  participants, technical challenges that arise during testing, and CMS’s  plans for fixing them.
Education. Twenty of the 28 stakeholders we contacted identified  concerns or recommendations related to CMS’s covered entity education  efforts. Specifically, these stakeholders’ comments focused on whether  covered entities were aware of CMS’s educational materials to help them  prepare for the ICD-10 transition. These stakeholders suggested CMS  emphasize benefits from transitioning to ICD-10, as well as best practices  and success stories, expand in-person training, and develop more  specialty-specific materials.
Covered entity awareness of educational materials. Eleven  stakeholders we contacted expressed concerns about the extent to  which the covered entities they represent were aware of and using the  educational materials developed by CMS. In particular, while all 28  stakeholders we contacted indicated that CMS’s educational materials  have been helpful to covered entities, some of them were concerned  that the materials may not be reaching the covered entities most in  need of them, such as solo or small physician practices, rural and  critical access hospitals, nursing homes, and home health agencies.
CMS officials indicated that all of the agency’s outreach efforts—as  described earlier in this report—have been intended to work in concert  to promote awareness of the ICD-10 transition and direct covered  entities, especially hard-to-reach entities, to helpful educational  materials. CMS officials stated that the agency has partnered with a  number of organizations to reach covered entities, including those  covered entities that some stakeholders indicated are most in need of  the materials. Specifically, CMS partnered with WEDI to create the  “ICD-10 Implementation Success Initiative,” a partnership between  payers, providers, coding organizations, and other organizations to  promote awareness of the ICD-10 transition by directing users to  available CMS and industry educational resources. In addition, CMS  officials indicated that the agency tracks the use of its educational  materials by, for example, monitoring the number of documents  downloaded or videos viewed, and uses the tracking information to  customize and develop new information as needed. However, the  agency’s monitoring activities do not provide specific information on  whether the providers most in need of these materials—which  stakeholders identified as solo or small physician practices, rural and  critical access hospitals, nursing homes, and home health agencies— are accessing and using them.
Place greater emphasis on sharing ICD-10 benefits, best practices,  and success stories. Seven stakeholders we contacted suggested  that CMS put greater emphasis on sharing ICD-10 benefits, best  practices, and success stories in order to increase support among  providers for the transition. Specifically, one stakeholder said that it  would be helpful if CMS could identify “physician champions” who  could discuss the benefits of transitioning to ICD-10, walk other  physicians through the steps needed to prepare for the transition, and  reassure them that they will not suffer financially in the process of  preparing for the transition. Similarly, another stakeholder suggested  that success stories could illustrate that the effort to comply with the  ICD-10 transition may not be as difficult as anticipated. A third  stakeholder mentioned that CMS could do more to explain how the  transition to ICD-10 can create value in delivering patient care.
CMS officials highlighted agency materials that describe benefits, best  practices, and success stories that are currently available on the Road  to 10 website, and also described materials they are developing. For  example, CMS officials identified website materials that describe  clinical, operational, professional, and financial benefits of using ICD- 10 codes, which are topics that physicians identified as resonating  with them; and video testimonials from physician champions. CMS  officials also noted that the agency is developing additional positive  testimonials and best practice resources from providers and payers,  as well as ICD-10 “use cases” that will provide practical examples of  how ICD-10 codes will be used in a clinical setting. Officials noted that  the development of these materials is part of an effort to share  positive physician experiences as a way to re-engage physicians and  other covered entities following the transition delay to October 1,  2015. CMS officials indicated that this information will be posted to the  CMS website in December 2014, but did not provide additional details  on the specific materials they plan to develop during the period of our  review.
Expand in-person training and provide more advance notice of those  events. Six stakeholders we contacted recommended that CMS  expand its in-person training for physician practices to additional  states. Initially, CMS officials indicated that they planned to hold these  in-person training events in 18 states.that every state has small or rural practices that are struggling to  make the ICD-10 transition and could benefit from CMS’s training   One stakeholder remarked  activities. Another stakeholder indicated that CMS had initially only  provided a few days’ advance notice for scheduled training, and  requested that CMS provide more advance notice.
CMS officials said the agency is expanding the in-person trainings   to additional states, beyond the 18 states noted above, where  resources allow. Specifically, as of January 2015, officials said that  they had held trainings in 11 additional states. CMS officials also  indicated that the agency is collaborating with nationally and locally  recognized organizations to expand training to additional states.  Officials said that where resources are not available for in-person  training, CMS is reviewing options to offer more video training through  the ICD-10 website. In response to concerns about the notice  provided for these events, CMS officials said that the Road to 10  website identifies scheduled in-person training events by location, and  that the agency is working closely with the CMS regional offices,  medical specialty associations, and other state and local partners to  raise awareness of these events.
Develop additional specialty-specific materials. Four stakeholders we  contacted requested that CMS continue developing additional  physician specialty-specific educational materials. For example, one  stakeholder suggested that CMS develop more materials that focus  on specific, practical examples of how the ICD-10 codes would be  used in a clinical setting.
CMS officials noted that the agency has made various specialty- specific materials available, and stated that the agency plans to add  more specialty-specific educational materials to its Road to 10  website, and, as requested, will partner with stakeholders to develop  materials targeted to their providers. In commenting on a draft of this  report, CMS officials noted that the agency plans to develop materials  for anesthesia, bariatric, general surgery, pulmonary, and renal  specialties; however, they did not indicate when those materials will  be made available on the website.
Outreach. Nineteen of 28 stakeholders we contacted recommended that  CMS take additional actions that could improve its outreach efforts.
Specifically, stakeholders recommended that the agency communicate  plans to ensure that Medicare FFS providers would be reimbursed in a  timely manner; provide information on the effect of the ICD-10 transition  on CMS’s quality measurement activities; contact providers through non- electronic methods, such as print media and mail; promote a greater  sense of immediacy in preparing for the transition; provide information on  alternative methods for Medicare claims submission; and make public  CMS’s Medicare FFS contingency plans.
Communicate plans to ensure Medicare FFS payment. Seven  stakeholders we contacted recommended that CMS take action to  ensure that providers would be reimbursed in a timely manner if  CMS’s Medicare FFS claims processing systems are unable to   accept and correctly process claims. These recommendations  included the following: (1) expand the use of the agency’s Medicare  Part B advance payment policy to account for instances where   MACs are unable to receive and, therefore, pay providers’ claims;(2) reimburse Medicare providers’ claims even if there are problems  with the ICD diagnosis codes submitted; and (3) allow Medicare  providers to submit either ICD-9 or ICD-10 codes—referred to as dual  coding—for a period of time following the October 1, 2015, transition  deadline.
CMS officials stated that the agency understands the importance of  paying claims on time during the ICD-10 transition, and is committed  to working closely with providers to ensure a smooth transition and  responded to each of the recommendations:
CMS officials indicated that the agency’s current authority permits  CMS to determine circumstances that warrant the issuance of  advance payments to affected physicians and suppliers providing  Medicare Part B services, and that this authority could be used  should CMS systems be unable to process valid Part B claims that  contain ICD-10 codes beginning October 1, 2015. Under these  circumstances, no action would need to be taken by the physician  or supplier, nor would the agency need to publish additional  criteria or modify the existing advance payment policy, according  to CMS officials.
CMS officials stated that the submission of valid ICD-10 codes is a  requirement for payment; however, when the presence of a  specific diagnosis code is not required for payment then the claim  would be paid even if a more appropriate ICD-10 code should  have been used on the claim. For example, CMS officials told us  that, because there are many reasons why an individual would  need to go in for an office visit, office visits do not require the  claim to include specific ICD-10 codes; therefore, as long as a  claim for an office visit includes a valid ICD-10 code, it would be  paid. Additionally, CMS officials indicated that, absent indications  of potential fraud or intent to purposefully bill incorrectly, CMS will  not instruct its contractors to audit claims specifically to verify that  the most appropriate ICD-10 code was used. However, audits will  continue to occur and could identify ICD-10 codes included  erroneously on claims which could lead to claims denials,  according to CMS officials.
CMS officials said that dual processing of ICD-9 and ICD-10  codes on Medicare claims is not possible given that HIPAA does  not allow for the use of two different code sets at the same time.
Communicate how the ICD-10 transition affects CMS programs that  use clinical quality measures. Six stakeholders we contacted  expressed a need for more information on how the ICD-10 transition  will affect CMS programs that make use of clinical quality measures.  One stakeholder suggested that there is a lack of understanding  about how the ICD-10 transition will affect quality measurement  reporting.
See http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment- Instruments/HomeHealthQualityInits/OASIS-C1.html. transition deadline. In commenting on a draft of this report, CMS  officials stated that CMS had made available a crosswalk of ICD-9  and ICD-10 codes for quality measures in the hospital inpatient  and hospital outpatient quality reporting programs.
Engage through non-electronic methods. Five stakeholders we  contacted recommended that CMS do more to engage with covered  entities through non-electronic methods. For example, one  stakeholder indicated that not all of its members rely on electronic  communications, instead relying on more traditional forms of receiving  information—such as print media and mail—and suggested that CMS  expand the methods it uses to engage with covered entities. Other  stakeholders recommended that CMS work with local or regional  resources, such as the Regional Extension Centers (REC), as part of  a strategy to reach a broader audience.
Beyond the agency’s electronic outreach efforts, CMS officials  indicated that the agency employs various methods, including bi- weekly stakeholder collaboration meetings, in-person training, and  print advertisements, to engage covered entities. Another activity  officials noted as responsive to stakeholder feedback is the direct mail  pilot project that began in August 2014, and which CMS officials said  the agency plans to expand in 2015. CMS officials noted that CMS is  able to track whether recipients of direct mail have accessed the  agency’s ICD-10 website. Additionally, CMS officials said that, in  2012, the agency began conducting multiple trainings with the RECs  on the ICD-10 transition in partnership with the Office of the National  Coordinator for Health Information Technology.
Promote a greater sense of immediacy. Four stakeholders we  contacted recommended that CMS’s outreach efforts foster a greater  sense of “immediacy” in order to convince covered entities that they  should begin preparing for the transition; the amount of time  necessary to properly prepare is significant. For example, one  stakeholder urged CMS to strengthen its message to providers by  encouraging providers to conduct specific transition-related activities,  such as a systems remediation assessment.
CMS officials noted that the agency has taken steps to modify the  types of messages they send covered entities as the transition  deadline approaches. After the most recent delay in the transition  date, officials said that CMS’s messages began highlighting the  practical steps covered entities could take to get started with their  transition to ICD-10. For example, officials noted that CMS has issued  “one year out” messages intended to help covered entities follow a  one-year plan to transition to ICD-10, as well as messages that direct  covered entities to detailed ICD-10 transition guidance and resource  materials. CMS officials said that the agency’s messaging in 2015 will  continue to focus on encouraging covered entities to begin specific,  technical activities, such as by providing guidance on how to conduct  end-to-end tests for ICD-10 readiness.
Communicate Medicare FFS claims submission alternatives. Four  stakeholders we contacted expressed concern that providers could  face delays in reimbursement if they have problems making changes  to their practice management or electronic health record systems to  enable the electronic submission of claims with ICD-10 codes by the  transition deadline; therefore, they suggested that CMS do more to  communicate alternatives for submitting claims.
CMS officials noted that the agency has already made available  information on alternatives for claims submissions to covered entities  through an MLN Matters article. These alternatives, according to the  article, consist of free billing software available from the MACs’  websites or MACs’ Internet portals if the portal offers claims  submissions. In addition, providers and suppliers may submit paper claim forms. However, this information is included in an article  primarily addressing CMS’s Medicare FFS ICD-10 testing approach,  and it may not be clear to covered entities that this document also  communicates Medicare FFS claim submission alternatives. Officials  indicated that CMS plans to publish a claims submission alternative  educational product in September 2015, but if the agency learns that  providers need the information sooner, they will issue the document  earlier.
Communicate Medicare FFS contingency plans. Four stakeholders  we contacted suggested that CMS should make public the agency’s  Medicare FFS contingency plans that address potential post-transition  issues. Two stakeholders suggested that without a contingency plan,  covered entities may doubt whether CMS is ready for the transition  deadline, and that making such plans public would demonstrate  CMS’s commitment to the transition date and instill confidence that  CMS has a clear strategy for addressing any issues that may arise.
CMS officials developed a draft contingency plan that outlines the  steps CMS will take to address specific issues affecting Medicare FFS  claims processing if they were to arise after the transition, but this  plan has not been shared with the public. Officials indicated that they  do not intend to make the contingency plan public because the  information relevant to providers—that is, claims submission  alternatives—has already been made available in an MLN article.  CMS’s contingency plan addresses the agency’s plans in the following  scenarios: if covered entities are unable to submit ICD-10 codes, if  covered entities are submitting incorrect ICD-10 codes, and if CMS’s  Medicare FFS claims processing systems are unable to accept and  correctly process claims. To help prepare in the case of the latter  scenario, the plan indicates that the agency would hold an exercise— which occurred in December 2014, according to CMS officials—to  simulate the actions that could be taken in such an event. Officials  said that if there are issues that occur on or after October 1, 2015,  CMS will use its regular communication channels to educate the  provider community about what is happening and what, if anything,  providers need to do.
Provider Burden. Seven of the 28 stakeholders we contacted expressed  concerns that the burden of participating in CMS audits and various other  concurrent programs is limiting and will continue to limit health care  providers’ ability to focus on ICD-10 transition preparedness, and  requested that CMS mitigate any additional provider burdens leading up  to and following the ICD-10 transition. For example, one stakeholder  suggested that CMS delay implementing any new audits, because the  individuals responsible for preparing for the transition to ICD-10 codes are  often the same individuals involved in responding to CMS’s audit  activities. Another stakeholder indicated that a lack of staff is the greatest  barrier to a successful ICD-10 transition, as providers are also trying to  simultaneously comply with a number of competing health reform  priorities, such as the Medicare Electronic Health Records program.
In written responses to us, CMS officials stated that the agency  understands the effect new audit activities have on providers. However,  officials also indicated that some audits may have the potential to  decrease provider burden, and that it would not be appropriate for CMS to  delay all new audits. Additionally, while CMS officials did not identify  specific actions the agency could take to address stakeholders’ concerns  about the burden of participating in various other concurrent programs,  they noted that the transition to ICD-10 is foundational to advancing  health care. Specifically, CMS officials stated that the granularity of ICD- 10 codes will improve data capture and data analysis, which can be used  to improve patient care, and inform health care delivery and health policy.
section_title: Concluding Observations
paragraphs: A successful transition to ICD-10 codes requires every health care  provider, clearinghouse, and payer to prepare in advance of the   October 1, 2015, transition deadline. CMS has taken multiple steps to  help prepare covered entities for the transition, including developing  educational materials and conducting outreach, and the majority of the  stakeholders we contacted reported that both of those activities have  been helpful to preparing covered entities for the ICD-10 transition. With  respect to Medicare, CMS reported that the agency’s Medicare FFS  claims processing systems have been updated to reflect ICD-10 codes,  and it is not yet known whether any changes might be necessary based  upon the agency’s ongoing external testing activities. CMS has also  worked with the states to help ensure that their Medicaid systems are  ready for the ICD-10 transition, but, in many states, work remains to  complete testing by the transition deadline.
section_title: Agency Comments
paragraphs: We provided a draft of this report to HHS for comment. HHS concurred  with our findings. In its written comments, reproduced in appendix I, HHS  stated that it is committed to helping address stakeholders needs and in  working with those that need additional assistance to prepare for the  transition. The Department detailed various methods it has used and is  using to prepare stakeholders, Medicare FFS claims processing systems,  and state Medicaid agencies for the transition.
HHS also provided technical comments, which we incorporated as  appropriate.
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If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or dsouzav@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made major contributions to  this report are listed in appendix II.
section_title: Appendix I: Comments from the Department of Health and Human Services
section_title: Appendix II: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Gregory Giusto,   Assistant Director; Nick Bartine; Shannon Legeer; Drew Long;   and Jennifer Whitworth made key contributions to this report.