ICD-10 Arrives Early – April 1, 2014: CMS Announces New CMS-1500 Healthcare Claim Form

The U.S. Health and Human Services (HHS) Centers for Medicare and Medicaid (CMS) announced today that Medicare will begin accepting a revised CMS-1500 form (version 02/12)  on January 6, 2014.  Embedded in this is a requirement for some healthcare IT vendors to start supporting a component of the International Classification of Diseases version 10 (ICD-10) earlier than the anticipated October 1, 2014 date.

According to CMS, Starting April 1, 2014, Medicare will accept only the revised version of the form.

The revised form will give  HIPAA Covered Entities who are health care providers the ability to indicate whether they are using ICD-9 or ICD-10 diagnosis codes, which is important as the October 1, 2014, transition approaches.  The revised form also allows for additional diagnosis codes, expanding from 4 possible codes to 12.

Effectively this means that any healthcare IT system that adjudicates, submits, or reports on claims data, where this requirement applies, that was scheduled to be compliant as of October 1, 2014 with ICD-10 must actually comply with a component of the ICD-10 requirements related to claims data as early as of April 1, 2014.

Only providers who qualify for exemptions from electronic submission may submit the CMS-1500 Claim Form to Medicare.  Exempted providers include those submitting dental claims, small providers with less than 10 FTEs, non-U.S. providers, and others.   For those providers who use service vendors, CMS encourages them to check with their service vendors to determine when they will switch to the new form.  While this might sound like only a small subset of the healthcare industry is impacted, remember that these “forms” get converted back to data.  The data types, fields and supporting business rules and workflows will be impacted. Since most adjudication systems, reporting and related supporting systems are not ‘versioned’ for exempted providers, this change effectively impacts a large component of health IT vendors and those who manage internally built systems to support CMS standards.

ICD-10 promises to introduce better information to improve the quality of healthcare by providing more granular data on the condition of the patient, how the patient acquired a condition, how the patient was treated for the condition and why.  This in turn it is hoped, will improve population health management and other components of healthcare.   At the same time ICD-10 is viewed as disruptive because it requires a re-write of healthcare IT systems, processes, and substantial re-training of medical coders, billing personnel, physicians, and other clinical staff.   From a financial perspective ICD-10 introduces a new payment paradigm including opportunities for improved reimbursement and potential risks of decreased reimbursement for HIPAA Covered Entities who do not carefully examine the nuances of the ICD-9 to ICD-10 transition.

ICD-9 codes must be used for services provided before October 1, 2014, while ICD-10 codes should be used for services provided on or after October 1, 2014. ICD-10 CM must be used for all diagnosis for both inpatient and outpatient claims.  ICD-10 PCS must be used for all inpatient procedures.

HIPAA Covered Entities  and Healthcare IT vendors who are building test plans must take this into consideration as they plan for the ICD-10 transition.

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Michael F. Arrigo

Michael Arrigo brings four decades of experience in the software, financial services, and healthcare industries. In 2000, Mr. Arrigo founded No World Borders, a healthcare data, regulations, and economics firm with clients in the pharmaceutical, medical device, hospital, surgical center, physician group, diagnostic imaging, genetic testing, health IT, and health insurance markets. His expertise spans the federal health programs Medicare and Medicaid and private insurance. He advises Medicare Advantage Organizations who provide health insurance under Part C of the Medicare Act. Mr. Arrigo serves as an expert witness regarding medical coding and medical billing, fraud damages, as well as electronic health record software for the U.S. Department of Justice. He has valued well over $1 billion in medical billings in personal injury liens, medical malpractice, insurance fraud cases. The U.S. Court of Appeals considered Mr. Arrigo's opinion regarding loss amounts, vacating, and remanding sentencing in a fraud case. Mr. Arrigo provides expertise in the Medicare Secondary Payer Act, Medicare LCDs, anti-trust litigation, medical intellectual property and trade secrets, HIPAA privacy, health care electronic claim data Standards, physician compensation, Anti-Kickback Statute, Stark law, the Affordable Care Act, False Claims Act, and the ARRA HITECH Act. Arrigo advises investors on merger and acquisition (M&A) diligence in the healthcare industry on transactions cumulatively valued at over $1 billion. Mr. Arrigo spent over ten years in Silicon Valley software firms in roles from Product Manager to CEO. He was product manager for a leading-edge database technology joint venture that became commercialized as Microsoft SQL Server, Vice President of Marketing for a software company when it grew from under $2 million in revenue to a $50 million acquisition by a company now merged into Cincom Systems, hired by private equity investors to serve as Vice President of Marketing for a secure email software company until its acquisition and multi $million investor exit by a company now merged into Axway Software SA (Euronext: AXW.PA), and CEO of one of the first cloud-based billing software companies, licensing its technology to Citrix Systems (NASDAQ: CTXS). Later, before entering the healthcare industry, he joined Fortune 500 company Fidelity National Financial (NYSE: FNF) as a Vice President, overseeing eCommerce solutions for the mortgage banking industry. While serving as a Vice President at Fortune 500 company First American Financial (NYSE: FAF), he oversaw eCommerce and regulatory compliance technology initiatives for top ten mortgage banks and led the Sarbanes Oxley Act Section 302 internal controls IT audit for the company, supporting Section 404 of the Sarbanes Oxley Act. Mr. Arrigo earned his Bachelor of Science in Business Administration from the University of Southern California. Before that, he studied computer science, statistics, and economics at the University of California, Irvine. His post-graduate studies include biomedical ethics at Harvard Medical School, biomedical informatics at Stanford Medical School, blockchain and crypto economics at the Massachusetts Institute of Technology, and training as a Certified Professional Medical Auditor (CPMA). Mr. Arrigo is qualified to serve as a director due to his experience in healthcare data, regulations, and economics, his leadership roles in software and financial services public companies, and his healthcare M&A diligence and public company regulatory experience. Mr. Arrigo is quoted in The Wall Street Journal, Fortune Magazine, Kaiser Health News, Consumer Affairs, National Public Radio (NPR), NBC News Houston, USA Today / Milwaukee Journal Sentinel, Medical Economics, Capitol ForumThe Daily Beast, the Lund Report, Inside Higher Ed, New England Psychologist, and other press and media outlets. He authored a peer-reviewed article regarding clinical documentation quality to support accurate medical coding, billing, and good patient care, published by Healthcare Financial Management Association (HFMA) and is published in Healthcare IT News.

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