CMS Will Not Deny ICD-10 Claims for Medicare Part B – Read Fine Print

ICD-10 based claims won’t be denied.  But read the fine print carefully.  CMS issued a Guidance Document today stating:

“… Medicare review contractors will not deny physician or other practitioner claims billed under the Part B physician fee scheduleHowever, a valid ICD-10 code will be required on all claims starting on October 1, 2015. It is possible a claim could be chosen for review for reasons other than the specificity of the ICD-10 code and the claim would continue to be reviewed for these reasons. This policy will be adopted by the Medicare Administrative Contractors, the Recovery Audit Contractors, the Zone Program Integrity Contractors, and the Supplemental Medical Review Contractor.”

According to the Kaiser Family foundation, Medicare Part B is a financially significant segment but not the largest.

  • Medicare “Part B, the Supplementary Medical Insurance (SMI) program, helps pay for physician, outpatient, some home health, and preventive services. Part B is funded by general revenues and beneficiary premiums.  An estimated 51 million people are enrolled in Part B in 2015.
  • Medicare Part A (55 million lives) [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][ includes hospitals using a DRG based system that is dependent on ICD-10]
  • Medicare Part C [also known as Medicare Advantage] includes 15.7 million lives
  • Medicare Part D for pharmaceuticals 42 million lives insured)

Our Take:

This is a big break for ambulatory E.H.R. and practice management software vendors as well as ambulatory care physicians and other providers, who get a break on the final implementation and support for ICD-10, but not for hospital inpatient based systems.  Essentially this means that CPT codes which have been the standard billing / procedure coding system for ambulatory remain the standard, and ICD-10 diagnosis codes only will be required.

However for ambulatory providers, there is no guarantee that audits will not increase if the ICD-10 CM diagnosis code isn’t used to document medical necessity.

Health plans are beginning to ask for more diagnosis information before approving claims for pharmaceuticals.  Expect some ripple effect of ICD-10 in the Medicare Part D and non-Medicare pharmaceutical reimbursement.

In conclusion, for  Medicare Part A there is no break on the mandated deadline.  Hospitals and the vendors of hospital based / inpatient systems do not get a reprieve and therefore still have the heavy lifting to do with ICD-10 CM, ICD-10 PCS procedure codes, and DRG based on the new coding system as mandatory requirements for compliance on October 1, 2015.   The largest portion of U.S. expenditures for healthcare still go to Medicare Part A and other inpatient hospital claims.  So, from an economic perspective, physicians who provide care in a hospital get no break and the largest portion of the healthcare economy does not get a break.



Michael F. Arrigo

Michael is Managing Partner & CEO of No World Borders, a leading healthcare management and IT consulting firm. He serves as an expert witness in Federal and State Court and was recently ruled as an expert by a 9th Circuit Federal Judge. He serves as a patent expert witness on intellectual property disputes, both as a Technical Expert and a Damages expert. His vision for the firm is to continue acquisition of skills and technology that support the intersection of clinical data and administrative health data where the eligibility for medically necessary care is determined. He leads a team that provides litigation consulting as well as advisory regarding medical coding, medical billing, medical bill review and HIPAA Privacy and Security best practices for healthcare clients, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, physician compensation, Insurance bad faith, payor-provider disputes, ERISA plan-third-party administrator disputes, third-party liability, and the Medicare Secondary Payer Act (MSPA) MMSEA Section 111 reporting. He uses these skills in disputes regarding the valuation of pharmaceuticals and drug costs and in the review and audit of pain management and opioid prescribers under state Standards and the Controlled Substances Act. He consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises ERISA self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $8 billion in healthcare mergers and acquisitions. Education: UC Irvine - Economics and Computer Science, University of Southern California - Business, studies at Stanford Medical School - Biomedical Informatics, studies at Harvard Medical School - Bioethics. Trained in over 10 medical specialties in medical billing and coding. Trained by U.S. Patent and Trademark Office (USPTO) and PTAB Judges on patent statutes, rules and case law (as a non-attorney to better advise clients on Technical and Damages aspects of patent construction and claims). Mr. Arrigo has been interviewed quoted in the Wall Street Journal, New York Times, and National Public Radio, Fortune, KNX 1070 Radio, Kaiser Health News, NBC Television News, The Capitol Forum and other media outlets. See and for more about the company.

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