Monday, July 11, 2016

Systemic failure in American medicine: combining ICD-10-CM with "leaf code" reimbursement rules

This is very much “inside baseball”. It’s related to professional work I do. It’s incomprehensible to most people, but it’s having a big impact on your healthcare. An impact that the vast majority of healthcare workers and administrators won’t understand. Only the coding specialists in unlit basement rooms know what’s going on.

For several decades American physicians have used a system of codes to justify procedures and bills. They’re like the occupation codes you might use to fill out your tax form, but there are thousands of them. They are called diagnostic codes, the old system was called ICD-9-CM. (ICD codes are also used in public health, epidemiology, research and information exchange, but that’s not what I’m writing about.)

For various reasons, which I personally think were unwise, the ancient ICD-9-CM system was recently replaced with a less ancient ICD-10-CM system. That was a disruptive change with limited value, but the change in coding systems by itself wasn’t the disaster. Yes, I know many physicians think the coding system change was the disaster, but they’re wrong. There are more codes, but there are ways that software systems could have made that proliferation manageable. The real problem is more subtle.

The disaster was that Medicare (CMS) and payers retained an old ICD-9 rule. A rule that only the “leaf” (most detailed) codes in the ICD-10-CM system could be accepted for payment. If you want to know what I mean by “leaf” check out this example from the ICD-10-CM codes for Type 2 Diabetes Mellitus:

Screen Shot 2016 07 11 at 9 51 32 AM

Doesn’t it look a bit like branches of a tree? Only the little green arrow codes can be accepted for payment. They are “most detailed”. They have “no children”. They are “leaves”.

If you’re with me so far, here’s the punchline. ICD-9-CM had “leaf” codes that essentially meant the same as the “root” code, ICD-10-CM doesn’t. (In the example above E11 is a root code.)

I’m simplifying a bit here. ICD-9-CM was a mess. It didn’t always have “unspecified” or “not otherwise specified” leaf codes that meant the same as the root code, but it mostly did. Diabetes Mellitus 250.00 meant the same as 250. 

ICD-10 is more intelligent, it doesn’t have these duplications. If you want to just say a patient has Type 2 Diabetes Mellitus you could just say E11.

Except you can’t get paid for saying E11. Because of the leaf rule. So that’s not an option in health record or billing systems. Instead physicians must choose between:

Screen Shot 2016 07 11 at 9 58 15 AM

But what if they don’t know or care if the patient has complications? Maybe they’re seeing them for a cold. Maybe the patient doesn’t know if they have DM complications. They have to choose one at random. It’s the same everywhere.

This is madness. The problem isn’t ICD-10-CM. It isn’t even the leaf code requirement. It’s the combination of the two.

In a sane world the fact that we combined an essential healthcare code system that lacked redundant leaf codes with a payment system that required leaf codes would be treated as a systemic failure. There would be congressional hearings and root cause analysis.

Instead we stagger on into the fog.


Unknown said...

This is an ignorant commentary. You don't say E11; you say "Type 2 DM." That codes as E11.9. Your documentation should be clinical, precise, and specific, because you are trying to take care of patients. The codes follow the specificity. ICD-10 is way better than ICD-9 was. There were so many conditions that had no corresponding codes.

JGF said...

Coding as E11.9 is declaring that the patient's type 2 DM has no complications.

E11.9 is fine if in fact the physician knows the patient has no complications. It is not a synonym for DM 2.

If a physician doesn't know a health care condition is X, but declares they do know, that's a false statement. It's technically fraudulent documentation and since it's part of justifying payment it is "fraud and abuse" type documentation.

Yes, nobody will prosecute, but conscientious physicians hate doing this. (Most physicians have wisely given up caring by this point, but there always idealists.) It also makes a mess of research data; it drives rampant miscoding. It's also irritating as hell -- physicians have to choose the "wrong" code for most of ICD-10 diagnoses just to get through the day. Many have learned to just code symptoms, those are simple billable leafs.

The problem is not ICD-10-CM, which is in many ways an improvement on ICD-9-CM. (I think not enough of an improvement, but it is better.) The problem is the leaf code/specificity requirement for reimbursement. That worked for ICD-9-CM because of what some people call the .00 code workaround (replicating the root code at the leaf).