HIPAA Administrative Simplification: Modifications to Medical Data Code Set Standards To Adopt ICD-10-CM and ICD-10-PCS, 3328-3362 [E9-743]

Agencies

• Office of the Secretary
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 74, Number 11 (Friday, January 16, 2009)]
[Rules and Regulations]
[Pages 3328-3362]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-743]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

45 CFR Part 162

[CMS-0013-F]
RIN 0958-AN25


HIPAA Administrative Simplification: Modifications to Medical 
Data Code Set Standards To Adopt ICD-10-CM and ICD-10-PCS

AGENCY: Office of the Secretary, HHS.

ACTION: Final rule.

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SUMMARY: This final rule adopts modifications to two of the code set 
standards adopted in the Transactions and Code Sets final rule 
published in the Federal Register pursuant to certain provisions of the 
Administrative Simplification subtitle of the Health Insurance 
Portability and Accountability Act of 1996 (HIPAA). Specifically, this 
final rule modifies the standard medical data code sets (hereinafter 
``code sets'') for coding diagnoses and inpatient hospital procedures 
by concurrently adopting the International Classification of Diseases, 
10th Revision, Clinical Modification (ICD-10-CM) for diagnosis coding, 
including the Official ICD-10-CM Guidelines for Coding and Reporting, 
as maintained and distributed by the U.S. Department of Health and 
Human Services (HHS), hereinafter referred to as ICD-10-CM, and the 
International Classification of Diseases, 10th Revision, Procedure 
Coding System (ICD-10-PCS) for inpatient hospital procedure coding, 
including the Official ICD-10-PCS Guidelines for Coding and Reporting, 
as maintained and distributed by the HHS, hereinafter referred to as 
ICD-10-PCS. These new codes replace the International Classification of 
Diseases, 9th Revision, Clinical Modification, Volumes 1 and 2, 
including the Official ICD-9-CM Guidelines for Coding and Reporting, 
hereinafter referred to as ICD-9-CM Volumes 1 and 2, and the 
International Classification of Diseases, 9th Revision, Clinical 
Modification, Volume 3, including the Official ICD-9-CM Guidelines for 
Coding and Reporting, hereinafter referred to as ICD-9-CM Volume 3, for 
diagnosis and procedure codes, respectively.

DATES: The effective date of this regulation is March 17, 2009. The 
effective date is the date that the policies herein take effect, and 
new policies are considered to be officially adopted. The compliance 
date, which is different than the effective date, is the date on which 
entities are required to have implemented the policies adopted in this 
rule. The compliance date for this regulation is October 1, 2013.

FOR FURTHER INFORMATION CONTACT: Denise M. Buenning, (410) 786-6711 or 
Shannon L. Metzler, (410) 786-3267.

I. Background

A. Statutory Background

    The Congress addressed the need for a consistent framework for 
electronic transactions and other administrative simplification issues 
in the Health Insurance Portability and Accountability Act of 1996 
(HIPAA), Public Law 104-191, enacted on August 21, 1996. HIPAA has 
helped to improve the Medicare and Medicaid programs, and the 
efficiency and effectiveness of the health care system in general, by 
encouraging the development of standards and requirements to facilitate 
the electronic transmission of certain health information.
    Through subtitle F of title II of that statute, the Congress added 
to title XI of the Social Security Act (the Act) a new Part C, titled 
``Administrative Simplification.'' Part C of title XI of the Act now 
consists of sections 1171 through 1180. Section 1172 of the Act and the 
implementing regulations make any standard adopted under Part C 
applicable to: (1) Health plans; (2) health care clearinghouses; and 
(3) health care providers who transmit any health information in 
electronic form in connection with a transaction for which the 
Secretary has adopted a standard.
    Section 1172(c)(1) of the Act requires any standard adopted by the 
Secretary of the Department of Health and Human Services (HHS) to be 
developed, adopted, or modified by a standard setting organization 
(SSO), except in the cases identified under section 1172(c)(2) of the 
Act. Under section 1172(c)(2)(A) of the Act, the Secretary may adopt a 
standard that is different from any standard developed by an SSO if it 
will substantially reduce administrative costs to health care providers 
and health plans compared to the alternatives, and the standard is 
promulgated in accordance with the rulemaking procedures of subchapter 
III of chapter 5 of Title 5 of the United States Code. Under section 
1172(c)(2)(B) of the Act, if no SSO has developed, adopted, or modified 
any standard relating to a standard that the Secretary is authorized or 
required to adopt, section 1172(c)(1) does not apply.
    Section 1172 of the Act also sets forth consultation requirements 
that must be met before the Secretary may adopt

[[Page 3329]]

standards. The SSO must consult with the following organizations in the 
course of the development, adoption, or modification of the standard: 
National Uniform Billing Committee (NUBC), the National Uniform Claim 
Committee (NUCC), the Workgroup for Electronic Data Interchange (WEDI), 
and the American Dental Association (ADA). For a standard that was not 
developed by an SSO, the Secretary is required to consult with each of 
the above-named groups before adopting the standard. Under section 
1172(f) of the Act, the Secretary must also rely on the recommendations 
of the National Committee on Vital and Health Statistics (NCVHS) and 
consult with appropriate Federal and State agencies and private 
organizations.
    Section 1173(a) of the Act requires the Secretary to adopt 
transaction standards and data elements for the electronic exchange of 
health information for certain health care transactions. Under sections 
1173(b) through (f) of the Act, the Secretary is required to adopt 
standards for: Unique health identifiers, code sets, security standards 
for health information, electronic signatures, and the transfer of 
information among health plans.
    Section 1174 of the Act requires the Secretary to review the 
adopted standards and adopt modifications as appropriate, but not more 
frequently than once every 12 months in a manner which minimizes 
disruption and cost of compliance. The same section requires the 
Secretary to ensure that procedures exist for the routine maintenance, 
testing, enhancement, and expansion of code sets, along with 
instructions on how data elements encoded before any modification may 
be converted or translated to preserve the information value of any 
pre-existing data elements.
    Section 1175(b) of the Act provides for a compliance date not later 
than 24 months after the date on which an initial standard or 
implementation specification is adopted for all covered entities except 
small health plans, for which the statute provides for a compliance 
date not later than 36 months after the date on which an initial 
standard or implementation specification is adopted. If the Secretary 
adopts a modification to a HIPAA standard or implementation 
specification, the compliance date for the modification may not be 
earlier than the 180th day of the period beginning on the date such 
modification is adopted. The Secretary may consider the nature and 
extent of the modification when determining compliance dates. The 
Secretary may extend the time for compliance for small health plans.

B. Regulatory Background: Adoption and Modification of HIPAA Code Sets

    The Transactions and Code Sets final rule (65 FR 50312) published 
in the Federal Register on August 17, 2000 (hereinafter referred to as 
the ``August 17, 2000 final rule'') implemented some of the 
requirements of the Administrative Simplification subtitle of HIPAA, by 
adopting standards for eight electronic transactions for use by covered 
entities (health plans, health care clearinghouses, and those health 
care providers who transmit any health information in electronic form 
in connection with a transaction for which the Secretary has adopted a 
standard). We established these standards at 45 CFR parts 160, subpart 
A, and 162, subparts A, and I through R. The ``Modifications to 
Electronic Data Transaction Standards and Code Sets'' final rule, 
published on February 20, 2003 (68 FR 8381) (hereinafter referred to as 
the ``February 20, 2003 final rule''), modified the implementation 
specifications for several adopted transactions standards, among other 
provisions. Please refer to the August 17, 2000 final rule and the 
February 20, 2003 final rule for detailed discussions of electronic 
data interchange and an analysis of the public comments received during 
the promulgation of both rules.
    In the August 17, 2000 final rule, we also adopted standard code 
sets for use in those transactions, including:
     International Classification of Diseases, 9th Revision, 
Clinical Modification (ICD-9-CM) Volumes 1 and 2 (including the 
Official ICD-9-CM Guidelines for Coding and Reporting) as maintained 
and distributed by the Department of Health and Human Services (HHS), 
for coding diseases, injuries, impairments, other health problems and 
their manifestations, and causes of injury, disease, impairment, or 
other health problems.
     ICD-9-CM Volume 3 (including the Official ICD-9-CM 
Guidelines for Coding and Reporting) as maintained and distributed by 
HHS, for procedures or other actions taken for diseases, injuries, and 
impairments on hospital inpatients reported by hospitals regarding 
prevention, diagnosis, treatment, and management.
    ICD-9-CM Volumes 1 and 2, and ICD-9-CM Volume 3 were already widely 
used in administrative transactions when we promulgated the August 17, 
2000 final rule, and we decided that adopting these existing code sets 
would be less disruptive for covered entities than modified or new code 
sets. Please refer to the August 17, 2000 final rule for details of 
that discussion, as well as a discussion of utilizing ICD-10-CM and 
ICD-10-PCS as a future HIPAA standard code set (65 FR 50327). Please 
refer to the August 17, 2000 final rule; ``Standards for Privacy of 
Individually Identifiable Health Information'' (65 FR 82462), published 
in the Federal Register on December 28, 2000; Standards for Privacy of 
Individually Identifiable Health Information; Final Rule (67 FR 53182) 
published in the Federal Register on August 14, 2002; and ``the 
Modification to Code Set Standards To Adopt ICD-10-CM and ICD-10-PCS'' 
proposed rule (hereinafter referred to as the ``August 22, 2008 
proposed rule'') (73 FR 49796), published in the Federal Register on 
August 22, 2008 for further information about electronic data 
interchange and the regulatory background.

II. ICD-9-CM

    The 9th revision of the International Classification of Diseases 
(ICD-9) was originally developed and maintained by the World Health 
Organization (WHO). While it was originally designed to classify causes 
of death (mortality), the scope of ICD-9 was expanded, through the 
development of the U.S. clinical modification, to include non-fatal 
diseases (morbidity). The Centers for Disease Control and Prevention 
(CDC) developed and maintains a clinical modification of ICD-9 for 
diagnosis codes which is called ``ICD-9-CM Volumes 1 and 2.'' The 
Centers for Medicare & Medicaid Services (CMS) maintains an additional 
clinical modification of ICD-9 for inpatient hospital procedure codes, 
which is called ``ICD-9-CM Volume 3.'' The Secretary adopted CDC's ICD-
9-CM in 1979 for morbidity applications. ICD-9-CM has been used since 
1983 as the basic input for assigning diagnosis-related groups for 
Medicare's Inpatient Prospective Payment System. ICD-9-CM Volumes 1 and 
2, and ICD-9-CM Volume 3 were adopted as HIPAA code sets in 2000 for 
reporting diagnoses, injuries, impairments, and other health problems 
and their manifestations, and causes of injury, disease, impairment, or 
other health problems in standard transactions.

A. ICD-9-CM, Volumes 1 and 2 (Diagnosis)

    CDC developed ICD-9-CM, Volumes 1 and 2. It produced a clinical 
modification to the WHO's ICD-9 by adding more specificity to its 
diagnosis codes. ICD-9-CM diagnosis codes are three to five digits 
long, and are used by

[[Page 3330]]

all types of health care providers, including hospitals and physician 
practices. The code set is organized into chapters by body system. For 
a discussion of the structure of the ICD-9-CM diagnosis code sets, 
please refer to the August 22, 2008 proposed rule (73 FR 49798).

B. ICD-9-CM, Volume 3 (Procedures)

    Inpatient hospital services procedures are currently coded using 
ICD-9-CM Volume 3, which was adopted as a HIPAA standard in 2000 for 
reporting inpatient hospital procedures. Current Procedural 
Terminology, 4th Edition (CPT-4) and Healthcare Common Procedure Coding 
System (HCPCS) are used to code all other procedures. The ICD-9-CM 
procedure codes, which are maintained by CMS, are three to four digits 
long and organized into chapters by body system (for example, 
musculoskeletal, urinary and circulatory systems, etc.). For a 
discussion of the structure of the ICD-9-CM procedure code set, please 
refer to the August 22, 2008 proposed rule (73 FR 49798).

C. Limitations of ICD-9-CM

    In the August 22, 2008 proposed rule (73 FR 49799), we discussed 
the shortcomings of ICD-9-CM. The ICD-9-CM code set is 29 years old, 
its approximately 16,000 procedure and diagnosis codes are insufficient 
to continue to allow for the addition of new codes, and, because it 
cannot accommodate new procedures, its capacity as a fully functioning 
code set is diminished. Many chapters of ICD-9-CM are full, and in 
others the hierarchical structure of the ICD-9-CM procedure code set is 
compromised. This means that some chapters can no longer accommodate 
new codes, so any additional codes must be assigned to other, topically 
unrelated chapters (for example, inserting a heart procedure code in 
the eye chapter of the code set). The ICD-9-CM code set was never 
designed to provide the increased level of detail needed to support 
emerging needs, such as biosurveillance and pay-for-performance 
programs (P4P), also known as value-based purchasing or competitive 
purchasing. For a detailed discussion of the shortcomings of the ICD-9-
CM code set, please refer to the August 22, 2008 proposed rule (75 FR 
49799).

D. Maintaining/Updating ICD-9-CM (Volumes 1, 2, and 3)

    Recognizing the need for ICD-9-CM to be a flexible, dynamic 
statistical tool to meet expanding classification needs, the ICD-9-CM 
Coordination and Maintenance Committee was created in 1985 as an open 
forum for receiving public comments on proposed code revisions, 
deletions, and additions. The Committee is co-chaired by CDC and CMS; 
CDC maintains ICD-9-CM Diagnosis Codes (Volumes 1 and 2), and CMS 
maintains ICD-9-CM Procedure Codes (Volume 3).
    As discussed in the August 22, 2008 proposed rule (73 FR 49805), we 
will re-name the ICD-9-CM Coordination and Maintenance Committee as the 
ICD-10 Coordination and Maintenance Committee at the point when ICD-10 
becomes the new HIPAA standard. Until that time, the ICD-9-CM 
Coordination and Maintenance Committee will continue to update and 
maintain ICD-9-CM. For a discussion of maintaining and updating code 
sets, please refer to the August 22, 2008 proposed rule (73 FR 49798-
49799).

III. ICD-10 and the Development of ICD-10-CM and PCS

    The ICD-10 code sets provide a standard coding convention that is 
flexible, providing unique codes for all substantially different health 
conditions. It also allows new procedures and diagnoses to be easily 
incorporated as new codes for both existing and future clinical 
protocols. ICD-10-CM and ICD-10-PCS provide specific diagnosis and 
treatment information that can improve quality measurements and patient 
safety, and the evaluation of medical processes and outcomes. ICD-10-
PCS has the capability to readily expand and capture new procedures and 
technologies.

A. ICD-10-CM Diagnosis Codes

    CDC's National Center for Health Statistics (NCHS) developed the 
ICD-10-CM code set, following a voluntary consensus-based process and 
working closely with specialty societies to ensure clinical utility and 
subject matter expert input into the process of creating the clinical 
modifications, with comments from a number of prominent specialty 
groups and organizations that addressed specific concerns or perceived 
unmet clinical needs encountered with ICD-9-CM. NCHS also had 
discussions with other users of the ICD-10 code set, specifically 
nursing, rehabilitation, primary care providers, the National Committee 
for Quality Assurance (NCQA), long-term care and home health care 
providers, and managed care organizations to solicit their comments 
about the ICD-10 code set. There are approximately 68,000 ICD-10-CM 
codes. ICD-10-CM diagnosis codes are three to seven alphanumeric 
characters. The ICD-10-CM code set provides much more information and 
detail within the codes than ICD-9-CM, facilitating timely electronic 
processing of claims by reducing requests for additional information.
    ICD-10-CM also includes significant improvements over ICD-9-CM in 
coding primary care encounters, external causes of injury, mental 
disorders, neoplasms, and preventive health. The ICD-10-CM code set 
reflects advances in medicine and medical technology, as well as 
accommodates the capture of more detail on socioeconomics, ambulatory 
care conditions, problems related to lifestyle, and the results of 
screening tests. It also provides for more space to accommodate future 
expansions, laterality for specifying which organ or part of the body 
is involved as well as expanded distinctions for ambulatory and managed 
care encounters.

B. ICD-10-PCS Procedure Codes

    CMS developed a procedure coding system, ICD-10-PCS. ICD-10-PCS has 
no direct relationship to the basic ICD-10 diagnostic classification, 
which does not include procedures, and has a totally different 
structure from ICD-10-CM. ICD-10-PCS is sufficiently detailed to 
describe complex medical procedures. This becomes increasingly 
important when assessing and tracking the quality of medical processes 
and outcomes, and compiling statistics that are valuable tools for 
research. ICD-10-PCS has unique, precise codes to differentiate body 
parts, surgical approaches, and devices used. It can be used to 
identify resource consumption differences and outcomes for different 
procedures, and describes precisely what is done to the patient. ICD-
10-PCS codes have seven alphanumeric characters and group together 
services into approximately 30 procedures identified by a leading alpha 
character. There are 16 sections of tables that determine code 
selection, with each character having a specific meaning. (See section 
V of the August 22, 2008 proposed rule (73 FR 49802-49803) for a chart 
that compares ICD-9-CM, ICD-10-CM, and ICD-10-PCS codes.)
    As explained in the August 22, 2008 proposed rule (73 FR 49801), to 
our knowledge, no SSO has developed, adopted, or modified a standard 
code set that is suitable for reporting medical diagnoses and hospital 
inpatient procedures for purposes of administrative transactions.

[[Page 3331]]

IV. Summary of Proposed Provisions and Analysis of and Responses to 
Public Comments

    In the August 22, 2008 proposed rule (73 FR 49796), we solicited 
comments from stakeholders and other interested parties on the proposed 
adoption of ICD-10-CM and ICD-10-PCS code sets. We received 3,115 
timely public submissions from all segments of the health care industry 
including providers, physician practices, hospitals, coders, standards 
development organizations, vendors, State Medicaid agencies, State 
agencies, corporations, tribal representatives, healthcare professional 
and industry trade associations, and disease-related advocacy groups.
    Some comments were received timely, but were not relevant to the 
August 22, 2008 proposed rule and were not considered in our responses. 
Those comments referred to general Medicare program operations; a call 
for the development of a single payer health care system in the United 
States; general economic issues; a request for finalization of HIPAA 
standards that were not included in the August 22, 2008 proposed rule; 
a request to adopt coding guidelines for CPT codes; comments on another 
unrelated notice of proposed rulemaking; and other issues that are 
outside of the purview of the August 22, 2008 proposed rule. The 
relevant and timely submissions within the scope of the August 22, 2008 
proposed rule that we received tended to provide multiple detailed 
comments on our proposals.
    Brief summaries of each proposed provision, a summary of the public 
comments we received (with the exception of specific comments on the 
economic impact analysis), and our responses to the comments are set 
forth below:

A. Adoption of ICD-10-CM and ICD-10-PCS as Medical Data Code Sets Under 
HIPAA

    In Sec.  162.1002(c)(2), we proposed to adopt ICD-10-CM (including 
the official guidelines) to replace ICD-9-CM Volumes 1 and 2 (including 
the official coding guidelines), for coding diseases; injuries; 
impairments; other health problems and their manifestations; and causes 
of injury, disease and impairment, or other health problems.
    In Sec.  162.1002(c)(3), we proposed to adopt ICD-10-PCS (including 
the official guidelines) to replace ICD-9-CM Volume 3 (including the 
official coding guidelines) for the following procedures or other 
actions taken for diseases, injuries, and impairments on hospital 
inpatients reported by hospitals: prevention, diagnosis, treatment, and 
management.
    Comment: Commenters overwhelmingly supported our proposal to adopt 
ICD-10-CM and ICD-10-PCS as code sets under HIPAA, replacing the ICD-9-
CM Volumes 1 and 2, and the ICD-9-CM Volume 3 code sets, respectively, 
citing the benefits we described in the August 22, 2008 proposed rule. 
Some commenters pointed out that the United States, with its continued 
use of ICD-9-CM, is behind the rest of the world which has already 
migrated to ICD-10, and that ICD-9-CM's basic structure is flawed and 
outdated, and cannot accommodate new medical technology and 
terminology. Commenters agreed that ICD-9-CM Volume 3 is running out of 
space, and that this space limitation curtails the ability to capture 
accurate reimbursement and quality data for health care documentation. 
A few commenters noted that, as providers migrate toward the use of 
electronic health records (EHRs), use of the more robust ICD-10-CM and 
ICD-10-PCS codes will be necessary to support EHRs' more detailed 
information requirements. Another commenter noted that waiting to move 
to ICD-10-CM and ICD-10-PCS incurs its own costs as the underlying data 
used for patient care improvement, institutional quality reviews, 
medical research and reimbursement becomes increasingly unreliable.
    Response: We are amending Sec.  162.1002 to adopt ICD-10-CM and 
ICD-10-PCS as medical data code sets under HIPAA, replacing ICD-9-CM, 
Volumes 1 and 2, and ICD-9-CM Volume 3.
    Comment: We also received a number of comments stating that we 
should not adopt ICD-10-CM and ICD-10-PCS as code sets under HIPAA. 
Several commenters said that the ICD-9-CM code set is adequate to meet 
current coding needs, making ICD-10-CM and ICD-10-PCS unnecessary. 
These commenters said that current ICD-9-CM codes do not have serious 
limitations, and perhaps simply need some modifications to alleviate 
any limitations that ICD-9-CM might have. A number of commenters said 
that we should not adopt ICD-10-CM and ICD-10-PCS because the cost 
associated with the transition from ICD-9-CM to ICD-10-CM and ICD-10-
PCS would be a burden to industry. However, they did not offer specific 
alternative solutions.
    Other commenters offered a number of different alternatives, 
including:
     Create additional space in ICD-9-CM through the annual 
elimination and reassignment of codes that are no longer used.
     Modify the structure of ICD-9-CM to provide for the 
assignment of additional codes.
     Continue to assign new procedures to the two, previously 
unassigned overflow chapters of ICD-9-CM, chapters 00 and 17, and once 
those chapters are filled, no new codes should be created that cannot 
be assigned to the appropriate body system chapter.
     Adopt the American Medical Association's Physicians' 
Current Procedural Terminology (CPT) for coding inpatient hospital 
procedures.
     Wait and adopt the ICD-11 code set. Two commenters stated 
that by the time the United States has achieved proficiency using ICD-
10-CM and ICD-10-PCS, the rest of the world will be using ICD-11, and 
our nation's coding reporting system will once again be incompatible 
with that of other countries.
     Decouple the coding of diseases at the point of patient 
care from the classification of diseases for secondary uses of medical 
record data by developing a U.S. Disease-Entity Coding System (USDECS) 
instead of adopting ICD-10-CM.
    One commenter erroneously interpreted our proposed adoption of ICD-
10-PCS as a proposal to replace CPT codes in the ambulatory setting. 
Another commenter said we should recognize that hospital outpatient 
departments are currently required to report using HCPCS and CPT codes, 
but that some hospitals have elected to code these hospital outpatient 
medical records using ICD-9-CM procedure codes.
    Response: None of the suggested alternatives adequately address the 
shortcomings of ICD-9-CM that were identified and discussed in the 
August 22, 2008 proposed rule. The majority of commenters supported our 
analysis of these shortcomings. As we noted in the August 22, 2008 
proposed rule (73 FR 49827), we do not believe that extending the life 
of ICD-9-CM by assigning codes to unrelated chapters or purging and 
reassigning codes that are no longer used is a long-term solution, and 
it would perpetuate confusion for coders and data users if hierarchy 
and code set structure were to continue to be set aside in the issuance 
of new codes. Gaining space in ICD-9-CM by annually purging codes that 
are not used is problematic because, while it creates space, this space 
may not necessarily be in the same chapters in which codes are needed. 
As no one asserted that this purging process would open up sufficient 
capacity to assign new codes

[[Page 3332]]

in the hierarchical sections in which the new codes ought to be placed, 
purging and reassigning might only lead to coder confusion and further 
contribute to the hierarchical instability of the code set. Moreover, 
such action would destroy the ability to perform longitudinal research.
    Modifying the existing ICD-9-CM code sets by adding more digits 
and/or alpha characters was discussed as a possible alternative to 
adoption of the ICD-10-CM and ICD-10-PCS code sets at public meetings 
of the ICD-9-CM Coordination and Maintenance Committee; however, there 
appears to be little industry support for this alternative. The 
disruption resulting from adding a digit and/or alpha character to the 
ICD-9-CM code set, and then trying to both refine and modify approaches 
to assigning codes would result in nearly the same costs in 
infrastructure and systems changes as a transition to ICD-10-PCS, but 
with no significant improvement in the coding system.
    In the August 22, 2008 proposed rule (73 FR 49804), we explained 
that we did not consider the CPT-4 coding system to be a viable 
alternative to ICD-10-CM and ICD-10-PCS code sets because CPT does not 
adequately capture facility-based, non-physician services, and 
commenters did not offer any new information to support that approach.
    In the August 22, 2008 proposed rule, we did not propose the 
replacement of CPT with ICD-10-PCS in the ambulatory setting. In the 
August 17, 2000 final rule (65 FR 50312), we adopted the HCPCS and CPT 
codes as the official procedure coding systems for outpatient 
reporting. ICD-9-CM procedure codes are not a HIPAA standard for coding 
in these settings, and while some hospitals may elect to double code 
their outpatient records using both HCPCS and CPT, as well as ICD-9-CM 
procedure codes for internal purposes, this is not a requirement. We do 
not encourage this type of double coding, and do not believe that this 
voluntary practice impacts the analysis of whether or not ICD-10-PCS 
should be adopted.
    We discussed waiting to adopt the ICD-11 code set in the August 22, 
2008 proposed rule (73 FR 49805), noting that the World Health 
Organization (WHO) has only begun preliminary work on ICD-11. There are 
no firm timeframes established for completion of the ICD-11 
developmental work, testing or release for use date. We are aware of 
reports that the WHO's alpha version of ICD-11 may be available for 
testing in 2010, with possible approval of ICD-11 for general worldwide 
use in 2014. However, work cannot begin on developing the necessary 
U.S. clinical modification to the ICD-11 diagnosis codes or the ICD-11 
companion procedure codes until ICD-11 is officially released. 
Development and testing of a clinical modification to ICD-11 to make it 
usable in the United States will take an estimated additional 5 to 6 
years. We estimated that the earliest projected date to begin 
rulemaking for implementation of a U.S. clinical modification of ICD-11 
would be the year 2020.
    The suggestion that we wait and adopt ICD-11 instead of ICD-10-CM 
and ICD-10-PCS does not consider that the alpha-numeric structural 
format of ICD-11 is based on that of ICD-10, making a transition 
directly from ICD-9 to ICD-11 more complex and potentially more costly. 
Nor would waiting until we could adopt ICD-11 in place of the adopted 
standards address the more pressing problem of running out of space in 
ICD-9-CM Volume 3 to accommodate new procedure codes.
    Finally, the development of a United States Disease-Entity Coding 
System (USDECS), which would involve developing a totally new 
classification system not based on any previous classification system 
platforms, would require even more time than implementing ICD-11, and 
would also hamper efforts to evaluate United States data in the context 
of other countries' experiences.
    Comment: A few commenters stated that HHS needs to ensure that the 
use of ICD-10-CM and ICD-10-PCS code sets will not conflict with other 
federally recognized standards.
    Response: We assume the commenter is referring to Secretarially 
recognized interoperability standards recommended by the Healthcare 
Information Technology Standards Panel (HITSP), a cooperative 
partnership between the public and private sectors formed to harmonize 
and integrate standards that will meet clinical and business needs for 
sharing information among organizations and systems. In some HITSP 
interoperability specifications, including those for Electronic Health 
Records, Laboratory Results Reporting and Biosurveillance, HITSP has 
defined or identified specific interoperability standards, including 
use of SNOMED-CT[supreg], to support interoperability of systems. As 
discussed in the August 22, 2008 proposed rule (73 FR 49803), ICD-10-CM 
and ICD-10-PCS are classification coding systems while SNOMED-
CT[supreg] is a clinically complex terminology standard. As we noted in 
the August 22, 2008 proposed rule, we do not believe that SNOMED-
CT[supreg] is a suitable standard for reporting medical diagnoses and 
hospital inpatient procedures for purposes of administrative 
transactions. The numerous codes would be impractical to assign 
manually and are not suited to the secondary purposes for which 
classification systems like ICD-10 codes are used because of their size 
and considerable granularity, complex hierarchies, and lack of 
reporting rules. (See 73 FR 49803-49804). SNOMED-CT[supreg] is not a 
substitute for ICD-10 as a coding system, but, as further noted in the 
August 22, 2008 proposed rule, the benefits of using SNOMED-CT[supreg] 
increase if such use is linked to a classification system such as ICD-
10-CM and ICD-10-PCS. Mapping would be used to link SNOMED-CT[supreg] 
to ICD-10 code sets. Plans are underway to develop these crosswalks, so 
a transition to ICD-10 code sets will ultimately facilitate realizing 
the benefits of using the specified interoperability standards 
including SNOMED-CT[supreg]. Moreover, it is the promulgation of 
regulations, and not the HITSP process, that dictates which standards 
are ultimately to be used for administrative transactions.
    Comment: A number of commenters stated that quality performance 
measures currently used for programs such as the Physician Quality 
Reporting Initiative (PQRI) are based on ICD-9-CM diagnosis codes, and 
it is unclear how the change to ICD-10 would impact those programs.
    Response: We anticipate that the use of ICD-10-CM, with its greater 
detail and granularity, will greatly enhance our capability to measure 
quality outcomes. We acknowledge that quality performance outcome 
measures are currently used for high-profile initiatives such as the 
hospital pay-for-reporting program. The greater detail and granularity 
of ICD-10-CM and ICD-10-PCS will also provide more precision for 
claims-based, value-based purchasing initiatives such as the hospital-
acquired conditions (HAC) payment policy. Crosswalks that allow the 
industry to convert ICD-9-CM codes into ICD-10-CM and ICD-10-PCS codes 
(and vice versa) are already in existence. These crosswalks and others 
that are developed during the implementation period will allow the 
industry to convert payment systems, HAC payment policies, and quality 
measures to ICD-10. We note that, under this rule, ICD-10 codes will 
not be implemented as a HIPAA code set until 2013. Programs that offer 
incentives that are based on performance outcome measures that may be 
impacted by the changeover from ICD-9-CM to ICD-10-CM will

[[Page 3333]]

have sufficient time to plan for a smooth transition to ICD-10 coding. 
Our own such preparation will include ICD-10 updates to the quality 
measures as part of our routine regulatory process.

B. Compliance Date

    In the August 22, 2008 proposed rule, we proposed October 1, 2011 
as the compliance date for ICD-10-CM and ICD-10-PCS code sets for all 
HIPAA covered entities. To illustrate our implementation timeline for 
preliminary planning purposes, we also published in the proposed rule 
(73 FR 49807) a draft implementation timeline for both Version 5010 and 
ICD-10-CM and ICD-10-PCS.
    Comment: While an overwhelming majority of commenters favored 
adoption of ICD-10-CM and ICD-10-PCS, they expressed many different 
positions regarding the compliance date. Most commenters disagreed with 
the proposed October 1, 2011 compliance date, stating that it did not 
provide adequate time for industry to train coders and complete systems 
changeovers and testing.
    In general, commenters expressed particular concern about the 
industry's ability to implement both ICD-10 and the concurrently 
proposed X12 Version 5010 transactions standards (Version 5010) in the 
proposed timeframe. The commenters pointed out that this timeframe 
would jeopardize plans' ability to process claims and could therefore 
result in more unpaid or improperly paid claims. They also pointed out 
that this compliance date would provide less time for adopting ICD-10-
CM and ICD-10-PCS than the actual amount of time it took industry to 
implement other HIPAA standards, including the National Provider 
Identifier. One commenter proposed incentive payments to HIPAA covered 
entities to help them achieve compliance given the short compliance 
timeframe.
    NCVHS' September 26, 2007 recommendation on the implementation of 
Version 5010 and ICD-10 was frequently cited by commenters as being the 
benchmark against which they measured their own recommendations. Some 
commenters stated that we should further consider the NCVHS 
recommendation to the Secretary that there be a 2-year time gap between 
the finalization of the implementation of Version 5010, and compliance 
with ICD-10. A number of commenters interpreted the NCVHS 
recommendation as being that of a 3-year time gap, and cited that as 
their basis for supporting a 2013 or in some instances, a 2014 
compliance date for ICD-10.
    In fulfillment of part of its HIPAA-mandated responsibilities, 
NCVHS submitted recommendations to HHS that suggested establishing two 
different levels of compliance for the implementation of ICD-10-CM and 
ICD-10-PCS codes sets relative to compliance with Version 5010. ``Level 
1 compliance,'' as interpreted by NCVHS, would mean that the HIPAA 
covered entity could demonstrate that it could create and receive ICD-
10-CM and ICD-10-PCS compliant transactions. ``Level 2 compliance,'' as 
interpreted by NCVHS, would mean that HIPAA covered entities had 
completed end-to-end testing with all of their trading partners. NCVHS 
further recommended that no more than one implementation of a HIPAA 
transaction or coding standard be in Level 1 at any given time, which 
tacitly suggests that Level 2 testing for Version 5010 could, in NCVHS' 
estimation, reasonably take place concurrently with initial Level 1 
activities associated with ICD-10 implementation.
    As commenters noted, the NCVHS letter stated that ``it is critical 
that the industry is afforded the opportunity to test and verify 
Version 5010 up to two years prior to the adoption of ICD-10.'' The 
letter's Recommendation 2.2 further states that ``HHS should take under 
consideration testifier feedback indicating that for Version 5010, two 
years will be needed to achieve Level 1 compliance.''
    A small number of commenters supported the proposed October 1, 2011 
implementation date. They believed that the date was achievable, and 
stressed that the benefits of ICD-10 are so significant that an 
aggressive implementation timetable was justified because it would make 
additional information available that would support health care 
transparency, and thereby benefit patients, and that further delays in 
implementation would result in increased implementation costs. Others 
simply stated that the time had come for the U.S. to catch up with the 
rest of the world in using ICD-10.
    A smaller number of commenters supported an implementation date of 
October 1, 2012. They, too, cited the benefits of ICD-10, and argued 
that a one-year postponement of the proposed October 2011 date would 
provide sufficient time in which the industry could achieve compliance 
with ICD-10-CM and ICD-10-PCS. A few commenters explicitly noted that a 
2012 implementation date would allow them adequate time to budget and 
plan for the changeover. Other commenters stated that ICD-10 compliance 
should come no earlier than October 2012; and still others recommended 
an October 2012 compliance date if such a compliance date would allow 
for a 3-year implementation timetable for ICD-10 following the Version 
5010 compliance date.
    A number of commenters suggested a compliance date of October 2013, 
citing insufficient time in which to install and test ICD-10-CM and 
ICD-10-PCS within their claims processing and other related IT systems, 
the need for coder and provider education and outreach, and the time 
needed for implementation of previous HIPAA standards. These commenters 
stated that an October 2013 date would afford them with the minimum of 
2 years after implementing Version 5010 that they said they needed in 
order to comply with ICD-10-CM and ICD-10-PCS. The compliance date must 
occur on October 1 of any given year in order to coincide with the 
effective date of the annual Medicare Inpatient Prospective Payment 
System (IPPS). A number of commenters supported a 2013 compliance date 
as more realistic than the proposed 2011 date, and urged that we move 
quickly to publish a final rule to adopt ICD-10-CM and ICD-10-PCS. 
Other commenters simply noted that 2013 was a reasonable date that 
would allow more time for effective implementation and training on the 
proper use of code sets. Commenters noted that this date should give 
HIPAA covered entities sufficient time to fully implement Version 5010 
before moving on to ICD-10. A few other commenters noted that the 
compliance date for ICD-10 should not be any earlier than 2013.
    The majority of commenters, including individual providers and 
industry associations, supported a compliance date of October 1, 2014 
which they said could be less costly, allow more time for education, 
and would better ensure that the desired benefits of the ICD-10-CM and 
ICD-10-PCS code sets are achieved. The majority of submissions that 
supported a 2014 compliance date were form letters submitted by members 
representing the position of one industry professional association.
    A few commenters suggested an implementation date of October 1, 
2015 or beyond, once again citing their perceptions of the high cost of 
the transition to ICD-10-CM and ICD-10-PCS, and the need for extensive 
education and training.
    Other commenters did not propose a specific compliance date, but 
rather indicated the need for 3 years after the Version 5010 compliance 
date. Other

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commenters suggested that 95 percent of covered entities be 
successfully converted to Version 5010 prior to the start of ICD-10 
implementation.
    One commenter stated that the adoption of ICD-10-CM should be 
delayed until the Diagnostic and Statistical Manual of Mental 
Disorders, Fifth Edition (DSM-V) has been released.
    Response: We recognize that the compliance date issue is crucial to 
the successful implementation of ICD-10. We have assessed the comments 
carefully, balancing the benefits of earlier implementation against the 
potential risk of establishing a deadline that does not provide 
adequate time for successful implementation and thorough testing. We 
cannot consider a compliance date for ICD-10 without considering the 
dependencies between implementing Version 5010 and ICD-10. We recognize 
that any delay in attaining compliance with Version 5010 would 
negatively impact ICD-10 implementation and compliance. The lack of 
information on cost estimate impacts also supports a later ICD-10 
compliance date to allow the industry to spread out any unanticipated 
costs over a longer period of time.
    Pursuant to a regulation published in this same edition of the 
Federal Register, the Version 5010 compliance date has now been 
established as January 2012, to afford the industry an additional year, 
for a total of 3 years to achieve compliance with Version 5010.
    From our review of the industry testimony presented to NCVHS and 
comments received on our August 22, 2008 proposed rule, it appears that 
24 months (2 years) is the minimum amount of time that the industry 
needs to achieve compliance with ICD-10 once Version 5010 has moved 
into external (Level 2) testing.
    We believe that the spirit and intent of the NCVHS letter 
recommends that the Secretary move the industry forward on the adoption 
and implementation of, and compliance with, Version 5010 and the ICD-
10-CM and ICD-10-PCS code sets. At the same time, NCVHS recognizes the 
wide-reaching impacts of the transition to ICD-10-CM and ICD-10-PCS, 
and in doing so, implies that any implementation plans and timetables 
should be structured as to be realistic for the industry as a whole.
    In establishing the ICD-10 compliance date, we have sought to 
select a date that achieves a balance between the industry's need to 
implement ICD-10 within a feasible amount of time, and our need to 
begin reaping the benefits of the use of these code sets; stop the 
hierarchical deterioration and other problems associated with the 
continued use of the ICD-9-CM code sets; align ourselves with the rest 
of the world's use of ICD-10 to achieve global health care data 
compatibility; plan and budget for the transition to ICD-10 
appropriately; and mitigate the cost of further delays.
    We believe that an October 1, 2013 ICD-10 compliance date achieves 
that balance, being 2 years later than our proposed October 2011 ICD-10 
compliance date and providing a total of nearly 5 years from the 
publication of the Version 5010 final rule through final compliance 
with ICD-10. The 32 months from completion of Level 1 testing for 
Version 5010 in January 2011 (at which point Level 1 ICD-10 activities 
can begin) to the October 1, 2013 compliance date for ICD-10 should 
allow the industry ample time to effect systems changeovers and testing 
so as to become fully compliant with the ICD-10-CM and ICD-10-PCS code 
sets.
    We note that those requesting compliance dates of 2014 and later 
did not suggest methods for mitigating the negative effects of delaying 
compliance, including the increased implementation costs which may 
result from the increase in the number and size of legacy systems that 
will need to be updated; delay in achieving the benefits identified in 
the August 22, 2008 proposed rule; and the impacts of continued 
degradation of the code sets. We further note that many health plans 
supported a 2013 compliance date. Since the complexity of ICD-10 
implementation will be much higher for health plans (because after 
health plans update systems to utilize ICD-10 codes, they will also 
have to develop claims processing edits based on those codes) than for 
individual providers and coders, we take the support of health plans 
for a 2013 compliance date as an indication of the reasonableness of 
this timeline.
    It is also important to note that, while NCVHS recommended that 
Level 1 activities for Version 5010 and ICD-10 should not overlap, it 
is inevitable that, as covered entities embark on requirements analysis 
for Version 5010, they will identify ICD-10 issues as a natural 
offshoot of those efforts. Thus, even if entities choose not to begin 
full-scale ICD-10 implementation efforts until Version 5010 has reached 
Level 2 compliance, they will likely begin that phase with a 
preexisting knowledge base about ICD-10, and will also have identified 
lessons learned and best practices that will inform those later 
activities.
    We also note that the Diagnostic and Statistical Manual of Mental 
Disorders, Fifth Edition (DSM-V) is projected to be released in 2012 by 
the American Psychiatric Association (APA). CDC is working with APA to 
ensure that ICD-10-CM and DSM-V codes match, and that the timing of 
this projected release would conform with the commenter's request that 
the ICD-10 compliance date occur after the release of DSM-V.
    We are adopting the ICD-10-CM and ICD-10-PCS as medical data code 
sets under HIPAA, replacing ICD-9-CM Volumes 1 and 2, and Volume 3, 
with a compliance date of October 1, 2013, and have updated the draft 
ICD-10/Version 5010 implementation timeline which previously appeared 
in the proposed rule (73 FR 49807) to read as follows:

         Timeline for Implementing Versions 5010/D.0 and ICD-10
------------------------------------------------------------------------
             Version 5010/D.0                          ICD-10
------------------------------------------------------------------------
01/09: Publish final rule.................  01/09: Publish Final Rule
01/09: Begin Level 1 testing period
 activities (gap analysis, design,
 development, internal testing) for
 Versions 5010 and D.0.
01/10: Begin internal testing for Versions
 5010 and D.0.
12/10: Achieve Level 1 compliance (Covered
 Entities have completed internal testing
 and can send and receive compliant
 transactions) for Versions 5010 and D.0.
01/11: Begin Level 2 testing period         01/11: Begin initial
 activities (external testing with trading   compliance activities (gap
 partners and move into production; dual     analysis, design,
 processing mode) for Versions 5010 and      development, internal
 D.0.                                        testing).

[[Page 3335]]

 
01/12: Achieve Level 2 compliance;
 Compliance date for all covered entities.
 This is also the compliance date for
 Version 3.0 for all covered entities
 except small health plans*.
                                            10/13: Compliance date for
                                             all covered entities.
------------------------------------------------------------------------
Note: Level 1 and Level 2 compliance requirements only apply to Version
  5010, NCPDP Telecommunication Standard Version D.0, and NCPDP Medicaid
  Subrogation Standard Version 3.0.

    Comment: One commenter stated that the October 1 compliance date 
should be changed to better align with the health care industry's 
regularly scheduled annual system changeovers.
    Response: The commenter did not reference specific system 
changeovers, suggest an alternative date, or specify the regularly 
scheduled system changes to which it refers, so we are unable to assess 
the validity of the comment. We received no other comments opposed to 
an October 1 date. The October 1 date was selected to ensure that the 
ICD-10 compliance date would coincide with the effective date of the 
Medicare IPPS update.
    Comment: A number of commenters urged that the compliance date for 
the HIPAA health care claims attachment standard not coincide with the 
Level 1 implementation activities related to either Version 5010 or 
ICD-10.
    Response: We will take this into consideration in establishing a 
compliance date in the health care claims attachment standard final 
rule.

C. Implementation Period

    Comment: A minority of commenters disagreed with our proposal to 
establish a single compliance date for ICD-10. Some commenters 
suggested a variety of alternatives for phased-in or staggered 
implementation of the ICD-10-CM and ICD-10-PCS code sets in order to 
alleviate the impact of implementation. A number of these commenters 
suggested that we allow ``dual processing'': in other words, acceptance 
of either ICD-9 or ICD-10 code sets on any given claim for a specified 
period of time. They expressed concern about having a single date on 
which all covered entities would have to convert to ICD-10, and 
stressed the need for testing between trading partners to ensure that 
claims are properly processed. They also pointed out that covered 
entities would have to maintain dual processes in any case to process 
old claims.
    Other commenters proposed that the ICD-10-CM diagnosis and ICD-10-
PCS procedure codes be implemented at different times. A few commenters 
suggested adopting other nations' approaches to implementing ICD-10 
such as those used in Canada and Australia, specifically, staggered 
implementation of the new codes either by geographic region, by covered 
entity category, and/or allowing for a later implementation date for 
small entities.
    Other commenters pointed out that diagnosis and procedure codes 
affect the amount of payment, and that dual processing (that is, the 
possibility that a claim for services provided on a given date being 
processed for reimbursement at two different rates based on two code 
sets) would add significant complexity.
    Response: Implementation of ICD-10 will require significant 
business and technical changes for all covered entities.
    We acknowledge that ICD-9-CM codes will continue to be used only 
for the period of time during which old claims (those with dates of 
service prior to October 1, 2013) continue through the payment cycle. 
We do not believe that this period during which covered entities will 
be maintaining the ability to work in two code systems is what 
commenters meant by ``dual processing.'' Rather, we believe that 
commenters utilized the term ``dual processing'' to mean the provider's 
ability to use their own discretion in deciding whether to submit 
claims using ICD-9 or ICD-10 code sets after the October 1, 2013 
compliance date. Such use of more than one code set for coding 
diagnoses or procedures, whether in a medical record or claim, would 
cause significant business process duplication. It could result in 
different information being shared about a patient because the ICD-10 
code set is so much more robust than ICD-9, and the code for a given 
diagnosis/procedure does not necessarily match one code to one code 
between the code sets.
    While HHS could elect to provide for some sort of ``staggered'' 
implementation dates, we have concluded that it would be in the health 
care industry's best interests if all entities were to comply with the 
ICD-10 code set standards at the same time to ensure the accuracy and 
timeliness of claims and transaction processing.
    We agree with commenters that maintenance of two code sets for a 
significant span of time such that, on any specific date of service in 
that time frame one could submit, process and/or receive payment on a 
claim based on ICD-9-CM or the ICD-10-CM and ICD-10-PCS code sets would 
raise considerable logistical issues and add to the complexity of the 
ICD-10 code set implementation. One would need to employ/operate 
duplicate coding staffs and systems. For example, we understand that 
Medicare's systems will not allow the use of two different code sets 
for services provided on the same date, and we presume that other 
covered entities' systems were likewise not designed with such 
capacities. Even if such coding and processing capabilities were 
available, the biller would have to ensure that claims indicated the 
coding system under which they were generated, and the recipient would 
need to put measures in place to avoid processing on the wrong system. 
We believe that this would impose a very significant burden on plans 
and providers/suppliers. The availability and use of crosswalks, 
mappings and guidelines should assist entities in making the switchover 
from ICD-9 to ICD-10 code sets on October 1, 2013, without the need for 
the concurrent use of both code sets in claims processing, medical 
record and related systems with respect to claims for services provided 
on the same day. Furthermore, although the Act gives the Secretary the 
authority to extend the time for compliance for small health plans if 
the Secretary determines that it is appropriate, we believe that 
different compliance dates based on the size of a health plan would 
also be problematic, since a provider has no way of knowing if a health 
plan qualifies as a small health plan or not.
    As stated in the August 22, 2008 proposed rule (73 FR 49806), a 
phased-in implementation of ICD-10 that allows for payment systems to 
accept both ICD-9 and ICD-10 codes for services rendered on the same 
day would constitute a significant burden on the industry. We continue 
to believe that, based on our previous HIPAA standards implementation 
experience

[[Page 3336]]

and in consideration of the complexities of the U.S. health care 
system's multi-payer system, allowing both code systems to be used and 
reported at the same time (i.e., for services/procedures performed on 
the same day) would create confusion in processing and interpreting 
coded data, and claims could likely be denied for services, or returned 
as errors if processing errors resulted in edits that indicated too 
many or too few digits. It would be more costly for the various health 
care payment systems used in the United States to accept and process 
claims with both ICD-9 and ICD-10 code sets. Providers would have to 
maintain both coding systems, and there would be significant system 
implications in trying to determine which coding system was being used 
to report the coded data.
    Adopting diagnosis and procedure codes at different times would 
result in similar system problems, namely pairing an ICD-9 diagnosis 
code with an ICD-10 procedure code, or vice versa. For more examples of 
problems associated with maintaining the two coding systems 
concurrently, please refer to the August 22, 2008 proposed rule (73 FR 
49806).
    Allowing the industry to use ICD-10-CM and ICD-10-PCS codes 
voluntarily would also result in confusion. Systems would not be able 
to recognize whether the code was an error made in an ICD-9 code entry, 
or actually an ICD-10 code, again causing rejection errors.
    We continue to believe it is in the industry's best interest, and 
that includes small health plans, to have a single compliance date for 
ICD-10-CM and ICD-10-PCS. This will reduce the burden on both providers 
and insurers who will be able to edit on a single new coding system for 
claims received for encounters and discharges occurring on or after 
October 1, 2013, instead of having to maintain two coding systems over 
an extended period of time. Providers and insurers would use ICD-9-CM 
edits and payment logic for claims relating to encounters and 
discharges occurring prior to the date of compliance, and the ICD-10-CM 
and ICD-10-PCS edits and payment logic for all claims relating to 
encounters and discharges occurring on or after the ICD-10 compliance 
date. They would not have the burden of selectively applying either the 
ICD-9-CM or ICD-10-CM edits and logic to claims before the compliance 
date, and as a result, we have not established dates for Level 1 and 
Level 2 testing compliance for ICD-10 implementation. We encourage all 
industry segments to be ready to test their systems with ICD-10 as soon 
as it is feasible. We believe that the October 1, 2013 compliance date 
will allow various payment systems to correctly edit the codes and make 
payments based on the payment and coding system in effect at that time, 
and is sufficiently far in the future to provide all sectors of the 
industry adequate time to implement the code sets.
    As described in section XI.D of the August 22, 2008 proposed rule 
(73 FR 49827), a number of phase-in compliance options for ICD-10-CM 
and ICD-10-PCS were considered and rejected because of the nature of 
the U.S. multi-payer system. Phased-in ICD-10-CM and ICD-10-PCS 
compliance based on staggered dates set by geography over extended 
periods of time would require plans (especially national plans), and 
possibly multi-state chain or national providers/suppliers or health 
care entities that were vertically integrated, to maintain and operate 
both ICD-9 and ICD-10 coding systems for an extended period of time. 
The time frame during which covered entities will need to learn and use 
the new ICD-10 codes, while at the same time continuing to work with 
the old ICD-9 codes, should be minimized because during this period 
there is an increase in the chance of errors in payments, and such 
confusion and uncertainty in the provider/supplier community could 
result in undesirable delays in processing claims that should be 
avoided to the extent possible. We believe that maintaining dual 
systems concurrently for an extended period of time would impose a very 
significant burden on plans and providers/suppliers. In the August 22, 
2008 proposed rule (73 FR 49827), we also referenced the Canadian and 
Australian experience with their geographic phased-in ICD-10 
implementation approach, and the problems they reported that were 
inherent in that approach. We have received no new information on other 
countries' experience with the implementation of their respective 
version of ICD-10 that would lead us to reverse our initial conclusion 
that a phased-in approach based on geographic boundaries is not in the 
best interests of the industry. Therefore, in consideration of the many 
problems inherent with these phased-in and/or staggered implementation 
alternatives, we are adopting October 1, 2013 as the compliance date 
for the ICD-10-CM and ICD-10-PCS medical data code sets.

D. Date of Admission Versus Date of Discharge Coding

    Comment: We proposed to follow the current practice of implementing 
new code set versions effective with the date of service, which for 
purposes of inpatient facilities means the medical codes in effect at 
the time of patient discharge. For example, if a patient is admitted in 
September and the patient is discharged on or after the October 1 
compliance date, the hospital would have to assign the codes in effect 
on October 1. Several commenters requested that inpatient hospital 
facilities use the version of the codes in effect at the date of 
admission instead of the date of discharge because this would benefit 
inpatient facilities that use interim billing. They proposed that 
hospitals that did not use interim billing could continue to use the 
date of discharge for determining the version of ICD code sets to be 
used for coding.
    Response: It has been a long standing practice for inpatient 
facilities to use the version of ICD codes in effect on the date of 
discharge. Most hospitals do not code their records for billing 
purposes until the patient is discharged. Much information is gathered 
through the process of inpatient treatment. Tests are performed, 
surgeries may be completed, and additional diagnoses may be assigned. 
Therefore, the documentation is more complete by the time a patient is 
discharged. At this point the hospital coder assigns the codes that are 
in effect on the date of discharge. All of our national inpatient data 
is based on this practice. We do not agree that changing this practice 
would be of benefit to hospitals, and maintain that the opposite would 
be true, and is counter to the implementation of a single, consistent 
ICD-10 implementation date. Furthermore, using the date of admission 
for some types of claims coding, and date of discharge for other types 
of claims coding would also greatly disrupt national data and create 
problems in analyzing what has, until this point in time, been a 
consistent approach to coding medical records. Hospitals engaged in 
interim billing will not see any change from their current practices. 
They will continue to use the code set in effect for services occurring 
prior to October 1, 2013 and will use the next year's update (in this 
case, ICD-10-CM and ICD-10-PCS for 2013) for services occurring on or 
after October 1, 2013.
    Therefore, we will not change the current practice followed by 
inpatient facilities of coding based on the date of discharge.

E. Coding Guidelines

    Comment: Several commenters expressed the need for ICD-10 coding 
guidelines to be developed and maintained. Some commenters incorrectly 
pointed out that guidelines

[[Page 3337]]

were not available, while others were aware of the ICD-10 guidelines 
that are posted on the CMS and CDC Web sites. Commenters expressed 
concern that the ICD-10-CM guidelines on CDC's Web page were created in 
2003, and stated that they are ``draft'' guidelines that have not been 
updated. Commenters further indicated that this lack of finalized 
coding guidelines will make it difficult for software and systems 
vendors to develop ICD-10 products and for covered entities to begin 
training staff. Commenters also stated that there should be a single, 
authoritative source for ICD-10 coding guidelines to avoid variations 
in the interpretation and use of the codes. These commenters questioned 
whether the implementation of ICD-10 should be delayed until such time 
as the guidelines can be updated.
    Response: We agree that it is important to have an official set of 
ICD-10 coding guidelines, and that they be properly maintained. CMS, 
CDC, AHA and AHIMA joined forces some time ago under a long-standing 
memorandum of understanding to develop and approve the guidelines for 
ICD-9-CM code set coding and reporting. These ``Cooperating Parties'' 
conduct annual reviews of these guidelines and develop new guidelines 
as needed, considering stakeholder input obtained through public 
meetings of the ICD-9-CM Coordination and Maintenance Committee, and 
through input submitted from AHA and AHIMA members. Only those 
guidelines approved by the Cooperating Parties are official and posted 
to CDC and CMS Web sites, and this has proven to be an effective 
approach to guideline development and maintenance. The Cooperating 
Parties will finalize a 2009 version of the Official ICD-10-CM coding 
guidelines, which will be posted to CDC's Web site in January 2009. 
Updated coding guidelines for ICD-10-PCS are included in the Reference 
Manual already posted to CMS' Web site at https://www.cms.hhs.gov/ICD10/Downloads/pcs_refman.pdf. Given the imminent availability of updated 
coding guidelines, we do not believe that it would be appropriate to 
further delay the adoption of the ICD-10 code sets pending the issuance 
of the updated guidelines.

F. ICD-10 Mappings and Crosswalks

    Comment: Many commenters emphasized the importance of reliable 
crosswa