What the New Medical Code Overhaul Means to You

Your doctor and medical staff may get crankier. Your health insurance claims may be denied or delayed. You could be pressured to pay health care balances in full, rather than over time. Welcome to the new world of medical coding taking effect Oct. 1, 2015.

That’s the day that the number of medical diagnostic codes will skyrocket from 14,000 to 68,000 and the number of codes for inpatient hospital procedures will balloon from 4,000 to 87,000.

Technically, the switch is known as the conversion from the ICD-9 (International Classification of Diseases), adopted in the U.S. in 1979, to ICD-10.

It’s been put off three times since the U.S. Department of Health and Human Services' initial 2011 date. The World Health Organization first adopted the expanded medical codes in 1990; some countries have used them since 1994. “We’re the last industrial nation to adopt it,” says Peter Strack, senior advisor, Strategy and Development, Business Advisory Services for the Altarum Institute, a health systems research and consulting organization.

Here, “this change has been fought tooth and nail by the American Medical Association and the medical world for several years. It’s hard to believe it’s truly going to happen,” says Martine Brousse, president of the Santa Monica, Calif., patient advocacy service AdviMed and a medical billing advocate for Nerd Wallet.

But it really is. And you can expect to see some not-so-pleasant ripple effects immediately.

Ideally, the extra codes will ultimately improve medical care in America. That’s because they’ll offer greater precision about treatments and diseases, which could then help the medical world better understand our ailments and how best to manage and approach them. Also, the new codes could help public health officials identify disease outbreaks sooner.

“ICD-10 provides greater granularity around clinical procedures and medical interventions,” says Strack. “We’ll see an improvement in clinical research looking at quality-outcome measurements.”

But more immediately, the coding cacophony could make life tougher for some patients, medical practices and hospitals. “There will definitely be challenges post-implementation,” says Strack. “We’ll see the industry bracing for that impact. In the short term, there will be bumps.”

According to The New York Times, “the change is causing waves of anxiety among health care providers.” Dr. Barbara McAneny, a cancer specialist in Albuquerque, N.M., told the Times: “I don’t think physicians are ready. I don’t think health plans are ready.”

The explosion in new codes is likely to lead to coding errors, which will lead to health claim reimbursement delays and denials. The Wall Street Journal says some coding experts fear denials could double during the transition to the new codes. (Medicare will offer a one-year grace period for physicians’ coding confusion as long as their codes are in the right broad categories.)

“ICD-10 requires a certain amount of data precision that doctors have not been used to,” notes Strack. “With five or six times the number of codes than before, there are a lot more decisions to go through for every claim.” Some ailment codes will be based on particular circumstances for patients, too.

“No one is sure how great the error rate will be,” says Dr. Orly Avitzur, Consumer Reports medical adviser and a neurologist based in Tarrytown, N.Y. “Billing departments will be inundated over the next three months fixing codes.”

Avitzur believes health care consumers using out-of-network physicians and health providers are the most likely to feel the effects of the coding change in their wallets. “Those require payment at time of service and require you to submit your bill and wait for a reimbursement check,” she notes.

Brousse expects that some medical practices will see a drop in income over the next few months due to billing processing delays by insurers and will, in turn, tighten the screws on patients. Many practices have had to spend tens of thousands of dollars preparing for the ICD-10 conversion (though they may be able to start charging higher fees by being more precise about conditions they treat).

The immediate cash-flow crunch in doctor’s offices, however, will mean “they will be a lot more aggressive at getting co-pays and deductibles upfront,” Brousse says. “They might also be more aggressive in requiring patients to pay their balances in full, instead of in monthly payments.”

Whether you’re going to an out-of-network doc or an in-network one, though, prepare for some crankiness and a little less personal attention between now and the end of the year. Medical practices — as well as hospitals and clinics — will be required to spend more time providing much more information to insurers and to Medicare than in the past.

“Your doctor and the office staff may be a bit more distracted,” says Avitzur. “It’s like learning a new language for us.”

Adds Brousse: “From being a billing manager, I can tell you: This is not easy. Any mistake will lead to a rejection by an insurer.”

Coding will be especially complicated for patients with injuries — like a fractured wrist due to a fall — notes Avitzur. “Injury codes will require a lot more detail and information about the sequence of diagnosis than before,” she says.

Strack also expects challenges for complex medical procedures such as “interventional cardiology” and obstetrics. A Wall Street Journal article said cardiologists will “have not one, but 845 codes for angioplasty.”

Brousse anticipates “a large number of appeals and backlogs” due to the new codes. One potential snag: You’ll be expected to have the right diagnostic code to get pre-approval from insurers for some tests and procedures. “I’m really worried that patients may have to delay treatment due to clerical errors,” she says. “It could be harmful for their health.”

If insurers delay approvals for procedures due to coding errors, you may find yourself waiting longer to get scheduled for, say, an MRI.

If your health claim is denied, Brousse says, contact your insurer and ask why. “In many cases, an insurance rep can call the medical office and get the correct diagnosis over the phone,” she notes.

Another tip: Check with your state’s insurance department to see if your state has a grievance process for health claims. “If treatment is denied by your insurer and your doctor says it’s medically necessary, the state may be able to step in and issue an order to pay for coverage,” says Brousse.

And patients, be patient: Strack estimates that “by the end of the first year [under ICD-10], the panic should have subsided considerably.”

Richard Eisenberg is the former Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue and former Managing Editor for the site. He is the author of "How to Avoid a Mid-Life Financial Crisis" and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS MoneyWatch. Read More