The Costs and Benefits of Moving to the ICD-10 Code Sets

by Martin C. Libicki, Irene T. Brahmakulam

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Abstract

In spring 2003, the National Committee on Vital and Health Statistics asked RAND to conduct a study of the benefits and costs of switching from ICD-9-CM (International Classification of Diseases, 9th Revision, Clinical Modification) codes for diagnoses and procedures to two code sets based on the 10th revision of ICD: ICD-10-CM and ICD-10-PCS. This technical report presents RAND’s first-order analysis of the benefits and costs of mandating such a switch (either simultaneously or sequentially). The author estimates a dollar range for (1) costs in the areas of additional training for coders, the impact on productivity, and system changes, and (2) benefits in the areas of more-accurate payments for new procedures; fewer miscoded, rejected, and improper reimbursement claims; better understanding of the value of new procedures; improved disease management; and better understanding of health care outcomes. He concludes that that switching to both ICD-10-CM and ICD-10-PCS is likely to generate more benefits than costs but that the switch, if it takes place, should be simultaneous and not sequential.

The research described in this report was conducted by the Science and Technology Policy Institute (operated by RAND from 1992 to November 2003) for the Department of Health and Human Services.

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