ICD-10 codes in Machine Learning
Most machine learning around ICD codes deals with auto-encoding documents or NLP to extract ICD codes automatically from documents. Once you have them, most applications I have seen use them as is. 

One simple alternative would be to assign the codes to relevant categories to reduce the number of levels and make them more interpretable. For example 


injury types (e.g. F00–F99 for mental disorders)
body parts (e.g. S10-S19 &amp; .. for neck injuries)
severity of injury etc.


depending on your application. Of course, if you don't want to define the categories beforehand, this can be done using some clustering or embedding method etc.