Use of ICD Codes in Medicare Stakeholders’ and CMS’s Systems

Medicare fee-for-service claims that include ICD codes are submitted,  processed, and authorized for payment through a combination of  stakeholders’ systems and CMS’s internal claims processing systems. This level of testing is supposed to simulate a  live production environment in which claims are submitted by  providers (or clearinghouses) via the MACs, adjudicated by CMS, and  approved or denied for payment. Based on the agency’s change management  documentation, officials responsible for overseeing the transition began  taking steps to update the systems in March 2010 and had finished  making the systems changes to address ICD-10 requirements in time to  meet the initial October 2013 compliance date. Industry standards developed by the Institute of Electrical and Electronics  Engineers (IEEE) state that systems testing should be conducted early  and often in the life cycle of a systems development project to allow for  the modification of products in a timely manner, thereby reducing the  overall project and schedule impacts. It also recommends planning for contingencies  to help mitigate risks and minimize the impact of errors that may be  introduced when new or modified systems are implemented into a live  production environment. CMS Made Contingency Plans to Help Minimize Impact of Claims Processing System Errors

CMS has established contingency plans to be executed in case errors  occur as a result of implementing modifications to the existing claims  processing systems, which is consistent with IEEE recommendations that  organizations define actions to be taken to minimize the impact of system  errors. Therefore, while it can be expected that system errors will occur, the  extent to which any such errors will disrupt the agency’s ability to properly  process claims cannot be determined until CMS’s systems begin  processing ICD-10 codes. CMS Provided Technical Support to Help Stakeholders Update Systems to Process ICD-10 Claims Data

CMS has taken various steps to help providers, clearinghouses, and  insurers that participate in the Medicare fee-for-service program  implement the systems changes they need to make for transitioning their  systems to ICD-10. CMS also provided enhanced technical capabilities that allowed  stakeholders to test the integration of their updated systems with CMS’s  claims processing systems environment. CMS Developed and Provided Guidance and Tools for Making System Changes

As early as 2008, CMS had developed and published a website that  includes information related to the implementation of systems changes  needed to process and submit ICD-10 codes for Medicare claims  processing. Additionally, CMS took steps to assist the MACs in their efforts to update  the systems they use to submit providers’ claims to CMS and to address  challenges identified by these contractors as they make changes to their  systems. The MACs noted that, given the variety of testers participating and claims  submitted during end-to-end testing, along with the three levels of testing  conducted as part of CMS’s change management process, in their view  overall testing had been comprehensive and sufficient to ensure that  stakeholders’ and CMS’s systems would be ready to process ICD-10  claims data on October 1, 2015. In fact, we  reported that agency officials had finished making the changes that they  determined were needed to process the new codes and had conducted  system testing and validation procedures consistent with industry  practices. Appendix I: Objectives, Scope, and Methodology

The objectives of our review were to determine (1) the status of CMS’s  effort to implement changes needed to be made to its systems in order to  process Medicare claims that include ICD-10 codes; (2) the extent to  which CMS’s testing and verification actions are sufficient to ensure  changes to its systems have been made to process Medicare claims that  include ICD-10 codes by October 1, 2015; (3) steps CMS is taking to  ensure that health care insurers, providers, and other entities have  access to the technical support, tools, and other resources needed to  identify, develop, and test system modifications, and to process Medicare  claims that include ICD-10 codes if needed system changes have not  been made; and (4) what is known about estimated costs to CMS,  insurers, and providers. We also reviewed  documentation describing mitigation strategies used to manage the  identified risks such as contingency plans for processing claims data in  case errors occurred. These contractors’ support was  intended to ensure that any errors that were not detected previously could  be corrected prior to systems being released into production. To determine the extent to which the industry stakeholder groups found  the support provided by CMS useful, we selected and held discussions  with entities that play a role in supporting the implementation of health  care information technology, including implementing system changes  needed to be made for the ICD-10 transition. Appendix II: ICD-10 Changes Implemented in Quarterly Releases, July 2010-October 2014

	Release date July 2010

Description  Implement Fiscal Intermediary Shared System ( FISS) Integrated Outpatient Code Editor changes related to the  tenth revision of the International Classification of Diseases (ICD-10)
Expand Multi-Carrier System (MCS) Diagnosis File to accommodate ICD-10 diagnosis codes  Create ViPs Medicare System (VMS) utility run for Durable Medical Equipment MACs identification of edits for  ICD-10  Update VMS Automated Development System to recognize and print the ICD-10 indicator  Remove any obsolete Quarterly Medical Review processes and reports from VMS that include ICD-9 codes  Expand MCS procedure code file to accommodate ICD-10 diagnosis codes  Expand Expert Claims Processing System for FISS to accommodate ICD-10  Expand FISS End Stage Renal Disease Parameter files, Hook Selection files, and Medical Policy Parameter files  to accommodate the transition to ICD-10  Convert FISS reason codes to ICD-10 format  Update MCS hard-coded edits for ICD-10 diagnosis codes  Expand MCS to accommodate ICD-10 by expanding Common Working File elements  Update the existing VMS Utilization Parameter files for ICD-10  Expand Related Diagnosis file to accommodate ICD-10 diagnosis codes  Update VMS Inbound and Outbound Claims Interface Processing  Convert FISS reason codes, Phase II  Expand FISS Medical Policy Parameter  Convert FISS reason codes, Phase III  Convert the Common Working File, Phase I Implementation  Include Type of Bill 33X for ICD-10  Create file to be used for planning and testing purposes in preparation for the ICD-10 code conversion  Convert FISS for Add-on Payment for Blood Clotting Factors, and ESRD Co-morbidity Adjustment Factors  Implement VMS ICD-10 Release III, No.
Why GAO Did This Study

ICD is the standard code set used in the United States to document patient medical diagnoses and inpatient medical procedures. Every claim submitted by health care providers to payers for reimbursement, including those for Medicare programs, includes these codes. CMS is responsible for enforcing the use of ICD codes and is requiring providers to begin using the 10th revision of the codes (ICD-10) on October 1, 2015. Its role in preparing for the transition includes making changes to the agency's information technology systems used to process Medicare fee-for-service claims and supporting stakeholders' efforts to implement changes to the systems they use to submit Medicare claims that are to include ICD-10 data. GAO was asked to study the actions planned and taken by CMS to support entities' transition to ICD-10. This report discusses (1) CMS's efforts to implement system changes needed for the agency to process claims that include ICD-10 codes, (2) the extent to which CMS's testing and verification actions are sufficient to ensure the system changes are made, and (3) steps CMS is taking to ensure that stakeholders have access to technical support needed to make system changes. To do this, GAO reviewed project documentation and held discussions with Medicare officials, contractors, and selected stakeholder groups that represent providers, health care clearinghouses, and insurers that share claims data with CMS. GAO provided a draft of this report to HHS and incorporated its comments as appropriate.

What GAO Found

The Centers for Medicare & Medicaid Services (CMS) has finished updating its systems with the changes it determined were needed to process the new International Classification of Diseases codes (ICD-10) on Medicare fee-for-service claims. In 2007, CMS began taking steps to identify components of its systems that needed to be changed to update the ICD codes from version 9 to 10. CMS began making the system changes in early 2010 as part of an established change management process for releasing system updates on a quarterly basis, and, by October 2013, had completed actions to modify its systems to process the new data. In doing so, CMS made changes to validate that codes on submitted claims were of the correct length and format specific to ICD-10 requirements and to determine whether submitted claims data included the proper codes to be processed and approved for payment.
Industry guidance states that systems testing should be conducted early and often in the life cycle of a project to allow for the modification of software in a timely manner, and that organizations should define procedures for approving systems for release and plan for contingencies to help mitigate risks that may be introduced when software changes are implemented into a live production environment. Consistent with these practices, CMS began testing and validating the changes made to its systems in March 2010. For each quarterly release, CMS conducted three levels of testing prior to implementing the systems that had been changed, including a level conducted to simulate a live production environment of Medicare claims processing. Agency reports on the outcomes of the tests described errors found and steps taken to ensure any such errors were corrected. The agency also held management reviews to determine whether each version of the modified systems was ready to be released into a live claims processing environment. In addition, CMS officials defined contingencies for cases when systems may not properly process claims that include ICD-10 codes. Such actions are important to help minimize the impact on Medicare stakeholders that could result from errors in CMS's systems. While CMS's actions to update, test, and validate its systems, and plan for contingencies can help mitigate risks and minimize impacts of system errors, the extent to which any such errors will affect the agency's ability to properly process claims cannot be determined until CMS's systems begin processing ICD-10 codes.
CMS provided technical support to help its stakeholders identify and make system changes. As early as 2008, CMS had developed and published a website that includes information related to the implementation of system changes to process and submit ICD-10 codes, such as checklists and “lessons learned” identified through collaboration with stakeholders, to help stakeholders identify and implement system changes. The agency also developed tools to help its Medicare Administrative Contractors update claims review and submission systems, such as those used to ensure valid claims are transmitted to CMS's claims processing systems. In addition, CMS expanded and enhanced capabilities to accommodate end-to-end testing that allowed stakeholders to test the integration of their systems with CMS's internal systems, and offered alternative technical solutions for submitting claims with ICD-10 data in case their systems are not modified in time to meet the compliance date.