The International List of Causes of Death was introduced to the world in 1893. The classification of this mortality information was based on earlier lists developed as early as 1853. This was the time of the discovery of microbes (by Louis Pasteur), the birth of genetics (by Gregor Mendel), and the development of anesthesia (discoverer controversial). Naturally, there have been a few revisions to the first list.

When this original International Classification of Diseases (ICD)—as it is referred to in the United States—was accepted “by all the statistical offices of North America, by some of those of South America, and by some in Europe,” the parties also agreed to a decennial (at least) review of the data.1 In 1975, the World Health Organization (WHO) was working on the ninth revision, the ICD-9.

This revisions was adequate, but even before this time, the WHO realized a major overhaul would be needed for the next version.1 It moved the tenth conference back, from 1985 to 1989, to allow more time for collaboration and development, and eventually endorsed the ICD-10 at the 43rd World Health Assembly, held in May 1990.

The United States first accepted the update for mortality in 1999 and later for use in reimbursement, setting the national deadline for conversion to the new coding system on October 1, 2013. Even though this date is still 4 years away, some believe it is not enough time, particularly when combined with a conversion from the HIPAA Accredited Standards Committee X12 version 4010A1 to ASC X12 version 5010. All covered entities, including clinical laboratories, must be compliant with this new system by January 1, 2012.

Yeah, So What Else Is New?

The conversion to ICD-10 and HIPAA ASC X12 5010 may be the biggest news going on in billing and coding today, but manufacturers of information systems continue to make updates intended to improve functionality, efficiency, and quality. By automating code capture, ensuring compliance, and speeding reimbursement, billing and coding systems also help the bottom line through the reduction of labor costs, lost charges, and incorrect billings.

“[Billing systems] help laboratories increase revenues by getting the charges out the door in the quickest way possible, so that they can meet the deadlines to get those revenues in,” says James Gearheart, laboratory sales director for Psyche Systems Corp, Milford, Mass.

Systems with analysis and reporting capabilities can also increase revenues by identifying areas for improvement, growth, or change. “For instance, they can go back to see if a client, doctor x’s office or hospital y, is physically generating a profit,” says Jim Terrano, president and CEO of TELCOR Inc, Lincoln, Neb.

New features tend to expand these capabilities. TELCOR has introduced the iLab bill, which allows people to log on from any Internet device, access their statements, and pay their bills. “It helps to simplify the process for collections for the laboratory,” Terrano says.

As customers update their technologies, information systems vendors keep up. “We’re constantly updating coordination of benefits and secondary insurance features, and as payors adopt standards and begin to understand the complexity of secondary insurance, we continue to refine our billing to take advantage of that,” says Lale White, CEO of XIFIN Inc, San Diego.

When looking for a system, laboratories want to keep in mind this evolution and as well as their specific environment, both in the short term and the long term. It will help keep up with not only their changing needs but also the changing demand in the industry.


Both updates are intended to improve the flexibility and accuracy of the health care system as well as facilitate the ability to perform comprehensive analyses of the data. Requirements for the new ICD included the flexibility to quickly incorporate emerging diagnoses and procedures and the specificity to identify them precisely, said Lale White, CEO of XIFIN Inc, San Diego, in a presentation at the 2009 Executive War College on Lab and Pathology Management.2

The effort has resulted in a vast expansion of the coded data—ICD-10-CM employs five times more codes than ICD-9-CM, an increase to 68,000 from 13,000. Naturally, the changes will impact every associated system, including encoding software, LIS, billing systems, ABN/medical necessity software, registration systems, claims submission/scrubbing systems, test ordering systems, utilization and managed care reporting systems, data warehousing, system-to-system interfaces, registries (such as cancer), and even paper forms.2

Laboratories should therefore start preparing for the conversion now, assessing the situation, gathering resources, and implementing change. Because much of the transition will occur digitally, vendors will play a key role. “Not only should each system be able to handle the new formats, but they will need to be able to accurately pass this data from one system to the next,” says Curt Johnson, vice president of sales and marketing for Orchard Software Corp, Carmel, Ind.

ICD-9 to ICD-10

The massive revision of the ICD was necessary to accommodate the changes that have occurred in medicine, including advances in technology and medical discovery. “Many of the [existing] categories are full and cannot expand, leaving new treatments to be coded under unrelated sections,” White says.

The ICD-10 is divided into two sets: the ICD-10-CM, which represents disease classification, and the ICD-10-PCS, which lists procedure codes. ICD-10-PCS has expanded even more than ICD-10-CM, growing to 87,000 codes from 3,000—29 times more.1 Injuries within the new system are grouped by anatomical site rather than by injury type, which decreases the need for supporting documentation with claims.

The codes themselves have also expanded, from three to five characters in the ICD-9 to three to seven in ICD-10. The longer format means that conditions that may have had one code before, such as a wrist injury, now have options to indicate specifics, such as right or left wrist, initial or subsequent encounter, and type of healing (such as routine, delayed nonunion, or malunion).1

The expanded codes permit more in-depth descriptions, allowing greater specificity, and the detailed data is intended to help providers and payors better measure health care services, refine grouping and reimbursement methodologies, and enhance the ability to conduct public health surveillance, according to White.

4010 to 5010

The update to HIPAA’s electronic transaction standards is also intended to improve health care processes as well as continue to protect privacy as systems convert to ICD-10. “Each new version of these standards should further reduce the administrative overhead associated with health care transactions,” said Dan Kazzaz, chair of the ASC X12 in a release.

The new 5010 standards were published earlier this year and affect all electronic claim submissions and remittance processing, as well as other ASC interfaces. The system was developed by the ASC X12 committee, comprised of Centers for Medicare and Medicaid Services, payor, and provider representatives, and has resulted in four basic types of changes, according to White: the front matter is now called Technical Report type 3 (TR3) and provides the narrative on business rules; technical changes include the reduction and removal of repeated loops and segments; structural changes alter the components; and data content has been edited to promote cross-transaction consistency and eliminate redundant, unnecessary qualifiers.1

White expects the implementation of this upgrade—from one standard to another—to go more smoothly than a previous conversion, which involved moving to a single standard format from many nonstandard variations. Yet, she still advises laboratories to begin preparing now.

Assessing the Situation

Psyche dispatcher

“While billing departments may feel the greatest burden, there will also be changes within the lab system to handle the conversion to the new codes. The transition from 4010 to 5010 and ICD-9 to ICD-10 will impact any department and information system involved in medical billing, including the laboratory and the LIS,” Johnson says.

White recommends laboratories start with a situational analysis. During this phase, the institution and/or laboratory should identify the stakeholders, assess the impact, formulate strategies and goals, develop staff education and training plans, prepare and test information systems, and plan for document changes.1

It is at this early point that laboratories should evaluate their affected inventory. “While the 5010 will be produced from the billing system, they need to confirm the ICD-10 process from physician order, to the LIS, to the charge interface, and ultimately to the billing system,” Johnson says.

Impacted systems will require software changes to handle the upgrades. Deb Larson, executive vice president of TELCOR Inc, Lincoln, Neb, suggests checklists for systems validation to help this process, a thoroughness that should be extended to all aspects of the workflow, including those outside the digital realm.


“If they have an outreach program, then they will be receiving these new codes from their physicians via paper requisitions as well as via any systems used for order entry. They should determine physician readiness to use the new standard as well as determine when they plan to deploy technology that supports entry of these codes,” Larson says.

Laboratories with outreach will need to coordinate with customers to ensure a smooth changeover. “[They] should develop a plan for outreach customer management through the transition process,” Larson says.

Similarly, laboratories will need to check in with all of their related vendors to confirm their plans for the transition. “This is primarily going to be a vendor responsibility to ensure compatibility with the new standards,” Johnson says.

Most vendors have their preparations already under way (indeed, some are even already compatible with ICD-10), but vendor review should consist of a number of steps that include obtaining timetables and conversion plans, determining contractual obligations, and ensuring integration.1


Once the situation has been fully assessed, laboratories need to develop and organize their strategies. This means developing objectives, action plans, and measurements, as well as determining the financial implications and arranging the resources.

B&C Orchard

Although there is some controversy surrounding the potential costs, there is no debate that there will be related expenses. CMS has estimated the training costs per coder at $550,1 but other estimates suggest the laboratory industry could spend an additional $13 million on items such as provider training and productivity loss.1

Coding professionals will need to increase their knowledge about human anatomy and pathophysiology, particularly in regard to the most common disease processes and treatments.1 Ordering physicians will also require education to ensure that charts are completed accurately and fully.

The American Health Information Management Association recommends coding professionals undergo training on the new systems 3 to 6 months prior to implementation.3 The time required will range from 24 to 40 hours depending on whether the trainee needs both ICD-10-CM and ICD-10-PCS education.3 Successful training will help to minimize the productivity loss. White cites research showing it took 6 to 12 months for coder productivity levels in Canada and Australia to return to normal after the implementation of ICD-10.

Systems tests should also take place before making the conversion. The new codes are already available, and laboratories can use them to test systems and processes and further prepare people.

B&C ABN alert

Some information systems are already ready as well. TELCOR’s outreach systems, including billing, currently support ICD-10, and the company will provide 5010 in parallel with 4010 by the end of 2011. “Customers will only be impacted in the process required to define and use these codes,” Larson says.

Other companies plan to make their updates closer to the deadline. “When the time comes, Orchard will make the necessary changes to our software,” Johnson says. Laboratories who convert early may not find payor systems compatible or requiring ICD-9 redundancy.

The original deadlines for conversion (October 1, 2001, for ICD-10 and April 1, 2010, for 5010) were pushed back to give payors and providers more time to prepare; vendors are expected to be ready well in advance. Laboratories should therefore make good use of the extra time.

“The deadlines of 2012 and 2013 seem to be a long way off, yet anyone involved with medical billing, including the laboratory, should begin to read and familiarize themselves, and stay current with, these subjects,” Johnson says—because the codes, they are a-changin’.

Renee Diiulio is a contributing writer for CLP.


  1. World Health Organization. History of the development of the ICD. Available at: Accessed August 9, 2009.
  2. Lale White/XIFIN Inc. ICD-10 implementation—What you need to know. 2009 Executive War College. April 28, 2009.
  3. Bowman S, Zeisset A. ICD-10 preparation checklist. American Health Information Management Association. Available at: Accessed August 10, 2009., vice president, marketing, XIFIN Inc, San Diego (not quoted).i class