Updated on: March 17, 2016

ICD-10 and the Sustainable Growth Rate: So Far, So Good

Original story posted on: March 23, 2015

This week Congress is expected to work out details on legislation to repeal the contentious sustainable growth rate (SGR) formula that will automatically cut physicians’ pay by 21.2 percent come Tuesday, March 31. Bipartisan leaders from the U.S. House of Representatives Ways and Means and Energy and Commerce Committees introduced H.R. 1470 last week.


As there was no language in the draft legislation that would postpone the adoption of ICD-10, stakeholders greeted the news with glee, followed a by note of cautious optimism. Last year the American Health Information Management Association (AHIMA), among other industry trade groups and healthcare organizations, were caught flat-footed when behind-the-scenes negotiations between Speaker of the House John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.) resulted in a last-minute rider to the SGR bill that delayed the compliance date of ICD-10 until no earlier than Oct. 1, 2015. 

This time, there is no such rider. But a rider of a different kind raised a red flag last week when the office of Sen. Ron Wyden (D-Ore.) issued a statement opposing the inclusion of the so-called Hyde Amendment that would bar federal funds for abortions being provided at community health centers.

In summary, the bill would…

  • Repeal the SGR and end the annual threat to seniors’ care while instituting a 0.5-percent payment update each year for five years.
  • Improve the fee-for-service system by streamlining Medicare’s existing web of quality programs into one value-based performance program. This would increase payment accuracy and encourage physicians to adopt proven practices.
  • Incentivize the use of alternative payment models to encourage doctors and providers to focus more on coordination and prevention to improve quality and reduce costs.
  • Make Medicare more transparent by giving patients more access to information and supplying doctors with data they can use to improve care. 

Among the details that the House will be negotiating this week will be ways to offset the reported cost of the repeal: approximately $137 billion.

Although another ICD-10 delay is not currently on the table, its inclusion last year in the SGR spawned uncertainty among many facilities and providers who had delayed implementation preparations until now, nearly 190 days from the compliance deadline. 

What might be some of the underlying factors that would explain the reticence of some hospitals to press ahead with the implementation of ICD-10 until they know for certain that there won't be any additional delay?

“Cost and competing priorities are the primary reasons,” wrote healthcare IT consultant Stanley Nachimson in an email to ICD10monitor. “Many hospitals focused on meaningful use, as it provided some bonuses from Medicare and Medicaid. Value-based purchasing (VBP) and other quality programs may also be competing priorities. There is no obvious return on investment (ROI) for ICD-10, although clinical documentation improvements have shown some returns for hospitals.”

Another reason Nachimson cited is the fact that since ICD-10 has been delayed multiple times, there has been reluctance by some to commit funding for implementation. 

“While larger hospitals may be able to absorb some of the losses from (the) delay, smaller ones may not have that luxury,” Nachimson said. “There is also the concern about loss of productivity for coders and the question as to when to send them for training and commit time to practice ICD-10.” 

Even when the announcement was made last week that a deal had been struck to repeal the SGR – and without an ICD-10 rider – AHIMA told its members that the association would continue to monitor upcoming legislation for any ICD-10 delay language.

Might that action by AHIMA breed a form of institutional skepticism, exacerbating a wait-and-see attitude? Dozens of health information management (HIM) professionals have told ICD-10 that their facilities are reluctant to move forward until they know for sure there won't be another delay.

“We will never be 100 percent certain of no delay until we arrive at Oct 1. However, I give the chances of a delay now at 5 percent or less,” Nachimson said. “I don’t see this as institutional skepticism. I would say that AHIMA is being diligent and doing what they feel is necessary to prevent any further delays.”

Nachimson recognizes that AHIMA and other organizations were caught by surprise with the last ICD-10 delay, suggesting that Congress was not well educated on the importance of the new coding set and therefore was easily convinced. 

“Now, AHIMA and others are making sure that they educate and communicate with … Congress to give members information on why there should be no delay,” Nachimson said. 

Nachimson added that any provider who is not ready for ICD-10 by Oct. 1 faces a huge chance of revenue shortfalls or stoppage because payers, who are moving forward to be ready, may reject their claims.


Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.
Chuck Buck

Chuck Buck is the publisher of ICD10monitor and is the executive producer and program host of Talk Ten Tuesdays.