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Updated on: March 22, 2016

ICD-10-PCS is Not Just for Inpatients: Time to Identify Non-Government Payer Policies

Original story posted on: April 10, 2013

Most of the industry, including the Centers for Medicare & Medicaid Services (CMS), assumes that ICD-10-PCS will be used just for facility reporting of hospital inpatient procedures and will not affect the use of CPT. ICD-9-PCS also does not impact payment, but it does offer other advantages, and facilities should be aware of these. For example, facilities sometimes require ICD-9-PCS for data-collection purposes.

In addition, facilities must consider other payers that are not “covered entities” under the Health Insurance Portability and Accountability Act (HIPAA). HIPAA-covered entities include

  • Healthcare providers who transmit any health information electronically in connection with certain transactions and their business associates
  • Health plans
  • Healthcare clearinghouses.

Any entity that does not fall into the above categories is called a “noncovered entity” and is not required to adopt the new ICD-10-CM/PCS system. Examples of these entities include property and casualty insurance health plans, workers' compensation programs, and disability insurance programs that submit noncovered transactions like paper claims, quality reporting, and patient assessment data sets. Even though not required, CMS leaders believe that most non-HIPAA entities will comply with ICD-10-PCS for inpatient only.

In its published list of myths and facts about the new ICD-10-CM/PCS system, CMS stated that “it is in noncovered entities’ best interest to use the new coding system. The increased detail in ICD-10-CM/PCS is of significant value to noncovered entities.” The agency will work with noncovered entities to encourage their use of ICD-10-CM/PCS.

It is important for providers to identify those payers who are “unknowns,” ask whether they plan to adopt the new system, and, if so, incorporate them into the facility’s implementation plan. This includes outpatient claims’ submission for non-HIPAA-covered entities, such as Workers’ Compensation and auto insurance companies.

Other things to consider include:

  • Payer contract language (especially when approved outpatient procedures become inpatients)
  • Hospital-specific code-assignment policies
  • State-association code-assignment policies. (Note that many state associations are moving toward removing the ICD procedure reporting requirement for outpatient services or allowing hospitals to determine their own policies.)

View from the Industry

On ICD10monitor’s popular Talk Ten Tuesday live internet broadcast show on October 11, 2011, we asked our audience the following poll question: Have you addressed ICD-10-PCS outpatient procedure coding with your non-government payers? If your answer is yes, what proportion of the payers indicated that they will require ICD-10-PCS?

The majority of our responders—74 percent—had not yet corresponded with their payers about this. Survey responders who have made contact are listed below as a percentage and so is the status of their contact.

  • 14 percent said yes, they had contacted payers, and some payers said they do not know yet whether they will require CPT or PCS
  • 9 percent said yes, they had contacted payers, and all indicated that they wanted providers to use CPT and not ICD-10-PCS
  • 3 percent said yes, they had contacted payers, and some, but not all, indicated they wanted providers to use ICD-10-PCS.



On the March 5, 2013, Talk Ten Tuesday broadcast, we asked a similar poll question: How many of you have confirmed that you will be coding PCS for outpatient services?

Forty percent of our audience hasn’t addressed the issue yet (down from a year before when it was 74 percent), and 25 percent said the question did not apply to them. The percentage of the remaining responses is as follows:

  • 16 percent will not be using PCS
  • 15 percent said yes, they will be using PCS
  • 4 percent are still not sure.

Providers who fall into this last category must contact all of their non-government payers, and ask whether they plan to use ICD-10-CM/PCS and whether they will use PCS for their outpatient billing. Obviously, this will impact many operational functions (including staff, education, productivity, systems, etc.) and time and energy will need to be incorporated into a facility’s implementation plan.

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.
Kim Charland, BA, RHIT, CCS

Kim Charland is senior vice president, clinical consulting services, Panacea Healthcare Solutions, Inc., St. Paul, MN.

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