Updated on: March 16, 2016

ICD-10: The Tail Wagging the Dog

Original story posted on: March 9, 2015

With the current focus on ICD-10 as a major transition currently impacting the healthcare industry, to some degree we have lost sight of the underlying goal of the transition: to improve the quality of healthcare data in this country for a wide range of uses.

We tend to focus on ICD-10 in the context of administrative codes for payment transactions. Yet some of us seem to have lost sight of the fact that these codes are the only national (and to some degree, international) standard we have to fully define the health state of each patient. Healthcare data cannot be very meaningful if the definition of each patient’s health state relevant to that data is not complete, specific, accurate, and consistently defined. Interoperability of all healthcare stakeholders will be significantly compromised without a standard that meets these requirements.


What’s at stake is not just a coding change, but also the reliability of all health information as we move forward into a new data-driven healthcare environment.

Healthcare in a Data-Driven Environment

There is little doubt that policymakers believe that the fee-for-service model is a key reason why healthcare in this country is three times more costly than that of virtually any other developed country. The only reliable data we have to compare value internationally (birth, death, and longevity) does not indicate that we are getting proportional value for this extremely high price. We continue to assert that we have the best healthcare in the world, but we don’t have the data to support that claim.

The U.S. Department of Health and Human Services (HHS) recently announced aggressive metrics targets for moving to a value-based model of provider reimbursement. This model focus more on the nature of the patient condition and how care maintains or improves that condition rather than the specific services delivered. The essence of it is that more services do not necessarily equal better care. For this type of model to result in equitable payment, the definition of patient conditions must be far more complete, specific, accurate, and consistently defined than it often is today. This notion is creating a financial driver to improve data that defines the “why” of healthcare in a way that recognizes substantial differences in risk, severity, and complexity to support reimbursement focused on the complexity of the problem and less on just services rendered. Accountable care models that look closely at organizations taking on financial risk for the care of a certain population will need to have risk adjustment models that account for the risk, severity, and complexity of the patient population.

Where Does ICD-10 Fit into This?

Unfortunately, the belief that ICD-10 adequately addresses the challenges we have with the quality of our current health data is wishful thinking.

ICD-10 provides an opportunity to be more specific, more complete, and more consistent – and to represent more accurately the nature of each patient’s conditions. Coding, however, can be just as problematic in ICD-10 as it was in ICD-9. The critical factor in high-quality data is not ICD-10. It is just a standard for reporting some of these key clinical concepts that make a difference in risk, severity, and complexity. Unless there is complete observation, accurate documentation, and consistent coding of the clinical concepts, data will not improve. In this new data-driven environment, ICD-10 is the provider’s friend. It gives the provider the opportunity to report the details that make a difference in the assessment of cost effectiveness and care equality, adjusted by parameters that make a difference. Hospitals have already discovered how small differences in documentation and coding can have a substantial impact on DRG payments. These differences will be magnified as DRGs and other forms of bundled payments factor into new payment weightings based on the enhanced ability to record the complexity of the patient condition. Hospitals are making large investments in clinical documentation improvement efforts and coding training because they have realized the bottom-line financial impact of these investments. These same impacts related to patient conditions are rapidly affecting the outpatient and professional environments.

What if ICD-10 Doesn’t Happen or is Delayed?

A lot of pushback in the efforts to move to ICD-10 is based on the belief that ICD-10 might not happen or get delayed again, and that all of the effort to move toward the new coding set will be wasted.

Clearly, any further delay would substantially limit the opportunity to leverage some of the additional concepts supported by ICD-10, but the real focus is on observing and capturing the data needed to provide good patient care at the source. Good clinical documentation is of paramount importance regardless of which coding system is being used. Good documentation goes well beyond any requirement of ICD-9 or ICD-10 or any coding standard. Complete observation and accurate documentation is what we were taught in medical school and residency. There is no new burden – just good care, and that is what we signed up to provide.


While ICD-10 is currently a major area of focus, it’s really the “tail wagging the dog.” The real change is in the migration to a data-driven, value-based purchasing, accountable care environment. In that environment, the details regarding medical concepts make a big difference in terms of risk, while complexity and severity of the patient condition become more important in determining equitable payment and ensuring that measures of quality and outcomes take into account these differences. In this new data-driven environment, ICD-10 is the provider’s friend, not an enemy.

ICD-10 is just an opportunity to capture these differences more effectively. Clinical documentation improvement is about good patient care, regardless of the standard used to capture the data. Clinical documentation improvement should not be code-specific. It should be code-agnostic. There is no new burden for documentation in ICD-10 over what we should be capturing today to provide good patient care. 


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.
Joseph C. Nichols, MD

Dr. Nichols is a board-certified orthopedic surgeon with a long history in health information technology. He has a wide range of experiences in healthcare information technology on the provider, payer, government, and vendor side of the healthcare business. He has served in positions in executive management, system design, logical database architecture, product management, consulting, and healthcare value measurement for the last 15 of his 35 years in the healthcare industry. He has given over 100 presentations nationally related to ICD-10 over the past three years on behalf of payers, providers, integrated delivery systems, consulting groups, CMS, universities, government entities, vendors, and trade associations. He co-chairs the WEDI (Workgroup on Electronic Data Interchange) translation and coding sub-workgroup and has received WEDI merit awards three years in succession. He is also an AHIMA-approved ICD-10 coding trainer. He is currently providing consulting services as the president of Health Data Consulting Inc. Dr. Nichols is a member of the ICD10monitor editorial board.