ICD-10 Delayed Until October 1, 2015, May Add $1B to $6.8B in Costs

The deadline for the implementation of ICD-10 has been extended for one year to October 1, 2015, according to the advance release of an HHS final rule. Required by the Protecting Access to Medicare Act of 2014 (PAMA) (P.L. 113-93), which states that ICD-10 may not be adopted earlier than October 1, 2015, the extension is estimated to add 10 to 30 percent to the costs already budgeted or spent by affected health care entities to meet the original October 1, 2014 deadline, the advance release states.


ICD-10, the tenth iteration of the International Classification of Diseases, is a set of codes used to classify diagnoses and procedures for the submission of claims to Medicare and private insurance. According to the press release announcing the final rule, the current iteration, ICD-9, “contains outdated, obsolete terms that are inconsistent with current medical practice, new technology and preventive services.” Health care providers and specialty groups collaborated with CMS to develop more accurate, detailed codes reflecting advances in medicine and medical technology.

“ICD-10 codes will provide better support for patient care, and improve disease management, quality measurement and analytics,” said CMS Administrator Marilyn Tavenner in the press release. “For patients under the care of multiple providers, ICD-10 can help promote care coordination.” The final rule cites benefits of ICD-10, including greater specificity of diagnosis, improved quality measurement and reporting, improved tracking of illnesses, and greater accuracy of reimbursement.

Providers’ ICD-10 Preparation

In a survey of 5,000 members of the American Academy of Professional Coders, 75 percent reported they are making progress in preparation toward the implementation of ICD-10. Twenty-five percent of those surveyed reported they had completed all necessary ICD-10 training, and 13 percent said they were prepared for the October 1, 2014 implementation. Twenty-three percent said they were actively testing with their vendors when the PAMA was enacted.

Delay of Implementation

The PAMA states that the Secretary of HHS may not adopt ICD-10 under Health Insurance Portability And Accountability Act of 1996 (P.L. 104-191) prior to October 1, 2015. HHS will implement ICD-10 at the earliest possible time, October 1, 2015, as a “delay longer than 1 year would slow or even stop progress towards ICD-10 implementation.” The new deadline will also “allow the industry to begin reaping the benefits of ICD-10 as soon as possible.” The final rule also stated that the one-year delay is the least expensive option for the industry, as any longer delay may render ICD-10 obsolete and diminish investments already made toward preparing for the transition. Covered entities will be required to continue using ICD-9 through September 30, 2015.

Waiver of Proposed Rulemaking

The Administrative Procedure Act “allows HHS to waive normal rulemaking requirements if it finds that notice and comment procedures are impracticable, unnecessary, or contrary to the public interest.” HHS waived notice and comment rulemaking to give covered entities enough time to know how to proceed.

Anticipated Effects

The final rule states that all HIPAA-covered entities will be affected by the delay. Because many government health programs were prepared to be compliant on October 1, 2014, those programs will incur costs from the delay. Systems that have been programmed to accept and process ICD-10 codes on October 1, 2014 will have to be reconfigured, resulting in costs from extended contracts and reprogramming work. HHS estimates Medicare will incur a total cost of $5 to $10 million, and state Medicaid agencies will incur a total of $169 to $182 million in costs. Hospitals and large providers will be required to maintain staffing levels, renegotiate contracts, and retest systems, resulting in a total cost of approximately $409 million to $3.7 billion. In total, the final rule estimated the total additional cost to commercial entities to be $1.6 billion to $6.8 billion.

CMS did not estimate the cost to small providers “because these costs were negligible.” Some small providers may even benefit from the extension, according to the final rule, depending on their current level of preparation.