It will take at least two years for the transition from ICD-9 to ICD-10 to have a substantial impact on Medicare inpatient Medicare Severity-Diagnosis Related Groups (MS-DRG) hospital payments.

That is the conclusion of new research published in the Journal of the American Health Information Management Association.

"The transition from the ICD-9 version of the MS-DRGs to the ICD-10 version of the MS-DRGs will have a minimal impact on aggregate payments to hospitals (-0.04 of a percent) and on the distribution of payments across hospital types (-0.01 to -0.06 of a percent)," the study's authors write. "Although the transition from the ICD-9 version of the MS-DRGs to the ICD-10 version resulted in 1.07 percent of the patients being assigned to different MS-DRGs, overall payment increases and decreases due to a change in MS-DRG assignment essentially net out."

The essential leveling of payments is likely because the new ICD-10 MS-DRG's are a replication of the ICD-9 version, the authors said.

"Since there is no substantial database of records coded in ICD-10 available, there is no way of recalibrating the MS-DRG payment weights to correspond to ICD-10 optimized MS-DRGs. Hence the MS-DRGs cannot take full advantage of ICD-10 until there is enough ICD-10 data available to allow the recalculation of the MS-DRG payment weights."

However, the authors, from 3M Health Information Systems, also said the relative status quo should not be assumed to be long-lasting—as more ICD-10 data is created, recalibration of payments using the more granular ICD-10 codes will be easier to accomplish.

"Realistically, the earliest an ICD-10 optimized version of MS-DRGs can be implemented is FY2018. This means that there will be two years of ICD-10 coded data available before an ICD-10 optimized version of the MS-DRGs is implemented," they wrote.

The delay, they contend, will allow for the evaluation of changes in coding practices between the two ICD versions, thereby minimizing opportunities for up-coding in the new optimized ICD-10 MS-DRGs.

The authors created a simulated ICD-10 database using 2013 Medicare Provider Analysis and Review data to enable their analysis.

The full study is available here.

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