What is this all about, anyway?

The coding of diagnoses by the health care system initially supported the goals of education and quality improvement (Dr. Slee, whom we mentioned in yesterday's post, was an early pioneer in health care quality improvement efforts).

However, in 1983 the government stepped in and changed that situation radically. It implemented a prospective payment system within the Medicare program. This system uses diagnosis-related groups (for hospital billing), which in turn are based on ICD-9-CM codes (at least for now).

Thus, all health care providers (physicians, hospitals, etc.) who accepted Medicare as payment for services (nearly all of them) were thus required to submit ICD-9-CM codes for the diagnoses that were relevant to a patient visit or hospital stay. If they wanted to get paid, that is.

Thus, beginning in 1983 ICD-9-CM took on the role of supporting billing, or "administrative" purposes (a euphemism for billing and payment) at the national level.

Because most health insurance companies mimic the programs and projects of Medicare, most of them followed suit. Thus, providers were required to submit ICD-9-CM codes to all third-party payers, not just Medicare.

The net result is that a change in the system for coding diagnoses has huge ramifications that impact nearly every physician, hospital, nursing home, and so on in the United States. And patient. How your diagnoses are encoded affect you, too.

In future posts, we will look at studies of the costs of changing the diagnosis coding system. We will also look at uses of "administrative" data that were never imagined prior to the implementation of DRGs in Medicare. We'll explain how diagnosis coding affects you. And we'll spell out the dysfunction current in the system, and why ICD-10-CM will not address most of it.