ICD9CM Volumes 1 and 2, and 3 were already widely used in administrative transactions when we promulgated the Transactions and Code Sets rule. We decided that adopting these existing code sets would be less disruptive for covered entities than modified or new code sets. In the Transactions and Code Sets final rule (65 FR 50327), we discussed comments on using the ICD10CM and ICD10PCS code sets as future HIPAA standard medical data code sets. Some commenters praised the accuracy of the ICD10CM and ICD10PCS code sets, others raised concerns about the differences between the ICD9CM and ICD10CM and ICD10PCS code sets, including the increased level of detail in ICD 10PCS. We responded that additional testing and revision were needed before adopting the ICD10CM and ICD10PCS code sets as a standard. (Please refer to the Transactions and Code Sets final rule for details of that discussion (65 FR 50327).)

In addition to standard transactions and code sets, the final rule adopted a procedure for maintaining existing standards, for adopting modifications to existing standards, and for adopting new standards. Our process in proposing the adoption of ICD10CM and ICD10PCS, to replace ICD9CM Volumes 1 and 2, and 3, follows that procedure. The following is a summary of the consultation requirements for the Secretary for the adoption of standards under sections 1172(b) through (f) of the Act:

For standards that have been developed, adopted, or modified by a standard setting organization, the SSO must consult with the following organizations in the course of such development, adoption, or modification:

For any other standards, the Secretary is required to consult with these same organizations.

As part of the HIPAA modification and update process, the NCVHS holds hearings on proposed changes to HIPAA transaction and code set standards and makes recommendations to the Secretary as appropriate.

Under section 1174 of the Act, the Secretary must also ensure that procedures exist for the routine maintenance, testing, enhancement, and expansion of code sets, and provide instructions on how data elements encoded before any modification may be converted or translated. As discussed in section VIII.A of this proposed rule, we will establish an ICD10CM/PCS Coordination and Maintenance Committee that is similar to the ICD9CM Coordination and Maintenance Committee. The ICD10CM/PCS Coordination and Maintenance Committee will be charged with routine maintenance, testing, enhancement, and the expansion of the ICD10 code sets. In addition, the National Center for Health Statistics (NCHS) has recently completed a crosswalk that maps ICD9CM Volumes 1 and 2 to ICD10CM. CMS also has developed a crosswalk that maps ICD9CM Volume 3 to ICD10PCS. These crosswalks are available at http:// www.cms.hhs.gov/ICD10 (accessed 81208) and http://www.cdc.gov/nchs/ about/otheract/icd9/icd10cm.htm, (accessed 81208). These crosswalks are revised in the fall of each year.

II. ICD9CM

The International Classification of Diseases (ICD) is developed and maintained by the World Health Organization (WHO). Originally designed to classify causes of death (mortality), the scope of the ICD has expanded to include nonfatal diseases (morbidity). The application of the classification to morbidity has expanded as the code set has been revised. Nonetheless, the United States and other countries continue to find it necessary to develop clinical modifications of the ICD to meet the needs of their respective health care systems that include administrative and clinical protocols, and require more detail and specificity for reporting health care.

When the Medicare hospital Inpatient Prospective Payment System (IPPS) was implemented in 1983, ICD9CM was used as the basic input for assigning the diagnosisrelated groups (DRGs). All diagnostic and procedural information was captured using ICD9CM.

A. ICD9CM Volumes 1 and 2 (Diagnoses)

NCHS houses the WHO Collaborating Center for the Family of International Classifications for North America (United States and Canada), and has responsibility for the implementation of the ICD. NCHS produced a clinical modification to WHO's ICD9 by adding more specificity to its diagnosis codes (ICD9CM Volumes 1 and 2). ICD9CM maps to ICD to facilitate comparison of mortality and morbidity statistics. ICD9CM was adopted in the United States in 1979 for morbidity applications, and was adopted as a HIPAA standard in 2000 for reporting diagnoses, injuries, impairments, and other health problems and their manifestations, and causes of injury, disease, impairment or other health problems in standard transactions. ICD9CM diagnosis codes are three to five digits long, and are used by all types of health care providers, including hospitals and physician practices. The code set is organized into chapters by body system.

B. ICD9CM Volume 3 (Procedures)

Inpatient hospital services procedures are currently coded using ICD9CM Volume 3. The WHO's ICD does not include procedure codes. ICD 9CM procedure codes are three to four digits long. The code set was adopted as a HIPAA standard in 2000 for reporting inpatient hospital procedures. Current Procedural Terminology, 4th Edition (CPT4) and Health Care Common Procedure Coding System (HCPCS) are used to code all other procedures. The ICD9CM procedure code set is organized into chapters by body system, and CMS maintains the ICD9CM procedure codes.

C. Maintaining/Updating ICD9CM (Volumes 1 and 2, and 3)

Recognizing the need for ICD9CM to be a flexible, dynamic statistical tool to meet expanding classification needs, the ICD9CM Coordination and
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Maintenance Committee was created in 1985 as a forum for receiving public comments on proposed code revisions, deletions, and additions. The Committee is cochaired by the NCHS and CMS; NCHS maintains ICD9 CM Diagnosis Codes (Volumes 1 and 2), and CMS maintains ICD9CM Procedure Codes (Volume 3).

Although the ICD9CM Coordination and Maintenance Committee is a Federal committee, suggestions for updates come from both the public and private sectors. Interested parties may submit recommendations for updates (that is, adding new codes, deleting codes, and editing descriptive material related to existing codes) at least 2 months before a scheduled meeting. Proposals for a new code must include a description of the code being requested and rationale for why the new code is needed. Supporting references and literature may also be submitted.

This Federal committee meets in March and September. Decisions on code title revisions are made by March for inclusion in the annual IPPS proposed rule. Updates on codes, payments, and reporting systems are finalized after the previous fall meeting and may become effective October 1 of the same year.

Section 503(a) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108173, enacted on December 8, 2003) included a requirement for updating ICD9CM codes twice a year, instead of a single update on October 1 of each year. Section 503(a) of the MMA, which amended section 1886(d)(5)(K) of the Act, states that the ``Secretary shall provide for the addition of new diagnosis and procedure codes in April 1 of each year, but the addition of such codes shall not require the Secretary to adjust the payment (or diagnosisrelated group classification) * * * until the fiscal year that begins after such date.'' By adding codes for a new technology at an earlier date, CMS can recognize the new technology more quickly for purposes of payment under the IPPS.

While section 503(a) of the MMA does not require the Secretary to adjust the DRG classification and payments until the subsequent fiscal year, the DRG software and other systems must be updated to recognize and accept the new codes, and providers must update their systems mid year to capture the new codes. Hospitals must obtain coding book updates and coding software updates and make other system changes to capture and report the new codes.

Proposals for new and revised codes, summaries of meetings, information about deadlines for comment, scheduled dates for the next meeting, deadlines for receipt of maintenance proposals, and mailing and email addresses are posted to the CMS Web site at http:// www.cms.hhs.gov/ICD9ProviderDiagnosticCodes, accessed 81208, and the NCHS Web site http://www.cdc.gov/nchs/icd9.htm, accessed 81208. Additionally, CMS and NCHS publish a complete addendum describing details of all changes to ICD9CM. It is publicized on their Web sites in May of each year. Many commenters on the proposed Transactions and Code Sets proposed rule commended this open process (65 FR 50343 50344).
III. Limitations of ICD9CM

A. Background

In 1997, the NCVHS began to study the issues related to known shortcomings of ICD9CM and to assess the need to transition to ICD10 (or an alternative code set), including the impact of such a transition. The NCVHS has conducted more than 8 days of hearings since 1997. Oral and written testimony was provided by more than 80 public and private sector groups representing the health care industry, Federal and State governments, the public health and research communities, health plans, and health care providers. In addition, the NCVHS commissioned a RAND Corporation study on the potential costs and benefits of transitioning to ICD10CM and ICD10PCS. From the testimony received and the RAND study findings, NCVHS concluded that ICD10CM and ICD10PCS should be adopted as a HIPAA standard to replace the current standard, ICD9CM Volumes 1 and 2, and 3. In a letter to the Secretary dated November 5, 2003, NCVHS recommended that HHS initiate the regulatory process for the concurrent adoption of ICD 10CM and ICD10PCS. The NCVHS letter (http://www.ncvhs.hhs.gov/ 031105lt.htm) accessed 81208, an overview of the development of ICD 10CM and ICD10PCS (http://www.ncvhs.hhs.gov/031105a1.htm) accessed 81208, summaries of the NCVHS activities (http://www.ncvhs.hhs.gov/ 031105a2.htm) accessed 81208, a list of organizations that have provided testimonies (http://www.ncvhs.hhs.gov/031105a3.htm) accessed 81208, and the RAND Corporation study (http://www.rand.org/pubs/ technical_reports/2004/RAND_TR132.pdf) are available on the NCVHS Web site (http://www.ncvhs.hhs.gov) accessed 81208. B. General

The ICD9CM code set has been in use for over 27 years, and additional codes have been added during that period to describe new procedures and diagnoses that reflect changes in medical practice. The total number of codes (approximately 13,000 for diagnoses and 3,000 for procedures) is insufficient to continue to respond to the need for new codes. Moreover, the code set was never designed to provide the increased level of detail needed to support emerging needs, such as biosurveillance and payforperformance programs (P4P), also known as valuebased purchasing or competitive purchasing. These limitations are discussed in detail below and have led to the current industry debate regarding replacement of ICD9CM. Industry experts have discussed and commented on these issues during testimony to the NCVHS, expressing their belief that the ICD9CM code set is nearing the end of its useful life. We invite public comment on concerns with continued use of the ICD9CM code set.

1. Space Limitations

The ICD9CM code set that we adopted in 2000 as a HIPAA standard had been evolving since 1979. Because of the new and changing medical advancements during the past 20 plus years, the functionality of the ICD9CM code set has been exhausted. This code set is no longer able to respond to additional classification specificity, newly identified disease entities, and other advances. Many chapters of ICD9CM are full, and the American Hospital Association (AHA) has estimated that we will run out of procedure codes in the appropriate, logical sections of ICD9CM as well as the overflow chapters in 2009. As a temporary solution, CMS has already begun to assign codes to the inappropriate sections of ICD9CM (for example, codes for heart procedures being placed in the eye chapter). We will continue to take this unusual step of making illogical code assignments in order to maintain the ability to capture emerging technologies. This illogical assignment of codes will lead to challenges for coders in identifying and assigning codes, but establishing new codes to identify new procedures remains important. The diagnosisrelated group (DRG) system classifies hospital cases into groups that are expected to have similar hospital resource needs. DRGs are assigned
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based on diagnoses, procedures, age, sex, and the presence of complications or comorbidities.

The technologies included in the DRGs are identified by ICD9CM procedure codes. ICD10PCS allows the use of DRG definitions that better define new technologies and devices, and that could be refined to take advantage of their additional specificity through more detailed descriptions. This critical lack of space for new procedures and conditions is one important consideration for proposing to adopt ICD 10CM and ICD10PCS. In addition, ICD9CM's space limitations are creating other problems, which are discussed below.

2. Impact of Workarounds on Structural Hierarchy

The hierarchical structure of the ICD9CM procedure code set is compromised. Some chapters can no longer accommodate new codes, with the result that any additional codes must be assigned to other topically unrelated chapters. For example, new hip replacement procedures must now be assigned to an ``overflow'' chapter for procedures that are not classified elsewhere. When those chapters become full, new procedures would have to be assigned to a chapter now devoted to procedures related to the eye. When a code is isolated in a separate, unrelated part of the ICD9CM book because there is no available space in the section where the code normally would be assigned, coders may not easily find the code. Researchers and statisticians also may miss cases in their analyses.

3. Lack of Detail

Industry experts have pointed out that in an age of electronic health records, it does not make sense to use a coding system that lacks specificity and does not lend itself well to updates. Another consideration about the limitations of ICD9CM is that to generate meaningful research results, researchers need to have access to comprehensive, rich data with a level of detail that does not exist with ICD9CM. Emerging health care technologies, new and advanced terminologies, and the need for interoperability amid the increase in electronic health records (EHRs) and personal health records (PHRs) require a standard code set that is expandable and sufficiently detailed to accurately capture current and future health care information. Coding that accurately describes diagnoses and procedures will capture information that is critical for research, and ultimately improves the quality of health care and cost containment by enabling the study of specific conditions and options for treating them. Accuracy also is a critical factor in the development of Pay for Performance (P4P) programs, because successful programs require detailed coding of diagnoses and the procedures performed to treat specific conditions.

The details for advanced technology procedures currently being performed today were not available when ICD9CM was being developed. Numerous ICD9CM procedure codes are based upon technology that is now outdated. As we move toward more sophisticated monitoring and quality reporting, this level of detail when reporting diagnoses and procedures becomes critical. Examples are noted below:

4. Mortality Reporting and Biosurveillance

The ICD9 diagnosis code set is no longer supported or maintained by the WHO. As of October 2002, 138 countries have adopted ICD10 for coding and reporting mortality data, and 99 countries have adopted ICD 10 or a clinical modification for coding and reporting morbidity data. In 1999, the United States adopted ICD10, but only for mortality reporting. Until the United States implements ICD10 for morbidity reporting applications, data incomparability will continue to increase throughout the world.

As we become a global community, it is vital that our health care data represent current medical conditions and technologies, and that they are compatible with the international version of ICD10. Because the United States is capturing morbidity data using the outdated ICD9 CM, there are problems identifying new health threats such as anthrax, Severe Acute Respiratory Syndrome (SARS), and Monkeypox.

The lack of specificity in ICD9CM also limits our ability to develop rapid interventions for emerging diseases affecting international populations. Diagnosis and procedure information are captured from administrative data that are submitted on health care claims, and admission and discharge summaries, but if the codes do not match the international standard and are unable to be compared, their significance is lost. Additionally, hospitals utilize diagnosis and procedure codes for utilization review, disease management, and research. Therefore, in addition to the need for precise diagnosis and procedure codes for payment purposes, detail and precision in coding are critical to the national and international health care community for mortality reporting, biosurveillance, treatment of patients, hospital management, and research.
IV. ICD10 and the Development of ICD10CM and PCS

A. Overview

The WHO developed ICD10 in 1989, and it was adopted by the World Health Assembly in 1990. Currently, the United States is the only G7 nation (the other G7 nations are Canada, France, Germany, Great Britain, Italy and Japan) continuing to use ICD9 for morbidity reporting. Furthermore, Great Britain, Denmark, Finland, Iceland, Norway, Sweden, France, Australia, Belgium, Germany, and Canada use a clinical modification of ICD10 for reimbursement and/or administrative purposes.

ICD10CM and ICD10PCS provide specific diagnosis and treatment information that can improve quality measurements and patient safety, and the evaluation of medical processes and outcomes. ICD10PCS has the capability to readily expand and capture new procedures and technologies.

For quality improvement programs to effectively result in meaningful clinical outcomes, improved practice management processes that document and measure patient care, and sustain provider investment in services that improve quality of care, the ability to modify or add to a list of treatments, diseases and conditions is essential. The ICD 10 code sets provide a standard coding convention that is flexible, providing unique codes for all substantially different procedures or health conditions and allowing new procedures and diagnoses to be easily incorporated as new codes for both existing and future clinical protocols.
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B. ICD10CM Diagnosis Codes

The NCHS has developed a clinical modification of the WHO's ICD10 called ICD10CM for reporting diagnosis codes. As in the relationship between ICD9 and ICD9CM Volumes 1 and 2, ICD10CM codes can be mapped back to the ICD10 codes. The NCHS has worked closely with specialty societies to ensure clinical utility and input into the process of creating the clinical modification, with comments from a number of prominent specialty groups and organizations that addressed specific concerns or perceived unmet clinical needs encountered with ICD9CM. The NCHS also had discussions with other users of the classification, specifically nursing, rehabilitation, primary care providers, the National Committee for Quality Assurance (NCQA), long term care and home health care providers, and managed care organizations to solicit their comments about the classification.

ICD10CM diagnosis codes are three to seven alphanumeric characters; the number of ICD10CM codes is approximately 68,000. The ICD10CM code set provides much more information and detail within the codes than ICD9CM, facilitating timely electronic processing of claims by reducing requests for additional information.

ICD10CM also includes the following improvements over ICD9CM:

ICD10CM codes with the same first three digits have common traits, and each additional digit adds more specificity. For example: I49. Other cardiac arrhythmias
I49.0 Ventricular fibrillation and flutter
I49.01 Ventricular fibrillation

I49.02 Ventricular flutter

Postprocedural disorders specific to a particular body system are located in categories created at the end of each chapter. Diseases are arranged according to an axis of classification based on etiology, anatomy, or severity, with anatomy being the primary axis for ICD10 CM. (See section V of this proposed rule for a chart that compares ICD 9CM, ICD10CM, and ICD10PCS codes).

C. ICD10PCS Procedure Codes

CMS developed a procedure coding system, ICD10PCS. ICD10PCS has no relationship to the basic ICD10 diagnostic classification, which does not include procedures, and has a totally different structure from ICD10CM. ICD10PCS is sufficiently detailed to describe complex medical procedures. This becomes increasingly important when assessing and tracking the quality of medical processes and outcomes, and compiling statistics that are valuable tools for research. ICD10PCS has unique, precise codes to differentiate body parts, surgical approaches, and devices used. It can be used to identify resource consumption differences and outcomes for different procedures, and describes precisely what is done to the patient.

ICD10PCS codes have seven alphanumeric characters and group together services into approximately 30 procedures identified by a leading alpha character. There are 16 sections of tables that determine code selection, with each character having a specific meaning. The first character shows the type of procedure by clinical specialty. Nearly half of these 16 sections remain undesignated at this time, leaving room for future expansion. Each subsequent place in the code has a specific function, the meaning of which may change depending on the section. For example, the fifth character in the imaging section identifies the contrast material used, while the fifth character in the medical and surgical section identifies the surgical approach. The second character defines the body system with the exception of the rehabilitation and mental health sections, in which the second character defines the type of procedure performed.

Example: the Medical and Surgical Section is organized as follows: Characters 1 2 3 4 5 6 7 Name of Section Body System Root Operation Body Part Approach Device Qualifier D. Statutory Requirements for Adoption of ICD10CM and ICD10PCS

Under sections 1172(b), (c), (f), and (g) of the Act, the Secretary must follow certain procedures and pursue certain objectives when adopting a modification to an initial standard. Under section 1172(b) of the Act, any standard adopted by the Secretary must be consistent with the objective of reducing the administrative costs of providing and paying for health care. As discussed in detail in section XI of this proposed rule, we believe that the costs for implementing ICD10 CM and ICD10PCS would be offset by the benefits within four years of implementation.

Under section 1172(c)(1) of the Act, any standard adopted by the Secretary must be a standard that has been developed, adopted or modified by a standard setting organization (SSO). Under section 1172(c)(2)(B) of the Act, however, section 1172(c)(1) does not apply if no SSO has developed, adopted, or modified any standard relating to a standard that the Secretary is authorized or required to adopt under HIPAA. To our knowledge, no SSO has developed, adopted, or modified a standard code set that is suitable for reporting medical diagnoses and hospital inpatient procedures for purposes of administrative transactions. Therefore, we are proposing to adopt ICD10CM and ICD 10PCS under section 1172(c)(2)(B) of the Act.

We note that the SNOMED Clinical Terms (CT)[supreg] code set may initially appear to be a standard developed by an SSO for reporting medical diagnoses and hospital inpatient procedures for purposes of administrative transactions. The College of American Pathologists (CAP), which developed SNOMED CT[supreg], is accredited by the American National Standards Institute (ANSI) as an
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accredited standards developer. The scope of the CAP's accreditation, however, is limited. The CAP is accredited for activity relating to clinical terminology that focuses on standardizing that terminology across the breadth of medicine. Consistent with this scope of focus, SNOMED CT[supreg], which is now supported by the International Health Terminology Standards Development Organization (http://www.ihtsdo.org), is clinical terminology that is primarily designed for primary documentation of clinical care. SNOMED CT[supreg] is not designed for carrying out health care transactions. In fact, part of the CAP's scope of ANSI accreditation is deriving mapping strategies from clinical reference terminology and medical classification schemes and codes sets used for statistical, billing, or user interface purposes. Thus, in order to be useful for health care transactions, the SNOMED CT[supreg] code set would first have to be mapped to a classification coding system, such as ICD10CM. (For further discussion of SNOMED CT[supreg] and its potential value to the development of electronic health records (EHRs), please refer to section VI of this proposed rule.) For these reasons, we do not believe that SNOMED CT[supreg] qualifies under section 1172(c)(1) of the Act as a standard developed by an SSO for reporting medical diagnoses and hospital inpatient procedures for purposes of administrative transactions.

Under section 1172(c)(3) of the Act, the Secretary must consult with the following organizations before adopting a standard that was not developed, adopted, or modified by an SSO:

These organizations are members of the Designated Standard Maintenance Organization (DSMO) Steering Committee. The DSMO Steering Committee considered a January 8, 2003 DSMO Change Request submitted by the Centers for Disease Control seeking modification to the transaction code set to accommodate ICD10CM and ICD10PCS. The DSMO Steering Committee approved the change request and recommended the adoption of implementation specifications that would support the implementation of ICD10CM and ICD10PCS to the NCVHS.

Furthermore, CMS also consulted with WEDI regarding ICD10CM and ICD10PCS after two industryfocused informational forums they conducted on ICD10CM and ICD10PCS during 2006. In a letter to the Secretary dated May 31, 2006, WEDI outlined discussions that occurred during an ICD10CM and ICD10PCS forum on April 19th and 20th 2006 in Chicago that was cochaired by representatives of the American Hospital Association, and Blue Cross and Blue Shield of South Carolina. The purpose of the forum was to solicit audience discussion and input on various implementation issues surrounding the possible adoption of the ICD10CM and ICD10PCS code sets. The forum was not intended to debate the issue of whether these code sets should be adopted, but rather what would need to occur if they were adopted. CMS will further consult directly with NUBC, NUCC, and the ADA before adopting any ICD 10 code set as a modification.

Under section 1172(f) of the Act, the Secretary must rely on the recommendations of the NCVHS established under section 306(k) of the Public Health Service Act and must consult with appropriate Federal and State agencies and private organizations.

The Secretary must publish notification in the Federal Register of any recommendation of the NCVHS. The NCVHS has conducted 8 days of hearings with providers, health plans, clearinghouses, vendors, and interested stakeholders on the adoption of ICD10CM and ICD10PCS in place of ICD9CM as the HIPAA adopted standard for reporting diagnoses and hospital inpatient services in standard transactions. (A list of organizations that provided comments to the NCVHS is available at http://www.ncvhs.hhs.gov/031105a3.htm, accessed 81208.) In a letter dated November 5, 2003, the NCVHS submitted to the Secretary its recommendation to adopt ICD10CM and ICD10PCS. This letter is available at http://www.ncvhs.hhs.gov/031105lt.htm, accessed 81208. The Secretary also has considered input from Federal and State agencies and private organizations regarding the adoption and implementation of ICD10CM and ICD10PCS, and has received input from a number of professional organizations and other industry stakeholders. The following organizations representing providers, health plans, clearinghouses, and vendors are among the stakeholders that have provided input:

Both ICD10CM and ICD10PCS provide laterality, precise anatomical descriptions, methods to report the exact causes of injury in diagnosing conditions, and approaches used to perform specific procedures. Laterality refers to the precision with which ICD10CM and ICD10PCS describe conditions and treatments for the anatomical right and left side. Information comparing ICD10CM and ICD9CM Volumes 1 and 2 is available at: http://www.cdc.gov/nchs/about/otheract/icd9/ icd10cm.htm (accessed 81208). Information comparing ICD10PCS and ICD9CM Volume 3 is available at: http://www.cms.hhs.gov/ icd9providerdiagnosticcodes/08_icd10.ASP (accessed 81208). VI. Discussion of SNOMED CT[supreg]

SNOMED Clinical Terms[supreg] (CT) is a comprehensive clinical terminology that provides a framework to manage language dialects, clinically relevant subsets, qualifiers and extensions, as well as concepts and terms that are unique to particular organizations or localities. It contains over 366,170 concepts with unique meanings and formal logicbased definitions that are organized into hierarchies. Some examples of these hierarchies are:

In order to express these clinical concepts, SNOMED CT[supreg] contains more than 993,420 English language descriptions, and approximately 1.46 million semantic relationships. It would be impractical to attempt to manually assign SNOMEDCT[supreg] codes. The number of terms and level of detail in a reference of clinical terminology such as SNOMED CT[supreg] cannot be effectively managed without automation, and are not suited for the secondary purposes for which classifications systems such as ICD10CM and ICD10PCS are used because of their immense size, considerable granularity, complex hierarchies, and lack of reporting rules.\1\
\1\ ``Coordination of SNOMEDCT[supreg] and ICD10: Getting the Most out of Electronic Health Record Systems'' Sue Bowman, RHIA, CCS, director of coding policy and compliance, AHIMA; Perspectives in Health Information Management Spring 2005 (May 26, 2005) http:// library.ahima.org/xpedio/groups/public/documents/ahima/bok1_ 027179.html, accessed 81208.

SNOMED CT[supreg] is a clinical terminology that is described as an input system that is primarily designed for the primary documentation of clinical care. A clinical terminology intended to support clinical care processes should not be manipulated to meet reimbursement and other external reporting requirements. Such manipulation presents the potential to adversely affect patient care, the development and use of decision support tools, and the practice of evidencebased medicine.

ICD9CM, ICD10CM, and ICD10PCS are classification coding conventions that are typically used for reporting requirements where data aggregation is advantageous. A classification system such as ICD arranges like entities for retrieval. It aggregates granular clinical concepts into categories for secondary data purposes. Examples of current use of this data include:

The benefits of using SNOMED CT[supreg] increase if it is linked to a classification system such as ICD10CM and ICD10PCS for the purpose of generating health information that is necessary for statistical analysis and reimbursement. The use of both SNOMED CT[supreg] and ICD10CM and ICD10PCS brings value to the development of interoperable electronic health records (EHR). The linkage of these two different coding systems for multiple purposes is accomplished through mapping.
``Mapping is the process of linking content from one terminology to another or to a classification.'' (http://library.ahima.org), accessed 81208. It requires deciding how different terminologies match, are similar, or differ. Mapping provides a link between terminologies to facilitate

Using SNOMED CT[supreg] mapped to ICD10CM and ICD10PCS permits the use of a clinical terminology that could be the basis for EHRs and the ICD10CM and ICD10PCS classification coding system that is used for reporting and data trend analysis.

As discussed in section IV of this proposed rule, we did not consider adopting SNOMED CT[supreg] as an alternative for ICD10CM and ICD10PCS because the code sets are designed for distinctly different purposes. We do not believe that SNOMED CT[supreg] qualifies under section 1172(c)(1) of the Act as a standard for reporting medical diagnoses and hospital inpatient procedures for purposes of administrative transactions. For similar reasons, we do not believe that we are required under the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104113, to consider adopting SNOMED CT[supreg]. The NTTAA and Office of Management and [[Page 49804]]
Budget (OMB) Circular No. A119, which provides some historical background and interpretation of parts of the NTTAA, directs Federal agencies to use voluntary consensus standards in lieu of government unique standards, except where inconsistent with law or otherwise impractical. Because we do not believe that SNOMED CT[supreg] is a suitable standard for reporting medical diagnoses and hospital inpatient procedures for purposes of administrative transactions, we believe that neither the NTTAA nor OMB Circular A119 requires that we consider it for adoption.

VII. Alternatives To Adopting ICD10 Code Sets

In deciding to propose adoption of ICD10CM and ICD10PCS, we considered a number of alternatives. We invite public comment on the following discussion of those alternatives and our rationale: A. Utilize Unassigned Codes

It would be possible to extend the life of ICD9CM by assigning codes to new diagnoses and procedures without regard to the hierarchy of the code set. This hierarchy groups procedures by body systems, and then groups similar procedures that apply to a specific body system into categories. For example, ICD9CM Volume 3 was examined to identify any open series of codes that could be used for new procedures and technologies. Codes 17.0017.99 (located between Chapter 3: Operations on the Eye, and Chapter 4: Operations on the Ear) were not being used. This series of 100 codes could be used for a wide range of new procedures and technologies, adding additional space for expansion within the existing structure of the ICD9CM procedure volume. Additionally, codes 00.0000.99 were not in use. The ICD9CM Coordination and Maintenance Committee decided to create a chapter in this unused location. This decision enabled the creation of 100 new codes to identify procedures that could not be assigned a code within the existing, and more appropriate, chapters because of space limitations. CMS departed from the current organizational structure of ICD9CM procedures when we created a variety of procedure codes in a new chapter 00, Procedures and Interventions NEC (NEC means Not Elsewhere Classified). CMS has created new codes in all 10 categories within chapter 00. Details on CMS coding changes are available on the CMS Web site at: http://www.cms.hhs.gov/ICD9ProviderDiagnosticCodes, accessed 81208.

While this approach of placing codes in a nonhierarchically created structure does extend the ability to assign ICD9CM codes to new diagnoses and procedures, it does not represent a longterm solution to the code shortage. It will only be an effective solution as long as there are empty code slots. Moreover, it does not address the remaining shortcomings of ICD9CM discussed above, such as the critical lack of detail that is required to support evolving business needs, for example, in the areas of biosurveillance and quality monitoring. While there have been space issues in ICD9CM Volumes 1 and 2, they have not been as pressing as the space needs in ICD9CM Volume 3. New categories/codes have been added within the chapters (body systems) of the classification, but not necessarily within the appropriate section within the chapter. New concepts have been incorporated into the existing structure, and in some instances this has meant not fully representing the concept as proposed because of space limitations. Some issues have been deferred and incorporated into ICD10CM because the concepts were inconsistent with the existing structure of ICD9CM. Unlike the procedures in ICD9CM Volume 3, which is a United Statesdeveloped system, the ICD9CM diagnosis codes are based on the WHO codes and must be consistent with the established structure.

The disadvantage of this solution is that it destroys the natural hierarchy inherent in the code set. This hierarchy assists a coder or health care professional in choosing the most appropriate code since one can quickly review closelyrelated codes. Common coding practices do not require searches for unrelated procedures in a separate part of the coding book. However, these new chapters capture a very diverse group of unrelated procedures that affect a variety of body systems and are not logically placed in the chapters to which they relate. This creates considerable confusion for coders and difficulty locating the new codes, raising the likelihood of coding errors and negatively affecting productivity.

B. Use CPT4 for Coding Hospital Inpatient Procedures

The American Medical Association (AMA) developed and maintains the Physicians' Current Procedural Terminology (CPT) coding system to capture physician services. CPT also has been used to capture services performed in outpatient and ambulatory care settings, and is the HIPAA adopted standard code set for reporting physician and certain other health care services. While evaluating the need to replace ICD9CM, the AMA recommended that CPT be used for coding inpatient services. A letter from the AMA's medical organizations supporting the use of CPT for inpatient coding was sent to the Secretary on September 23, 2002. A copy of this letter is included in the Summary Report of the ICD9CM Volume 3 Coordination and Maintenance Committee, December 6, 2002 meeting at http://www.cms.hhs.gov/ICD9ProviderDiagnosticCodes (accessed 81208). The AMA was concerned about industry suggestions that a uniform procedure coding system be identified for use in all health care settings. If this were to be the case, the AMA wanted CPT to be considered as that uniform procedure coding system.

The NCVHS had previously evaluated ICD9CM Volume 3 and CPT as potential coding systems that could be used to capture services in all health care settings. After extensive hearings and discussions, the NCVHS issued a ``Report of the National Committee on Vital and Health Statistics Concerning Issues Relating to the Coding and Classification Systems'' in November 1990. It found structural problems and serious flaws with both CPT4 and ICD9CM Volume 3. During 1993, an NCVHS subcommittee held three meetings and three working sessions which addressed the creation of a single procedure classification system for multiple purposes in the United States. It was felt that neither system could capture services in all health care settings. Despite continuing NCVHS hearings, there has been no endorsement of the use of CPT for hospital inpatient procedure coding.

The Government Accountability Office (GAO) undertook a study on the use of multiple procedure coding systems, issuing a final report in August 2002 entitled, ``HIPAA Standards, Dual Code Sets Are Acceptable for Reporting Medical Procedures'' (GAO02796). The report concluded that ICD9CM Volume 3 and CPT do not meet all of the criteria for standard code sets under HIPAA and the procedural code set requirements recommended by NCVHS, including the criteria for adequate levels of detail for data analysis, and a capacity to add new codes in response to new technology. GAO sought advice from industry experts such as the American Hospital Association (AHA) and the American Health Information Management Association (AHIMA) as to whether CPT could be used for inpatient coding. AHA and AHIMA reported that CPT ``does not adequately capture
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facilitybased, nonphysician services.'' The GAO report states that CPT has not been shown to be acceptable or comprehensive enough to serve as a single procedure code set for reporting both hospital inpatient and outpatient physician services. Therefore, GAO did not recommend the use of CPT4 to capture inpatient services. Additional criticisms of CPT are that it does not include laterality, it has no predictable syntax, and the detail provided is inconsistent across procedures.

The AHA, Federation of American Hospitals, and AdvaMED wrote a letter to the NCHVS on November 19, 2002 regarding the implementation of ICD10CM and ICD10PCS. The letter endorsed the implementation of ICD10CM and ICD10PCS as a national standard, and opposed the use of CPT for hospital inpatient services because it was designed for services more commonly provided in physicians' offices, not services provided in a hospital inpatient setting.

C. Wait and Adopt ICD11

One possible option is to forego adoption of ICD10 and wait until ICD11 is ready for implementation. The WHO, the developer of the ICD classification, has begun preliminary work on ICD11. However, no firm timeframes for the completion of developmental work or testing have been identified, and no firm implementation date has been designated. Work has not yet begun on developing the companion procedure codes needed to implement ICD11 in the United States. This means that the earliest projected date for implementation would be 2020, assuming that no clinical modification is needed for the ICD11 and that the companion procedure code set could be completed in time. We project that we could not implement ICD11 until 2016 because it is still in development, testing would be required, and there are no firm timeframes for completion of developmental work.

In addition, ICD11 will follow the same alphanumeric structure as ICD10, which differs from that of ICD9. Since ICD11 would build upon ICD10, many of the costs and much of the work associated with upgrading to ICD11 will be mitigated by ICD10 implementation. This option of waiting for ICD11 was eliminated because there are no confirmed dates for ICD11 readiness or adoption, ICD11 will not include a procedure classification system and without ICD10 to build upon, use of ICD11 is likely to take longer to implement. ICD9CM would still have to be used in the interim, and ICD9CM is not the pathway to ICD11 because it has a different structure than both ICD10 and the anticipated ICD11.
VIII. Provisions of the Proposed Regulation

A. Use of ICD10CM and ICD10PCS by Covered Entities

In this proposed rule, we propose to adopt the ICD10CM and ICD 10PCS code sets to replace the ICD9CM Volumes 1 and 2 code sets for reporting diagnoses and Volume 3 code set for reporting procedures when conducting standard transactions. We would revise Sec. 162.1002(b) and Sec. 162.1002(c), and adopt ICD10CM and ICD10PCS in place of ICD 9CM, Volumes 1 and 2, and 3. We would adopt ICD10CM to replace ICD 9CM Volumes 1 and 2, including the official coding guidelines, for coding diseases, injuries, impairments, other health problems and their manifestations, and causes of injury, disease, impairment, or other health problems. Additionally, we would adopt ICD10PCS to replace ICD9CM Volume 3, including the official coding guidelines, for the following procedures or other actions taken for diseases, injuries, and impairments on hospital inpatients reported by hospitals: prevention, diagnosis, treatment, and management.

HIPAA covered entities would be required to use these codes when diagnoses and hospital inpatient procedures need to be coded in HIPAA transactions. Because ICD10PCS codes are only used for inpatient hospital procedures, the ICD10PCS codes would not

FOR FURTHER INFORMATION CONTACT Donna Pickett (301) 458-4434 for ICD- 10CM, Pat Brooks (410) 7865318 for ICD10PCS, and Denise Buenning (410) 7866711 for other questions.