In 2015, hospitals began to transition from existing ICD-9 procedure and diagnosis codes to more detailed ICD-10 codes. The new codes are expanded to provide greater detail related to patient conditions and the procedures performed during hospital inpatient stays. Officially, the implementation was effective for admissions where the patients were discharged on or after Oct. 1, 2015. Because this date falls within the date range of the most recent processing year (calendar year 2015), it is possible to compare admissions and results in the same year under both ICD classifications. Discharges are coded under ICD-9 over the first three quarters of the year, and coding then switches to ICD-10 in the fourth quarter.
Inpatient Discharges, 2015: ICD-9 Versus ICD-10
A high-level review yields one major finding: The average charge for an inpatient discharge increased by 6.2 percent for the fourth quarter, rising to $46,002 under ICD-10, even though the average length of stay (ALOS) remained constant compared with discharges processed under ICD-9.
A more in-depth look at five of the most commonly occurring diagnoses finds that this overall pattern is consistent across these diagnoses: The length of the inpatient stay remains constant or even declines, while the charges increase, with increases ranging from less than 1 percent for a “typical” pneumonia admission to more than 8 percent for admissions for cesarean section deliveries and for acute kidney failure. The effect on total charges for the latter two conditions alone amounts to a nearly $400 million increase in charges for a single quarter of discharges. Across the total dataset of 17 million admissions, the calculated increase would result in increased charges exceeding $45 billion.
A breakdown of discharges by payer type shows significant increases in charges for the same period from commercial HMOs, commercial liability insurers, and charity care providers exceeding 10 percent. The increases are most striking in the commercial space: These payers show increases in charges per discharge that, in some cases, are twice the increases seen in government-sponsored programs such as Medicare, Medicaid, and the Veteran’s Administration. Much as with the previously discussed data, the ALOS for these payer types either declined (in the case of commercial HMO and charity care) or increased slightly (in the case of commercial liability).
Highest-Volume Diagnoses, 2015: ICD-9 Versus ICD-10
Volume by Payer, 2015: ICD-9 Versus ICD-10
From this analysis, it seems clear the more detailed level of description provided by the implementation of ICD-10 codes is a major factor in the significant increases in charges seen for inpatient hospital stays. The sudden increases in charges identified by ICD version for the same or similar conditions for admissions with similar ALOS would appear to validate this finding. The increases identified among commercial health plans (both HMO and liability) and the increasing number of patients seen in these plans would seem to suggest additional increases will be seen in the 2016 data as well.
This research and analysis was prepared by Optum Advisory Services. For more information, please contact Jan Welsh at [email protected].
Many states collect inpatient admission data from hospitals and then make the data available as non-identifiable data sets for commercial and academic use. The data, which provide the basis for this analysis, form a searchable archive from a population of nearly 20 million annual admissions with a geographic stretch from coast to coast, including states large and small.