The federal government's newly released final rule on medical-loss ratio requirements will allow insurers to count a certain percentage of their ICD-10 conversion costs as a quality improvement activity, Health Data Management reports (Goedert, Health Data Management, 12/5).
Background
U.S. health care organizations are working to transition from ICD-9 to ICD-10 code sets to accommodate codes for new diseases and procedures. Health care providers and insurers have until Oct. 1, 2013, to adopt new ICD-10 code sets (iHealthBeat, 11/18).
The federal health reform law's MLR rule requires health insurers in the small group market to spend at least 80% of their premium revenue on medical costs and quality improvement activities. Insurers in the large group market must spend at least 85% of their premium revenue on medical costs and quality improvement activities (Daly, Modern Healthcare, 12/2).
The remaining percentage of insurers' premium revenue can go toward administrative expenses or other non-clinical costs (Health Data Management, 12/5).
Beginning next year, health insurers that do not meet the MLR standard must provide the difference to policyholders as rebates (Modern Healthcare, 12/2).
Accounting for ICD-10-Related Costs
Under the final MLR rule, ICD-10 conversion costs that account for up to 0.3% of an insurer's premium revenue can be counted as quality improvement activities for the 2012 and 2013 reporting years (Raman, International Business Times, 12/5).
Any additional costs for ICD-10 maintenance and claims adjudication systems would count as administrative costs under the MLR rule (Health Data Management, 12/5).
UnitedHealth Group estimates that it will spend about $510 million between 2010 and 2015 on the conversion to ICD-10 code sets and HIPAA 5010 transaction sets (International Business Times, 12/5).