Falling From Grace: How to Deal with the End of the Flexibility Period

It’s the end of September already, which means we’re only days away from the end of Medicare’s ICD-10 flexibility period—the year-long grace period in which CMS did not deny claims solely due to lack of code specificity. Beginning next month, though, the gloves are off—and, as a result, denials may increase. If you’ve been using this last year to become an expert on the nuances of the new code set—including how to use your clinical knowledge and documentation to select the most specific code available—then you may not even notice a change. If not, there are still a few things you can do to prepare. Here’s what you should know about the end of the flexibility period (as summarized from the Q&A portion of this CMS doc):

There will be no extension—and no phase-in period.

According to CMS, the grace period will end on October 1, 2016, and there will be no extension or phase-in period, because “providers should already be coding to the highest level of specificity.” The ICD-10 flexibility period was only put into effect so contractors performing medical reviews wouldn’t deny claims based solely on lack of specificity if there was “no evidence of fraud.” But, beginning October 1, providers must choose the most specific codes available—or risk claim denials.

CMS has three pieces of advice to help you prepare:

  1. Don’t use unspecified codes when a more specific one is available. (If you’re wondering how specific your codes should be, there’s no black-and-white answer. You must code to the highest level of specificity you can, while ensuring your documentation supports your coding choices—which brings us to number two.)
  2. Ensure your clinical documentation supports your code selections.
  3. Know that many major insurance carriers never implemented a grace period at all, which means many providers are already successfully using specific codes. In fact, according to a survey cited by CMS, providers have, for the most part, transitioned from ICD-9 to ICD-10 with little issue. (In other words, stay calm and carry on.)

Providers may still use unspecified codes—if the situation warrants it.

According to CMS, providers should report the most specific code available that’s supported by clinical knowledge and documentation. However, there are situations in which unspecified codes “are acceptable, even necessary”—such as “when sufficient clinical information is not known or available about a particular health condition to assign a more specific code.” CMS uses the example of a patient with a diagnosis of pneumonia: if no additional information is available to help the provider or coder determine the specific type of pneumonia the patient has, an unspecified code would be acceptable. To learn more about unspecified codes, check out these resources.

CMS is prepared to handle these changes.

CMS believes that the success of the initial ICD-10 transition proves that the organization is ready to handle new codes and processes. As such, they expect no delays with their enforcement of the post-grace period rules or the 2017 code update. This update includes the deletion of certain codes, the introduction of some new codes, and the revision of some code descriptions. “While this year’s update includes many new codes, the new clinical concepts are minimal,” CMS explained. The Center also notes that similar code updates occurred annually up until a freeze was established to help providers and payers prepare for the ICD-10 transition. As with any update, CMS recommends that providers:

  1. “Determine which codes affect their practices, and
  2. Focus on clinical concepts behind new codes.”

Audits will look just like they did before the ICD-10 transition.

As of October 1, 2016, CMS review contractors may deny claims due to lack of code specificity—and notify providers regarding issues and the steps necessary to correct those issues—in the same way that they did prior to the ICD-10 transition on October 1, 2015. To avoid audits, CMS says, “the provider community should code claims to the degree of specificity supported by the encounter and the medical documentation.”

There are more resources if you have questions.

For more ICD-10 coding resources, visit the Provider Resources section of the CMS ICD-10 website. There, you’ll find a complete list of the 2016 ICD-10-CM codes and code titles. You can also find the updated 2017 ICD-10-CM code set for services you provide on or after October 1, 2016, here. CMS updates the NCDs and LCDs whenever new codes are added. You can learn more about NCD updates on CMS’s ICD-10 website and LCD updates in the searchable Medicare Coverage Database.


While some experts do expect an increase in denials following the end of the Medicare’s flexibility period, CMS doesn’t seem too concerned. How do you feel? Is your clinic prepared? Have you been coding to the greatest level of a specificity up to this point—or do you plan to up your game now?