Alabama Medicaid to Honor Physician ICD-10 ‘Grace Period’ for Coding Errors

In response to a request from the Medical Association, Alabama Medicaid will not penalize physicians for coding errors under ICD-10 as long as a valid ICD-10 code from the correct “family of codes” is used. This follows a similar policy by CMS for Medicare Part B claims announced in early July.

“The inclusion of a transition or ‘grace period’ is significant as we believe that Alabama physicians and medical practices are not yet fully prepared for the switch from ICD-9 to ICD-10,” Association President Dr. Buddy Smith wrote in his letter to all health plans and insurers in Alabama requesting they follow the CMS guidelines for a coding error grace period. “While the Medical Association has been an outspoken opponent of ICD-10 and remains so, the inclusion of a grace period makes this federal mandate less problematic for medicine.”

In summary, while Alabama Medicaid will implement ICD-10 on Oct. 1, the Agency will allow a grace period during which physicians will not be penalized for ICD-10 coding errors as long as the ICD-10 code used is in the same “family of codes.”

A “family of codes” is the same as the ICD-10 three-character category. Codes within a category are clinically related and provide differences in capturing specific information on the type of condition. However, the code may require more than three characters to be valid.

To date only Medicare Part B, Blue Cross and Blue Shield of Alabama and Alabama Medicaid have granted a “grace period.”

Alabama Medicaid has more information about ICD-10 implementation and readiness details here. Even more information about ICD-10 readiness can be found in our ICD-10 Physician Resource Center.