After two years of delays, the new ICD-10 codes are live in hospitals across the country.

The tends of thousands of new government-mandated codes describe diseases and hospital procedures in the billing process. The codes are aimed to cover everything that medical professionals may be called on to treat.

Read more codes via @EveryICD10 on Twitter.

How do these codes affect health insurance companies, employers and their human resource departments. contributor Bruce Japsen covers that part of the story.

From erroneous medical bills to denied health services, Americans may need patience grappling with insurance claims beginning today, the much-anticipated launch of tens of thousands of new government-mandated “ICD-10” codes used to describe diseases and hospital procedures in the billing process.

At least one analysis says one in four of the nation’s doctor practices aren’t ready for the transition to  International Classification of Diseases, Tenth Revision, known as “ICD-10.” After two years of delays, medical care providers have to be ready for the conversion to 140,000 new codes that they will use in order to bill government and private insurers.

Health insurance companies, employers and their human resources departments have been working with patients and health plan enrollees, warning of potential problems. Aon Hewitt (AON ), a large employee benefits consultancy, says there is potential for doctors and hospitals to use outdated codes and potentially bill patients for services that could be covered.

“This is a complex conversion that could initially lead to disruptions across the medical field,” said Chris Miles, senior vice president of Aon Hewitt’s health group. “Providers may see overall delays in claims processing, and some individuals may have insurance claims that are denied for services that were provided, but not properly coded.”

The conversion is being required by the Centers for Medicare & Medicaid Services to provide more specificity to the existing coding system. The outgoing ICD-9 codes have limited information about medical conditions and hospital procedures while the new ICD-10 code “sets provide flexibility to accommodate future healthcare needs, facilitating timely electronic processing of claims by reducing requests for additional information to providers,” the Centers for Medicare and Medicaid Services (CMS) has told doctors.

“The impact of the ICD-10 switchover on the healthcare system will not be fully understood until after claims processing begins on Oct. 1,” American Medical Association president Dr. Steven Stack said earlier this week.

But physician groups admit there could be challenged based on surveys they’ve conducted of their colleagues.

Medical Group Management Association president and chief executive Dr. Halee Fischer-Wright said a recent “survey showed 20% or more of physician practices have not received the billing system updates necessary for ICD-10.”

“This could significantly disrupt the submission of patient claims,” Fischer-Wright added.

ICD-10 conversion has been a massive undertaking for private insurers as well since they will use the codes in their claims processing and paying doctors and other providers of medical care.  It has added significant capital expenses to health insurance companies, impacting the likes of Anthem WLP +% (ANTM), Aetna AET -0.93% (AET), Cigna CI -0.75% (CI), Humana HUM +0.06% (HUM) and UnitedHealth Group UNH -1.75% (UNH).

Benefits experts say health plan enrollees could see a delay in authorization for certain tests and procedures if doctors aren’t adequately coding the services. Insurance claims also could be denied.

But the shift to new codes is a good thing overall, particularly as doctors and hospitals move away from fee-for-service medicine to a healthcare system that pays providers based on outcomes and quality.

“Transferring to the new medical claim codes will allow key industry stakeholders to better track and manage diseases, measure the quality of care and evaluate patient outcomes—all of which support the shift toward value-based payment plans,” Miles said.