Ten Critical Questions About the Financial Impacts of ICD-10

Transcription

1 A Report by Phoenix Health Systems Ten Critical Questions About the Financial Impacts of ICD-10 Revenue Cycle Risks Facing Healthcare Providers A GUIDE TO CONVERTING PROSPECTS INOT CUSTOMERS By Thomas Grove

2 Ten Critical Questions 1. What Impact Will ICD-10 Have on Cash Flow? 2. How Will ICD-10 Impact Reimbursements? 3. Will ICD-10 Affect Denials? 4. What is the Role of Payers in the Transition? 5. Where Will ICD-10 Affect Productivity? 6. How Does DRG Grouping Under ICD-10 Affect Revenue? 7. What Kind of Testing Should be Performed? 8. How Should Physicians be Supported? 9. Will the Transition from ICD-9 to ICD-10 be Immediate? 10. How Can Revenue Risks be Avoided? 2

3 Be Prepared for the Financial Impacts of ICD-10 Much of the ongoing discussion on ICD-10 centers on coding and information technology. However, a clear understanding that ICD-10 is, at its core, a revenue problem, is often lacking. This guide is designed to answer healthcare providers central questions, and remedy misconceptions, about the risks ICD-10 implementation poses from a financial perspective. The Report offers: A fresh perspective on the financial impacts of ICD-10 to educate the CEO, CFO, CIO, revenue cycle managers, and staff on the ICD-10 team. Strategies to minimize impacts. A convenient format to share this knowledge with your team. For more information, or to set up a customized webinar to educate your team about the transition to ICD-10, contact us. 3

4 Question One What Impact Will ICD-10 Have on Cash Flow? 4

5 Cash flow interruptions are inevitable. ICD-10 is nothing less than a complete replacement of the codes that are the foundation of the billing and reimbursement process. Some parts of the ICD-10 transition are pass/fail. If your system upgrade effort does not succeed, you will be unable to generate ICD-10 compliant claims, and your cash flow will come to a complete stop. Most hospitals and their vendors recognize the critical nature of the IT upgrades and have made this their top IT priority. Vendor scheduling of upgrades and resources for upgrading and testing are key concerns. According to CMS, long-term increases in A/R Days could be as high as 20%; while short-term increases (between 6 months and 2 years) could be between 20% and 40%. 5

6 ICD-10 Cash Flow = Claims Inventory Management Un-coded Visits The time required to code charts may double in the short term, leaving un-coded charts as the largest potential backlog. Claims pended due to claim scrubber or clearinghouse edits Because of unfamiliarity with ICD-10 codes (i.e. errors), the inventory of claims that have been coded, but not successfully reached the payers is expected to rise. This inventory is critical to monitor and refine daily. It s the first sign that issues with coding will affect A/R. Claims submitted to payers UnitedHealth Group has estimated that payers, on average, will take seven days longer to adjudicate claims. Monitoring your major payers will identify cash flow risks from slower payment, and indicate when you must negotiate with payers for prepayments. 6

7 Question Two How Will ICD-10 Impact Reimbursements to Providers? 7

8 One of the goals of ICD-10: Revenue Neutrality Payers and CMS have stated that one of the goals of the ICD-10 conversion is that it be revenue neutral, i.e. you should receive the same reimbursement whether the visit is coded in ICD-9 or ICD-10. The differences between the two code sets mean some mismatches will occur. At first, a lack of documentation specificity is expected to result in the use of more non-specific codes, thus lowering DRGs and reimbursement. Once documentation improves, the improved documentation will lead to increased coding specificity, and thus to more accurate payment. In some instances ICD-10-CM will simplify the coding process and eliminate common errors related to correct sequencing. Payers will be refining reimbursement rules to take advantage of the more precise ICD-10 code set. Small changes are likely to be implemented early in the conversion process., with more significant changes over time. 8

9 Question Three Will ICD-10 Affect Denials? 9

10 Denials are expected to increase greatly. As illustrated in our Financial Impacts of ICD-10 Infographic, claims denials are expected to increase greatly perhaps %. Payers are implementing ICD-10 with a combination of new claims processing rules and using ICD-10 to ICD-9 translation. Since payers don t have access to millions of ICD-10 coded claims to thoroughly test the full scope of claims, more denials are the expected result. Errors at the level reported by HIMSS and WEDI (noted below), will result in dramatic increases in claims denied, each of which will require appeals, documentation, and other follow-up within a short period of time. This increase in denied claims is expected to dramatically impact the number of calls to the payer, and increase call wait times. This will equate to your insurance follow-up representatives spending more hours resolving claims issues.! HIMSS and WEDI s recent pilot program reported an accuracy rate of only 63% among properly trained coders. 10

11 Question Four What is the Role of Payers in the Transition? 11

12 Payers have a lot of work to do, too. Your payers are in the same position you are struggling to comply with a massive regulatory mandate. The average health plan has about 1 million distinct lines of business rules that define how the payer s systems act to process claims under ICD-9. The majority of these items involve processing claims with specific procedure codes and diagnoses, all of which change under ICD-10. Some payers have chosen to remediate their systems rewriting their business rules in ICD-10; while others have chosen to deploy a mapping solution, where ICD-10 codes are mapped back to ICD-9 for processing. Payers don t have a large mass of ICD-10 coded claims for testing, so partnering with selected providers is a key part of their testing strategy, and should be part of your strategy for testing as well. 12

13 Are you prepared to meet the ICD-10 deadline? Where is your organization in the transition process? Who will be my primary contact at your organization for the transition to ICD-10? Can we schedule recurring meetings to keep progress on track? What will we need to do in order to test with you? When will you be ready to accept test transactions? Will you be adjudicating our test claims and responding to them with 835s? Do you anticipate any changes in policies or delays in payments to result from the switch to ICD-10? Do we have to register or be approved in some fashion to make the transition using ICD-10 codes? Are you going to process claims natively in ICD-10 or map back to ICD-9? Are you offering any financial risk mitigation, such as prospective payments to providers? What training are you offering??questions to ask Your Payers 13

14 Question Five Where Will ICD-10 Affect Productivity? 14

15 Coders will experience some of the greatest loss in productivity. The impact on productivity will be greatest on coders, but anyone who needs to document, determine, record, or use an ICD-10 diagnosis or procedure code will be affected. This includes: Practitioners This group will be required to document patient care at the higher level of specificity and granularity required for proper ICD-10 coding. The upgrades to EMR systems to accommodate ICD-10 and meaningful use should be very supportive, once the documenters get past the learning curve of the updated systems. Business Office Personnel Business staff will be required to become familiar with both the intricacies of ICD-10 coding as well as the payers responses to the codes. Workflow processes will have to be redesigned to accommodate the changes. Data Analytics / Decision Support Staff These staff will be required to redesign their reporting to accommodate ICD-10 and to properly manage a mixture of ICD-9 and ICD-10 data when reporting periods that cross the transition date. 15

16 Outpatient registration and scheduling staff are often called upon to take a physician s handwritten diagnosis (or worse, the patient s verbal rendition of the handwritten diagnosis) and determine the appropriate ICD-9 diagnosis codes. Knowing the ICD-10 codes for common diagnoses will be challenging enough, but can be addressed in most cases by reference to a job aid. Significant challenges will occur when more information is needed to determine appropriate coding. Currently, the registrar or scheduler picks up the phone, calls the physician s office, and waits while the admin answers, retrieves the patient chart, and interprets the noting. At best, this adds three to five minutes to a registration, effectively doubling the time required. With ICD-10, the volume of these calls will increase, and unfamiliarity with the new codes in the physician office will cause significant delays that will dramatically impact throughput. i Productivity Impact Example 16

17 Question Six How Does DRG Grouping Under ICD-10 Affect Revenue? 17

18 Poor mapping will impact reimbursement. There is a risk that the same pa(ent visit, when coded in ICD- 9 and ICD- 10 will produce disease and procedure code combina(ons which map to different DRGs, and thus produce different levels of reimbursement. Mi#ga#on Strategies: Conduct an analysis of your top 25 DRGs using GEMS mapping to iden(fy cases where current pa(ent visits are likely to split into mul(ple DRGs. Con(nue this analysis as documenta(on improves through your training efforts to further refine expecta(ons. Insufficient specificity in documenta(on may result in lower DRGs and lower total reimbursement. Mi#ga#on Strategies: Provider training is a primary mi(ga(on strategy. Use outcomes of ongoing chart analysis to iden(fy high- value training topics. 18

19 Question Seven What Kind of Testing Should be Performed? 19

20 Internal and external testing should be done to ensure that claims are paid. Internal Tes#ng Each system that handles ICD- 10 coded data should be tested, once upgraded. This tes(ng ensures that the applica(ons (and interfaces) can properly handle ICD- 9 and ICD- 10 data, and must be conducted before the upgraded system is brought into produc(on. Integrated tes#ng should occur once all of the applica(ons involved in the documenta(on and crea(on of a pa(ent bill have been upgraded. Though many healthcare organiza(ons don t have a dedicated test environment where all func(ons can be tested in this way, you should plan for the most realis(c test possible in your environment. External Tes#ng Most payers are planning to create a method for submission tes#ng. This involves the submission of an electronic claim file to a clearinghouse or third party, which validates that the transac(on file meets required standards. This type of tes(ng is valuable, as it enables significant tes(ng to every provider at a rela(vely low resource cost. Unfortunately, as many providers learned when tes(ng for HIPAA v5010, it is quite possible to pass the submission tes(ng with a file that meets the criteria, but would never result in payment. The gold standard for tes#ng is end- to- end tes#ng, where actual claims are submi]ed to the payer, which adjudicates those claims and returns 835s with payment/denial status. Because such tes(ng is labor intensive for payers, many have already closed their test pools to new applicants. Nevertheless, it s a good idea to use your influence with your major payers to a]empt at least some end- to- end tes(ng. 20

21 Question Eight What are the Best Ways to Support Physicians? 21

22 Train physicians to begin coding, now. Your physicians are the primary documenters of diagnosis and procedures in the hospital sedng. Their documenta#on is the founda#on of coding and billing in ICD- 10. Train physicians to begin coding immediately to the level of specificity required for ICD- 10. This more specific documenta#on: Is good medical prac(ce; there s no reason to wait Will provide your coders with be]er charts for prac(ce coding now and ager the transi(on. Will provide more accurate data to use in cash flow forecasts Train all the physicians who refer pa(ents to your facility for tes(ng to write ICD- 10 compliant orders for outpa(ent tes(ng that s expected to occur ager October 1, Note: Many primary care physicians write lab orders for pa7ents to use before the next visit in 6 months. Include ICD- 10 requirements in your facility s clinical documenta(on improvement process. Develop a communica(on plan to adequately distribute ICD- 10 messages to your en(re physician popula(on. 22

23 Use ICD-10 as a Strategic Element in Your Physician Relationships. i Consider ways to use ICD-10 as a strategic opportunity to improve ties with the physician community. Services that you might consider providing include: ICD-10 training for physicians and their office staff Technical support for ICD-10 related issues Provide coding help-desk support for offices who need the assistance of a trained coder to answer ICD-10 coding questions Offer coding/billing services to offices as a contract service 23

24 Question Nine Will the Transition from ICD-9 to ICD-10 be Immediate? 24

25 Don t plan on a clean transition from ICD-9 to ICD-10 codes. There will NOT be a clean break when the industry transitions between ICD-9 and ICD-10. It is unlikely that 100% of payers will be ready to accept ICD-10 claims on 10/1/14. Historical example During the transition to the HIPAA v5010 transaction standards, many payers were unready, and continued to accept the older version of claims (in some cases for months) until their systems were fully remediated. Even if all payers transition as scheduled, ICD-9 data will: Continue to be used and coded regularly until all patient visits discharged by 9/30/14 are coded. Continue to be used for insurance follow-up activity on all claims originally coded in ICD-9. Be used for any audit activity on all claims originally coded in ICD-9. 25

26 The ICD-10 transition is governed under the original congressional mandates for covered entities under HIPAA. Workers compensation are not covered entities and are therefore exempt from the mandate to convert their billing practices to ICD-10. In some states, the workers compensation program is conducted under contract by a commercial entity. In many cases these commercial entities are making the transition. Most states where the workers compensation program is state run are not making the transition or are planning for a later transition date. In some states, workers compensation is provided by a mix of private insurers. In at least one case (New Jersey) the state is not providing guidance to the insurers, allowing them to each keep their own transition schedule. Each provider who performs workers compensation services must survey their carriers to determine transition plans and dates. Liability carriers, e.g. auto insurance carriers, also are not required to transition to ICD-10. Clean Break for!no Workers Compensation 26

27 Question Ten How Can Revenue Risks be Avoided? 27

28 Assess the impacts of implementation. If you haven t already done so, assess the impacts of the implementation on your organization. Assess all the systems, interfaces, and workflows where medical coded data is created, stored, or moved. A good way to begin the assessment is to go through a patient visit, and trace the places where data is captured and stored. Pay careful attention to workflows. Some will need to be changed, and the productivity of others will be impacted. Assess the impact on systems and interfaces that store, manipulate, or pass ICD-9 data today. These systems require upgrades, with resources required for implementation, testing, and end user training. Focus on reporting all reports that include ICD-9 codes today, either directly or as part of the selection criteria must be addressed. Assess the financial impacts, being sure to include costs for productivity impacts and adequate reserves for cash flow impacts. An ICD-10-skilled consultant can greatly speed up the assessment process. 28

29 The end result of your assessment should be a plan for ICD-10 remediation activities. Some examples of items that should be in the plan include: Addressing productivity impacts, including a 50% drop in coder productivity (which requires twice the coding support) Providing adequate support in the business office for a 2 to 3x increase in denials Negotiating with payers for prospective payments if ICD-10 impacts affect the processing of claims Providing appropriate training to every member of the workforce who documents or interacts with coded data Consider ample practice time as necessary training for coders to lessen the initial impact Make the implementation of the plan an institutional imperative, and provide the resources and capital to execute the plan.!planning for ICD-10 29

30 Conclusion Plan to Protect Your Revenue ICD-10, by completely replacing the medical codes that are the foundation data on which our system of healthcare payment is based, is one of the most significant regulatory requirements ever to face US hospitals. ICD-10 will affect every department that provides, bills for, and handles reimbursement of every medical service. Critical impacts include: One-time costs, such as for system upgrades and training Ongoing costs, such as for permanent impacts to productivity Significant potential for delayed reimbursement as providers and payers struggle with the details of implementation The ICD-10 transition effort begins with a comprehensive assessment and implementation plan, the execution of which must be an institutional imperative in order to protect revenue after October 1,

31 Schedule a Customized ICD-10 Webinar To educate your management team. We are currently helping organizations like yours. Our ICD-10 experts are available to discuss how ICD-10 will impact your particular organization. We provide end-to-end implementation services or fill-in expertise in areas where you may need specialized help. The deadline is just around the corner. Let us know how we can help you. Contact us by or phone: Phoenix Health Systems info@phoenixhealth.com Or on our web site: Contact Us 31