ICD-10 Transition for Providers: Mitigate the Financial Risks

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1 ICD-10 Transition for Providers: Mitigate the Financial Risks INTRODUCTION The ICD-10 transition will have tremendous impact on a provider organization, and this impact will be felt for years after the migration. To ensure success, a provider must understand how its business will be affected, plan to mitigate negative impacts, and manage the process beyond October to ensure that remediation activities can be maintained over time. The federal government has set an October 1, 2015 deadline for switching from ICD-9 to ICD-10 code sets for diagnoses and inpatient procedures. There s a lot at stake in this clinical terminology overhaul. Nearly every aspect of a provider s operations will be impacted. Healthcare organizations must confront a number of potential pitfalls, including: Up to 10% increase in claims error rates. An increase in payer denial rates of up to 200% post go-live. Significant underpayments or delayed payments. Poorly translated reports that compromise clinical and operational decision making. 1 This translates to a loss of real dollars that can disrupt your organization s revenue cycle, and time is in short supply. For healthcare organizations that have fallen behind the ICD-10 adoption curve, it is already too late to purchase a software tool in hopes of speeding up conversion activities. Such providers will need to rely on a suite of services to augment their teams to push their conversion projects over the finish line. Health Language offers services specifically focused on ICD-10 remediation. Our consultants can help you identify your conversion challenges and create a path forward. 1

2 REIMBURSEMENT RISK Regardless of the remediation approach a health system takes, the first critical step is understanding the threat landscape. Among the top risks is the potential impact of an ICD-10 transition on the provider s revenue cycle. The greatest threats to reimbursement neutrality are the potential DRG shifts between ICD-9 claims and corresponding ICD-10 claims. To minimize risk, the provider must first understand the changes associated with ICD-10. Most providers will have already received training in the ICD-10-CM and PCS code sets and realize they are moving from 16,000 codes to some 150,000 codes. But that s not the whole story-field lengths and available characters are increasing with the introduction of the expanded alphabet in the code sets, and providers will also find substantial changes in the official Coding Guidelines. For example, ICD-9 encounter codes (V codes) for rehabilitation are no longer acceptable as a principal diagnosis; coders are instructed to assign the medical condition as the reason for the encounter when coding in ICD-10. The sequencing rules of several diagnoses have changed as well, with many of these alterations automatically resulting in changing reimbursement. Anemia with neoplastic disease, for instance, is sequenced differently in ICD-9 compared with ICD-10-anemia is sequenced first in ICD-9, but malignancy should be the principal diagnosis in ICD-10. This sequencing change may result in a different DRG weight. The problem, in general, stems from the increased granularity of ICD-10, which significantly increases the coding options that may change the DRG weight. Factors that may trigger a DRG shift include mistakes by inexperienced coders and insufficient physician documentation at the point of care. In some cases, the financial impact may be unavoidable, requiring a provider s team to reopen conversations with payers. Identifying reimbursement risk and establishing priorities for remediation can prove a daunting task. Providers that fail to prioritize internal resources to understand high-risk and high-dollar service lines could experience significant financial loss in the transition. Unfortunately, some organizations will be hard pressed to free up sufficient inhouse resources to tackle an ICD-10 project in a timely fashion. Working with a team of consultants such as Health Language can speed up the schedule. Health Language can evaluate a provider s operations, pinpoint its risk exposure, and create a remediation plan that addresses precisely those elements that need to be fixed. A specific plan may focus dual coding and chart review activities on key problem areas or ramp up the provider s clinical documentation improvement (CDI) program or coder education efforts. In some cases, the plan could prompt a provider to go back to its payers and update its contracts. USING CLAIMS ANALYTICS TO ESTABLISH PRIORITIES Health systems need to prioritize problem areas as they create and execute an ICD-10 conversion plan. Providers should identify and scrutinize potential high-risk codes and claims well in advance of the ICD-10 deadline. Using claims analytics software to simulate ICD-10 claims is one of the most efficient ways to assess potential ICD-10 financial risk. An important consideration when hiring an outside team of consultants is whether its solution leverages a claims analytics methodology. 2

3 At Health Language, our ICD-10 remediation methodology consists of four primary steps: 1. Simulate DRG shifts Take 837I historical ICD-9 claims and simulate ICD I claims using the MS-DRG or APR- DRG grouper. 2. Categorize risks Stratify risk classifications according to high frequency, high cost, provider, and service line. 3. Determine root cause Apply mitigation strategies for each risk area. Common reasons include true financial risk, new coding guidelines, and new documentation requirements. 4. Modify downstream activities Customize CDI and coding education programs, review list mapping and systems remediation activities, update EMR templates, and validate by prioritizing your dual coding efforts and chart reviews. Make your time count. DRG SHIFT: ONE SCENARIO DRG shifts can have significant financial impact on a provider s business. Consider this scenario: The original ICD-9 claim indicates a principal diagnosis of major depressive disorder, unspecified degree. The subsequent ICD-10 claim, however, involves a code that indicates major depressive disorder, single episode, unspecified. This difference causes a DRG shift and decrease in DRG weight. Often, unspecified codes as a principal diagnosis will cause a decrease in DRG weight. In the case of the F32 (major depressive disorder) codes in ICD-10, a provider would need to indicate the severity of illness (mild, moderate, severe, etc.) to avoid the unspecified code. The need to specify severity is a common theme in ICD-10. A provider that replaces the unspecified ICD-10 code with a more specific code can neutralize the DRG shift. 3

4 Health Language s ICD-10 remediation service can help providers identify such DRG shifts and take appropriate action. In the preceding example, Health Language would place the shift in the CDI category and use this information to inform a provider s CDI program. Health Language can help institute an ongoing regimen of granularity, which will improve clinical documentation. Providers that document major depressive disorder, for instance, should be coached to capture severity of illness during their patient encounters. From a technology perspective, a provider should update EMR templates to drive better documentation, which can also decrease queries by coders. BEYOND OCTOBER 2015 The ICD-10 transition will have very large impact on provider organizations that will be felt for years after the migration. To ensure a successful transition, a provider must understand how its business will be affected, plan to mitigate negative impacts, and manage the process beyond October to ensure that remediation activities can be maintained over time. One way to accomplish that goal is to analyze ICD-10 claims after the transition date to validate that your CDI programs and system remediation activities were successful. This approach can provide insights into any remaining areas that haven t been addressed properly, or pinpoint outstanding financial risks that haven t been mitigated. This process will require significant due diligence and expertise long after the ICD-10 conversion is complete. WHAT TO LOOK FOR WHEN SELECTING A VENDOR A majority of providers have found preparing for the ICD-10 transition to be too complex and too resource and time intensive to undertake on their own. As the healthcare industry aims to fill the expertise gap, a number of vendors now specialize in assisting healthcare organizations as they transition from ICD-9 to ICD-10. Below is a list of questions to ask when selecting a vendor to complete your ICD-10 remediation project: Does the vendor use a claims analytics tool that has the ability to pinpoint potential reimbursement risk areas? Does the vendor have the ability to separate and break down its analysis by organizations and service lines? Doing so allows for visibility into separate areas of your enterprise. Does the vendor provide you specific areas where you need to mitigate your risks? If they do, can you trust those recommendations based on the clinical expertise provided by the vendor? Can the vendor provide references? Completing an ICD-10 remediation project is complex and can have serious repercussions if not completed successfully, so confirm that your potential partner has ICD-10 project experience. Can the vendor provide clinically experienced and certified personnel? Partners with in-house AHIMA ICD- 10 approved trainers and coders, nurses, physicians, PhDs, and medical informaticists will be able to provide the smoothest conversion for your organization. Many organizations are using the ICD-10 transition to establish a governance process around ICD-10, and as an opportunity to embrace terminology management across their organization. To learn more about how Health Language has helped customers establish an Enterprise Terminology Management discipline, visit us at www. healthlanguage.com. 4

5 THE HEALTH LANGUAGE ENTERPRISE TERMINOLOGY MANAGEMENT PLATFORM Our platform provides you with the software, content, and consulting solutions that map, translate, update, and manage standard and enhanced clinical terminologies on an enterprise scale, enabling the information liquidity required to support some of healthcare s toughest challenges, such as meaningful use compliance, ICD-10 conversion, population health management, analytics, accountable care organizations, and semantic interoperability among systems. OVER A DECADE OF SUPPORT FOR THOUSANDS OF CLIENTS WORLDWIDE Over a decade of international ICD-10 experience (USA, UK, Canada, and Australia) has given us a strong understanding of standard terminologies and how to create clinically-equivalent relationships between ICD-9 and ICD-10. Our staff of AHIMA-approved ICD-10 trainers and certified coders, medical professionals, PhDs, and medical informaticists will ensure your organization s success in ICD-10 and beyond. ABOUT WOLTERS KLUWER HEALTH Wolters Kluwer Health is a leading global provider of information, business intelligence, and point of care solutions for the healthcare industry. Serving more than 150 countries and territories worldwide, Wolters Kluwer Health s customers include professionals, institutions, and students in medicine, nursing, allied health, and pharmacy. Major brands include Health Language, Lexicomp, Lippincott Williams & Wilkins, Medicom, Medknow, Ovid, PharmacyOneSource, ProVation Medical, and UpToDate. Wolters Kluwer Health is part of Wolters Kluwer, a market-leading global information services company. Wolters Kluwer had 2013 annual revenues of 3.6 billion ($4.6 billion), employs approximately 19,000 people worldwide, and maintains operations in over 40 countries across Europe, North America, Asia Pacific, and Latin America. 1 HIMSS G7 committee report, Health Language 4600 South Syracuse Street Suite 1200 Denver, CO healthlanguage.com Wolters Kluwer Health All Rights Reserved. HL-WP-I10-Provider

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