Using ICD-10 to Enable Change Lessons Learned from the Frontline HIMSS 2009

Transcription

1 Using ICD-10 to Enable Change Lessons Learned from the Frontline HIMSS 2009 Agenda Background and overview of ICD-10 Regulatory update and timeline Comparison of ICD-9 and ICD-10 Overview of industry implications Providers Payers ICD-10 experience a case study Strategic point of view Next steps Q&A Background and overview of ICD-10

2 ICD-10 background and overview The first major change in diagnostic coding in the U.S. in over 30 years - The most significant overhaul of the medical coding system since the advent of computers. The WEDI Workgroup Health industry s version of Y2K - Encompasses moving from 5 digit numeric codes to 7 digit alphanumeric codes with embedded logic in the new code structure and a different decision tree - Approximately 7 times more ICD-10 codes than ICD-9 codes (24,000 ICD-9 codes and 150,000 ICD-10 codes) A complex, time-consuming and expensive compliance challenge - More complex than HIPAA compliance - Will touch nearly every operational and IT process and dramatically influence data and financial reporting strategies PricewaterhouseCoopers Slide 4 ICD-10 background and overview (continued) A complex, time-consuming and expensive compliance challenge (continued) - Conversion could cost the U.S. health industry $1.64 billion over the next five years, according to CMS, a figure that could be substantially underestimated - The Robert E. Nolan Company estimates total industry implementation costs to be $6-14 billion during a 2-3 year implementation period - Several healthcare organizations have set budgets between $ M for ICD-10 planning and implementation A daunting undertaking in the midst of multiple other priorities and challenges (RAC, EMR implementation, revenue pressure) Will ensure more accurate payments for new procedures, fewer rejected claims, improved disease management, and harmonization of disease monitoring and reporting worldwide Will enable the U.S. to compare its data with international data to track the incidence and spread of disease and treatment outcomes PricewaterhouseCoopers Slide 5 Regulatory update and timeline

3 ICD-10 and HIPAA 5010: A Regulatory Update and Background On January 15, 2009, Health and Human Services (HHS) released the final 5010 and ICD-10 regulations and final compliance dates are: : Level 1 (can create and receive compliant transactions, ready for testing) by 12/31/2010 Level 2 (completed testing with trading partners, ready for production mode) by 12/31/ ICD-10 full compliance by 10/1/2013 Challenges: Approximately 7 times more ICD-10 codes than ICD-9 codes (24,000 ICD-9 codes and 150,000 ICD-10 codes) Restructured code logic and length of the codes Most major business processes will be impacted: - Reimbursement (Claims) - Medical Management - Provider Contracting - Finance - Actuarial / Underwriting - Reporting / Data Management Comparison of ICD-9 and ICD-10 Comparison of ICD-9 and ICD-10 ICD-9-CM vs. ICD-10-CM & ICD-10-PCS A comparison Diagnosis ICD-9-CM ICD-10-CM Numeric with only letters V and E used All codes are alphanumeric with an alpha Maximum of 5 digits lead character Minimum of 3 digits Maximum of 6 digits plus qualifier No laterality (Left vs. Right) Minimum of 3 digits Laterality (Left vs. Right) Example ICD-9-CM Closed Fracture of shaft of femur ICD-10-CM S Displaced spiral fracture of shaft of right femur ICD-9-CM ICD-10-PCS (inpatient only) Procedures Minimum of 3 digits/maximum of 4 digits; decimal point Minimum/maximum: 7 digits; no decimal point after the second digit Alphanumeric with all codes starting with three Numeric alphanumeric characters Example Laparoscopic appendectomy ICD-9-CM ICD-10-PCS ODTJ4ZZ CPT PricewaterhouseCoopers Slide 9

4 Overview of industry implications Overview of industry implications Providers Overview of industry implications Providers Revenue Cycle Significant impact on most/all processes Diagnostic Related Groups (DRGs) and other groupers will need to reflect the new ICD-10 codes (and updated CMS requirements) IT Most/all systems and applications with ICD-9 codes will need to be updated to reflect new, more complex ICD-10 codes Field length/logic Billing systems and functions EHR, CPOE, eprescribing and other HIT applications Electronic authorization process Electronic claims submission process All technologies should be reviewed to leverage increased granularity of ICD-10 codes with clinical decision support Clinical data repository/data warehouse(s) PricewaterhouseCoopers Slide 12

5 Overview of industry implications Providers (continued) Training Most/all personnel will need to be trained on ICD-10 codes and associated process changes Coders Nurses Physicians Technicians Others Reporting Most/all reporting processes and outputs will need to reflect new ICD-10 code structure Quality assessments and reports Outcomes management Reports used for Strategy, Marketing and Recruiting Clinical Accuracy of medical records even more critical Case Management and other patient-targeted programs will need to be revised (and could be enhanced) with new ICD-10 codes Customized clinical content within new EMR applications like Epic PricewaterhouseCoopers Slide 13 Overview of industry implications Providers (continued) Research Activities All activities based on ICD-9 codes will need to be revised to reflect new ICD-10 code structure All research activities should be reviewed to explore opportunities for improvement based on increased specificity in the ICD-10 codes Change Management Due to significant changes in day-to-day processes, detailed change management plans should be developed and executed All processes associated with patient safety and quality improvements should be reviewed for improvements with availability of more detailed ICD codes PricewaterhouseCoopers Slide 14 Overview of industry implications Providers (continued) Physicians Provide appropriate training and tools for all physicians to learn and understand ICD-10 - Identify champions to lead training and adoption Superbills will be challenging Review and enhance current record-keeping methods by utilizing more granular level of ICD-10 codes (e.g. EHR) Review and update current pay-for-performance programs Leverage technology and clinical decision making (with evidence-based medicine) through new ICD-10 codes Review and bolster processes for monitoring physician practice patterns to incorporate into quality management initiatives All size practices are impacted PricewaterhouseCoopers Slide 15

6 Overview of industry implications Providers (continued) Payers Contracting and reimbursement mechanisms will need to be reviewed and/or bolstered All processes (and the systems that support them) associated with electronic exchange of information with payers will need to be reviewed and be able to accommodate new ICD-10 codes Pay-for-performance initiatives will need to be reviewed and could be reviewed and enhanced based on the new ICD-10 codes Any clinical and quality reporting with payers will need to be updated to include ICD-10 codes Timeline may require dual processes Vendor Management Who are your vendors and what are the linkages - Practice management tools - Clearinghouses - Care management vendors - Many others Vendor ICD-10 readiness and approaches will need to be assessed, validated and monitored Any reports generated in conjunction with vendors containing coding data will need to be updated PricewaterhouseCoopers Slide 16 Overview of industry implications Providers (continued) Patients Patient awareness initiatives may be required to explain the changes in procedures and diagnosis processes for improved patient satisfaction ICD-10 communication plans should address patient constituencies PricewaterhouseCoopers Slide 17 Overview of industry implications Payers

7 Overall implications Transaction upgrade is major effort Code set upgrade even bigger General implementation concerns Transition concerns Data correlation concerns IT and business impact Customer and provider implications Workers compensation PricewaterhouseCoopers Slide 19 Breadth of impacts Providers Employers Members Agents Trading partners Business associates Vendors PricewaterhouseCoopers Slide 20 Applications impacts Automated letters Authorizations Actuarial Underwriting Proposals Business intelligence Groupers, bundling, medical necessity Claims history DBs Claims entry Claims adjudication Pricing Utilization review Crosswalk implementation Customized desktops DRG pricing Duplicate checking EDI Gateway EOB reformats Edits Web VRU OCR Provider DBs Remittance Reporting Settlement Membership Care management Training Transitions, with mixture of old and new codes PricewaterhouseCoopers Slide 21

8 Applications changes Changes to: - Field size/format - Logic (edits, adjudication rules, etc.) - Screen Maps - Tables/Files - Databases - Reports/Queries - COTS applications (translators, groupers) Extensive Testing, Testing, and Testing PricewaterhouseCoopers Slide 22 Business impacts Updates to data in benefit files, provider repository, medical management repository, and claims repository Product development Provider contracting Provider relations Communications Customer service Medical management Utilization review P4P Actuarial Underwriting Finance Reporting Enrollment Claims processing Group contracts Individual contracts Internal Audit/Fraud & Abuse Training Vendor Oversight/Contracting Budgeting and planning cycle Government programs Legal/Government Relations/Compliance Testing PricewaterhouseCoopers Slide 23 Sticky points during transition Dual standards (triple processing?) Archived data, medical records Distorted/Lost statistics Rating/Fees Hard copy NCQA, HEDIS, employer reporting Cross year functions and episodes of care Business associates Trading partner testing and migration Etc. PricewaterhouseCoopers Slide 24

9 Crosswalks are essential Crosswalk tables between ICD-9-CM and ICD-10-CM/PCS are available Backward and forward not complete Decisions would require manual intervention Agreement to add code for payment purposes Map to SNOMED-CT will be needed Crosswalks are essential to avoid manual processing, assure consistency and prevent: Loss of historical data Inability to run incentive programs Improper payments, fraud and abuse PricewaterhouseCoopers Slide 25 Steps to ease implementation Dust off old HIPAA project plans Develop migration strategy for 5010 and ICD-10 (including critical business decisions and what if s ) Prepare realistic estimate (don t be overly optimistic) Inventory all potential impacts Identify a series of interim steps, each with a timeline leading up to the overall target date. Budget for cost, effort and staff accordingly Conduct internal awareness initiatives Conduct extensive outreach to providers, employer groups, members Start Now PricewaterhouseCoopers Slide 26 ICD-10 Experience a case study

10 Impact discussion Case study ICD-10 Impact assessment Project overview Issues Action Results Large payer replacing a new enterprise legacy system concerned about ICD-10 potentially coming into play in the middle/shortly after go-live. Cross-Functional Leadership and Core Teams Assembled in 2007 Conducted impact assessment over 18 week period. - Conducted~30 interviews across 14 functional areas - Provided~150 employees at least 30 minutes of awareness training - Held weekly Leadership and Core Team meetings to monitor project status and provided approval/guidance - Maintained project plan to include additional interviews and other follow-up activities - Vetted results with Leadership Group and Core team PwC identified significant potential impacts across a variety of functions and stakeholders, including: - Providers - Vendors - Employers - Members - Community - Various Internal Operational Impacts PricewaterhouseCoopers Slide 28 HIPAA v5010 and ICD-10 implementation phases The chart below illustrates the entire lifecycle of the 5010 and ICD-10 remediation process. The first two phases address the impact assessment and strategy definition. They provide the foundation for understanding the depth and breadth of the impacts, setting the strategic direction and guiding principles for the overall initiative.. The other latter two phases relate to remediation and implementation. PricewaterhouseCoopers Slide 29 Impact discussion Case study ICD-10 Impact assessment Impact assessment project approach summary Inputs Assessments Outputs Stakeholder Interviews Infrastructure Review Leadership Workshops Disciplined assessment process to accomplish the following: Effective Mobilization Stakeholder Identification Kick-Off Meeting/Training Leadership Workshops Conduct Group Facilitated Sessions Documentation Review Impact Analysis: - PwC/Client Collaboration - Data Analysis - Vetting - Industry Perspective - Client Environment - Multi-View, based on: Client organization Payer Classification Framework People, Process, Technology Main findings Inventory of strategic business decisions/options List of critical success factors Key contingencies Current and schedule projects impacted by ICD-10 Cost estimate (range) List of impacted projects List of recommended projects Action plan for key next steps PricewaterhouseCoopers Slide 30

11 ICD-10 Impact Assessment Case Study Cross-Functional Enterprise Themes Ten main cross-functional enterprise themes that developed across the functional areas review: Data Infrastructure Actuarial & Pricing Process Redesign & Training Communications Modernization Vendor Strategy Budget Competitive Advantages Provider Community Crosswalk Cross Mapping ICD- 9 and ICD-10 diagnosis and hospital procedure codes Impact of ICD-10 on Client s relationships, interactions and contracts with providers Opportunities to differentiate product design, medical management and growth strategies Planning f or ICD-10 costs, resource allocation, and program management ICD-10 impacts and opportunities relative to Client s vendors Modernization of claims processing system and ICD-10 convergence Client s strategic position and approach to ICD-10 Process improvement, training, and coordination Financial impacts related to ICD-10 convergence ICD-10 impact on reporting and system applications PricewaterhouseCoopers Slide 31 Strategic point of view Strategic point of view PwC point of view Compliance vs. Strategic Strategic Strategic imperatives Imperatives Support enterprise strategy Leverage/ reduce costs Catalyst to imperatives Maximize ROI Achieve competitive advantage Mandated projects PricewaterhouseCoopers Slide 33

12 Strategic point of view PwC point of view Based on early industry research and interviews, we expect many payers will try to crosswalk ICD-9 to ICD-10 (e.g., provider submits a claim with a 10 code, payer maps to and adjudicates to a 9 code, and then flips back to a 10 code on the EOB). Early Starting Points High-performing organizations will address key components of ICD-10 sooner rather than later with: - Early identification of high impact areas - Development of ICD-10 strategy aligned with enterprise strategy to leverage effort - Focused education for better strategic and management decision-making - Opportunities to integrate into existing projects to reduce overall costs - Proper sizing/sequencing of work streams Potential ROI Early start may lead to a substantial reduction in ICD-10 costs and increase ROI ROI will be achieved via early identification of key issues, proper training, timely strategic decisionmaking, integration of required activities into existing and future work streams to reduce redundancy and rework Estimated cost for large organization's ICD-10 conversion is in the hundreds of millions of dollars; conservative 1% savings from early assessment would provide significant savings PricewaterhouseCoopers Slide 34 Strategic point of view Sample of Potential Strategic Opportunities for a plan Consistency and Simplicity The granularity of the ICD-10 will likely force significant changes to current plan designs. A plan may have a strategic opportunity to use ICD-10 planning and implementation in support of a central plan design tool and adjudication engine to enable simplification of plan designs and claims adjudication logic. There could also be collateral opportunities in challenging areas such as actuarial, employer reporting, and others. Data Strategy and Data Management The ICD-10 data sets will be new to everyone in the industry, including a plan s competitors. This will present a unique opportunity for a plan to advance a data architecture and data management strategy leveraging ICD-10 data sets to achieve future state reporting for internal and external stakeholders, including the data requirements of P4P arrangements. Medical Management Strategy Increased granularity could provide an opportunity to align the health care management strategy and associated initiatives with ICD-10 planning and implementation (reporting to support advanced disease management and wellness activities). Such capabilities can also enhance the ability to anticipate return on investments by making targeted marketing and outreach efforts possible in the areas of medical management. In addition, enhanced codes also allow for more detail and specificity in provider reporting/management of new and emerging pay-for-performance and consumer directed initiatives, as well as significantly enhancing overall healthcare reporting and transparency capabilities. PricewaterhouseCoopers Strategic point of view Sample of Potential Strategic Opportunities for a plan (continued) Provider Incentives The new ICD-10 codes allow for more detail and specificity in provider reporting and management of new and emerging pay-for-performance (P4P) and consumer directed initiatives that the current ICD-9 code cannot support. The increased specificity of the ICD-10 codes will significantly enhance healthcare reporting and increase transparency. IT Project Portfolio Alignment The systemic nature of the ICD-10 initiative provides an opportunity for both re-prioritizing the IT Project Portfolio as well as re-aligning some projects to leverage resources and investments to achieve common business, strategic and compliance objectives. Following a thorough review of the portfolio, a crosswalk should be developed demonstrating where those leverage points exist and the most efficient and effective sequence and timeline of those projects. Finance and Actuarial The new codes can provide opportunities to assess costs and potential savings options at a new level of detail. This can assist with improved product pricing forecasting in appropriately considered in the implementation efforts. If these are not appropriately addressed in the implementation effort, it could out organizations at a competitive disadvantage. PricewaterhouseCoopers

13 Next steps Next steps Spread the word. Broad orientation now is important to get everyone thinking about what ICD-10 means to them and their responsibilities. Detailed planning requires enterprise knowledge via a thorough impact assessment. Impact Assessment knowledge and planning in 2009 is critical. Even with the extended HHS timeline, the slower the progress the less strategic the effort can be. Develop refined budget and action plan, including interdependent projects. PricewaterhouseCoopers Slide 38 Q&A

14 Thank you 2009 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.