Embrace the Advantages of ICD-10 and Healthcare Transformation

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With so many changes happening simultaneously in healthcare, it is no wonder there is pushback on initiatives such as ICD-10. For some, there is the perception that the implementation of ICD-10 will create significant burdens on the practice of medicine. While ICD-10 does require a change in how medical encounters/episodes are documented, organizations that commit to data analytics using ICD-10 can realize benefits from better insight into how care is delivered, how data can help improve patient outcomes and improvements to the bottom line.

Data analytics requires an investment of time to understand how to design reporting for success with ICD-10 and as quality becomes a key component for maximum payment. As organizational data becomes more structured, dashboard reporting and information systems will help organizations find ways to achieve success with meaningful data. One good thing about ICD-10 is that everyone starts with the same data at the same time. So, the race is to figure out how to use and "operationalize" the data, including ICD-10.

While HHS recently announced it will delay ICD-10 by one year, it is delaying the inevitable. The ICD-9 classification system is old and is in need of change for many reasons. Rather than resisting change, organizations that make a commitment to understanding the detail in icd-10 and data analytics can achieve benefit from the new coding system.

Using data to influence care delivery

There are several components of healthcare reform, including HIPAA 5010, health information exchanges, electronic medical records, accountable care and ICD-10 that are creating work for physician practices and hospitals.

Version 5010 accommodates the new code sets and is a foundational step in healthcare transformation and in ICD-10 implementation. The advantages of 5010 are delivered through standardization and ensuring the industry is operating with consistent transactions.
When 5010 became effective January 1, 2012, some facilities were not ready. CMS' Office of E-Health Standards and Services  delayed penalties for 90 days, giving many organizations the opportunity to become compliant before penalties were assessed, and on March 15 announced a further delay of the deadline until June 30, 2012. A benefit in any delay of ICD-10 is that it will provide additional time to implement strong change management practices.

The convergence of all of these healthcare reform components results in an industry that is electronic and which has a repository of valuable data. Benefits regionally and worldwide are more likely as data can be combined and analyzed across all organizations for comparative and analytical results. Since one must change reporting and benchmarking to achieve maximum benefit under ICD-10, now is also the time to get ahead of the data process and understand how the new procedures and diagnosis combined with other data can influence the outcome of care and help improve operations.

Many of the coding changes in ICD-10 are because of laterality and anatomic sites. Many other changes are to document greater specificity of care. Despite the concern that ICD-10 requires more work, physicians, payors and providers should embrace the benefit of greater specificity that exists in ICD-10 and use that data to influence how care is delivered and managed. 

Making a commitment to analytics and electronic transactions

An increase in specificity only delivers value if organizations commit to data analytics. Collecting data is meaningless if nothing is done with it. On the other hand, organizations that commit to data mining will reap the benefits of specificity in ICD-10.
One of the key benefits is the ability to obtain a richer view of the patient condition. A global view is more readily available from the combined benefit of HIEs, 5010 transaction sets, and EMRs. These items enable data to exist in an electronic format, with some consistency. Therefore, having data for care (HIE), processing (5010) and capturing data for reporting (EMR) is made easier in an electronic environment. Similarly, capturing the right ICD-10 data allows for quicker and easier drill-down into some of the details by using the available information to investigate the way care is/was delivered.

With access to electronic information, hospitals and physicians that operate in a community can share patient information for greater insight into patient history. For example, physicians can access medications that are administered, historical episodes of care and gain a fuller patient history which will help with the identification and management of complications and complexities of care. 

There are isolated incidences where ICD-10 has the potential to yield greater reimbursement than in ICD-9. One such case involves amputation excluding upper limb and toe. In this particular case, "gangrene not elsewhere classified" is the principle diagnosis under ICD-10 with a pressure ulcer on right ankle as a secondary diagnosis. In ICD-9, per coding guidelines, the pressure ulcer event sequences as a primary diagnosis. In ICD-10, the guideline for pressure ulcer is "code first any underlying gangrene," resulting in primary diagnosis of gangrene. Under ICD-10, this case results in an MS-DRG of 239 with a relative weight of 4.5544. Under ICD-9, it results in MS-DRG 579 with a relative weight of 2.6935. Knowing the specific codes of your practice and the changes between the two code sets will help illustrate where other such opportunities exist.

Understanding how ICD-10 changes the demands of documentation can also help guide physicians on where to focus effort to document to the right level of specificity in order to avoid procedure-related documentation queries that are expected to increase for areas such as fusions, intestinal surgeries and vascular procedure coding where greater specificity of anatomy is required.

The combination of financial data with quality data is pushing the clinician to have more involvement and address more of the business issues of healthcare delivery. Quality data is also beneficial to measure efficiency and support informed decisions. For example, data can reveal how much time is spent performing procedures and what common elements yield successful outcomes. It also can provide insight into patterns of care, readmissions or spending on pharmaceuticals to provide physicians with data to address balancing quality with cost efficiency to achieve positive clinical and financial outcomes.

Programs like pay for performance and accountable care organizations link efficiency and care outcomes to financial rewards. The ability to combine data elements such as contract terms, quality terms and efficiency terms will help organizations to measure performance. But, to achieve benefits, organizations must commit to an improvement program that includes analyzing data. That's because greater specificity in and of itself isn't where improvement is realized. Data analytics are the key to driving change.

Controlling costs and improving cash flow

Additionally, payor influences can also create benefit from ICD-10 and impact revenue cycle. Greater coding specificity reduces the need for healthcare payors to request copies of medical records. With 5010 transactions implemented, all payors have to transmit in a structured and standardized process. This contributes to improvement because of efficiencies gained through electronic transmissions and more automated processes. And, visibility into claim status and electronic payments speeds up cash flow for providers.
It has been said that greater specificity will translate to fewer claim denials and more timely payment on the payeor side. Fewer rejected or miscoded claims positively impacts provider revenue and requires fewer resources.

Data reporting provides insight into favorable or negative trends such as understanding true costs of procedures or which procedures are driving the majority of costs. With this insight actuaries can better apply premiums because ICD-10 enables payers to capture more high risk elements, enabling them to assign cost and payment of care to the right group. Increased specificity with ICD-10 also makes room for new procedures and techniques.

As payors migrate to ICD-10, they are evaluating charges, procedures and benefits relative to the cost of care. Understanding contract terms to ensure revenue neutrality across the enterprise is an important objective. When considering all the factors that can influence neutrality (case mix changes, better documentation, and actual terms) a teamed approach of dual coding and processing between providers and payers which uses actual medical records is a recommended approach. A tool that is flexible and offers relatively easy modeling scenarios would also be valuable during this time of change.

As organizations prepare to migrate to the new code set, many are turning to partners for success. A business process service provider can ensure organizations have resources for better change management processes and current technology to ensure their healthcare reform initiatives are a success. Organizations that do not have resources for dual coding or a system that is tracking contract terms and processes for accurate documentation and reimbursement, as well as reporting for improvement, should include those things in their ICD-10 transition plans. An outsource partner may be the right choice if one alleviates the need for additional training, capital investment and IT resources while enabling organizations to take advantage of state-of-the-art technology and solutions.
While the ICD-10 transition requires a significant shift, the benefit to organizations that commit to capturing data and data analytics is immense. And, a delay in ICD-10 may be just the thing to help make it happen. Physicians can access more information for more-informed care and payers can improve revenue cycle management and streamline processes. Change is coming; how are you planning to make it work to your advantage?

Veronica Hoy, MBA, is vice president of the HealthSERVE Consulting unit of SourceHOV. SourceHOV is one of the largest pure play business process outsourcing and consulting companies in the markets served. SourceHOV serves more than 50 percent of the FORTUNE 100® companies and has a global workforce. Headquartered in Dallas, the company has locations in six countries. For more information on SourceHOV’s ICD-10 offering, visit www.sourcecorp.com/icd10 or contact Veronica Hoy at This email address is being protected from spambots. You need JavaScript enabled to view it. or (877) 369-0344.

More Articles on ICD-10:

HHS Proposes One-Year Delay of ICD-10 to 2014
Survey Suggests ICD-10 Delay is Favorable for Providers
MGMA Issues 7 ICD-10 Recommendations


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