ICD-10 Prep Work: Why Hospitals Need to Reach Out to Payers

Hospitals need to work with payers to properly prepare for ICD-10.

In the past six months, hospitals have considerably increased their internal training efforts in preparation for the transition to ICD-10, according to a survey conducted by the consulting firm Health Revenue Assurance Associates.

The transition from the ICD-9 code sets used to report medical diagnoses and inpatient procedures to ICD-10 is required for everyone covered by HIPAA starting Oct. 1, 2014. The HRAA survey — a follow-up to industry research HRAA conducted in April — found 78 percent of hospitals have begun ICD-10-CM training and 64 percent have started ICD-10-PCS training for their coding staff, up from 60 percent and 45 percent, respectively, in April.

However, although 71 percent of hospitals plan to submit ICD-10 coded claims to payers before Oct. 1, 85 percent said they don't know if their payers plan to map claims using CMS reimbursement maps to group the claims to diagnosis-related groups.

A lack of communication and preparation between payers and providers before ICD-10 hits could lead to piles of denied claims and delayed reimbursements, says Dean Boyer, chief technology officer of HRAA.

"If [hospitals] don't have their major payers lined up and the payers don't understand how the hospitals are going to code using ICD-10, that becomes a recipe for miscommunication," he says.

There's no requirement saying hospitals and payers need to meet and work out how they will communicate using the new ICD-10 language, but he says it's an important step in the preparation process nevertheless.

"This is not just a coding change," he says. "We're actually changing some of the ways in which we want to look at healthcare. From an actuarial perspective, on the payer side, this could have tremendous impact on how they manage their plans. This could change the way hospitals are reimbursed for the services they provide."

Recognizing the risks of not discussing ICD-10 with payers, some providers are trying to get a leg up on the preparation process. "The potential challenge is the payers have limited resources, and I think the ability for every facility to test with every payer isn't going to materialize," says Chris Pass, senior vice president of revenue cycle at Walnut Creek, Calif.-based John Muir Health. "You need to get on the schedule early."

Examine the hospital claims portfolio
When it comes to payer preparation, Mr. Boyer says hospital and health system executives should first focus on understanding what their portfolio of claims look like. For example, a hospital may realize it has one payer that deals with most of the claims concerning coronary disease.

"I would look at where my biggest financial impact is, and I would reach out to those payers very quickly," he says. "Have them go through, adjudicate and tell you what they're going to reimburse. Is it the same revenue you were getting with ICD-9?"

Figure out an approach for payer preparation
Once a hospital or health system identifies its key payers, it should start communicating with them about ICD-10 testing and work toward a revenue neutral exchange. "Payers are going to want to be open to that," Mr. Boyer says. "If you're the one handling the majority of their customers, they're going to want to make sure they're not denying claims unnecessarily."

John Muir Health has already reached out to payers and is working out how to conduct ICD-10 testing to determine how the payers will adjudicate claims. "We're doing dual coding right now to give the payers claims to adjudicate," Mr. Pass says. "We're talking about handing them a box of dual-coded claims. They're going to adjudicate those claims and hand them back to us."

John Muir Health is installing a new electronic health record system that won't go live until early next year, so the testing probably will start in April or May, he says.

Determine a strategy for payers who don't want to partner
Hospitals may encounter payers that don't want to partner to prepare for the ICD-10 transition, Mr. Boyer says. In that instance, hospital and health system executives will want to develop a proactive strategy to predict the acceptance or denial of claims as accurately as possible under the circumstances, he says.

"If you can't get the payer to work with you, you have to look to the general equivalency maps the payers are producing," he says. "It's going to be important to look at what information those payers are providing."

Mr. Boyer advises hospital executives to use predictive analytics to stay ahead of the curve and prepare for reimbursement delays involving payers that aren't as cooperative.

Test the claims processing workflow
In addition to testing the contract terms and payer systems for adjudicating, John Muir Health plans to test the claims processing workflow as well, Mr. Pass says.

 Our plan is to attempt to test the end-to-end process with electronic claims," he says. "What we're trying to test is the workflow of getting a claim through our system to them."

Conclusion
Despite the planned payer testing, Mr. Pass expects his health system will encounter some challenges and speed bumps during the transition to ICD-10. The processing system on the payer side will likely vary, with some payers planning to dual process ICD-10 and ICD-9 claims while others plan to convert ICD-10 claims down to ICD-9 or vice versa, he says.

Additionally, he views some coding disparities as inevitable. "We have a code map," he says. "I guarantee that ours is going to be slightly different on certain codes than Blue Cross or Blue Shield."

The testing to determine how payers will adjudicate claims is one way to address that potential problem, and having budget neutrality in contracts will mitigate it. However, Mr. Pass says he doesn't think the issue will ever be eliminated because all the payers "are never going to agree to the mapping."

And, of course, there's the risk that all of the payers won't be ready to test before ICD-10 officially launches. "In 2014, it's going to be difficult for a while," Mr. Pass says. "There will be little bugs and little things we need to worry about and work our way through."

More Articles on ICD-10:
End-to-End Testing for ICD-10: A Primer for Healthcare Executives
6 Tips for Taking a Holistic Approach to ICD-10 
5 Signs Your Clinical Documentation Program is Not Ready for ICD-10 

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