ICD-10 still offers myriad challenges: More turn to outsourced services to generate bills,revenue

The relatively quiet first week of the transition to the ICD-10-CM coding system had some observers comparing it to Y2K, a supposed global computer crisis that was largely averted by some straightforward software programming.

Editor's note: This is the second of four articles exploring revenue cycle challenges affecting community and safety net providers. Part 1 provided an overview of the issue. Coming soon are installments on patient self pay and revenue cycle readiness.

Don't be fooled.

Behind the scenes we have already seen reports of commercial health plans rejecting claims for lack of specificity in clinical documentation. Organizations without up-to-date electronic medical records have experienced glitches in clinical documentation improvement (CDI) and computer-assisted coding (CAC) systems. Coders and physicians have spent hours on the telephone with insurer representatives who lack basic knowledge on the coding methodology.

The truth is we have yet to see the true impact of a shift from approximately 13,000 diagnosis codes in ICD‐9‐CM to more than 68,000 in version 10. Many coders are still working on bills for services delivered prior to the Oct. 1 debut of ICD-10. Even among hospitals and medical groups large enough to have done their due diligence to ensure that their internal systems and communication processes were in place in time, the impact of ICD‐10‐CM outside of their direct control could still have a significant impact to their medical and financial health.

A Sept. 29 survey by market research firm Black Book found the biggest coding concern of 70% of hospital CFOs is their payer's lack of readiness due to denials and coding roadblocks to getting paid.

Black Book also found that 79% of hospitals over 200 beds were also confident in their coding resources yet only 16% had completed testing of ICD-10 between their facilities and all their respective payers.

Smaller community hospitals and safety net providers may not be ready for ICD-10 at all. They lack in-house expertise required to coordinate the shift across clinical, operational and financial operations.

One of the authors is CFO of The Polyclinic in Seattle, a large multispecialty physician clinic that has taken on full risk for claims and medical management of Medicare Advantage products with three different large commercial payers. Through these arrangements, Polyclinic has worked with providers large and small, and while everyone has challenges, the brunt of ICD-10 will be taken by the smaller providers, especially physicians in solo practices and the smaller multi-specialty groups. If they are not on an electronic practice management system or full EMR, life just got a lot worse Oct. 1.

Getting specific
While ICD-10-CM still has many codes that are non-specific, the tremendous increase in number of codes and code expansions allows for much greater capture of specificity. For angioplasty alone, a cardiologist will have 845 different codes from which to choose. ICD-10-CM will better capture every patient's condition and allow for better measurement of outcomes and analysis of data. The Centers for Medicare and Medicaid Services publishes many local and national coverage determinations, which offer specific payment guidelines often based around diagnostic coding. Other payers also have payment policies that are impacted by diagnosis codes. With every diagnosis code changing, all of these policies will have to be revised and updated. This in turn opens up a prime opportunity for payers to become more stringent in their payment policies.

Clinical documentation improvement initiatives will need to play a much larger role in making certain the specificity needed to most accurately capture the condition and acuity of the patient is present in the documentation. Small changes can have a big impact on the accuracy of the code selected and paint a much clearer picture of the patient to the payer.

For example, there is a vague code in ICD-9-CM for limb pain; if the patient comes in with arm or leg pain in soft tissue that is not specific to a joint, the code is the same. In ICD-10-CM there are multiple codes that identify which limb and which part of the limb, so this one code translates to 31 different options. Using an unspecified code could potentially result in a denial for services if the location of the pain is not appropriately mapped to the location of the treatment.

The big slowdown
The complex nature of ICD-10 will undoubtedly slow coders down, exacerbating pre-existing conditions. The need for additional coders comes during a longstanding national and coder shortage.

ICD-10 is also going to slow physicians down, reducing the amount of time they can spend on direct patient care. That is just going to be a challenge for a period of time while physicians learn a whole new nomenclature.

Thus we will see slowdowns in patient care and coding on the provider side and claims processing on the payer side. This is why days' cash on hand is a key metric in revenue cycle management. Providers need enough cash to survive an inevitable cash flow squeeze as payers work through their own issues with ICD-10.

Healthcare organizations should use leading key performance indicators (KPIs) to compare performance before and after the migration to ICD-10. The following indicators will provide strong guidance on organizational performance with ICD-10:

  • Initial claims denial rate, including reasons for rejection
  • Average time to code a chart
  • Gross accounts receivable (AR), days discharged not final coded
  • Gross days in discharged not final billed (DNFB)
  • Net AR days
  • Cash collections as a percentage of net patient revenue

Another red flag of readiness problems is an EHR/EMR system that may still be mapping to ICD-9-CM codes. The trick will be to quickly identify whether this is happening and to be able to fix it promptly.

Outsourced coding is paying off
Black Book's late September survey found that 93% of hospitals over 175 beds that had been outsourcing their CDI and CAC for more than nine months have testified to significant (over $1 million) gains in appropriate revenue and proper reimbursements following the implementation of outsourced services, but prior to ICD-10 transition. Additionally, 85% of CAC and CDI outsourcers confirm quality improvements and increases in the case mix index.

Providers that have not outsourced any functions to support ICD-10 may still benefit from support such as coder and physician education. Or, providers may want to identify a partner to supplement coding and accounts receivables staffing, to ensure the ICD-10 transition does not impact revenue during the next six to 12 months.

Ultimately ICD-10 will help both providers and payers by providing a more specific view of procedures performed and outcomes achieved. Until then it will be another disruptive force in healthcare.

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.

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