The Financial Risks of Transitioning to ICD-10: Key Considerations for Hospitals and Health Systems

The following content is sponsored by VitalWare.

Concerning ICD-10 preparation, the time has come for hospital finance executives to put pen to paper, says Kerry Martin, CEO and founder of healthcare intelligence provider VitalWare. Waiting too long could result in getting caught in "rush hour" as providers leave crucial tasks until the last-minute scramble to catch up before the deadline next year.

"Being an early adopter in the ICD-10 world is the smartest thing they can do," Mr. Martin says of hospitals and health systems.

A key part of preparing for the transition is assessing the potential financial impact and taking steps to prevent a decline in physician and coder productivity, which could lead to revenue loss. The fiscal risk depends on various factors including physician documentation, coder education and DRG Grouper version updates, which will change in the months before ICD-10 goes live Oct. 1, according to Mr. Martin.

The process is definitely "more like a marathon than a sprint," he says. He shared some advice to help healthcare providers make it across the finish line by the implementation deadline.

Look beyond predictive analysis and top DRGs
Many companies in the healthcare marketplace promote predictive analysis, which involves "cross-walking" ICD-9 claims to ICD-10, using general equivalence mappings or some other translation tool, to determine whether diagnosis-related group shift will occur or not. But Mr. Martin says this technique isn't the best way to determine financial risk comprehensively.

"To me, the only way they can assess their risk is by pulling charts, coding those charts and grouping those charts natively," he says. "Until a coder looks at a chart and codes it [in ICD-10], they have no idea what their financial risk is. It's not fun and it's not easy, but it's the only way for them to get their arms around that."

VitalWare has natively ten-coded 7,500 inpatient charts from hospitals around the country and can run a hospital's claims against this data to get a good understanding of what lies ahead for the provider's finances, he says. Based on those coded cases, they've discovered the real risk lies outside of the top 20 or 100 high-volume DRGs, according to Mr. Martin. Therefore, it's crucial for hospitals and health systems to look beyond those DRGs when preparing for the transition to ICD-10.

"That's exactly where CMS has said they're going to be financially neutral," he says of the top DRGs. "They've made sure the grouper is solid in those top DRGs."

Focus on physicians: The risk is in the charts
Lost coder productivity has emerged as a point of concern for providers as the ICD-10 changeover date looms closer. Based on other countries that have already switched to their own uses of the coding system, some health information management leaders have projected a 20 to 40 percent decrease in coder productivity, which could lead to delayed cash flow and lost revenue.

Mr. Martin says providers must address the coder's productivity in unison with physician productivity.  Why should healthcare executives look to the physician to prevent a drop in productivity?  Because, he says, "it all starts with documentation."  That's what coders code from and, if the right details are not in the chart, then the physician will need to be "queried" for additional information.

"The best thing we can do is educate the physician," he says. "If we focus on physician productivity, the coder productivity loss will be nominal."  

It's only when coders are searching charts for information that doesn't exist that their productivity really suffers, he says.

For hospitals and health systems looking to keep physicians productive, it all comes down to training them to document the right things so coders don't have to use not-otherwise-specified codes or query back to the physician for clarification, he says.

"If [the physician is] interrupted the next day for more information from the previous day that he didn't document, the physician's productivity is going to go down," he says. "We should be focused on how we can keep the physician's productivity such as it is today and not decreased due to additional queries and interruptions by clinical documentation specialists."

He advises providers to pull charts, look at what's in their current documentation and note any deficits. For instance, physicians might not include documentation that may lead to major complications or comorbidity designation in the DRG groupers, resulting in the patient looking less sick on paper and the hospital getting reimbursed less than it should.

"The physician needs to be trained on their specific cases," he says. "You pull a case and you say, 'Hey Dr. Green, let me show you some of the information necessary for ICD-10 coding. If it is missing I will have to come interrupt you to get it.'  This is why training needs to be laser-focused."

Training physicians on their specific case documentation is only part of the equation, however. Mr. Martin says providers should also implement technology that will prompt clinicians on what to record on their charts, "a tool that specifically says to a physician, 'Here's what you need to document when you're dealing with heart failure,'" for instance.

Hospital executives should consider tools and applications that will accomplish this and can be embedded in electronic medical records or installed on devices such as iPads, he says.

Coder approach: Train and audit
Although they aren't the main focus, long-term coder productivity issues are still a concern when it comes to financial risk, Mr. Martin says.

"The risk could be in the coder’s inability to forget the ICD-9 guidelines and use the ICD-10 guidelines.  It is hard to forget 10, 20, or 30 years of coding expertise overnight.  However this is exactly what we are asking the coders to do he says.

The number one action providers can take to address this issue is to pull charts, have their staff code them natively and have an outside company audit those charts. Ideally, the outside company should have certified ICD-10 trainers on staff who have coded at least 500 charts in the new coding system, he says.

"That exercise allows you to see how long it's going to take coders to actually code charts," he says. "You're definitely alleviating risk."

Pay attention to payers: Get the analytics from the coded cases to managed care teams
Once providers have cases their coders have completed in accordance with ICD-10, they should prioritize getting that information to their managed care teams, according to Mr. Martin. He says assessing cases for all payers — not just Medicare — is important for negotiating contracts.

"If you don't give that managed care person any of this analytic data, then they're basically negotiating with a blindfold on," he says.

A managed care team with all of the proper ICD-10 financial analytic data about various DRGs and the provider's financial risk, will know what and how to deal with health insurers and possibly be able to work out neutrality clauses, he says.

The grouper factor: Wait and see and test
The current grouper logic that assigns MS-DRGs presents a certain level of risk for hospitals and health systems preparing for ICD-10. Right now, most organizations are using version 30 of the MS-DRG Grouper to group claims in ICD-10, but Mr. Martin says version 31 should be out within the next month or two, Version 32 will probably be in use when ICD-10 goes live.

"We're still dealing with a 'pilot grouper' that isn’t going to be the production grouper for ICD-10," he says.

Depending on adjustments to future versions and potential added calculations and weightings, providers who think they've adequately minimized their risk at this point could be in for an unpleasant surprise next year if they don't consider grouper changes. Subsequently, he says providers shouldn't do just one risk assessment but several, conducting new analyses as the new versions come out.

Providers who aren't dual-coding inside their patient accounting systems and are using another application such as Excel should strongly consider implementing a database system that can regroup quickly, he says.

"If you put it into Excel, it's not going to be easy to put it back through the grouper," he says.

In the end, though, there's only so much providers can do to avoid snafus. "The grouper is the grouper," Mr. Martin says. "We can't do anything about it except wait and see what the next version does."

Overall, Mr. Martin says the biggest financial risk for providers is doing nothing.

At this point, providers should have started the process of pulling charts and should carry out a focused dual-coding effort, he says. By January or February, they should have a blueprint for physician training by individual physician or by specialty.

"There's a huge risk in just sitting back and waiting and not doing any of these exercises," he says.

More Articles on ICD-10:
Making the Move to ICD-10: How Prepared is Your Practice?
The Productivity Gap: Protecting Your Revenue When ICD-10 Goes Live
7 Common ICD-10 Errors for Hospital Coders 

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