Minimizing the Lost Revenue Risk of the ICD-10 Transition

September 16, 2013

Like it or not, ICD-10 is on the way. Here's how to plan ahead and project its impact to minimize disruption to your practice's revenue cycle.

The clock is ticking for ICD-10 compliance and healthcare providers face considerable challenges ahead. There are software upgrades to implement, training classes to administer, and the widely anticipated loss of productivity to absorb as clinical and clerical staff deploy a vastly different code set for filing claims.

The biggest hurdle, however, may be simply keeping the lights on when the switch gets flipped next fall. Indeed, many providers and trade groups fear the cumbersome new system, which requires far greater specificity on both medical diagnoses and inpatient procedure codes, could wreak havoc on revenue cycle management in the months immediately following implementation.

If the staggered transition to ICD-10 in Canada between 2001 and 2005 is any guide, U.S. practices may endure declining payments for years after the Oct. 1, 2014, compliance deadline, due to problems related to insufficient documentation, coding errors, and increased payer scrutiny of claims. Denial rates may also take a turn for the worse, with a corresponding increase in accounts receivable days.

"The impact on reimbursement is a great unknown," said Robert Tennant, senior policy advisor for the Medical Group Management Association, noting smaller practices will feel the effects disproportionately because their business structures typically require that they divest all profit annually through disbursements to physician owners. Thus, their cash reserves are more limited than hospitals or healthcare networks. "They don’t have $1 million sitting in the bank," said Tennant.

While ICD-10 presents a clear and present risk to your revenue cycle, however, there are steps you can take now to stay solvent if reimbursement suddenly falters.

AUDIT YOUR CLAIMS

With more than 68,000 diagnostic codes and 87,000 procedure codes required under ICD-10, compared with 14,000 diagnostic and 4,000 procedure codes under the current ICD-9, the opportunity for human error is significant, said D’Arcy Gue, executive vice president of corporate services for IT consulting firm Phoenix Health Systems in Richardson, Texas. As such, she said, Medicare and commercial payers will be monitoring claims more closely to ensure compliance and will likely issue more requests for added documentation, slowing down the payment process.

The financial impact of ICD-10, though, will be different for every practice. Gue recommends each practice analyze their claims history to determine how many dollars are likely to be at risk. Look specifically for high-volume (those you use most often) and high-dollar codes that will be put under the microscope. "That can be somewhat predictive of how ICD-10 will impact your revenue," said Gue. "The most important thing you can do is to understand how ICD-10 will impact your organization and plan ahead for that."

Tennant notes many billing vendors can provide a claims history report, which you can use to perform an internal audit. Study your previously adjudicated claims, he says, and use that documentation to assign ICD-10 codes. "Work backwards," said Tennant. "Ask yourself what code would I put on this after Oct. 1, 2014? That will be a good guide."

DUAL CODING

The next few months are also an opportunity to give ICD-10 a test drive. Ask your billers, coders, and clinicians - anyone who produces patient documentation - to begin assigning dual codes (ICD-9 and ICD-10) for all new claims, said Tennant.

While resource intensive, it’s perhaps your best tool for giving providers the practice they need to file a compliant claim, and highlight any weaknesses in clinical documentation. That, in turn, will help to minimize delays and denials post-implementation.

"Ask your clinicians, in-house coders, or outhouse coders to assign [an ICD-10] code to every claim and if they can’t because of insufficient documentation, that’s a flag for continued education," said Tennant. "You may notice that three out of your five physicians have their documentation in order for ICD-10 claims, but two do not."

COMMUNICATE WITH VENDORS

At the same time, CMS suggests all practices reach out to their vendors as soon as possible to find out what upgrades they may need, what it will cost, and when pre-testing can begin. That includes billing clearinghouses, and practice management or EHR software vendors.

"They may be upgrading only the latest version of their software, so if you’re running an older version you are going to have to spend some money on software upgrades, and hardware upgrades necessary to run that new software," said Tennant. That’s a potentially big expense at a time when revenue may be light, which requires strategic budgeting.

STEEL YOUR CASH RESERVES

You can also ensure revenue integrity during the ICD-10 transition by asking your bank for a temporary increase in your line of credit, said Dale Blasier, chairman of the coding coverage and reimbursement committee for the American Association of Orthopedic Surgeons. The size of the credit line should be sufficient to cover operating expenses for at least three months to six months, he said.

"This is all coming at a time when we’re looking at fee-for-service payment models to disappear and other models to come into play which makes it difficult for all of us to plan," said Blasier.

Like it or not ICD-10 is on its way. By planning ahead and projecting its impact, however, you can minimize disruption to your revenue cycle - and keep your practice off of life support - when the new coding system goes live next year.