ICD-10 and HIPAA 5010 and Health Care Reform

I am often asked to provide an overview of what our firm does.  When we explain that, among other things, we help health plans and health care providers grapple with ICD-10 the follow on question is about “health care reform,” which usually means the bill passed by congress, HR 3590 the Patient Protection and Affordable Care Act (PPACA).

Health Care Reform vs. HIPAA Mandates by CMS

ICD-10 was mandated in August 2008 prior to the election of President Obama.  It is a mandate from the Federal Health and Human Services’ Centers for Medicare and Medicaid (CMS).  Therefore the debate about health care reform, while important, is a different issue than the move to a new diagnosis and procedure coding system entitled ICD-10.  On the other hand, ICD-10 will become the basis for the collection and reporting of diagnosis and procedure code data that will in turn be used for the quality measures that ARE part of health care reform and payment reform.

ICD-10 Impacts

Currently much of our work in the ICD-10 area is in also educating prospective clients on the differences between these initiatives, and helping them realize that moving from ICD-9 to ICD-10, unfortunately, is not just an upgrade.  There are no magic boxes or algorithms to move from one coding system to the other.  There is no “tool” alone that can help solve this problem.  No electronic medical record software company, nor health plan claims system will be able to do your job for you. If you own ICD-10 for a hospital or health insurance company, it would not be prudent to hand over an internal compliance effort to your software vendor.  They should be your partner, but they aren’t going to do this work for you.  Your company will need to make some hard choices, and to do it right you need to align the business, IT, clinical, informatics, and other parts of the organization.  For hospitals, revenue cycle stakeholders should be key participants.  For health plans, actuary and medical policy participants such as the medical director need to be key participants.

Re-Training and Re-Skilling Coders, Phyisicans, and Others

Medical coders will need to go back to be better trained on anatomy, physicians will have to coordinate with coders and be more specific in diagnosis, health plans will have to re-write their benefit designs and medical policies, and hospitals will have to improve clinical documentation to clearly indicate “medical necessity” to avoid risks in lost reimbursements.  These are just a few of the areas that health care companies have to consider.

ICD-10 is a new paradigm that will re-shape the way that our $3 trillion health care economy gets paid. And that is a different use of the ICD code set than Canada, or Europe which uses the World Health Organization (WHO) version of ICD-10.

Federal Legislation Update

Just when it appeared that health insurance legislation was largely done, Senator Patrick Leahy (D-VT) is now poised to offer an amendment to the financial regulatory bill on the Senate floor that would repeal the very limited exemption (under the McCarran-Ferguson Act) from federal antitrust laws currently applicable to health insurance companies.

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More on Federal Legislative News

McCarran-Ferguson requires state supervision for the exemption to work, and it does nothing to exempt anyone from state antitrust laws.  More to the point, none of the anti-competitive behaviors cited by the Senator (price-fixing, bid-rigging, market allocation, collusion) are part of the exemption; they are all prohibited under McCarran-Ferguson.  If passed it could become law, since the House has already passed a very similar measure earlier this year.

No World Borders believes that the clock is ticking on important implementation deadlines for electronic health care and claims compliance dates, and these changes only delay that process.  Many health care companies are still asking “What is HIPAA 5010” when they should be asking “how fast can we implement HIPAA 5010.”   The new EDI standard enables improved data and provides the foundation for the ICD-10 medical coding standard.  These two initiatives have important implementation milestones.  See www.noworldborders.com for more information on our home page.

States Legislative Update

ARIZONA: The recently adjourned session of the General Assembly was dominated by a significant budget deficit. Health care issues were discussed but few measures passed. Mandates for mental health and oral chemotherapy parity, and a PBM regulation bill were defeated. In the bill prohibiting carriers from setting the reimbursement rates for uncovered dental services, the definition of a “covered service” was amended to limit the services actually impacted, maintaining some consumer protection. A task force was established to review and coordinate the services provided, and identify evidence-based treatment and best practices for addressing autism spectrum disorders. Finally, resolutions were passed urging Congress to allow flexibility in required services if federal assistance is insufficient for compliance with federal reform.

CALIFORNIA: Legislation supported by many health plans that would prohibit cost and quality data gag clauses in hospital contracts passed the Assembly Health Committee (17-0) last week with strong bipartisan support. The measure now heads to the full Assembly for a floor vote.  The California Hospital Association remains opposed, and the California Medical Association has raised concerns that the bill needs to include language to make clear the bill does not apply to them. As a result of this vote, the hospital association may step up its opposition. Many health plans are continuing to urge support for the bill.  This will have interesting impact on the implementation of ICD-10 for medical providers, because ICD-10 is hoped to improve medical coding practices and ultimately data quality via analytics.

The Senate Health Committee voted along party lines to defeat a bill that would have amended the state Constitution to require voter approval before any state or federal health care legislation could take effect. The bill would have applied to the new federal health reform law, as well as any state health care overhaul plans. Tony Strickland, the author of the bill, argued that voters should have a say in any health care overhaul because the changes are personal and potentially costly for residents. Opponents counter that voters already play a role in the process by electing the lawmakers who craft health care legislation. Strickland has said that he would launch an independent initiative to put the issue on a future ballot if his bill failed to advance.

COLORADO: Governor Ritter announced the availability of Colorado’s new health reform electronic website, a dedicated portal for information on the national Patient Protection and Affordable Care Act. This site will also house information on the work underway in state government to successfully implement the many provisions of the new health reform law, including the proceedings of the Interagency Health Reform Implementation Board. Some of the most immediate initiatives, such as the temporary high-risk pool and upcoming grant opportunities, are also featured. In general, portals are an important move in adopting medical coding standard ICD-10 because it enables data entry into electronic form for claims.  We believe the state of Colorado is ahead of many other states on adoption of the EDI standard HIPAA 5010 as well.

CONNECTICUT: In a flurry of last minute activity, the legislature passed a 2010-2011 state budget that does not include several very costly tax proposals, including an $88 million “unitary tax” that would have been levied on insurers already paying a significant premium tax and a $20 million increase in the Insurance Fund assessment. The Insurance Fund assessment is intended to cover the operations of the state Insurance Department; however, the increase would have resulted in shifting the cost of a number of public health programs from the state onto private payers. Several other problematic bills also failed to pass, most notably an Individual Market Prior Approval bill that would have created an onerous and costly public hearing process for virtually any individual rate adjustment. Anti-mail order pharmacy, contracting limitations, and numerous costly coverage mandate bills all failed to pass.

A number of bills did pass with amendments limiting their scope and financial impact, including legislation that would have prohibited SSDI offsets for disability coverage. This was amended to a disclosure only requirement, as was a rental network limitation. The rescission bill was amended to conform to the new federal law allowing rescissions only in cases of intentional misrepresentation or fraud. One new mandate passed, requiring plans to cover orally administered anticancer medications on the same basis as intravenously administered anticancer medications. The bill now goes to the governor, who is expected to sign it. Also, the legislature unanimously passed a bill that would increase transparency of medical mishaps at hospitals and surgical facilities, If the bill is signed by the governor, annual reports prepared by the department of Public Health after July 1, 2011 will include details of all adverse events reported at hospitals.

DELAWARE: The House Economic Development, Banking, Insurance, and Commerce Committee postponed legislative action on a bill that seeks to prohibit health insurers from denying coverage for medically necessary procedures and tests. Many health plans are concerned by the vague language of the bill, which currently provides no definition for the term “medically necessary.”  Prior to the tabling of the bill Rep. Dan Short, the bill sponsor, indicated his openness to amendments. The committee is expected to bring it back for consideration next week. Health Insurance Companies will continue to closely monitor this legislation.

DISTRICT OF COLUMBIA: The D.C. Council is considering the “Reasonable Health Insurance Ratemaking and Reform Amendment Act” to regulate proposed health insurance premium rate increases. The bill would require health insurers to pay at least 80 cents of every individual plan premium dollar on medical care, and at least 85 cents of every group plan premium dollar on medical care. The bill also fleshes out the standards by which rates are set and approved in the District. In practical terms, it directs the Department of Insurance, Securities and Banking (DISB) to consider additional company financial information rather than relying solely on individual insurance product information when reviewing health insurance rate filings. Current law only requires that the rates not be excessive, inadequate, or unfairly discriminatory, but offers little other guidance.

The newly introduced “Health Care Reform Advisory Board Establishment Act” would create an advisory board to guide the District government through the implementation of state-level reforms required by the recently approved federal health care reform law. The new law presents state and local governments with an enormous implementation challenge.

ILLINOIS: The Illinois General Assembly was scheduled to adjourn May 7, but, facing a $13 billion deficit, it failed to pass a budget. Consequently, legislators will likely come back for a day or two prior to May 31. To date, legislation proposed by the Governor and Insurance Director to implement provisions of the federal health reform law at the state level has been stalled. Their bill would go much farther than the federal law, including such requirements as prior approval of rates and major insurance industry assessments. To this end, the Director of the Department of Insurance has indicated that there will be hearings on the issues contained in the bill over the course of the year. In addition, the Comprehensive Health Insurance Plan (CHIP) Board is moving forward with setting up a temporary high-risk pool for federal eligibles who have been uninsured for six months and have a pre-existing condition — using solely the $190 million in funds delegated by the federal government over the next three and one-half years. Those funds are expected to cover only between 3,000 and 7,000 individuals. The CHIP Board agreed to proceed conservatively, opening up the pool initially only to those with one of 31 pre-existing conditions. Individuals will be enrolled on a first-come, first-served basis. Expansions will be considered as claims experience is evaluated.

MAINE:  Governor Baldacci has signed a number of new bills into law, including a prosthetics with microprocessors bill. Under current law, health insurance carriers are required to provide coverage for prosthetic devices, but coverage is not required for those devices containing a microprocessor. The amendment removes the exclusion; however, it maintains the exclusion for microprocessors for prosthetic devices designed exclusively for athletic purposes. The new law is effective January 1, 2011. Other new laws include:

  • An autism coverage requirement that was amended to limit the mandate for the diagnosis and treatment of autism spectrum disorders to persons 5 years of age and under, and to require that applied behavior analysis services be provided by a person professionally certified as a behavior analyst or under the supervision of a professionally certified behavior analyst, with maximum annual benefit of $36,000 per year.
  • A ban on lifetime or annual caps slightly ahead of the federal law.
  • The Maine Childhood Immunization Program, which requires plans to provide immunizations and cover the costs of recommended vaccines for children in the state not covered by the federal Vaccines for Children Program.
  • Required coverage for early intervention services, after a referral from a primary care provider, for children from birth to age 3 if the child has an identified developmental disability or delay. The bill limits coverage to $3,200 per year per child up to a maximum of $9,600 by the child’s 3rd birthday.
  • A requirement that dental insurance policies providing coverage of dependent children allow the opportunity to enroll a dependent child in dental insurance coverage during the first 30 days of the child’s life and any open or annual enrollment period.

MICHIGAN: With the advance of federal health care reform, all major state insurance and health reforms are stalled. Specifically, there is no movement on the Speaker’s plan to consolidate public employees into one pool or the Senator George/Representative Corriveau proposals to fully overhaul the individual insurance market. Governor Granholm’s administration is moving forward with implementing insurance reforms by Executive Order. An initial decision was made that Michigan will in fact implement the high-risk pool provision of federal reform by subcontracting with a health carrier or insurer to administer the federally subsidized risk pool. The state was
delegated $141 million in funds for the temporary risk pool through 2014. The DOI has issued a request for information to carriers and potential vendors seeking input on this topic and, in particular, how such a program would operate in conjunction with Michigan’s “carrier of last resort”. DOI is particularly interested in comments regarding eligibility criteria, plan design and benefits for those individuals who would qualify for the federal risk pool money.

MISSOURI: May 2 marked the deadline for a provider group that had begun a ballot initiative to put “any-willing provider” language to a vote of the people in the form of a constitutional amendment. They failed to file any signatures by the deadline, effectively killing the ballot measure. In other business, the Senate voted last week to approve a modified version of the “Freedom of Choice in Health Care Act,” which asks voters to approve a new state statute that says no state or federal law can compel a patient, employer, or health care provider to participate in any health care system. The original proposal called for a constitutional amendment to be voted on at the general election in November. The new version would change only the state statutes, not the constitution, and would go before the voters at the August primary elections, not in November. If approved by the House, the question then goes directly to the voters, since the Governor does not have the option to veto referendum bills.

NEW JERSEY: The Department of Banking and Insurance (DOBI) sent a letter to Health and Human Services
expressing its intent to participate in the high-risk pool program
as established under the Patient Protection and Affordable Care Act. New Jersey’s current guaranteed issue mandate does not lend itself to the creation of a separate new pool. Rather, DOBI intends to use its estimated $141 million federal appropriation to build upon the existing Individual Health Coverage Program. Additionally, state Senator Joe Vitale indicated his desire to see the NJ Family Care (SCHIP) Program further utilized as a vehicle for insuring residents.

NEW MEXICO:  Morris J. “Mo” Chavez resigned his position as New Mexico State Insurance Superintendent on May 4. The resignation was accepted by the Chairman of the Public Regulation Commission that has oversight of the Insurance Division. Deputy Superintendent Thomas Rushton was appointed as interim replacement.

OKLAHOMA: A Conference Committee debating a bill that would allow the sale of insurance across state lines has released draft language it is considering. The bill would allow the Commissioner to negotiate compacts with other states to allow insurers domiciled in those states to sell insurance in Oklahoma without a certificate of authority. The Commissioner would have authority to regulate the market conduct and financial solvency of those insurers. While any such compact would be presumed valid, it would be subject to rejection by a majority vote of the legislature or veto by the Governor. The out-of-state insurers would not have to offer Oklahoma’s mandated benefits but would be subject to Oklahoma premium taxes.

Michael F. Arrigo

Michael Arrigo, an expert witness, and healthcare executive, brings four decades of experience in the software, financial services, and healthcare industries. In 2000, Mr. Arrigo founded No World Borders, a healthcare data, regulations, and economics firm with clients in the pharmaceutical, medical device, hospital, surgical center, physician group, diagnostic imaging, genetic testing, health I.T., and health insurance markets. His expertise spans the federal health programs Medicare and Medicaid and private insurance. He advises Medicare Advantage Organizations that provide health insurance under Part C of the Medicare Act. Mr. Arrigo serves as an expert witness regarding medical coding and billing, fraud damages, and electronic health record software for the U.S. Department of Justice. He has valued well over $1 billion in medical billings in personal injury liens, malpractice, and insurance fraud cases. The U.S. Court of Appeals considered Mr. Arrigo's opinion regarding loss amounts, vacating, and remanding sentencing in a fraud case. Mr. Arrigo provides expertise in the Medicare Secondary Payer Act, Medicare LCDs, anti-trust litigation, medical intellectual property and trade secrets, HIPAA privacy, health care electronic claim data Standards, physician compensation, Anti-Kickback Statute, Stark law, the Affordable Care Act, False Claims Act, and the ARRA HITECH Act. Arrigo advises investors on merger and acquisition (M&A) diligence in the healthcare industry on transactions cumulatively valued at over $1 billion. Mr. Arrigo spent over ten years in Silicon Valley software firms in roles from Product Manager to CEO. He was product manager for a leading-edge database technology joint venture that became commercialized as Microsoft SQL Server, Vice President of Marketing for a software company when it grew from under $2 million in revenue to a $50 million acquisition by a company now merged into Cincom Systems, hired by private equity investors to serve as Vice President of Marketing for a secure email software company until its acquisition and multi $million investor exit by a company now merged into Axway Software S.A. (Euronext: AXW.PA), and CEO of one of the first cloud-based billing software companies, licensing its technology to Citrix Systems (NASDAQ: CTXS). Later, before entering the healthcare industry, he joined Fortune 500 company Fidelity National Financial (NYSE: FNF) as a Vice President, overseeing eCommerce solutions for the mortgage banking industry. While serving as a Vice President at Fortune 500 company First American Financial (NYSE: FAF), he oversaw eCommerce and regulatory compliance technology initiatives for the top ten mortgage banks and led the Sarbanes Oxley Act Section 302 internal controls I.T. audit for the company, supporting Section 404 of the Sarbanes Oxley Act. Mr. Arrigo earned his Bachelor of Science in Business Administration from the University of Southern California. Before that, he studied computer science, statistics, and economics at the University of California, Irvine. His post-graduate studies include biomedical ethics at Harvard Medical School, biomedical informatics at Stanford Medical School, blockchain and crypto-economics at the Massachusetts Institute of Technology, and training as a Certified Professional Medical Auditor (CPMA). Mr. Arrigo is qualified to serve as a director due to his experience in healthcare data, regulations, and economics, his leadership roles in software and financial services public companies, and his healthcare M&A diligence and public company regulatory experience. Mr. Arrigo is quoted in The Wall Street Journal, Fortune Magazine, Kaiser Health News, Consumer Affairs, National Public Radio (NPR), NBC News Houston, USA Today / Milwaukee Journal Sentinel, Medical Economics, Capitol ForumThe Daily Beast, the Lund Report, Inside Higher Ed, New England Psychologist, and other press and media outlets. He authored a peer-reviewed article regarding clinical documentation quality to support accurate medical coding, billing, and good patient care, published by Healthcare Financial Management Association (HFMA) and published in Healthcare I.T. News. Mr. Arrigo serves as a member of the board of directors of a publicly traded company in the healthcare and data analytics industry, where his duties include: member, audit committee; chair, compensation committee; member, special committee.

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