ICD-10 Implementation Train Wreck

Health care providers can help minimize the downside cash flow and revenue impacts of ICD-10 by organizing and planning for contracting with Payers in anticipation the change to ICD-10 in October 2013. 

Health care payers will be designing their reimbursement plans for 141,000 new ICD10 codes.  It will be critical for providers to know their required reimbursement for these new codes before they negotiate with Payers who will certainly try to reduce reimbursement.

In this adversarial healthcare environment, health care providers must be proactive in understanding a strategy to avert potential disasters in their reimbursement system.  With the thin margins that most hospitals already operate on, we believe this will be one of the most important aspects of implementing ICD10.  ICD-10 is not just a new diagnostic system of coding; it is more importantly a new reimbursement system.

Here are just a few more to think about:

  • Management some payers and providers apprently still perceive that a GEM (General Equivalence Map) will provide the magic bullet they need to automatically convert their systems from ICD-9.  Unfortunately, this is not true.  GEMs are icomplete because they are based on going from less detail to more.

  • Recently we talked to a company that felt that if they simply changed the field length in their databases, they would be ready for ICD-10.  Unfortunately this is not the case.

  • If you rely on an out of network repricer, and your vendor uses automated methods based on historical data, they won’t work under ICD-10.  Significant modifications will be required. 
  • Avoiding the ICD-10 implementation train wreck will be easier if your company is doing an assessment of the business, process, system, clinical and IT impacts early in this process.  Conversely, those health insurance firms, hospitals, clinics, physician groups and other entities who are proactive in seeing an ICD-10 assessment as an avenue to improved revenue and cash flow will be better positioned strategically when the market shifts.

    If you do not believe you have these skills in house, look to partner with a consulting team that has the process, people, methods and tools to successfully navigate this new reimbursement system.

    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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