ICD-10 Readiness Compromised by ICD-10 Revenue Cycle, Analytics Vendors

ICD-10 Will Force Clinical and Organizational Integration

The ICD-10 transition in the U.S. (World Health Organization,( or WHO) international classification of diseases, ICD-10 version CM for diagnosis codes and related ICD-10 PCS for procedure coding) will have the effect of forcing coders, nursing staff, case management, as well as physicians upon each other in ways that most organizations have yet to consider.  And, for health plans and hospital systems to have any chance of keeping reimbursements  somewhat neutral, they will have to talk about the intersection between the revenue cycle of the hospital and the medical policy and business rules of the health plan under ICD-10.

True ICD-10 readiness in a health care provider or health plan is dependent on all parties being aligned at the same go live date.  Coordinating the ICD-10 transition requires a sharp eye in the project management office (PMO) as well as experienced analytics and revenue cycle professionals who work closely with the clinical and operations departments.   One of the things that has not been highly regarded in the past is the role of the coder.

RAC View vs. Clinical Documentation and ICD-10

In our recent review of hospital revenue cycle and analytics companies, we find that many are focused on marketing their solutions for “RAC” or recovery audit trails.  RAC was mandated by Congress through the 2003 Medicare Modernization Act and uses auditors to review Medicare Part A and B provider reimbursement claims for billing errors.    The interoperability between administrative, clinical, and financial systems has in the past been the nexus of the  revenue cycle management process.  That is because clinical integration minimizes the likelihood of future claims being flagged for review.   An underlying area that supports this is proper documentation to support medical necessity and avoid utilization management reviews by contracted health plans.

We find that most analytics and revenue cycle companies are ignoring or underestimating the future role coordinated medical coding will have, the transition to ICD-10, and the clinical documentation and processes on the revenue cycle.  The ICD-10 transition will re-write the book on revenue cycle management (RCM).  RAC audits and Electronic Medical Records (EMRs) will be subject to a new paradigm with ICD-10.

Re-Aligning the Organization Away from ICD-9 to ICD-10

If a health care provider is having difficulty with RAC audits under ICD-9, we can predict that their clinical documentation challenges in the transition to ICD-10 will be harder for them.  Consequently, case management staff may be challenged with review of medical records for medical necessity because auditors will randomly select clinical rationale (criteria) for justification of the level-of-care.  The risk is that claims may be revisited and denied going back many years.  Health care provider staff must ensure that the criterion for each year where there is a denial is being appealed are using the criteria for that year.   ICD-10 introduces a new wrinkle in RAC audits.  When the criteria shift from being expressed in ICD-9 to ICD-10, there will be new challenges to abstract the level of care policy used prior to October 1, 2013 and the policy used after that date.  Therefore a RAC that spans October 1, 2013 will force provider staff to navigate policy, diagnosis and procedures in two different coding systems.

Changes in Analytics, Medical Policy and Clinical Intelligence

“Evidence-based clinical decision support” will be revised under ICD-10, and staff will need to be prepared to support potential audits under ICD-9 prior to October 1, 2013 and under ICD-10 diagnosis and procedure coding after that date.  Health plans will be revising business rules for what to pay, pend, and deny.  Similarly hospital systems will need to change their health-information technology approach to admit / discharge / transfer (ADT).

Clinical Benchmarks will Change under ICD-10

Clinical benchmarking will also change under ICD-10.  Disparities in vendor systems and varying readiness for a shift in the diagnosis and procedure coding that drives the core reimbursement algorithm, or Diagnosis Related Groups (DRGs), as well as assumptions around level of care (LOC), inpatient rehabilitation services and skilled nursing will exacerbate this problem for unprepared RCM vendors and their hospital clients.  There are four to six significant organizations that publish quality measures for health care providers and health plans.  All of these measures will be reported using ICD-10.  This includes Medicare Advantage HEDIS 5-Star Ratings for health plans, and CMS Value Based Purchasing for Medicare Advantage patients at hospitals.   These quality measures will offer a carrot – increased CMS reimbursements of one to five percentage points.  Quality measures will also offer a stick – reduced payments from CMS for the lowest performing health plans and hospitals.  That alone re-defines what is important in measuring revenue cycle for providers since the shift of a percentage point in top line revenue could mean the difference between profit and loss for hospitals that already operate on thin margins.

Multi-site Hospital Systems Have Additional Need for Integration

In particular, multi-site hospitals that do not have a clinically integrated revenue cycle system, or that use disparite multi-vendor systems will be exposed to more risk in RAC.  This is because the need to aggregate, report, and analyze claims data across multiple years of history to defend audits across the health system’s data and the continuum of care creates more complexity across multiple systems.

Vendor Independent ICD-10 Assessments

Organizational readiness and clinical alignment should be assessed by a competent third party ICD-10 consulting services vendor, and tested prior to October 1, 2013 to provide adequate attestation of readiness under HIPAA.  A credible ICD-10 assessment should include the clinical documentation and supporting processes for hospitals, and for health plans a review of medical policy.  Clinically integrated documentation and medical policy will drive Accountable Care in the future and must be a cornerstone of a successful ICD-10 implementation.  ICD-10, Accountable Care, and Payment Reform supported by quality measures will drive change in the Revenue Cycle Management and Health Care Analytics business.  An ICD-10 assessment using clinical scenarios and thorough testing will be the best way to ensure that health care providers and health plans are prepared.  Vendors who are prepared will thrive.  Vendors who are not will struggle.

– Michael Arrigo is Managing Partner of No World Borders.  We welcome your comments to this blog

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Michael F. Arrigo

Michael is Managing Partner & CEO of No World Borders, a leading healthcare management and IT consulting firm. He serves as an expert witness in Federal and State Court and was recently ruled as an expert by a 9th Circuit Federal Judge. He serves as a patent expert witness on intellectual property disputes, both as a Technical Expert and a Damages expert. His vision for the firm is to continue acquisition of skills and technology that support the intersection of clinical data and administrative health data where the eligibility for medically necessary care is determined. He leads a team that provides litigation consulting as well as advisory regarding medical coding, medical billing, medical bill review and HIPAA Privacy and Security best practices for healthcare clients, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, physician compensation, Insurance bad faith, payor-provider disputes, ERISA plan-third-party administrator disputes, third-party liability, and the Medicare Secondary Payer Act (MSPA) MMSEA Section 111 reporting. He uses these skills in disputes regarding the valuation of pharmaceuticals and drug costs and in the review and audit of pain management and opioid prescribers under state Standards and the Controlled Substances Act. He consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises ERISA self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $8 billion in healthcare mergers and acquisitions. Education: UC Irvine - Economics and Computer Science, University of Southern California - Business, studies at Stanford Medical School - Biomedical Informatics, studies at Harvard Medical School - Bioethics. Trained in over 10 medical specialties in medical billing and coding. Trained by U.S. Patent and Trademark Office (USPTO) and PTAB Judges on patent statutes, rules and case law (as a non-attorney to better advise clients on Technical and Damages aspects of patent construction and claims). Mr. Arrigo has been interviewed quoted in the Wall Street Journal, New York Times, and National Public Radio, Fortune, KNX 1070 Radio, Kaiser Health News, NBC Television News, The Capitol Forum and other media outlets. See https://www.noworldborders.com/news/ and https://www.noworldborders.com/clients/ for more about the company.

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