ICD-10, Electronic Medical Records, Analytics May Work Only 65% Of the Time – Or Not at All

The Health Information Technology for Economic and Clinical Health (HITECH) Act – part of the American Recovery and Reinvestment Act (ARRA) – provides incentives for the adoption of electronic medical records (EMRs) and related technologies.  The Centers for Medicare and Medicaid (CMS) mandated change to a new HIPAA diagnosis and procedure coding standard, ICD-10 originally by October 1, 2013, and now by a new date specified by CMS.  Many don’t yet see the inter-relationship between EMRs and ICD-10.  Without coordination between EMR and ICD-10 the clinical documentation of medical necessity that determines claims payment, hospital revenue cycles will be at risk, because the EMR is a container for the ICD-10 codes.  And, most health care companies have hundreds of systems that will be impacted by ICD-10.  Some hospitals run on a 2% profit margin.  Payment reform incentives and penalties based on quality measures – reported in the future using ICD-10 – present unprecedented risk and opportunity to this margin.  A one percent shift in revenue cycle management (RCM) reimbursements is worth $2.6 Billion to our health care economy.

Yet today we find that 35% on average of an organization’s current EMR,  supporting analytics, RCM, documentation, and processes will not have the specificity for the new ICD-10 code sets

This means hospital billing and reimbursements, claims auto adjudication rates, and other health care metrics stand to be negatively impacted.  Meaningful use (MU) of EMRs is an exercise in language.  It translates the vocabulary that physicians use into codes – like ICD-10.  Furthermore, the supporting analytics aren’t tuned to report on ICD-10 CM and ICD-10 PCS (CM for diagnosis and PCS procedure) codes.

Clinical documentation improvement (CDIs) aren’t usually geared toward this issue.  ICD-10 brings new “many to many” ways of expressing a fracture of the tibia, for example, and the procedures to treat.  Most hospital systems we work with have many more ancillary systems in radiology, etc. that are also impacted, and the EMR isn’t the core system of record (yet) for everything that goes on in a hospital.

If you ask a hospital or hospital CFO if they are prepared live on 65% of their income, it gets them thinking more seriously about ICD-10.  ICD-10 may cause an EMR and supporting documentation to only work part of the time, or perhaps not at all.  Health care providers should ensure that the EMR vendor is on track toward ICD-10 compliance, however, they should not rely on their EMR vendor as the panacea.  We recommend that health plans and providers seek an independent third party to assess their major HIT systems and vendors.

The ARRA legislation is separate from the Patient Protection and Affordable Care Act (PPACA) being reviewed by the Supreme Court.  At this time, therefore the HITECH Act is not at risk of being rescinded.

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2016 – Arrigo, Michael F – CDI as a Foundation for Value-Based Care. Published by the Healthcare Financial Management Association (HFMA)

Michael F. Arrigo

Michael Arrigo 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 IT, and health insurance markets. His expertise spans the federal health programs Medicare and Medicaid and private insurance. He advises Medicare Advantage Organizations who provide health insurance under Part C of the Medicare Act. Mr. Arrigo serves as an expert witness regarding medical coding and medical billing, fraud damages, as well as 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, medical malpractice, 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 SA (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 top ten mortgage banks and led the Sarbanes Oxley Act Section 302 internal controls IT 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 is published in Healthcare IT News.

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