ICD-10 Financial Risk Assessment Should Include Data Quality Assessment

ICD-10 Financial Risk Assessments should include an analysis of historical healthcare claims data for one, two, or ideally three retrospective periods.  A data quality assessment is essential, making sure that claims are not duplicates, and that they therefore represent unique events.  This is particularly important in view of interim billing on hospital claims.  It’s very easy to count hospital admissions multiple times from claims data unless you reconcile claims to a single hospital stay.

There should be built-in quality assurance that checks for inpatient claims ICD-9 CM and ICD-9 procedure codes, (i.e. Admit through Discharge claims, without processing voided claims, etc.) After the initial data quality check, duplicate patient account numbers should be ruled out.   Similarly ICD-9 CM and CPT code based outpatient claims should be checked.   There are differences in the approach for DRG based claims and non DRG based claims.

Once this is complete, ICD-10 reimbursement risk should be estimated by specialty and setting to direct ICD-10 Clinical Documentation Improvement efforts for providers.

For health plans, the ICD-10 Financial Risk Assessment can guide remediation efforts for medical policy management systems and rules.

How do you know if you got it right?  ICD-10 testing should include reimbursement impacts.  Therefore despite the fact that CMS has down-scaled requirements, we believe that end to end testing including the EFT for remittance is the only way to truly know before the go-live data if ICD-10 remediation efforts, clinical documentation improvement and the ICD-10 financial risk analysis was successful.

After the analysis, further elaboration by AHRQ code and disease category is useful to determine precisely where to perform chart audits by individual physician / provider.  There is no substitution for chart reviews and dual coding in ICD-9 and ICD-10  to determine the actual reimbursement risk.

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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. He leads a team that provides Cybersecurity best practices for healthcare clients, ICD-10 Consulting, 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, Insurance Fraud, payor-provider disputes, and consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises 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 quoted in the Wall Street Journal, New York Times, and National Public Radio.

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