Assessing ICD-10 Financial Risk by Service Line

Health care service line management (SLM) began to evolve in the 1980s to help organizations increase their market share as an off set to losses in revenue due to implementation of DRGs (Diagnostic Related Groups). Due to the focus of service line management, it was originally not successful. There is now a resurgence of the SLM model with a focus on improvement of clinical performance, financial performance, and patient satisfaction.

Assessing ICD-10 financial risk is a multi-faceted challenge. ICD-10 introduces financial risk that should  be assessed using a variety of tools.  Since ICD-10 is the data standard that will be used to express the condition of the patient, the procedure to treat the patient, and the reimbursement for the procedure it is essential that information systems supply data to the service line managers that support ICD-10. The service line team must be able to analyze actionable data in order to make changes as needed.  Cost accounting, variance reports, flexible budgeting, reimbursement modeling, clinical productivity, case mix and severity, quality assurance, and marketing management.

If your organization uses EDI x12 transaction standard 837 claims files to perform your assessment on inpatient encounters? Are you using a data warehouse?  Consider data quality issues as well as non-standard patient identifier schemes which may be used to map to service lines.  Some organizations use DRGs or APR DRGs as part of their service line definitions.

However, without support from physicians it will be difficult to make clinical changes that can improve patient care.  And that creates the challenge.  If you are using an analytics tool to perform part of a component of an ICD-10 financial risk assessment, your ICD-10 clinical documentation improvement efforts can be led by indicators developed in analytics. Those analytics should be broken out in the way the healthcare provider measures its performance, which may be as a service line.  The ICD-10 assessment including ICD-10 reimbursement risk analysis can guide you to specialties and even individual providers (physicians, nurses, and other clinicians) who may create a greater reimbursement risk based on incomplete documentation in ICD-9.

There is an important strategy that should be used in auditing charts and communicating the results with physicians. In our practice we feel we’ve perfected some approaches that were guided by a physician, for physicians.  Please contact us for more information.

Physician engagement, combined with chart audits and analytics must be used carefully in a balanced method to ensure that the ICD-10 transition works smoothly across service lines, physician groups, and financial management.

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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 and for more about the company.

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