For Providers, Revenue Assurance through the ICD-10 Transition is Key

Posted on July 16, 2013 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 15 blogs containing almost 6000 articles with John having written over 3000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 13 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

The following is a guest blog post by Vik Anantha, Vice President – Financial Management Solutions, Edifecs, Inc.
Anantha Vik - Edifecs
We all know ICD-10 is a complex and costly initiative. One of the promises of ICD-10 is the potential for enhanced granularity, laterality and overall reporting accuracy. This is particularly important to providers because health plans use the ICD code set to determine reimbursements based on the medical condition of the patient and procedure(s) used for treatment.

With promise comes risk. ICD-10 not only exponentially increases the number of diagnostic and procedure codes, it changes the structure of the coding scheme and introduces new clinical concepts, terminology and granularity. These widespread changes will force business process and policy changes in areas such as benefits, medical management, and payer contracting. In other words, ICD-10 will affect almost every operational, clinical and financial process.

On the business side of ICD-10, revenue neutrality is a big concern for healthcare CFOs and revenue cycle management leaders. While it’s unrealistic to expect revenue neutrality at a claim level (there will always be some variation), it’s entirely possible to achieve revenue neutrality in aggregate. And this should be the goal.

It won’t be easy. Improper and incomplete coding can increase denial rates, causing significant revenue loss. Even error-free claims hold financial risk, particularly for healthcare organizations that depend on DRG (diagnosis-related group) methodology for reimbursement. The process of mapping ICD-9 codes to their counterparts in ICD-10 can be very complex, and there is often no single, one-to-one relationship.

The DRG for a certain claim is selected based on the ICD code(s) present on the patient claim. Therefore, the reimbursement on every claim depends on the assignment of diagnosis codes and inpatient procedure codes to specific DRGs.: As a result, migration to ICD-10 could result in significant over- or underpayment when using DRG-based reimbursement if providers use the wrong code.

Here are a few real-world examples:

  • ICD-9 procedure code 38.12 (extirpations of upper arteries with an open approach) is grouped to DRG 039. The same procedure in ICD-10 has 31 mapping options. Thirteen of these map to the same DRG and will generate the same reimbursement. However, the remaining 18 ICD-10 codes group to DRG 027, which generates a higher reimbursement. Selecting one ICD-10 code over another could result in nearly a 100% payment increase ($5,927.14 for DRG 039 vs. $12,409.74 for DRG 027.)
  • ICD-9 procedure code 2754 (repair of cleft lip) groups to DRG 134. This procedure has six potential ICD-10 codes, all of which group to a lower-weighted DRG 138, which represents a more generic procedure. This could reduce reimbursement by approximately $1,000 ($5,269.34 for DRG 134 vs. $4,203.28 for DRG 138.)
  • ICD-9 diagnosis code 86.01 (traumatic pneumothorax with open wound into thorax) is grouped to DRG 201. In ICD-10, this claim maps to a combination of two ICD-10 codes. Together, the two codes group to DRG 199, which increases reimbursement by 276% ($3,910.60 for DRG 201 vs. $10,816.98 for DRG 199.)

These examples show that payment variation under ICD-10 can cut both ways. If a provider organization can’t quantify its risks, it may end up dealing with unfavorable payer contracts, longer collection cycles and uncertain financials.

Of course, this type of analysis can be very time- and labor-intensive. Providers and payers should work together to identify and prioritize areas of risk, based on actual historical data. Analyzing a provider’s own data based on reality-based ICD-9 to ICD-10 mapping scenarios delivers the “street-level view” of the real operational and financial risks posed by ICD-10 to the organization, rather than just a list of every possible risk.

Many providers already have clinical documentation improvement (CDI) initiatives underway, and coding improvements made by these teams can be a key part of the financial analysis as well. The CDI process will narrow the number of ICD-10 codes to those the provider will actually use, which can then be used to build financial modeling maps specific to that provider, rather than using generic maps such as GEMs.

Providers looking to ensure consistent revenue cycle management through the ICD-10 transition should take the following steps:

  • Identify high-level risks at the outset, using historical data
  • Integrate with physician/clinical/coding training and CDI efforts
  • Refine analysis and prioritize risk with refined, “reality-based” mapping
  • Iterate, validate and improve to allocate resources based on real risk
  • Test and transition with highest possible degree of confidence

ICD-10 does hold promise for the healthcare industry. The transition period is likely to be bumpy and somewhat painful. But with some foresight and commitment to working with each other, providers and payers can assure themselves of financial neutrality in both directions.