Managing External Risks Associated with ICD-10: A Framework for Providers and Payers

Transcription

1 Managing External Risks Associated with ICD-10: A Framework for Providers and Payers Author: Matthew R. Dutton, Consultant Matthew R. Dutton has 20 years of experience within the healthcare industry. He has assisted providers, payers, clearinghouses, and software vendors with system implementations, business operations imperatives, strategic decision-making, and program/project management improvement. making and program/project management improvement.

2 Managing External Risks Associated with ICD-10 As 2013 winds down and 2014 fast approaches, providers and payers will start asking each other two key questions regarding ICD-10: 1. What are you going to code? 2. What are you going to pay? In looking at previous CMS regulatory initiatives, e.g., v5010/d.o., there has never been 100% compliance. After October 1, 2014 there will be coding errors, reimbursement errors, and even providers and payers that are not at all ready for the ICD-10 cutover. This article outlines these risks and articulates a risk management framework that will guide both payers and providers through the ICD-10 transition. Before outlining the framework for external risk management, let s define three commonly used ICD- 10 risk management techniques: DEFINITIONS: Dual Coding (for providers) The ability for Health Information Management (HIM) Coders to code a medical record in both an ICD- 9 code and an ICD-10 code. Dual Coding is a revenue cycle concept that is intended to test the ICD- 10 capability and productivity prior to go-live and also provides the ability to send an ICD-9 code after go-live to a payer that is not ready for ICD-10. Dual Use (for payers) The ability of a health plan s claims systems to accommodate services performed prior to October 1, 2014 for both ICD-9 and ICD-10 codes until all claims and other transactions that utilize ICD-9 have been processed and completed. CMS and other health plans intend and plan for a dual use period. During the dual use period, transactions with ICD-9 codes for services after October 1, 2014 will be not be processed. The length of the dual use period will generally be aligned to the timely filing period in each state, e.g. 1 year past the date of service. Dual Processing (for payers) The ability of a health plan s claims processing systems to accommodate both ICD-9 and ICD-10 codes simultaneously without regard to date of service. During the dual processing period, transactions with ICD-9 codes for services after October 1, 2014 will be accepted and processed. Dual processing can be used to insulate the health plan from the risk of a CMS grace period, similar to what occurred during the v5010/d.o transition. A health plan would accept, adjudicate, and pay a claim from an external provider regardless of what code set is documented within the claim.

3 While there are no specific regulations preventing a health plan from accepting non-compliant ICD-9 transactions, there is a business risk of potentially needing to translate to an ICD-10 code prior to reporting externally. A systematic translation from ICD-9 to ICD-10 is well known to be highly ambiguous and requires the details found in medical records and an ICD-10 certified Coding professional. EXTERNAL RISK MANAGEMENT FRAMEWORK FOR PAYERS: Risk Category Risk Response Plan Probability x Impact = Exposure CMS Allows for a Grace Period Provider is not ready for ICD-10 Response strategy: Accept the risk and prepare for a contingency strategy allowing for dual processing. Mitigation plan: Very limited options to mitigate, almost a wait and see approach. Contingency plan: Ensure the capability exists for consuming claims with either ICD-9 or -10 codes after the compliance deadline if CMS allows for a grace period. Response strategy: Mitigate the risk by informing contracted providers that the payer will reject non-compliant claims with ICD-9 after the deadline. Promote the likelihood of inbound ICD-10 claims via external testing. Mitigation plan: Mitigate with advanced notice of the payer s intent to reject noncompliant claims. Promotion plan: Confirm testing schedule where a selected provider submits a representative sample of their claims. Contingency plan: Assuming CMS stays the course with a strict October 1, 2014 compliance deadline, the payer s contingency strategy will be to reject (not deny) the claim on the grounds that it is not a clean claim. Probability seems low at this time; however, CMS has historically announced compliance criteria and/or date changes at the last minute. Impact is considered high and is correlated to provider ICD-10 readiness. Exposure to the risk without a contingency strategy should be considered unacceptable. Industry readiness surveys continue to point to providers as not being ICD-10 ready. Providers are noticing that U.S. payers have started taking a firm stance about rejecting non-compliant claims. The Probability would therefore be lowmedium. Impact is very high in that a rejected claim may result in a phone call to our service center and/or create claims backlogs. Exposure to the risk can be lowered as the payer obtains factbased readiness results via external ICD-10 testing with providers.

4 EXTERNAL RISK MANAGEMENT FRAMEWORK FOR PROVIDERS: Risk Category Risk Response Plan Probability x Impact = Exposure CMS Allows for a Grace Period Payer is not ready for ICD-10 Or Payer s claims system was configured incorrectly for ICD-10 benefits and pricing Response strategy: Accept the risk and prepare for a contingency strategy for dual coding. Mitigation plan: Very limited options to mitigate, almost a wait and see approach. Contingency plan: Ensure the capability exists for producing claims with either ICD-9 or -10 codes after the compliance deadline if CMS allows for a grace period. Send an ICD-9 if a payer is not ready for an ICD-10. Response strategy: Mitigate risk by contacting a provider s top payers and reviewing fee schedules within reimbursement contracts for commonly used ICD-10 codes a provider intends to use. Mitigation plan: Engage the payer s Provider Relations/Contracting function and schedule 837 claims testing. Ensure that a risk-based approach is used and test claim data is based on high-dollar/high-risk services. Promotion plan: Promote the likelihood of accurate pricing by submitting testing claims with ICD-10 and demanding an 835 remittance in return. Contingency plan: Assuming CMS stays the course with a strict October 1, 2014 compliance deadline, yet the payer is not ready for ICD-10, discuss alternative payment strategies such as bulk estimated payments until the payer is ready. Send an ICD-9 if the payer still accepts it. Probability seems low at this time; however, CMS has historically announced compliance criteria and/or date changes at the last minute. Impact is higher for institutional providers as professional providers are primarily paid on CPT/HCPCS, not ICD codes. Exposure to the risk without a contingency strategy should be considered unacceptable. Based on conversations with AHIP and clearinghouse intelligence, payers seem to be preparing to accept and process claims with ICD- 10. The risk is somewhat higher for incorrect reimbursement due to inaccurate claims system configuration. Impact is very high as disruption in accounts receivable can be catastrophic for a provider. Exposure to the risk can be lowered by scheduling testing with the provider s top payers. NOTE: Risk-based (capitation) contracts need to be carefully reviewed as some payers are considering holding payment if episode data contains ICD-9 codes.

5 CONCLUSION: Considering the framework provided within this article, an organization should consider the following three steps: 1. Create an inventory for your external trading partners, sorting by annual dollar volume (high to low). 2. Reach out to your trading partners and schedule a test of healthcare transactions, e.g. 837 claims and 835 remittances using claims with ICD-10 codes. 3. Take appropriate steps to insulate your organization by preparing for dual processing and dual coding contingency strategies. When engaging external trading partners, focus on answering the following: What will you code? and What will you pay? By using these two questions for your book of business, you will be taking appropriate steps towards managing external risk associated with the ICD-10 transition.