Freed Associates

ICD-10 Readiness

TOPIC: Health Reform 2.0, Information Technology

Final preparations are underway to minimize healthcare industry disruptions as the ICD-10 cutover draws near. Success stories surrounding ICD-10 adoption shine a positive light on this transition, but there are still concerns surrounding these final stages of change. Identifying the key readiness risks and working together to address these concerns will help ensure a seamless transition for each HIPAA-covered entity and warranty success.

Key ICD-10 Readiness Risks

  1. Provider compliance to ICD-10 and willingness to code accurately: the primary driver to reimbursement issues will be the accuracy of the ICD-10 codes submitted on claims. With the recent CMS/AMA agreement, CMS gave providers one additional year of “close is good enough.” Commercial payers have not followed suit. Be prepared for rejected claims and payment problems by not complying with each payer’s billing requirements.
  2. Backlogs in business operations: Providers should be reducing inventories in Coder work queues and accounts receivables while payers should be reducing claims inventories to have a workload cushion. We anticipate that coding productivity losses coupled with clinician compliance to documentation quality will lead to an increase in overall accounts receivables. Commercial payers will be contending with payment disputes and a potential increase in pended claims, primarily due to questionable coding quality from the provider or a failure to update custom reimbursement contracts that contained ICD-9 references.
  3. Professional provider billing software: whether in the office or at a third party billing vendor, systems must be upgraded to the ICD-10 compliant version.
  4. Payer and clearinghouse EDI system configuration: Each clearinghouse receives EDI policy instructions from individual payers. Some payers have instructed the clearinghouse to perform rejections for claims still using the ICD-9 code set after the October 1, 2015 cutover while other payers wish to reject claims themselves so as to identify which providers are not complying with ICD-10. Visit payer websites to understand how payers have configured their EDI systems to accept or reject claims during the ICD-10 cutover period. The safest approach is to follow the bill type specific ICD-10 billing instructions provided by CMS, available here.
  5. MS-DRG grouper pricing systems: These systems are used by payers to perform grouping and pricing functions during claims adjudication. Vendors recently just received CMS’ release of MS-DRG V33 and are currently upgrading software for release in days leading up to October 1st, 2015. If software vendors are late or if payer configuration/testing goes into October, our payers may have to hold claims or group and price using V32 software. Providers should closely monitor AR Days and payment accuracy for claims adjudicated during the month of October.
  6. Hospital reimbursement contracts with references to ICD-9 codes: As an institutional provider, be sure to thoroughly review all reimbursement contracts with payers. If any references to ICD-9 diagnosis or procedure codes are found, be sure to work with the payer’s contracting department and clearly understand which ICD-10 codes the payer assumes you will be billing after October 1, 2015.
  7. Government payer readiness: While CMS’ fee for service line of business has been thoroughly ICD-10 tested within the industry, Medicare Advantage risk adjustment and state Medicaid programs have not been thoroughly vetted for ICD-10 readiness. Remember, CMS instructed fiscal intermediaries to offer advanced payment in the event of catastrophic claims systems issues for fee for service claims only. There was no mention of Medicare Advantage or Medicaid programs. If highly dependent on these sources of revenue, then be sure to set aside appropriate financial reserves as a contingency strategy.

During these final stages of preparation we must continue to evaluate the individual needs and concerns of each organization. Addressing these key readiness risks will dictate the level of success during this transition and ensure smooth sailing ahead.