ICD-10 & Patient financial services Stacey L. Harper, RHIA, CPC, CPMA Senior Manager, WeiserMazars LLP

Agenda Introduction ICD-10 Overview Impact of ICD-10 to Non-HIM Areas Hidden Costs for ICD-10 Transition Preparing for the Transition

ICD-10 Overview

What is ICD-10? ICD-10 is a diagnostic coding system implemented by the World Health Organization (WHO) in 1993 to replace ICD- 9, which was developed by WHO in the 1970s. ICD-10 is in almost every country in the world, except the United States.

Deadline for compliance: Introduction to ICD-10 ICD-10 is the new coding set that replaces the current set, ICD-9 ICD codes are used to assign diagnosis and procedure information to claims in order to generate reimbursement ICD-10 is the biggest change in standard coding systems in over 30 years Deadline for compliance: October 1, 2014

Implementation on October 1, 2014 ICD-10-CM: Diagnosis coding Used for inpatient and outpatient Used by providers, coding and other clinical/operations staff ICD-10-PCS: Procedure coding Used for inpatient only Used primarily by coding CPT© codes will continue to be used for outpatient procedure coding

ICD-9 vs. ICD-10

ICD-9 vs. ICD-10

ICD-9 vs. ICD-10

ICD-10 Procedures

Key Notes on the ICD-10 Transition A substantial percentage of ICD-9 codes do not map one-to-one to ICD-10 codes; this requires human intervention to determine the correct code The codes do not map the same ‘forward’ (ICD-9  ICD-10) as they do ‘backward’ (ICD-10  ICD-9) Although CMS has published a translation tool, it has left the specific determinations up to each of the individual payers to derive how to interpret the codes and the mapping DRG reimbursements to Hospitals are based on ICD-10 groupings and will change The code change effective date is based upon discharge date; consequently, there will be a large window (~3 years) in which both ICD-9 and ICD-10 codes will need to be accepted (dual processing) Source: HIMSS Virtual Event 2011

Benefits of ICD-10 Greater coding accuracy and specificity Higher quality information for measuring healthcare service quality, safety, and efficiency Improved efficiencies and lower costs Reduced coding errors Greater achievement of the benefits of an electronic health record Recognition of advances in medicine and technology Source: HFMA

Benefits of ICD-10 (cont.) Alignment of the US with coding systems worldwide Improved ability to track and respond to international public health threats Enhanced ability to meet HIPAA electronic transaction/code set requirements Increased value in the US investment in the SNOMED-CT Space to accommodate future expansion Source: HFMA

Specificity looks like this… One-to-Twenty-Four Mapping ICD-9-CM 821.01 (Fracture, femur, shaft, closed) ICD-10-CM S72.301A S72.301G S72.302A S72.302G S72.309A S72.309G S72.321A S72.321G S72.322A S72.322G S72.323A S72.323G S72.324A S72.324G S72.325A S72.325G S72.326A S72.326G S72.331A S72.331G S72.332A S72.332G S72.333A S72.333G S72.326A Nondisplaced transverse fracture of shaft of unspecified femur, initial encounter for closed fracture S72.326G Nondisplaced transverse fracture of shaft of unspecified femur, subsequent encounter for closed fracture with delayed healing

Key Areas of Impact Source HIMSS Virtual Event 2011

How does ICD-10 affect your facility? This coding change affects the entire Health System including revenue cycle, medical operations, payers and other vendor contracts and a significant number of information systems CLAIMS SYSTEMS PEOPLE VENDORS Numerous information systems will require remediation prior to go-live Includes core billing systems Each system change will require testing and training by IS and the end- users Thousands of staff directly impacted by change Clinical providers, coding & revenue cycle staff will require in depth training Staff will need to be involved in integrated testing of system changes The majority of payors in the nation will be required to convert to ICD-10 Payer systems will require updates and testing Other vendors are also affected by the change (i.e. registries, clinical outcomes data) Every claim generated by each facility will be affected Payer contracts will require review Improved documentation will be required to support coded claims

Impact of ICD-10 to Non-HIM Areas

Who Needs to Understand ICD-10? Beyond coders… PFS leadership as payers may reject based on ICD -10 coding and medical necessary codes PFS leadership and contracting to ensure contracts can accept both ICD-9 and ICD-10 on the UBs post go live Utilization review and all care management as payers will need to be able to do pre-certifications and concurrent review with ICD-10 Decision support and all areas using ICD-9/10 coding for tracking, reporting, etc. (Trauma registry, outcome comparisons, contracting, etc.). IT leadership must be involved to ensure all impacted areas are ready

Other Non-HIM Uses for ICD-9/ICD-10 Reimbursement by payers Medical necessity screening Quality of care indicators Outcome measurements Medical care review Method to index medical records Storage and retrieval of dx data

Other Non-HIM Uses for ICD-9/ICD-10 Utilization patterns and review by payers Research data Statistics Reasons for Denials Monitoring and analyzing the incidence of disease and other health problems Identify health care trends Future health care needs

Patient Access Impacts Systems Core Financial System Eligibility Systems Patient Liability Estimation Systems Case Management Tracking Workflow & Process Pre-authorization Admissions Preauthorization (278) & Eligibility (270/271) transactions ABNs Denials Management Policies, procedures and job descriptions that refer to ICD-9 functions

Patient Access Impacts Training PAS & Pre-Auth Professionals ICD-10-CM Basics Resources Testing and training resources as needed to upgrade affected systems according to IS plan Resources to participate in payor testing as necessary Pre-authorization backlog prevention plan Potential slow down with payor processes post go-live Evaluate and pursue educational seminars and resources relevant to PAS; i.e., NAHAM, HFMA, HIMSS

Patient Financial Services Impacts Systems Coding/abstraction software Core Financial Systems Bolt-on Financial Systems Billing Clearinghouse Denials Management Systems Payment Variance Software Patient Liability Estimation Reporting Databases Case Management Software

Patient Financial Services Impacts Workflow & Process Integrated testing & planning with payors Potential for slower and lower collections initially ICD code reports Changes in payor contracting language around ICD-10 compliance and how it impacts claims Denials Management Review & update policies, procedures, and job descriptions as necessary

Other clinical impacts Authorization & notification – services and conditions that require prior/concurrent authorization or notification on September 2014 will need to be managed through transition Utilization Management (UM) – services and conditions that a health plan seeks to engage in UM activities will need to be managed through and post transition Post-Hospital Follow-Up Programs (i.e. CHF) – will need to be identified for effective outreach and case management through transition

Other clinical impacts Complex Case Management (CCM) – outpatient conditions requiring concurrent case management support need to be effectively identified and monitored through transition to ICD-10 Disease Management (DM) – strategies for identification and stratification for selection of DM programs will need updated for ICD-10 HEDIS Reporting, STARS ratings and accreditation documentation – these supporting data elements need to be captured without gaps and effectively measure historical trends

Hidden Costs of ICD-10 Transition

Financial Impacts Need to plan for decrease in productivity to prevent billing backlogs during training and initial implementation Other countries, including Canada, have reported an increased number of days in coding turnaround in the immediate ICD-10 go-live period Based on actual data from a large urban community hospital in Toronto Ontario Canada, staff productivity never rebounded to pre-ICD-10 levels for some patient types.

Financial Impacts New information demands to support the coding process could result in potential increases in Accounts Receivable (AR) days, increased rate of claim denials and lost/deferred revenue AHIMA estimates that tertiary hospitals and hospitals with a varied case load will have a greater lag time returning to normal productivity than those hospitals whose case-mix range is relatively small and well defined as the staff are introduced to the wide variety of codes

Potential Hidden Costs Back log of uncoded claims with ICD-9 while trying to get coders ready for ICD-10. Remote coding may need to occur as well as OT. Rejected claims from payers who are not ready to accept UB-04 with ICD -10 PLUS ICD-9 as necessary. Vendor software rejecting ICD-10 or edits not working correctly thus slowing claim submission. Manual intervention to ensure claims are submitted and accepted. New software if existing software for related ICD-10 work is not compatible.

More Hidden Costs Cost to conduct a ‘risk assessment’ to assess current documentation patterns for providers and care givers. Cost to conduct training for providers and care givers on enhanced documentation Cost to review EMR or other software to adapt to enhanced documentation requirements Cost to conduct a ‘readiness assessment ‘ pre go live to determine readiness of coders, documentation and vendors.

More …. Loss of productivity – rebills, denials, rejections, EOB work, medical necessity rejections/follow up Loss of productivity – excessive physician queries, coder slow down with new coding process Growth in the discharged not final billed… Potential impact to the Case Mix Index Cost of implementing a clinical documentation improvement program Cost of EMR changes and training of all impacted staff Cost of any changes to the functionality of the any software and training costs

Preparing for the Transition

ICD-10 Goals: Organizing the Effort Seamless transition to ICD-10 (meet regulatory/payer requirements) Maximize the benefits of ICD-10 transition Support physicians with implementation Provide thorough education & training Enhance quality & reimbursement outcomes Leverage innovative solutions/ technology Coordinate technology & resource needs IMPLEMENTATION APPROACH Project Oversight Remediation Benchmarking & Monitoring Develop communication plans Develop direction, scope and outcomes of work stream teams Coordinate efforts & resources to ensure appropriate project progression Manage day-to-day activities and challenges Update and test systems Educate thoroughly; test and re-test aptitude Coordinate and team with payers Revise policies, procedures & workflows Develop monitoring tools and dashboards Determine benchmarks and post-live goals Measure, measure, measure, MANAGE

Billing Cycle Coding Loop Billing Loop Coding Issue Resolved? Physician Documentation Coded Data HIM Coding Billing Loop Coding Specificity? Bill Creation and Editing DRG Groupers Physician Query Claims Denial? Claims Submission Bill Payment Electronic Funds Transfer

Payer readiness UB submissions with ICD-9 and ICD-10 - conversion dates Denials with new reasons –as ICD-10 is far more specific Contract language that addresses ICD-10 inclusions/exclusions Claim scrubbers/payer scrubbers – ABN issues (LCD/NDC dx codes/CMS), ‘if ‘ rules, edits Pre-authorization process/coverage

Duality of Systems Will payers, vendors (claim submission and scrubber) and other IT systems be able to handle ICD-9-CM as well as ICD-10-CM and ICD-10-PCS at the same time? Rebills of pre-conversion, medical necessity software, scrubbers, ensuring all payers are ready to convert AND test with each payer = critical to the successful conversion. Don’t forget all payers (Medicaid, Worker’s Comp, etc.)

Considerations for PFS Budget ICD-10 training specific to PFS staff that falls outside of enterprise offerings References, books and tools specific to PFS for ICD-10 Training time allocation for all impacted staff receiving ICD-10 training Staff time allocation for relevant system upgrades, i.e., testing applications, training, etc. Estimate additional hours for PFS staff for late 2014 and 2015 for the ICD- 10 transition due to negative productivity Business Associates Confirm the ICD-10 transition plan for any affected third parties: Denials & Appeals agencies Eligibility software Worker’s Comp Outsourcing for follow-up functions Bad debt & early out functions

Considerations for PFS Jobs & Competencies Assess affected jobs and competencies across the Department Evaluate and estimate impact to PFS productivity/output for the initial stages of the transition This area will be working in a 'hybrid' environment of ICD-9/ICD-10 initially Revise impacted job descriptions to incorporate ICD-10 skill set and knowledge base Policies & Procedures Review all existing policies and procedures for department to determine if any must be updated due to ICD-10 Determine if any new policies and/or procedures need to be created as a result of the ICD-10 implementation Finalize all policies and procedures related to ICD-10

Considerations for PFS Reports & Data Extracts Confirm all active ICD code reports for PFS Understand implications to reports and data extracts for both internal and external reporting as applicable as a result of the ICD-10 transition Modify and test reports for the ICD- 10 world Consider capabilities when needing to compare ICD-9 to ICD-10 state Systems, Applications & Databases Solidify ICD-10 upgrade and transition plan for all affected systems, applications & databases: Core financial systems Interfaces Billing clearinghouse Reporting databases Eligibility software Case mix/DRG groupers Case management functions Patient liability estimation software Registries and external reporting

Considerations for PFS Payors ICD-10 testing plans with payors should be underway or commencing shortly Develop payor report cards for pre/post-transition to compare metrics and performance Keep communication open during and post-transition Potential errors! Payors (including Medicare/Medicaid) are correcting medical policies (LCD/NCD, etc.) which are diagnosis driven; this leaves potential for errors and gaps that will need worked out over time Post Implementation Plan / Evaluation Develop post implementation plan to evaluate the following items: PFS staff adoption of ICD-10 education & transition to determine if and where follow-up training is needed Outcome of transition regarding system changes and payor workflow Revenue & reimbursement impacts Denials rates Outcome of transition with Business Associates Budget impact

Performance Monitoring Monthly Weekly Daily Monitor revenue and reimbursement metrics by payor monthly Monitor case mix on a monthly basis Perform reimbursement service line reviews monthly Monitor physician discharge performance Monitor physician documentation weekly Monitor case mix weekly Monitor coder & biller efficiency weekly Monitor financial metrics (DNFB, A/R, Clean Claims Rate, Final Billed Not Submitted, Denials rates) daily Set up dashboards with drill-down capability to service line and payor

Be prepared for… Worst Case Scenario System Issues Non-System Errors Create worst-case scenarios for Revenue Cycle impacts using forecasting to determine cash reserves to support revenue impacts for at least 12 months Be prepared to have dialogue with payors regarding concerns over claims adjudication, denials rates, documentation requests and billing inquiries and claims rejections System Issues No matter how thorough testing, be prepared for some health plans, external vendors or internal systems to be unable to accept ICD-10 codes Be prepared to have someone in the organization “troubleshoot” problems to determine whether it is system, interface, coding, documentation or other external issue Non-System Errors For the first 6 to 12 months, expect significant amount of human error related to coding, documentation, claims submission, adjudication and denials management It is likely that there will be increased queries from coders for documentation and increased billing inquiries from health plans Be prepared to assess aptitudes and swiftly retrain as needed

Driving Success Through Education ICD-10 User Categories Basic Users Clinical Users Documenters Super Users ICD Code Utilization Aware of codes and use them in some application; only require general understanding More detailed understanding of codes and how they drive reimbursement Document to support codes and may be involved in their selection Involved in coding or auditing services, or the education and training of such items Example Departments/ Roles Patient Access, Scheduling, Registration, PFS, IS, Senior Mgmt. Data Analysts, Research, IS (Clinical & Revenue Cycle), Quality, Mgmt. MDs, Therapists, CRNAs Coders, CDI, Registrars, Auditors, PFS Level of Training Required Minimal High-level Detailed & targeted Detailed coding & billing training Planning for Education Outline expected training and education requirements for each user category and job code Include training content, various teaching methodologies, and estimated timeframes for education roll-out Develop and roll out detailed training plan

Education Timeline

Questions & Discussion

Resources

AHIMA ICD-10-CM/PCS Resources ICD-10-CM/PCS Transition: Planning and Preparation Checklist at www.ahima.org/downloads/pdfs/resources/checklist.pdf A Top 10 List: Phase I – ICD-10-CM/PCS Implementation at www.ahima.org/icd10/preparing/aspx Audio Seminars & Online Courses http://www.ahima.org/ContinuingEd/ Communities of Practice http://cop.ahima.org/ Conferences & Events http://www.ahima.org/events/ ICD-10 Page www.ahima.org/icd10 Web Store www.ahimastore.org

Other Resources Making the Health System Work Better for Everyone: The ICD-10 Collaboration Imperative; OptumInsight ICD-10 collaboratives best practices -- Published on ICD10 Watch (http://www.icd10watch.com) Provider-Payer Collaboration: Strategies to test ICD-10 Provider and payer perspectives (AHIMA)

About us

About The Health Care Group Industry experience, effective solutions, proven results The WeiserMazars Health Care Group offers health care providers a powerful combination of service and results- oriented strategy to help them meet their business goals, overcome challenges, and improve performance. Proven Results – Our in-depth knowledge of current national and regional trends and best practices allows us to create and implement solutions that are realistic, effective and lead to improved efficiency for an organization’s operations. Our clients rely on us for: Health care specialized teams Smart, Effective Solutions – Our practical, targeted approach helps attain goals on time and within budget through a hands-on managed process. National knowledge Hands-on experience Focused on high quality results A Strong Partnership – We value our client relationships and work hard to sustain a trust-based partnership. Thorough knowledge of health care issues and best practices Expertise – We have developed special insight over many years of practical experience in the field and deep understanding of current industry trends. No pre-conceived notions or boilerplate solutions Vendor independent; no affiliations

Full Scope of revenue cycle management services A track record of helping improve overall revenue cycle performance Access Care Assessment and Process Improvement Point of Service Collections Revenue Cycle Assessment and Transformation Charge Master/Charge Capture Revenue Integrity Cash Acceleration (Insourcing) Collection Agency and External Vendor Analysis Denial Management and Mitigation Revenue Cycle Process Improvement Charge Master/ Capture Denial Management Cash Acceleration Application of Technology