1. Transition to Value Based Payment
Presented by: Julie E. Chicoine, Senior Vice President and General Counsel May 5, 2016

2. Medicare – Four Parts A – Inpatient acute care (1965)
B – Outpatient, provider services (1965)
C – Medicare Choice > Medicare Advantage (1992, revised 2003)
D – Prescription Drug Program (2003)

3. Medicare Costs 1967 - $4.6 billion 2014 - $600 billion
“CBO projects that in just 10 years (2024) Medicare spending will reach nearly $1.1 trillion.”

4. Americans 65 or older Life Expectancy Long Term Challenges
million
million
million
Life Expectancy

5. Quality vs. Quantity
Healthcare is shifting from FFS model to pay- for-performance methods
Payers will reward value and care coordination - rather than volume and duplication
HHS testing and expanding new health care payment models

6. HHS Framework Payment Models: Category 1: FFS no link to quality
Category 2: FFS with quality link
Category 3: Alternative Payment Models built on FFS architecture
Category 4: Population Based Payment
Source:

7. Better Care – Smarter Spending
Shift from Volume to Value
Increasing accountability for quality and total cost of care
2011 – Value Based Claims - 0%
2018 – Value Based Claims - 90%
Timeline
30% of Medicare payments in alternative payment models (categories 3 & 4) by the end of 2016
50% of Medicare payments in alternative payment models (categories 3 & 4) by the end of 2018
Overall, 85% of payments in categories 2 through 4 by 2016 and 90% by 2018

8. How does VBP relate to ICD-10
Accuracy and completeness of coding drives many of the quality and severity-of-illness indicators that in turn determine value-based payments or penalties
Accuracy and preciseness of the coding of a patient’s record ultimately will affect VBP payments and whether reimbursement increases or decreases

9. What Are ICD Codes?
The International Classification of Disease (ICD) codes are the international classifications for all diseases and many other health problems for purposes of health management, including:
Analysis of the general health of population groups
Monitoring of the incidence and prevalence of diseases
Monitoring other health problems in relation to other variables such as the characteristics and circumstances of the individuals affected, reimbursement, resource allocation, and quality
ICD codes are now a key component in reimbursement, quality and utilization review and other data management activities

10. What is ICD-10? Replaced ICD-9 – Not a revised version of ICD- 9
ICD-10 represents a complete change from one coding system to a new one structured in an entirely new way
Like all medical coding systems, it provides a way to condense textual clinical information into “codes” that can be used for billing and other data-based applications

11. ICD 9 ICD 10 Quantifying Value Diagnosis 14,000 Procedures 4,000
68,000
87,000

12. ICD-10-CM
Diagnosis Coding System – Used to report the patient’s condition (i.e., what’s wrong with the patient)
Used in all settings – hospital inpatient, hospital outpatient, physician office, etc.

13. Procedure Coding System – Used to report surgical procedures performed
ICD-10-PCS
Procedure Coding System – Used to report surgical procedures performed
Direct replacement for ICD-9-CM Volume 3
Only used in a hospital inpatient setting (and only for reporting facility services)

14. Key ICD-10 Changes Alphanumeric codes
Expanded injury codes – grouped by anatomic site not injury type
Laterality (right vs. left)
Obstetric codes include trimester
Diabetes codes differentiate between I, II, drug, chemical induced diabetes, or due to an underlying condition (chemotherapy)
Intraoperative and postoperative complications
Visits – initial or subsequent

15. Disease Etiology Diabetes ICD 9 (10 codes) ICD 10 (300+ codes)
Type I and Type II
ICD 10 (300+ codes)
Pregnancy induced diabetes
Drug or chemical induced diabetes
Diabetes caused by underlying condition, (cancer, cystic fibrosis, etc.)

16. Laterality
Elderly Patient falls and fractures left wrist. A month later, fractures right wrist
ICD-9-CM
Does not identify left versus right, or stage of healing
ICD-10-CM
Left versus right
Initial encounter, subsequent encounter
Routine healing, delayed healing, nonunion, or malunion

17. Patient Non-Compliance
Non-Compliance With Prescribed Treatment
Intentional Under dosing of Medication Regimen Due to Financial Hardship (Z91.120)
Unintentional Under dosing of Medication Regimen Due to Age-Related Debility (Z91.130)
Intentional/Unintentional Under dosing for Other Reason (Z91.128/Z91.138)
Under dosing of Medication NOS (Z91.14)

18. Detailed Condition ICD 9 CM – Chronic Ulcer of Unspecified Sites
707.8
ICD 10 Chronic ulcer of other specified sites
L98.41 Non-pressure chronic ulcer of buttock
L98.411… of buttock limited to breakdown of skin
L … of buttock with fat layer exposed
L … of buttock with necrosis of muscle
L … of buttock with necrosis of bone

19. ICD 10 and Value Based Payment
To say that the ICD-10 transition was challenging is an understatement
Now it’s time to maximize the benefits of accurate ICD-10 code selection to ensure your organization’s for success under new value-based reimbursement models

20. Questions

21. Serving Texas Hospitals/Health Systems