Policy & Regulation News

With ICD-10 Tomorrow, Are Revenue-Neutral Results Unlikely?

By Jacqueline DiChiara

- ICD-10 implementation begins tomorrow with tangible concerns about codes, claims, and the basic ability to remain calm under fire on the tip of many a healthcare provider’s tongue. Perhaps a tad reminiscent of strategically cramming for a final exam period to ace that next big exam, preparation for Thursday, October 1 is hopefully now as finalized as can be before the switch to ICD-10 is officially flipped on.

icd-10 implementation code compliance

Unlike a generally more celebratory countdown to midnight on the eve of New Year’s or the stunningly uneventful countdown to Y2K, what will ICD-10 implementation look like once the impact has hit tomorrow and the revenue cycle management dust begins to settle? Questions remain: Should healthcare entities expect bellicose payor audits? To what extent will payment rates change? What will the overall impact of coding inconsistencies look like? Will October 1 be nothing more than just another Thursday? Does failing to prepare mean preparing to fail?

To more clearly reflect on where the healthcare industry currently stands as the final ICD-10 countdown begins, George B. Breen, Member of Epstein Becker & Green (EBG) Firm in the Health Care and Life Sciences and Litigation Practices, Chair of the National Health Care and Life Sciences Practice Steering Committee, and a Board of Directors member, and Bethany J. Hills, EBG Member in the Health Care and Life Sciences practice, spoke to RevCycleIntelligence.com this week via email to offer final thoughts for healthcare providers about what to expect once ICD-10 implementation begins shortly. 

Although Breen and Hills both confirm they aren’t necessarily expecting anything to happen on October 1, they jointly maintain the ICD-10 transition is indeed the beginning of a new era of complexity and specificity in medical record documentation.

RevCycleIntelligence.com: What will the greatest challenges be for the month of October? Other long-term challenges you foresee? How can they best be overcome?

George B. Breen/Bethany J. Hills: Training and work flow challenges associated with the ICD-10 transition will continue well past October. Existing reimbursement arrangements will be impacted and payment delays to providers will occur.

Note that while CMS’ recently announced a 12 month “grace period” - where neither quality penalties nor contractor claim denials will occur relative to physician or other practitioner claims under Part B – so long as a valid ICD-10 code is used from the right family – this does not apply to inpatient hospital services. Nor does it automatically translate to managed care.

Contracts with managed care entities may not sufficiently address the revenue impact. Many insurers are working to map ICD-9 to ICD-10 but there is unlikely to be a revenue neutral solution. As a result, we expect revenue challenges – translated as delays - involving both public and private payors.

RevCycleIntelligence.com: What do you anticipate as possible reimbursement impacts?

Breen/Hills: Under ICD-10, the number of diagnostic codes available for coding healthcare services will go from 13,000 to 68,000. For inpatient services, diagnosis and procedure codes are often grouped through software programs into diagnostic-related groups (DRGs). These “groupers” are central to the claims and payment process for inpatient services because claims payment is based on the DRG. As part of ICD-10 implementation, new DRG “grouper” methodologies will be needed to translate the new codes into DRGs for payment.

For inpatient services, reimbursement rates based on a percentage of what Medicare pays likely will be least impacted. Reimbursement rates based on negotiated case rates tied to specific DRGs likely will be most impacted. As such, case rates will need to be adjusted or reassigned to DRGs within a new grouper methodology. 

Some managed care agreements may address ICD-10 conversion by requiring providers and the plan to comply with ICD-10 in claims submission and payment processes as of the implementation date. Agreements for reimbursement of inpatient services based on case rates tied to specific DRGs will require plans to implement new rates in conjunction with ICD-10 implementation. While it’s impossible to predict how such rates will need to change, agreements typically have multiyear terms with limited rights to terminate early.

RevCycleIntelligence.com: Where should the focus be as the healthcare industry waits for the upcoming ICD-10 go-live just around the bend? What advice can you offer for healthcare providers, physicians, and hospital executives?

Breen/Hills: Recognize that the transition impacts more than just billing and coding. This transition plainly impacts compliance departments. Consistent with an ever increasing focus on payment for quality and medical necessity, healthcare providers must ensure that the medical record contains enough specificity for the selection of the ICD-10 code that best reflects that condition. 

If a clinical record does not contain enough information to support the selection of a specific code, the compliance department must understand the impact of this inconsistency on the claim and be able to determine whether there is a reimbursement impact. Indeed, billing and compliance staff should have comparable training and apply consistent standards in evaluating the medical record and identifying the appropriate ICD-10 code. 

With more specificity, increased enforcement will likely follow. Healthcare entities should anticipate – and be prepared to respond to – aggressive payor audits, both private and public, in addition to enforcement efforts focused on whether clinical documentation supports the ICD-10 code selected, and the potential for claims of false or fraudulent billing when they do not.