Flip­ping the code switch

Healthcare in­dus­try ner­vous about readi­ness for big ICD-10 con­ver­sion

Modern Healthcare - - NEWS - By Joseph Conn

Ready or not, the U.S. healthcare in­dus­try is poised to flip the switch from the ICD-9 to the ICD-10 di­ag­nos­tic and pro­ce­dural cod­ing sys­tem on Oct. 1, sig­nif­i­cantly chang­ing how bil­lions of dol­lars in med­i­cal claims are cal­cu­lated and billed ev­ery day.

Ex­perts pre­dict most large hos­pi­tals and health sys­tems and most large physi­cian groups will weather the fed­er­ally re­quired con­ver­sion just fine, though they could ex­pe­ri­ence tem­po­rary cash-flow squeezes be­cause of ICD-10-re­lated pay­ment de­lays.

The or­ga­ni­za­tions most likely to have trou­ble, how­ever, are smaller providers, par­tic­u­larly smaller physi­cian prac­tices. Some med­i­cal groups say prob­lems as­so­ci­ated with the con­ver­sion could drive some small doc­tor groups out of busi­ness.

A last-minute re­prieve is un­likely. Af­ter three pre­vi­ous de­lays of the ICD-10 start date, no one pre­dicts there will be a fourth.

At Ad­vo­cate Lutheran Gen­eral Hos­pi­tal in Park Ridge, Ill., coders have been train­ing for the changeover since Jan­uary, which has made it hard for them to do their reg­u­lar work. “We’re as pre­pared as we’re go­ing to be,” said coder Kathy Scud­eri. Ev­ery­one just wants to switch to ICD-10 and “get this over with,” added cod­ing su­per­vi­sor San­dria Robin­son.

For the Ad­vo­cate sys­tem as a whole, Dr. Anu­pam Goel, vice pres­i­dent of clin­i­cal in­no­va­tion, voiced con­fi­dence that Ad­vo­cate’s 11 hos­pi­tals, 1,500 em­ployed physi­cians and 3,000 af­fil­i­ated physi­cians are ready. The one-year ex­ten­sion Congress granted last year was needed, he said.

The ICD-10 code changes will af­fect all Health In­sur­ance Porta­bil­ity and Ac­count­abil­ity Act-cov­ered en­ti­ties—hun­dreds of thou­sands of providers, pay­ers and claims han­dlers. The codes will be used to au­tho­rize and cal­cu­late tril­lions of dol­lars in pay­ments from Medi­care, Med­i­caid, com­mer­cial in­sur­ers, Tri­care and the Vet­er­ans Health Ad­min­is­tra­tion to hos­pi­tals, physi­cians and other providers. ICD-10 is a much more com­plex and de­tailed cod­ing sys­tem than ICD-9, which has been used since the 1970s. For providers, there are about 68,000 di­ag­nos­tic codes un­der the new ICD-10CM (clin­i­cal mod­i­fi­ca­tion) codes—five times more than un­der ICD-9-CM. There is an even more com­plex ma­trix of 87,000 new codes for hos­pi­tal­based pro­ce­dures in the ICD-10-PCS (pro­ce­dural cod­ing sys­tem)—29 times more codes than in ICD-9.

Nev­er­the­less, warn­ings about a U.S. healthcare melt­down have faded fol-

low­ing a deal struck in July be­tween the CMS and the Amer­i­can Med­i­cal As­so­ci­a­tion, which had long op­posed ICD-10 con­ver­sion. How­ever, no knowl­edge­able ob­server fore­sees an en­tirely smooth tran­si­tion. Mem­o­ries linger of the cat­a­strophic roll­out in Oc­to­ber 2013 of the fed­eral in­sur­ance ex­change, the last ma­jor gov­ern­ment health in­for­ma­tion tech­nol­ogy launch.

“It’s like the garbage dis­posal,” quipped Robert Ten­nant, se­nior pol­icy ad­viser for the Med­i­cal Group Man­age­ment As­so­ci­a­tion. “You’re flip­ping a switch and hop­ing a fork isn’t in there.”

One rea­son for worry is that a re­cent MGMA sur­vey found that 9.2% of sur­veyed physi­cian groups were still us­ing an elec­tronic data trans­mis­sion for­mat in­ca­pable of car­ry­ing ICD-10 codes. Physi­cians groups are par­tic­u­larly vul­ner­a­ble to cash-flow crunches be­cause they typ­i­cally don’t hold cash re­serves due to fed­eral tax rules. A Texas Med­i­cal As­so­ci­a­tion sur­vey re­leased in Au­gust con­cluded that pay­ment de­lays linked to ICD-10 could force some physi­cian prac­tices to close or push older physi­cians into re­tire­ment.

A sur­vey in May and June of physi­cians and hos­pi­tals by the Amer­i­can Health In­for­ma­tion Man­age­ment As­so­ci­a­tion and the eHealth Ini­tia­tive found lower ICD-10 pre­pared­ness scores for hos­pi­tals with fewer than 100 beds and physi­cian groups with one to 10 doc­tors com­pared with larger hos­pi­tals and doc­tor groups.

“Some of my col­leagues just aren’t tak­ing it se­ri­ously,” said Marty Fat­tig, CEO of 16-bed Nemaha County Hos­pi­tal in Auburn, Neb. “They’re say­ing, ‘I’ll just wait un­til it goes into ef­fect and see what hap­pens.’ I don’t feel like fly­ing that way.” Fat­tig said his hos­pi­tal was ready to switch to ICD-10 last year and is ready now.

The CMS says Medi­care is ready for the con­ver­sion. Most com­mer­cial health plans are ready, said Clare Krus­ing, a spokes­woman for Amer­ica’s Health In­sur­ance Plans.

Emdeon, one of the largest claims clear­ing­houses, is ready and so are most in­dus­try play­ers it works with, said Mike Deni­son, Emdeon’s se­nior di­rec­tor of reg­u­la­tory com­pli­ance. But around 1% of Emdeon’s cus­tomers are still us­ing an­ti­quated busi­ness sys­tems that are tech­ni­cally in­ca­pable of sub­mit­ting claims with ICD-10 codes. “That is a very big con­cern,” he said.

Dur­ing an online con­fer­ence Aug. 27, act­ing CMS Ad­min­is­tra­tor Andy Slavitt, whose agency man­dated the switch to ICD-10, ac­knowl­edged the un­cer­tainty. “As with any­thing of this mag­ni­tude, even with all the plan­ning, there will be bumps,” said Slavitt, who vowed to pay “per­sonal at­ten­tion to ev­ery­thing that hap­pens from now un­til af­ter our launch.” He knows per­son­ally what can hap­pen, hav­ing served as Op­tum’s re­pair­man-in-chief when the firm was hired to fix the floun­der­ing HealthCare.gov web­site in 2013.

Among the big­gest un­knowns are state Med­i­caid pro­grams. The CMS has been mon­i­tor­ing those pro­grams’ ICD10 readi­ness but has been tight-lipped about its find­ings.

The CMS has al­lowed four state Med­i­caid pro­grams—in Cal­i­for­nia, Louisiana, Mary­land and Mon­tana—to use a work­around, called a cross­walk sys­tem, rather than fully con­vert­ing to ICD-10. They will take in­com­ing fee-for-ser­vice claims coded in ICD-10, con­vert them into ICD-9 codes, and use the older sys­tem to cal­cu­late pay­ments.

A cross­walk is a com­puter text file with ICD-9 codes in one col­umn and cor­re­spond­ing ICD-10 codes in another. Cross­walks can map codes in ei­ther di­rec­tion, from ICD-10 to ICD-9 or the re­verse. But Dr. An­drew Boyd, as­sis­tant pro­fes­sor in bio­med­i­cal and health in­for­ma­tion sciences at the Univer­sity of Illi­nois at Chicago, cau­tioned that cross­walks can com­pro­mise data qual­ity be­cause of codes that don’t map to sim­i­lar con­cepts and can cause de­layed or re­jected claims be­cause of cross-cod­ing is­sues.

Holly Louie, pres­i­dent-elect of the Healthcare Billing and Man­age­ment As­so­ci­a­tion, said she’s heard from fel­low billing as­so­ci­a­tion mem­bers that some small pri­vate in­sur­ers also may use a cross­walk sys­tem to con­vert ICD-10 claims into ICD-9 codes.

Louie said her group’s sur­vey in June found that 63% of its mem­bers had seen no ICD-10 test­ing with state Medic-

aid pro­grams or plans in their states.

“There is no way to know what’s go­ing to hap­pen with those mil­lions of claims,” Louie said.

As promised by the CMS, claims pro­cessed us­ing ICD-10 codes ap­pear to pro­duce the same rev­enue as those us­ing the cur­rent ICD-9 cod­ing sys­tem, said Tim Mar­shall, man­ag­ing di­rec­tor of the Claro Group, a fi­nan­cial and man­age­ment con­sul­tancy firm.

Ex­perts warn, how­ever, that rev­enue streams even at the largest and most well-pre­pared provider or­ga­ni­za­tions could be con­stricted for months fol­low­ing the Oct. 1 switch, as physi­cians, coders and pay­ers ad­just to the far more vo­lu­mi­nous and com­plex ICD-10 sys­tem. It’s widely ex­pected that clin­i­cians’ and coders’ pro­duc­tiv­ity will at least tem­po­rar­ily be re­duced.

“Hos­pi­tals in­tu­itively un­der­stand there will be some pro­duc­tiv­ity losses, but a lot of hos­pi­tals haven’t nec­es­sar­ily thought through how that is go­ing to im­pact their cash flow,” Mar­shall said. “There may be three- or four- or five-month de­lays in col­lect­ing that money.”

His firm has been ad­vis­ing clients “to re­visit their com­mer­cial con­tracts for cash-flow guar­an­tees. Most hos­pi­tals don’t have those terms in place, so they are fac­ing, most likely, cash crunches.”

While most hos­pi­tals have es­tab­lished lines of credit to get them through cash-flow squeezes, Mar­shall said, they may need larger lines or mod­i­fi­ca­tions on their debt covenants. “It’s def­i­nitely pos­si­ble that some ill-pre­pared hos­pi­tals could have tech­ni­cal vi­o­la­tions of some of their debt pro­vi­sions,” he said. “What ex­actly the bank or the debt hold­ers might do with that, I don’t know.”

But San­dra Wolf­skill, di­rec­tor of healthcare fi­nance pol­icy for rev­enue cy­cle at the Healthcare Fi­nan­cial Man­age­ment As­so­ci­a­tion, said her group’s mem­bers are con­fi­dent they have cash-flow is­sues cov­ered. “For a pe­riod of time, hos­pi­tals are go­ing to be liv­ing with one foot in each world,” she said. “Hos­pi­tals are treat­ing this like any other con­ver­sion. They know where their num­bers are and where they’re sup­posed to be and what they’ll have to watch.”

Larger or­ga­ni­za­tions with greater fi­nan­cial re­sources ought to sur­vive the squeeze with­out too much trou­ble, said Dan Stein­gart, vice pres­i­dent and se­nior an­a­lyst at Moody’s In­vestors Ser­vice. “There could be some cash-flow dis­rup­tion, but that should be it,” he said. “The vast ma­jor­ity of our rated hos­pi­tals have suf­fi­cient bal­ance sheet re­serves to man­age the dis­rup­tion and some even es­tab­lished lines of credit.”

Data from re­cent sur­veys on ICD-10 pre­pared­ness from the MGMA and other groups sug­gest there likely will be big­ger fi­nan­cial trou­bles for some smaller physi­cians groups, hos­pi­tals, health plans and billing com­pa­nies that have lagged in their prepa­ra­tions and tech­ni­cal ca­pa­bil­i­ties. Small physi­cian prac­tices are con­sid­ered the most vul­ner­a­ble.

Nev­er­the­less, dur­ing the Aug. 27 CMS con­fer­ence, the agency an­nounced pos­i­tive re­sults from its fi­nal round of end-to-end test­ing of claims sub­mit­ted to Medi­care ad­min­is­tra­tive con­trac­tors us­ing ICD-10 codes. The con­trac­tors had fixed a few bugs un­cov­ered in test­ing rounds in Jan­uary and April and were pro­nounced ICD-10 ready. They bat­ted 1.000, adroitly han­dling the 29,000 claims de­liv­ered to them in this latest test­ing round.

But the 1,200 providers, claims clear­ing­houses and other claims senders struck out a lot in the test­ing, ac­cord­ing to the CMS. Thir­teen per­cent of their sub­mis­sions were re­jected as the re­sult of mul­ti­ple sender er­rors. About 3% bounced be­cause of an in­valid sub­mis­sion of ICD-9 codes. Another 2% were re­jected for in­valid ICD-10 codes.

Those re­sults were not en­cour­ag­ing, said Stan­ley Nachim­son, a con­sul­tant and ICD-10 ex­pert. “Re­mem­ber, these were peo­ple who be­lieved they were ready to do the test­ing,” he said. “We don’t know what’s hap­pen­ing to those en­ti­ties that haven’t pre­pared or been in­volved in the test­ing yet.”

At Nemaha County Hos­pi­tal, Fat­tig said the five-physi­cian med­i­cal staff and two coders have led the way in get­ting ready. “The key in a small hos­pi­tal is the med­i­cal staff,” he said. “If they de­cided they didn’t want to do this, we’d be sunk.”

At North Hills Fam­ily Medicine in Keller, Texas, Dr. Gre­gory Fuller, a part­ner, is wor­ried about rev­enue losses be­cause of re­duced pro­duc­tiv­ity from us­ing ICD-10. He said all five physi­cians in his group will do their own cod­ing at the point of care but he still ex­pects prob­lems.

For each physi­cian, the prac­tice has de­vel­oped a “cheat card” of their top 200 di­ag­noses and cor­re­spond­ing ICD-10 codes, and their EHR sys­tem has a built-in ICD-10 lookup tool. “But if I have to look up some­thing un­usual, that’s go­ing to burn up time,” Fuller said. “That’s lost rev­enue. And the real story is, are claims go­ing to get de­nied be­cause the codes are not spe­cific enough?”

He ex­pressed re­lief that Medi­care is go­ing to give doc­tors wig­gle room on ICD-10 com­pli­ance un­der the deal the AMA ne­go­ti­ated with the CMS in July. “But that’s not true for com­mer­cial pay­ers,” he said.

Some com­mer­cial health plans say they will vol­un­tar­ily fol­low the CMS’ re­laxed rules. That in­cludes Cox Health Plans, based in Spring­field, Mo. Most mem­bers of the Health Plan Al­liance, a 50-mem­ber trade as­so­ci­a­tion for provider-spon­sored plans like Cox Health, are do­ing like­wise, said Cox Chief In­for­ma­tion Of­fi­cer Su­san Butts.

Like many physi­cians, Fuller is an­gry about be­ing forced to make the switch. “We’re ready,” he said. “But I’m not happy about it. There is noth­ing about ICD-10 that is go­ing to help me with pa­tient care.”

At Ad­vo­cate Lutheran Gen­eral Hos­pi­tal in Park Ridge, Ill., coders have been train­ing for the switch to ICD-10 since Jan­uary.

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