April 30, 2013

Are We Focusing on the Right Things?

By Cynthia D. Fry, Ph.D. Howard Walker

With the enormous amount of work that needs to be accomplished and the time left before ICD-10 implementation receding, we need to be sure we are focusing on the right things.

For the last several months, Catholic Health East (CHE) has performed analysis of the projected reimbursement impact of ICD-10 at our hospitals. The feedback we have heard from associations and consultants indicates that this impact could be substantial, and that everyone should be performing similar analysis. Based on our very detailed reports and our conversations with other health systems, however, we are finding the current impact to be low.

We analyzed two years’ worth of claims data from 17 hospitals located from Maine to Florida, and the results were similar. For example, for one hospital, 28,061 claims were examined, with a favorable reimbursement impact of $1,516,596 recorded during a two-year period. Below is a breakdown of the DRG shift impact:

Count

Amount

Impact

28,061

$1,516,596.35

25,583

$0.00

Zero

1,284

($6,892,168.45)

Negative

1,194

$8,408,764.80

Positive

Ninety-one percent of the DRGs did not change when using the GEMs tables. Of the 9 percent with changes, the majority of them fell into three categories:

  • One-to-many mapping: Based on the ICD-10 code selected, the DRG can shift. For example, DRG 775 has the potential to connect to one of three DRGs, based on the ICD-10 procedure code selected. This issue can be remedied by selecting the ICD-10 code that makes the DRG revenue-neutral.
  • No maps: An attempt to select the appropriate code (or not mapping the code at all) can cause a DRG shift, especially with primary diagnosis codes or procedure codes. These issues can be remedied by selecting the ICD-10 code that makes the DRG revenue-neutral.
  • Approximate maps: A handful of diagnosis codes are causing DRGs to shift from an MCC to a CC DRG.

While the reimbursement impact results were interesting, our team reconvened to discuss where we should be spending our time during these next 17 months, and whether we should continue to analyze claims data.

We concluded that reimbursement impacts likely will not come from the ICD-10 mapping, but rather from declines in productivity, increases in claim denials, under-coding of claims, and increased claim processing times. Those first three factors are under our control. The last one is in the hands of the payers.

So, where are we going to focus?

We believe that our three greatest current areas of concern involving ICD-10 include:

  1. End-to-end testing to ensure that claims processing works.
  2. How payers will process payment of our claims.
  3. The shortage of coders coupled with productivity declines in patient financial services.

1. End-to-end testing:

On a recent Philadelphia/Delaware Valley ICD-10 Cohort conference call (15 hospitals and/or health systems were involved), United Healthcare (UHC) and Aetna shared information relating to ICD-10. The key takeaway was that both organizations indicated that they will not test with every provider, because it is too burdensome. They instead will test with their largest providers, and only those that are ready to test. According to the representative from Aetna, that organization plans to begin testing during the second half of this year, and it will stop testing in August 2014. UHC will begin testing during the first quarter of 2014. If either of these payers represents a significant portion of your pay mix, you might want to contact them and request to be in their testing queue. It is likely that all payers are thinking along the same lines as Aetna and UHC (i.e., they are not testing with all providers), so again, you should determine which payers you feel most vulnerable with if or when claims processing breaks down. Remember, attempt to get in those payers’ end-to-end testing queues.

CHE has two hospitals participating in the HIMSS/WEDI national testing pilot. Since we do not want to put all of our “testing eggs” in one basket, we are pursuing other testing collaborations with payers. Late last week CHE reached out to the Hospital Association of Pennsylvania (HAP) and asked it to coordinate a statewide testing payer/provider collaborative. The association is considering it, and we are awaiting their response. St. Peter’s Health Partners (a group of CHE hospitals) has gathered the hospitals in the Albany, N.Y. area, in conjunction with their regional hospital association (Iroquois HealthCare Alliance), and has formed a joint committee of providers and health plans to work together to ensure the successful implementation of ICD-10. Other states have formed testing cooperatives as well.

 


 

2. How payers will process payment of our claims:

Some payers are assuming that we will not be coding correctly, projecting that requests for medical records may increase significantly, delaying payment. Both Aetna and UHC indicated that any contracts with carveouts, or those that feature diagnosis codes, must be re-negotiated. They also indicated that they are reluctant to have windfall provisions or provisions for paying providers if the payor claims processing systems break down. This reinforces the need for end-to-end testing.

3.  The shortage of coders coupled with productivity declines in patient financial services:

All providers are faced with the coder dilemma. However, we are considering staffing contingency plans for patient financial services in the event of material increases in claim denials and the building up of accounts receivable. We plan daily monitoring of key indicators such as claim denials posted, and we plan to analyze whether they are from a particular health plan or occurring for a particular reason.

What do we feel good about?

We have just about completed our outpatient workflow analysis across 17 hospitals, identifying potential patient issues that could occur post-Oct. 1, 2014 if patients do not present with an order that has an ICD-10 code or a sufficiently detailed written diagnosis. We have identified our risk areas, established remediation plans and determined non-clinical training needs. We also have assessed the status of our physician documentation by taking current records and attempting to code them using ICD-10. Our clinical documentation programs and ICD-10 training are on track.

While we feel good about our progress, however, at times we are overwhelmed by the amount of work still to be completed in the upcoming months. Not all of it is under our control, which is why increased collaboration and communication with health plans and other providers will be critical.

About the Authors

Cynthia D. Fry is vice president of revenue for Catholic Health East, a multi-institutional, Catholic health system located in 11 eastern states from Maine to Florida. Cynthia leads the revenue management initiative that is designed to improve operational performance through synergistic efforts across CHE’s various entities and is also CHE’s executive sponsor for ICD-10.

Howard Walker is director of revenue cycle systems and projects, is the Catholic Health East ICD-10 program manager. Prior to CHE, Howard was a manager at Accenture in the healthcare practice. Howard has his bachelors from Villanova and his M.B.A (May, 2013) from Penn State.

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