December 1, 2015

ICD-10 a Possible Case Study in Large-scale Preparation

By Magnus Leblanc

After two months of working full-time with ICD-10-CM/PCS, what do we know about the success of providers’ transition efforts? In general, it’s too early to tell. It will likely be 90 to 120 days from implementation before we have solid revenue cycle data to determine the financial impact of ICD-10.

But in the meantime, organizations can assess how well they prepared for the transition and what they need to do going forward to ensure success.

In that spirit, we surveyed Optum360 clients to find out how they fared in terms of productivity, accuracy, documentation quality, and other performance metrics. The findings indicate that, at least among the small population of healthcare providers we surveyed, organizations were well-prepared.

For this survey, we were particularly interested in understanding whether the use of computer-assisted coding has improved success rates associated with the transition. Overall, those who fully implemented a computer-assisted coding (CAC) solution seem to be doing better than those who did not.

While industry estimates for productivity forecasted an initial decrease between 25 and 50 percent, the majority of our clients with CAC installed experienced productivity levels that remained steady. Also of interest was the fact that a majority of our clients without CAC experienced a productivity drop of about 20 percent. From our initial review of the data and our understanding of our clients, it seems like the clients without CAC who did not see a significant drop can attribute their success to dual coding.

On the documentation side, we anticipated that we would see a jump in the number of physician queries related to coding. However, the overall number of queries that our clients are reporting remained flat. Other numbers reported, including discharged not final billed and case mix index, were also flat. (Because CMI doesn’t necessarily turn on a dime, this will need more study.)

What can these results tell us? While we can’t draw hard conclusions – this was a non-scientific survey with a non-random, self-reporting population – we can say with confidence that the results show preparedness as key to the successful transition.

Most of the ICD-10 headlines coming from the Centers for Medicare and Medicaid Services (CMS) during recent weeks have emphasized the mildness of the initial reaction about the new code set. For example, the ICD-10 earthquake barely caused a shake, ICD-10 day one saw small glitches, and hospitals touted success on the first day of the ICD-10 transition, etc.

The generally mild reaction after more than six years of hand-wringing shouldn’t be dismissed. This isn’t a case of much ado about nothing. This is a case study for being prepared.

Some observers compared the ICD-10 challenge to the Y2K challenge. It’s easy to see why. Both had significant IT implications, came with dire predictions, and threatened to roar like a lion. But it seemed after the fact that both brayed like a lamb. However, the hype around ICD-10 was real.

Those for whom ICD-10 shaped up to be a “non-event” likely spent three to four years of effort getting ready. They trained and prepared professionals from multiple departments, not only in what they needed to know about the transition, but also to help these departments know how to work together. They upgraded IT systems and tested with vendors, clearinghouses, payors, and various other business vendors. Without all this preparation, ICD-10 would not have been a non-event; it would have been a “can we keep our doors open?” event.

While the implementation delay from 2014 to 2015 was disheartening for many in the industry, there is no doubt that the additional year of preparation helped. The fallout from ICD-10 would have been large and loud in 2014. But providers made good use of the extra time. They got their physicians and their coders better educated. They focused on electronic medical record (EMR) optimization and efficiencies, expanding CAC implementations, and enhancing clinical documentation and physician query templates.

While much of the hard work is behind us, there is still work to be done. Providers need to measure and manage reimbursement analytics that will indicate revenue challenges ahead, specifically by focusing on the following factors:

  • Days in account receivables (A/R): Review A/R days outstanding by dividing the last 12 months’ revenues by the net collectible accounts receivable outstanding at a point in time multiplied by 365 days.
  • Discharged not final billed: Attend to held/suspended accounts, accounts awaiting clinical documentation, and accounts awaiting query response from the provider.
  • Denial experience: Denial rates can be measured by first-pass resolve rate, clean claim rate, payor rule errors, utilization review denials, medical necessity denials, held or pended claims, etc.
  • Actual payments versus expected payments: Assess this metric by examining historic reimbursement data and trends, creating payor scorecards, analyzing payor cost neutrality, and determining financial variation.
  • Clinical documentation improvement program key performance indicators: KPIs include CMI, severity of illness, risk of mortality, complications and co-morbidities capture rate, chart review rate, query rate, physician response rate, and physician agreement rate.

The industry will learn more about the effects of ICD-10 in the coming months. But everyone involved in ICD-10 preparation should take pride in the fact that the code set conversion was seen as anti-climactic.

About the Author

Magnus LeBlanc is a senior managing consultant in the Optum360 Provider Consulting Team based in New Orleans. Magnus brings over 27 years of healthcare experience, which includes a strong background in information technology and systems management/support as well as process improvement and business analysis. Prior to joining Optum, Magnus was the director of information technology services for Carson Tahoe Regional Healthcare in Carson City, Nev.

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