February 7, 2014

Maintaining Positive Cash Flow in a Post-ICD-10 Environment

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With only eight months to go, now is the time to ensure that your hospital or practice maintains a positive cash flow after ICD-10 goes live. A critical initiative will be to understand payers’ expectations regarding the processing of ICD-10 claims.

To start, create a spreadsheet that includes all the payers to which you billed accounts with dates of service in 2012 and 2013. For each payer, you will want to track the following items:

 

  1. Confirmation in writing that the payer will be ready to accept and process ICD-10 claims as of Oct. 1, 2014;

  2. ICD-10 claims testing status with your organization;

  3. Review of ICD-10 updated payer contracts;

  4. Review of ICD-10 reimbursement mappings; and

  5. ICD-10 denials/pending claims.

The difference in ICD-10 compliance requirements among payer types makes it critical for providers to be flexible. As an example, many providers expect all workers’ compensation and motor vehicle agency payers to be noncompliant with ICD-10 as of the live date, since these payers are non-covered entities under HIPAA. However, the Ohio Bureau of Workers’ Compensation (OBWC) has announced that it plans on implementing ICD-10 on Oct. 1, 2014. Anthem Workers’ Compensation also indicated that it “will be capable of accepting and processing ICD-10 diagnosis and inpatient procedure codes on the mandated deadline of Oct. 1, 2014.”

The provider also will need to be 100 percent confident that practices’ billing software vendors can produce electronic and paper claims with either ICD-10 or ICD-9 claims, based not only on date of service, but also by payer. Payers have varying degrees of readiness with the transition to the ANSI-5010 claim format, so you must be prepared to submit ICD-9 claims for all payers to maintain a steady cash flow.

Next, determine payers’ processes for testing ICD-10 claims. The Centers for Medicare & Medicaid Services (CMS) has instructed Medicare Administrative Contractors (MACs) to conduct ICD-10 testing during the week of March 3, 2014. Many industry associations, including the American Medical Association (AMA) and Medical Group Management Association (MGMA), are requesting that CMS expand the testing scope. Currently, each MAC is responsible for either hosting a registration site for the testing week or providing an email address for providers to enter registration information. For example, WPS Medicare allows you to register at the following link: http://wpsmedicare.com/j8macpartb/departments/edi_/2014-icd10-testing-day.shtml.

Aetna indicates on its ICD-10 FAQ website that it “will contact you directly if we plan to test with you. We select testing partners based on several factors,” the message reads. “One factor is ICD-10's effect on the contract's reimbursement methodology. Contact your clearinghouse partners to initiate test planning in order to ensure readiness.”

Anthem BCBS indicates that it “plan(s) to conduct acceptance testing for EDI direct-submitters starting in early 2014. If you are not a direct submitter, you will need to partner with your claims submission vendor (clearinghouse, billing company, etc.) to test with us.”

Of course, not every payer will have a formal testing process, but it is vital to attempt to test with as many payers as possible with your available resources.

Appoint a dedicated resource to review the contracts your organization has with your 10 largest payers. Key areas of focus should include the type of protection payers are offering for problems with claim submission and compensation for a delay in claim payments.

Many providers have negotiated the allowance for an extension of timely filing deadlines (i.e. from 60 days to 120 days) during a defined transition period after ICD-10 implementation (i.e. for dates of service through March 31, 2015). If payers are unable to adjudicate clean claims within a timely manner (i.e. 30 days, as required by CMS), there should be interim payments and subsequent reconciliation defined within the contract. Also, providers should work with payers to include a long-term process for monitoring the quality of ICD-10 coding in a defined transitional period. This will result in fewer ICD-10-related denials over time. If applicable, providers should review any pay-for-performance contracts with payors, as these contracts rely heavily on diagnosis coding.

CMS has indicated that, despite the emphasis on specificity in ICD-10, codes that indicate an unspecified diagnosis are sometimes appropriate and should be used when necessary. CMS specifically has noted that “unspecified codes should be reported when they are the codes that most accurately reflect what is known about the patient’s condition at the time of that particular encounter.” However, commercial payors may not be as flexible. AAPC’s vice president of ICD-10 education and training, Rhonda Buckholtz, has stated that “health plans have already begun to institute medical policies that will not pay for an unspecified code when a more specified alternative exists.”

A likely scenario for submitting a high-dollar procedure with an unspecified ICD-10 diagnosis to a payer that does not recognize unspecified codes could result in the claim being sent to case management and held for at least 20 days – and then returned to the provider as a denial that requires resubmission with more specific diagnosis codes. This could put a major dent in a provider’s cash flow. For each commercial payer, providers must review thoroughly how ICD-10 reimbursement mappings are defined, taking note as to whether commercial payers will recognize unspecified codes for inpatient, outpatient, and physician encounters. If certain unspecified codes are not included in the mappings that your leadership feels should be included, based on review of clinical documentation, now is the time to negotiate this with payors.

Lastly, your organization will want to create a team of ICD-10 denial specialists. The size of this team will vary based on the volume of claims your organization submits on a weekly basis. The leader of this team should be detail-oriented and experienced with correcting medical necessity denials. Someone with a clinical background would be preferable, since he or she would understand anatomy and disease processes and would understand what clinical documentation applies to specific ICD-10 codes. It is also important to include a provider on this team to communicate ongoing clinical documentation issues. This can help avoid denials for unspecified ICD-10 codes or ICD-10 codes that are not part of a payer’s medical policy.

The leader of this team should be tasked with tracking the volume and type of denials by payer to measure the effectiveness of the team’s efforts.

About the Author

Andy Tolep, CCS, CPC, is a senior healthcare consultant with Hayes Management Consulting. He is CCS and CPC certified, and has more than ten years of experience in medical coding/auditing and healthcare revenue cycle analytics. He also has expertise in educating providers on clinical documentation quality, denial management, and revenue cycle optimization.

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Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.