April 3, 2012

One Sure Way to Fail with ICD-10: Insulating Systems and Processes from the New Code Set

By Ian C. Bonnet

Any suggestion that your organization can survive the transition to ICD-10 by insulating your systems and processes should be flatly rejected.

The collective solution approaches of payers (commercial and government) and providers (institutional and professional) will drive the operational continuity of the healthcare industry and improve the value we deliver to our stakeholders. WellPoint invested heavily in understanding the business and clinical outcomes of insulating systems and processes versus remediating them, or replacing some, in order to be fluent in ICD-10. Our findings were clear, and they apply to entities involved in the entire life cycle of healthcare transactions, including payers and providers alike: insulating your systems and processes, and particularly transforming data at the claim level prior to processing, will create systemic and fatal flaws.

For a payer, the concept of insulating systems and processes involves, among other things, taking inbound claims in ICD-10 and translating them to ICD-9. For a provider, insulating involves producing bills in ICD-9 and then translating them to ICD-10. These both can be done directly or by having an intermediary such as a clearinghouse perform the data translation. On the surface, insulating seems to be a reasonable alternative to renovating. However, the costs and risks of insulating far exceed those of renovating, so before embracing an insulation methodology, your organization should have full awareness of the facts.

First, insulating impacts institutional reimbursement and professionally focused analytics. WellPoint’s analysis identified impacts to greater than 50 percent of reimbursements in high-cost areas under methodologies that process ICD codes (i.e. DRGs). This analysis also showed material changes in analytics used in quality programs through which paid claim data is used to describe the populations served by our professional provider networks.

Second, insulating negatively impacts business and clinical rules. Our analysis identified changes made to such rules, which include those that pend claims for clinical review or initiate case management processes. In some instances, rules are not invoked as they would have been with the original claim, and in other cases the rules are invoked but result in the opposite outcome from what would have been produced with a non-translated claim.

Third, insulating presents a higher total cost to ownership. To be very clear, any attempt to deploy an “insulating” utility will consume scarce resources meant to build, integrate, maintain and ultimately deconstruct processes. And this “utility” will cause errors that must be reconciled and corrected manually. If you consider the real outcomes of claim processing under an insulating approach, you will realize quickly that there is no cost-benefit argument for insulating.

The reason insulating failures occur is simple. When data is translated at a claim level, the resulting records frequently do not represent the intent of the original records, and every process that consumes the translated data is impacted. Those impacts are material, and they will negatively impact business continuity. Any advice indicating that insulating is a viable approach to adopting ICD-10 should be taken with caution.

About the Author

Ian C. Bonnet is a vice president of WellPoint and leads the company’s enterprise adoption of ICD-10 across all business and IT areas. As the largest health plan in the country, WellPoint has developed a comprehensive set of strategies not only to adopt the new code set, but also to innovate as it pertains to the quality of care we provide to our members and the communities we serve. Ian has more than 15 years of experience with health plans, providers and government agencies in developing and executing large-scale business and technology change across finance, claims processing, revenue cycle, customer service, healthcare information technology and medical management.

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