April 28, 2014

Will the ICD-10 Delay Tempt Providers to Employ an “Ostrich Strategy” with Respect to Transition Preparation?

By Marlon M. Parris, MBA and Cindy Doyon, RHIA

After Congress passed and President Obama signed into law the “doc fix” legislation on April 1, the “reset button” was pressed on the giant countdown clock displaying the number of days remaining for providers to get ready for ICD-10, with Oct. 1, 2015 being the new deadline. Centers for Medicare & Medicaid Services (CMS) representatives had yet to comment on this second extension of the deadline as of this writing.

Will the ICD-10 delay tempt providers to employ an “ostrich strategy” (hiding their heads in the sand, ignoring the challenge, hoping it will go away, etc.), with respect to ICD-10 transition preparation? Recently Katie Wike reported on a poll of 353 respondents (including 196 providers) conducted by the Workgroup for Electronic Data Interchange (WEDI), which found that only half of queried providers had completed an ICD-10 impact assessment.1

Recent advice to providers by Chris Powell, Precyse’s CEO, and Mike Nolte, MedAssets’ COO, suggest otherwise:2

Powell said providers should use this delay to continue staff education efforts, to improve their clinical documentation processes, and to build a strong foundation for process improvement and downstream strategic initiatives connected to the Patient Protection and Affordable Care Act. Also, Nolte stated, adoption of ICD-10 remains a question of “when,” not “if,” and he encouraged providers to proceed with plans and preparations in full force.

Almost all aspects of providers’ operations will be affected by ICD-10, and a key area is the financial risk associated with reimbursement. According to John Bardis,this can be interpreted as “…industry trends putting financial and operating pressure on hospitals and other providers.”

For example:

  • Baby boomers are now retiring and migrating from private pay to Medicare at a rate of 5,000 to 10,000 individuals per day. This alone means we will see hospital reimbursement rates per individual, or payment per unit of service, continue to decrease. Cost per unit has to decline at least at the same rate just to break even.

  • Reimbursement to hospitals as part of commercial insurer contracts with the state exchanges may initially fall somewhere between private pay rates and Medicare, depending on how narrow the provider networks are.

These industry dynamics constitute a risky proposition for providers. Incentives of the current fee-for-service schedule will be turned upside down in a value-based system that will reward better care coordination, a reduction in practice variation, and higher quality of care.

Also, the financial risk involved in the selection of ICD-10 diagnosis and procedure codes, coupled with translation to MS-DRGs, can be significant. One analysis from a 250-bed hospital, MS-DRG-based reimbursement risk exposure assessment utilizing ICD-9 to ICD-10 mapping highlighted about a $30,000 to $300,000 drop in revenue due to documentation accuracy issues.

Providers wishing to take a more proactive approach should consider including in their strategic and tactical transition preparation game plans a continuous process improvement methodology such as Lean Six Sigma. Providers also should perform ICD-10 training and launch an ICD-10 coding pilot, and consider leveraging computer-assisted coding (CAC) technology.

Lean Six Sigma is a powerful, flexible, and proven cost and waste elimination method that has been used successfully in both private and public organizations. A few points to keep in mind include:

  1. Start with the simplest Lean Six Sigma technique/tool that will help you to understand quickly the “as is” (current state) process issues that you’ll be seeking to improve in the “to be” (future state).

  1. Focus your energies in areas where there is strong support for the Lean Six Sigma program and you will be likely to have some quick hits/results.

  1. Use data and facts to help in decision-making.

  1. Consider your organization’s operating culture as you embark on a Lean Six Sigma program and make adjustments in your rollout approach as necessary in order to expertly calibrate the change towards a continuous process improvement culture.

  1. Provide basic Lean Six Sigma awareness training broadly and specialist training selectively to support business strategy.

Adequate ICD-10 training and practical application of learning through actual coding practice, targeted at each provider’s high-volume and high-dollar populations for all patient types (but especially inpatient visits) can be beneficial in shortening the ramp-up time for coders to attain basic proficiency and accuracy. Lessons learned from one of our ICD-10 coding pilot projects indicated that allocating sufficient time for practice charts had a positive impact on coder ICD-10 readiness.

Providers should utilize CAC technology with eyes wide open. The following quote by a 16th-century scholar sums it up well: Change is not made without inconvenience, even from worse to better.” The KLAS Computer-Assisted Coding 2013 Performance Report indicated that “while few reported significant coder productivity gains, many felt that CAC is having a somewhat positive impact on coder productivity, and most are optimistic they will realize gains in the future.”

In conclusion, here are a couple takeaways for you:

  1. Have a comprehensive ICD-10 transition plan (with people, processes, and technology) and diligently execute it. If you don’t have a plan, use the ICD-10 delay to start developing one now!

  1. Maintain a laserlike focus on timely completion of key milestones in your transition plan.

  1. Avoid being pennywise and pound-foolish with your ICD-10 process innovation. Leverage Lean Six Sigma methodology or another process improvement approach. If you need outside consulting help, get it!

According to Chris Powell,“there is certainly much hard work in the form of clinical documentation improvement (CDI), training and development, process improvement, and systems testing to be completed between now and(October 2015). Managing the ICD-10 transition amid other pressing initiatives can be challenging, but it is critical that we remind ourselves why ICD-10 is so important. ICD-10 gives physicians and hospitals better information about patient populations for use in quality and outcomes programs to help improve patient health while allowing them to be appropriately reimbursed for the care provided.”

So now that you have a roadmap, it’s time to abandon that “ostrich strategy” and embrace continuous process improvement to flourish in a value-based performance management patient care environment.

We wish you much success with your ICD-10 transition in the upcoming months.

About the Authors

Marlon M. Parris, MBA, Certified Six Sigma Black Belt, is the director of process innovation with Precyse (www.precyse.com), a leader in health information management (HIM) technology and services.

Cindy Doyon, RHIA, is vice president of coding and client audit services with Precyse (www.precyse.com), a leader in health information management (HIM) technology and services.

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