Anesthesia Business Consultants

Discover Practical & Tangible Professional Articles &
Advice Dedicated to the Anesthesia Community

Ipad menu

Spring 2014

ICD-10 is the Latest Y2K: The Potential Impact on Provider Revenue

Darlene Helmer, CMA, CPC, ACS-AN, CMPE, MBA,
Vice President of Provider Education & Training, ABC

Looking back fourteen years ago, Y2K was all a buzz and everyone, especially the IT department, was busy waiting for the impact of Y2K to reveal itself. The ball dropped in 2000 and nothing happened. No planes fell out of the sky, computers did not crash. All of the preparation and expenditure for naught, or was it? What did we learn from the Y2K experience? Even though the impact was negligible, preparation was the key. We know that had something occurred, some were not prepared and many were well prepared.

Let’s fast-forward to 2014. ICD-10 is this years’ Y2K. Rest assured, ICD-10 will have a profound effect on providers; in fact, it is the largest modification ever to hit the healthcare arena. Providers who delay or ignore their implementation process will suffer a negative financial impact whereas those who work to prepare should be able to steer themselves through the issues encompassing this change. Once again, preparation is the key. This time we are guaranteed that there will be an impact. The Centers for Medicare and Medicaid Services (CMS) proclaims that ICD-10 will provide benefits such as increased specificity that will lead to accurate and timely reimbursements, better quality of care, and improved care management. The CMS also claims, due to the increased specificity of the new system, it will be more difficult to gain reimbursement for an improper claim. Regardless of these statements, the implementation of this new code set will impact the entire realm of healthcare. The total effect of converting to the ICD-10 system for the United States is unknown. There are studies that discuss the impact of ICD-10 in other countries, but a true estimation cannot be predicted, due to other mitigating factors (i.e. different payer environments, and different levels of implementation, etc.). Utilizing the information that we have gained from other countries will contribute to suitable preparation. It will assist us in alleviating many of the negative outcomes with the variety of practices who navigate the transition with success. However, the question of the degree of impact remains unknown.

Clinical documentation is a vital part of ICD-10. It captures the medical condition of the patient and has always played a vital role in medical coding and billing. CPT codes explain what was done during the visit, operation and/or treatment while ICD coding explains why it was done. A valid “what” and “why” code, which is supported by medical record documentation, must be submitted on the claim form for payment. Medical necessity denials happen when the “what” and “why” are not in agreement with CMS or other payers coverage policies (e.g. National or Local Coverage Determinations (NCD/LCD)). CMS will be reviewing and updating all of these policies for ICD-10 conversion. The Medicare Coverage Database states that all ICD-10 LCDs will be published by April 10, 2014, and any other LCDs which do not contain ICD-10 information will be published no later than September 4, 2014. CMS also indicated that all LCDs will be given new numbers.

In order for practices to prepare appropriately for the implementation of ICD-10. There are six key steps that have been identified to successfully manage the risks associated with the change in code sets: planning, communicating and training, assessing and improving workflow, testing software and processes, implementing and surviving post-implementation. Planning is crucial to a successful transition. It is fundamental to ensure that top leadership understands the extent and significance of the change. It all starts at the top; leadership buy-in will trickle down.

The next critical step is to create an ICD-10 project team, no matter how small the practice. It is important to take time to review the ICD-10 resources from CMS, trade associations, payers and vendors. Make sure the staff is aware and informed of the upcoming charges. A project team is critical. Charge the project team to identify how ICD-10 will affect your particular practice. Make sure to ask these two key questions: (1) How will ICD-10 affect your people and processes? (2) How can we include ICD-10 as we plan for projects like meaningful use of electronic health records? A budget should be part of the ICD-10 project plan for your practice as there are definite costs associated with implementation. It is important to identify each task as well as designating the person responsible for that task. Create deadlines so you do not fall short in your plan. A critical part of this plan is to ensure sign-offs from all of the stakeholders, physicians, nurses, coder/billers and all office personnel.

Communication is a critical part of implementing your plan as is training all of your stakeholders. Review the potential changes in documentation and educate your practice. Remember: training is a considerable part of communication. Training should be customized for the different roles in your organization. It is important to explore what options are available to train the staff. Explore the need and resources available for outsourcing coding, both during training implementation, and post-implementation. Run a report from your system of the top 10 ICD-10 codes and crosswalk them to ICD-10 for a reference point. Table 1 illustrates a few examples.

Examine your workflows and processes to determine the need for change to accommodate the new code set. Review your authorization, referral registration clinic and hospital encounters, orders, testing, interfaces; contracts, research participation, financial operations, quality reporting as well as payer relationships. There will be some financial impact; productivity backlog alone will cause an impact to your revenue. There are many predictions regarding the effect on revenue, but on average the estimate is 25 to 65 percent. According to our assessment, anesthesia should be at the lower end. Nevertheless, you must ask yourself the question, can you handle a 25 percent decrease in production and revenue due to this new code set? Physician clinical documentation plays a vital role in this conversion. It must be your focal point for assessing ICD-10 readiness. Spend time reviewing the need for more specific documentation and the ramifications of poor documentation on the practice. Previously, we have focused on documentation for procedures, (i.e. upper 1/3 of the ureter, upper vs lower abdomen) to gain additional units for reimbursement. Now we have to focus on documentation of the diagnosis to be assured that the diagnosis correctly matches the procedure and supports the medical necessity.

Testing internal systems and processes will identify key vulnerabilities such as volume, capacity and other performance parameters. Create some test data, which is scenario driven, that will assist in evaluating the performance impact of the available diagnosis codes submitted per claim. Request your vendor’s testing plan and how it will involve coding and other practice staff. Question your vendor staff about their plan. What will be the claims and reports? What is the process for rejections and re-submissions related to incorrect codes? Are there charges for these updates? Will training be provided and do you have a plan to assist us in extracting the information necessary? Create an inventory of external systems and processes with which you exchange data, i.e. payers, hospitals, outsourced billing and coding and government entities.

Many practices request information regarding the potential impact on reimbursement. Again, it is difficult to determine the total impact of the conversion. Communicate with payers about anticipated changes in reimbursement schedules or payment policies. The nature of these changes will vary based upon your particular practice. ICD-10 should be included in future contract negotiation discussions with the payers to decrease the risk of compliance errors and claims denials. During the transition period following ICD-10 implementation, payers will continue prior reimbursement policies. Challenges with billing productivity combined with potential payer claims processing challenges may result in significant impact to cash flow. Taking out a line of credit to cover this impact would be prudent.

The last step, post implementation, is just as important as the first step. Rely on your contingency plan for each potential failure point to assure business continuity. Monitor the systems and functions and correct the errors, or identified problems, immediately so that reoccurrence does not create continual problems. Start with the highest volume issue and work your way down, so as to release the greatest amount of claims for reimbursement. Monitor your coding accuracy and productivity and implement strategies to address identified problems. ABC clients will not have to be concerned about coding itself, but will need to focus on documentation and preparation throughout the practice, especially for pain practices. The risks associated with a less successful ICD-10 implementation are decreased productivity, financial, delayed payments, increased AR and more denials. The causes are many: inaccurate and incomplete documentation, inadequate training at varying levels within the organization, failure to address system readiness to process ICD-10 codes, failure to make administrative form, documentation and policy updates, as well as failure to assess and prepare for payer readiness. Prepare the way for ICD-10, the latest Y2K.

Darlene F. Helmer, CMA, CPC, ACS-AN, CMPE, MBA serves as Vice President of Provider Education and Training for ABC. She has 30+ years of healthcare financial management and business experience. She works closely with the ABC compliance department and is a member of the ICD-10 training team. She is a long-standing member of MGMA, AHIMA, AAPC and other associations. She is a frequent speaker at local and state conferences. You can reach her at