Report on ICD-10 Risks and Risk Mitigation


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ICD-10 WILL CHANGE EVERYTHING It is important that your hospital is prepared for the changes. If you aren’t, you will face significant risks, most notably NO CLAIMS REIMBURSEMENTS AFTER OCTOBER 1, 2014. Other Areas at Risk Include: Provider Readiness Vendor / Payer Readiness People Processes Financial Impacts Don’t fall victim to the risks of ICD-10 Download the report today and begin your preparations. - See more at:

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Report on ICD-10 Risks and Risk Mitigation

  1. 1. ICD-10Implementation: ItsInherentRisks forHospitals andstepstowardsmitigatingthem ByD’ArcyGuerinGue
  2. 2. ICD-10 Implementation: Its Inherent Risks for Hospitals and Steps Towards Mitigating Them by D’Arcy Guerin Gue D’Arcy  is  the  SVP  of  Marketing  and  Corporate   Services  at  Phoenix  Health  Systems.   As  a  co-­‐founder  of  Phoenix,  D’Arcy  has  had  a  number   of  pivotal  leadership  roles  contributing  to  the  growth   of  the  company.  Currently,  she  leads  overall   corporate  administration,  marketing,  services   development  and  knowledge  management.   She  had  led  various  strategic  initiatives,  including  the   development  of  our  HIPAA  Security  and  Privacy   tools,  ICD-­‐10  services  and  online  education   programs.   She  is  a  regular  contributor  to  Phoenix  Health   Systems  and  the  health  IT  community.     1
  3. 3. Contents ICD-­‐10  Background   ICD-­‐10  Risks  and  Risk  Mitigation   Provider  Readiness   Vendor  and  Payer  Readiness   People   Processes   Financial  Impacts   Next  Steps   2
  4. 4. ICD-10 Background 3
  5. 5. A little background on ICD-10 • Meaningful  Use  and  ICD-­‐10  are  closely  associated. • The  robust  ICD-­‐10  coding  system  has  been  the  world standard  for  capturing  healthcare  data  for  decades  –  but  has been  resisted  by  our  healthcare  industry. • Without  incorporating  ICD-­‐10  into  national  Meaningful  Use efforts,  we  will  remain  behind  most  countries  –  rendering our  HIT  reform  much  less  “meaningful.” • ICD-­‐10  is  integral  in  achieving  Meaningful  Use’  goal  for  a strongly  integrated  US  healthcare  environment  that  supports superior  population  health  management. ICD-10 is Needed to Achieve Meaningful Use Data  capture   and  sharing   Advanced     clinical  processes   Improved   outcomes   2011   2012   2015+  2014   ICD-­‐10   Meaningful  Use  Objectives  –  Create  significant  improvements  in   population  health  through  a  transformed  nation-­‐wide  delivery  system   1. Improve  Quality,  Safety,  Efficiency 2. Engage  Patients  and  Coordinate  Care  Nationwide 3. Capture  and  Optimize  Use  of  Highly  Detailed  Healthcare  Data 4. Improve  Population  and  Public  Health ICD-­‐10   4
  6. 6. Achieving Population Health Management Goals Strategies Employed to Achieve Health Management Goals Meaningful  Use   ICD-­‐10   HIPAA   Source: ONC and Federal Health Information Technology Plan, 2011-2015. 5
  7. 7. Why is ICD-10 Essential to Meaningful Use? ICD-­‐10  provides  improved  data  to  support:   • Greater  specificity  in  capturing  and  using  healthcare  data • More  exact  measurement  of  the  quality,  safety  and efficacy  of  care • More  accurate  billing  and  claims  payments • Improved  performance:  clinical,  financial  and administrative • Improvements  in  operational  and  strategic  planning • Better  resource  utilization • Maximizes  investment  in  EHRs,  databases,  etc. • Better  response  to  environmental  and  other  crises • Better  data  research  and  clinical  trials • Better  prevention  of  healthcare  fraud  and  abuse • Tracking  public  health  and  risks,  and  setting  health  policy • Increasing  adoption  of  beneficial  new  technologies 6
  8. 8. ICD-10 Will Change Everything Hospital  staff  across  the  enterprise  will  need  education  to   adapt  to  broad  changes  in  systems,  processes,  and   documentation.   Every  tool,  system,  report,  program,  process  and  interface   involving  ICD-­‐9  diagnosis  or  procedure  codes  must  be   adapted  for  ICD-­‐10.   Revenue  Cycle  Systems   Registration   Patient  Management   Coding  System/HIM   Professional  Billing   Patient  Accounts   Administrative  Systems   Decision  Support  Systems   Data  Warehouse   Business  Intelligence  System   Clinical  Systems   Emergency  Department   Laboratory   Pharmacy   Radiology  –  RIS  &  PACS   Surgical  Services   Interfaces   (Engine  &  Point-­‐to-­‐Point)   ADT   Charges   Coding  Abstract   Data  Extract  Files   Internal  Systems   External  Systems   Professional  Fee  Billing   End  User   Documentation   Reports   Forms   7
  9. 9. Like Most Major Changes, Converting to ICD-10 Has Major Risks The  most  important  risk: NO  CLAIMS  WILL  BE  PAID   AFTER  OCTOBER  1,  2014     by  Medicare  and  most     insurance  payers.   Areas of major risk Provider Readiness Vendor and Payer Readiness People Processes Financial Impacts 8
  10. 10. ICD-10 Risksand RiskMitigation 9
  11. 11. Provider Readiness Risks According  to  an  April  2013  WEDI  survey,  most  healthcare   providers  have  made  little  headway  on  moving  to  ICD-­‐10   since  early  2012.   The  industry  is  well  behind  the  milestones  in   recommended  timelines.  E.g.  CMS  estimates  that  the   average  small  hospital  will  need  14  months  of  effort  in   order  to  go  live  with  ICD-­‐10  by  October  1,  2014.   “Unless  more  providers  move  quickly  forward  with   their  implementation  efforts,  there  will  be  significant   disruption  on  October  1,  2014.”  (WEDI)   CMS Recommended Timeline: ICD-10 Implementation 10
  12. 12. Provider Readiness Risk Mitigation Organize  your  implementation  effort,  now.   • Become  familiar  with  ICD-­‐10  requirements. • Appoint  a  project  manager,  key  project  staff  and stakeholders  to  be  involved. • Provide  awareness  training  to  stakeholders  and  senior  staff. • Develop  impact  assessment  project  plan  and  budget. • Gain  senior  management  commitment. Conduct  an  impact  assessment.   • Inventory  all  systems,  processes  and  workflows  where  ICD-­‐9 may  reside. • Identify  all  departments  and  functions  that  will  be  impacted. • Identify  talent  gaps. Develop  enterprise-­‐wide  implementation  project  plan  working   back  from  October  1,  2014  deadline.   11
  13. 13. Vendor / Payer Readiness Risks Providers’  readiness  depends  on  vendors  and  payers’   systems  upgrades  and  successfully  testing  well  before  the   October  1,  2014  deadline.  Historically,  an  industry  culture   of  “non-­‐collaboration”  has  been  the  norm.     So  far,  providers,  payers  and  vendors  have  been  operating   under  differing  ICD-­‐10  implementation  timelines.  Payers   are  farthest  ahead  of  providers,  but  many  vendors  are  not   upgrading  as  quickly  as  payers.  Providers  who  have  done   little  work  on  ICD-­‐10  do  not  know  the  readiness  status  of   their  partners.   Systems Changes Will Be Challenging and Time Consuming Hospitals  may  have  as  many  as  100  or  more  affected  systems.   Systems  impacts  include:   • IT  system  changes,  including  interfaces • Upgrades  or  replacement  of  software • Testing  and  retesting  with  vendors  and  payers • Modified  field  lengths • Modified  system  logic • Updates  to  superbills/encounter  forms  and  databases • Systems  with  both  ICD-­‐9  and  ICD-­‐10  codes • Retaining  historical  data  in  ICD-­‐9  format IT  Talent  Gaps  May  Require   Additional  Staff  or  Outside  Support   12
  14. 14. Impact of ICD-10 on Systems 13
  15. 15. Vendor / Payer Readiness Risk Mitigation Create  a  vendor  inventory,  including  products  and  versions.   Determine  processes  that  need  vendor  and  payer     ICD-­‐10  support.   Discuss  business  needs  early  on  with  vendor  and  payer  partners.   • Understand  their  timelines  for  upgrades  and  collaborate  on implementation  goals. • Incorporate  vendor  and  payer-­‐related  tasks  in  project management  (e.g.  training,  change  management). • Require  deadlines  for  upgrades  and  other  deliverables,  and  track them. Work  with  vendor  /  payer  partners  to  test  and  remediate  well  in   advance  of  the  compliance  dates.   • Payer  systems  are  changing  too,  and  have  to  work  with  yours! Look  into  ICD-­‐10  Collaboratives  in  your  state   • Their  goals  are  to  promote  integrated  ICD-­‐10  adoption  across payers,  vendors  and  providers. Charge  an  individual  with  ongoing  responsibility  for  regular,   frequent  communications  with  partners.   • Ensure  that  executive  oversight  is  provided  at  a  high  level  to ensure  necessary  cooperation. 14
  16. 16. People Risks Almost  all  segments  of  the  organization  will  experience  disruption.   Senior  management  must  provide  adaptive  organizational  vision   and  strategies.   Coders  must  learn  new,  more  difficult  codes,  and  handle  increased   queries.   Physicians  must  be  trained  (and  required)  to  adopt  new  codes  and   documentation.   Clinicians  must  be  trained  to  ensure  clinical  documentation   enhancement  that  reflects  increased  ICD-­‐10  detail.   Information  technology  staff,  already  burdened  with  Meaningful   Use  /  EHR  initiatives,  must  take  on  more  work.   • Talent  gaps  are  likely  for  this  specialized  work  –  which  may necessitate  outside  support. Financial  management  and  administrative  staff  must  learn  new   codes  and  deal  with  potential  reductions  in  revenue  and  cycle   productivity.   The  industry  is  experiencing  staff  shortages  of  specialized  skills  to   manage  /  conduct  ICD-­‐10  implementation  projects.   • Shortages  are  causing  long  recruitment  cycles  and  higher paychecks. 15
  17. 17. Involve  internal  stakeholders  in  creating  assessment,  education,   training  and  communication  plans.   • Establish  a  comprehensive  business  vision  and  governance structure  to  facilitate  conversion  and  ensure  alignment. • Perform  a  careful  assessment  of  staff  and  talent  gaps. • Define  ICD-­‐10  stakeholders  and  include  representatives  on  the Project  Team. • Select  team  leaders  with  strong  program  and  project management  skills. • Clearly  outline  and  document  the  scope  of  the  project,  including responsibilities,  process  flows  and  budget  –  beginning  with organizational  impact  assessment. • Include  key  stakeholder  representatives  in  each  phase  of  the conversion  project. Get  organizational  buy-­‐in  early  on,  from  the  ground  up.   • Appoint  a  Training  Leader  to  oversee  training  strategies. • Outline  and  implement  an  ICD-­‐10  training  program  early. o Determine  initial  awareness  training  needs  and  audience. o Target  audiences  for  more  intensive  training,  e.g.  coding staff,  analysis,  key  decision  makers,  physicians,  nurses, administrative  and  financial  staff. • Give  special  attention  to  clinicians’  awareness  of  their  roles  in ensuring  a  successful  ICD-­‐10  transition. o Get  “sponsorship”  by  clinical  leaders. People Risk Mitigation “The  No.  1  challenge  leaders  cite  to  ICD-­‐10  readiness  is   physician  cooperation.”  (Health  Leaders  Intelligence)   16
  18. 18. People Risk Mitigation Identify  a  “Coding  Leader.”   Evaluate  current  coder  knowledge  and  capabilities.   • Some  staff  may  need  training  or  retraining  in  biomedical sciences. • Some  staff  may  need  to  be  replaced. Conduct  a  selection  process  for  a  coder  training  solution.   Consider  Computer  Assisted  Coding  alternatives  (CAC).   Determine  if  temporary  coder  staff  augmentation  will  be   needed.   17
  19. 19. The  sheer  magnitude  of  process  changes  across  the  enterprise  will   be  disruptive,  if  not  managed  properly  with  authority  and   transparency.   Poorly  conceived  or  badly  integrated  changes  in  business  and   clinical  processes  will  negatively  impact  effectiveness  of:   • Workflows,  forms,  and  policies  and  procedures • Clinical  documentation • Coding  productivity  and  accuracy • Reporting  and  planning • Billing  and  revenue  cycle • Enterprise  analytics Because  ICD-­‐10  codes  are  much  more  complex,  and  cover  greater   specificity  than  ICD-­‐9,  CMS  anticipates:   • An  increase  in  coding  turnaround  time  after  initial  ICD-­‐10  go  live • Initial  decreases  in  quality  and  accuracy  of  coding • Disruption  of  data  analysis,  especially  quality  data  and  historical trends • Inaccurate  or  incomplete  coder  interpretation  of  clinical  records • Increases  in  physician  queries Processes Risks 18
  20. 20. ICD-10 Impact on Processes 19
  21. 21. ICD-9 / ICD-10 Mapping Discrepancies Will Affect Processes Since  ICD-­‐10  codes  are  not  matched  exactly  with  ICD-­‐9,   approximations  and  mismatches  will  occur.   There  is  a  strong  risk  that  information  will  be  lost  and  errors  made.   Disruptions  and  delays  will  occur  in  financial,  clinical  and   administrative  functions.   Processes  affected  include:   • Documentation • Decision  support • Productivity  and  efficiency  practices • Contracts  and  business  processes • HIM • System  logic  and  edits • Billing • Claims  processing • Case  management 20
  22. 22. Processes Risk Mitigation Vet  process  owners  and  super-­‐users.   Complete  a  comprehensive  assessment  of:   • Internal  and  external  reporting:  Any  report  that  contains  ICD diagnoses  or  procedure  codes  (e.g.  back-­‐end  billing  and  HIM reports,  ad-­‐hoc  reports) • Operational  processes  and  workflows • Manuals  and  policies • Documentation  processes • Current  coding  capabilities Develop  an  implementation  plan  that  is  fully  integrated,  not   piecemeal.   • Implement  integrated  change  management  strategies,  policies, and  procedures  across  all  functional  areas. • Monitor  acceptance  and  effectiveness  of  initiatives. Balance  deadlines,  internal  business  requirements,  trading  partner   readiness  and  vendor  schedules.   21
  23. 23. Mitigating  Mapping-­‐Related  Risk   Tailor  the  CMS  crosswalk  framework,  “The  General  Equivalence   Mappings”  (GEMs)  to  your  organization’s  implementation.   • GEMs  was  developed  in  collaboration  with  payer,  hospital  and physician  organizations. • GEMs  forms  the  basis  for  an  industry  standard  crosswalk  and mapping  tool. Because  matches  between  ICD-­‐9  and  ICD-­‐10  are  imprecise,   organizations  must  customize  the  crosswalk  to  reflect  its  particular   business,  clinical  and  financial  priorities.   Implement  a  dual  coding  strategy  to  eliminate  problems  in  critical   areas.   • Care  services  prior  to  Oct.  1,  2014  will  require  continuing  use  of ICD-­‐9  code  sets  for  some  time.  (e.g.  resubmissions,  appeals) • Dual  coding  allows  reporting  in  either  ICD-­‐9  or  ICD-­‐10. • Enables  validation  of  both  ICD-­‐9  and  ICD-­‐10  code,  simultaneously. • Will  allow  continuing  historical  and  longitudinal  comparisons. • Scope  of  dual  coding  should  be  based  on  priorities  and  practicality. Develop  processes  to  ensure  that  proper  translations  occur  and  that   transactions  go  to  the  correct  system.   • Keep  an  audit  trail  of  translations  made  and  the  systems  involved. • Ensure  original  transactions  and  service  history  can  be reconstructed  in  their  original  codes  for  any  business  process  that relies  on  the  submitted  code. Processes Risk Mitigation 22
  24. 24. Develop  Risk-­‐Based  Implementation  Scheduling   Identify  processes  that  are  at  greater  risk  by  ICD-­‐10  changes   and  schedule  them  in  the  implementation  appropriately.   • Evaluate  the  impact  on  each,  based  on  their  level  of operational  or  financial  risk. • Develop  a  corresponding  priority  schedule  in  the implementation  plan. Give  special  attention  to  planning  the  modifications  of   business  processes  to  manage  revised  components  of  the   value  chain.   Determine  the  approach  and  timing  for  updating  analytics  and   reporting  to  support  ICD-­‐10  effort.   Delay  non-­‐critical  business  intelligence  initiatives  until  after   the  ICD-­‐10  implementation.   Processes Risk Mitigation 23
  25. 25. Centers  of  Medicare  &  Medicaid  Services  (CMS)  estimate     ICD-­‐10  will  initially  result  in  a  decrease  in  cash  flow  and  loss  of   revenue.   Denial  rates  are  expected  to  increase  by  100%  -­‐  200%  post-­‐ implementation,  with  an  increase  in  A/R  days  by  20%  -­‐  40%.   Healthcare  organizations  will  likely  endure  declining  payments   for  up  to  two  years  after  the  October  1,  2013  implementation   date,  depending  on  quality  of  implementation.   Claims-­‐error  rates  are  expected  to  increase  from  6%  to  10%  as   compared  to  the  current  average  of  about  3%  with  ICD-­‐9.   Financial Impact Risks Potential Impact of ICD-10 on Finances 24
  26. 26. The  Goal  of  Revenue  Neutrality   CMS  expects  that  ICD-­‐10  will  have  a  revenue-­‐neutral  impact  on   providers  in  the  long  term,  but  this  is  unlikely,  short  term.   To  help  avoid  revenue  hits,  a  financial  impact  analysis  should  be   conducted,  including  a  process  map  that  models  the  transition   from  ICD-­‐9  to  ICD-­‐10.   • The  map  should  reflect  how  all  processes  flow  and  connect  to each  other  pre-­‐ICD-­‐10  and  post-­‐implementation • Will  show  how,  where  and  when  the  transition  will  affect  the revenue  cycle. • Will  enable  developing  an  action  plan  to  provide  special attention  to  potential  revenue  cycle  vulnerabilities. Financial Impact Risks ICD-10 Impact on Hospital Revenue Cycle 25
  27. 27. ICD-10 Revenue Cycle Impacts 26
  28. 28. Financial Impact Risks Both  CMS  and  some  payers  expect  that  there  will  be  delayed   payments  due  to  the  ICD-­‐10  transition,  which  will  impact   revenue  directly.   • Immediately  before  and  after  go-­‐live,  expect  increased  payer scrutiny  to  identify  potential  duplicate  billings  and/or payments  for  service  (i.e.,  billings  under  both  ICD-­‐9  and  ICD-­‐ 10).   • Increased  payer  requests  for  medical  record  verifications  for specific  claims  are  likely. • Documentation  and  coding  errors  will  slow  payments. An  increase  in  aged  accounts  and  accounts  receivable  will   impact  productivity  and  staffing.   Various  tools  and  studies  are  available  in  the  market  to  assist   with  payment  prediction   27
  29. 29. Financial Impact | Risk Mitigation Educate  staff  about  the  relationship  between  ICD-­‐9,  ICD-­‐10,  CPT  and   revenue.   Set  financial  benchmarks  in  the  implementation  and  financial   processes.   Prepare  a  solid  financial  management  plan,  upfront:   • What  will  the  business  look  like  in  an  ICD-­‐10  world  vs.  ICD-­‐9? • Perform  strategic  planning,  using  analytics,  trending,  reporting  and revenue  forecasting. Cash  flow  management:   • Begin  cash  flow  analysis  early. • Establish  lines  of  communication  with  banks  and  payers  regarding potential  financial  issues. Budget  for  potential  cash  flow  impacts;  prepare  for  delayed  payments   and  claims  adjudication.   • Adjust  accounts  receivable  cash  reserves. • Consider  getting  temporary  increases  in  lines  of  credit. • Manage  A/R  to  minimize  denied  payments  and  write-­‐offs. Ensure  strong  communication  with  payers  to  reduce  claims  payment   confusion  and  delays.   Train  clinical  and  administrative  staff  on  fraud,  waste  and  abuse   regulations  and  reporting.   Get  independent  audits  of  past-­‐submitted  claims   Run  both  ICD-­‐9  and  ICD-­‐10  in  tandem,  post-­‐implementation  to   help  reduce  slowdowns  in  payments.   28
  30. 30. Financial Impact Risk Mitigation Plan  for  HIM  productivity  delays  and  educational  expenses.   Prepare  for  increased  denial  tracking,  trending  and  reporting  needs.   Right-­‐size  staffing  in  patient  access,  HIM  and  patient  accounting  to   handle  increased  work  volume.   Emphasize  good  documentation,  which  directly  impacts  accurate   code  assignment,  billing  and  payment  timing.   Crosswalks  and  translation  tools  must  allow  the  organization  to   anticipate  and  adjust  for  financial  impacts  related  to  the   implementation.   Budgeting  for  ICD-­‐10   Using  the  impact  assessment,  analyze  direct  and  hidden  costs  of   transitioning  to  ICD-­‐10.   • Involve  CFO  in  budgeting  for  costs  of  ICD-­‐10 • Expect  capital  cost  outlays  and  increased  staffing  costs  in  order  to: o Map  and  load  codes o Develop  new  reports o Map  dual  coding  systems o Retrain  users o Hire  new  coders  or  move  to  computer  assisted  coding  (CAC) o Augment  IT  and  other  staff  with  specialized  talent • Include  upgrades  of  systems  or  costs  to  replace  old  systems • Consider  costs  to  purchase  implementation  tools 29
  31. 31. Don’t Delay… Phoenix  Health  Systems  provides   ICD-­‐10  project  planning,  leadership   and  implementation  expertise.   With  over  20  years  of  healthcare  IT   experience,  Phoenix  is  passionate  about   supporting  exceptional  healthcare.   Don’t  fall  victim  to  the  risks  of  delaying   the  transition  to  ICD-­‐10  –  start  preparing   now.  We  can  help.     Get  a  FREE  ICD-­‐10  Assessment.   Schedule  a  meeting  with  one  of   our  ICD-10  experts  today.     30