Post-implementation ICD-10 challenges

With no delay to the October 1, 2015 implementation date in sight, ICD-10 coding will be required by CMS for all diagnosis coding and all inpatient procedures for payment for all dates of service after September 30, 2015, with the exception of Medicaid programs in California, Louisiana, Maryland, and Montana, as CMS is allowing those states to take incoming claims coded in the new ICD-10 system, convert them to ICD-9 codes and use that system to calculate payments.

Beyond the obvious training and work flow challenges associated with the change, a whole host of challenges will arise as ICD-10 becomes the new reality. Here are four of them.

Reimbursement challenges

Existing reimbursement arrangements may be impacted by the ICD-10 transition in several ways. As discussed previously, changes to reimbursement rates, particularly based on some DRGs, may occur. Such changes may or may not be effectively “neutralized” by the revenue neutrality provisions in some managed care contracts.  We expect to see such issues ultimately going through the dispute resolution process provided for in such contracts.

Related:ICD-10's impact on reimbursement

Clinical documentation sits at the crux of reimbursement challenges and may create a number of unanticipated outcomes. Value-based payments, regardless of the specific methodology, could be significantly affected by the ICD-10 transition.  How accurately the clinical documentation captures the visit and the diagnosis will ultimately impact incentive payments.

Healthcare providers must ensure that the medical record contains enough specificity for the selection of the ICD-10 code that best reflects that condition.  More specificity is required by the ICD-10 codes; thus, more specificity is required in the underlying documentation.  The Centers for Medicare & Medicaid Services (CMS) announced in July that there would be limited flexibility regarding the claims payment and quality reporting if the level of specificity is not correct. Specifically, CMS is providing a 12-month transition where neither quality penalties nor contractor claim denials will occur relative to physician or other practitioner claims under Part B based solely on the level of specificity of the ICD-10 code so long as a valid code is used from the right family.

But this 12-month CMS partial “safe harbor” does not apply to services other than Part B services and does not automatically translate to managed care where private health plans often base quality incentives and value-based payments on Medicare reporting and standards.  Providers are rightfully concerned that the quality incentives they have been working so hard to achieve may dwindle as ICD-10 implementation begins if their underlying documentation does not contain the level of detail needed to identify and select the ICD-10 code with accuracy.

NEXT: Compliance challenges

Compliance challenges

The transition to ICD-10 could place a new burden on already resource-strained healthcare provider compliance departments.  Strong compliance departments employ internal auditing as a way to identify coding errors and prevent or correct overpayments. 

If a clinical record does not contain enough information to support the selection of a specific code, it is important for the compliance department to understand the impact of this inconsistency on the claim and determine whether there is a reimbursement impact. 

Billing and compliance staff should have comparable training and apply consistent standards in evaluating the medical record and identifying the appropriate ICD-10 code.  And, the compliance department should be equipped to make overpayment determinations where deficiencies are identified. 

Related:What healthcare executives should know about ICD-10

For example, the compliance department must determine whether the CMS flexibility on accepting the correct family of codes for the claim acceptance also permits that same flexibility in an overpayment analysis.

With more specificity, increased enforcement will likely follow. Healthcare entities should anticipate aggressive payer audits, both private and public, and enforcement efforts focused on whether clinical documentation supports the ICD-10 code selected.    

Next: Increased specificity challenges

Increased specificity challenges for integrated entities

Clinically integrated healthcare settings with multiple providers and provider types may find the ICD-10 transition particularly challenging in light of the need to increased specificity and consistency in the clinical record. 

Accountable care organizations (ACOs) and similarly organized collaborations may find existing practices for integration, including existing technologies for documentation and auditing, are insufficient for the ICD-10 transition. 

Coverage and policy changes

Existing reimbursement methodologies may not retain the same levels of payment in the ICD-10 transition.

The ICD-10 transition may also require changes to health plan coverage and payment policies and reporting systems that will have both an operational and reimbursement impact on healthcare providers. 

Providers must be vigilant and review all policy and manual changes released by health plans, as many such changes will be addressing operational issues identified in the ICD-10 transition. 

These changes may require new documentation standards, may apply new coverage limitations as tied to the ICD-10 coding and may impact the format and timing of quality reporting to insurers. 

George B. Breen is a member of Epstein Becker Green’s Health Care and Life Sciences and Litigation practices in Washington, D.C.  He is chair of the firm's National Health Care and Life Sciences Practice Steering Committee.  Bethany J. Hills and Jackie Selby are members of Epstein Becker Green’s Health Care and Life Sciences practice in New York, New York.