As the date for switching to ICD-10 coding approaches, HRMR asks how the change will affect healthcare and what a risk manager needs to know about the transition.
The US is lagging behind most of the rest of the world when it comes to ICD-10 adoption. ICD-10 is the diagnostic coding system implemented by the World Health Organization (WHO) in 1993 to replace
ICD-9, and the US date for ICD-10 compliance is fast approaching. From October 1, 2014 the new codes will be in use. The introduction of a newer, much more detailed system is a timely development.
“When the government originally announced the switch the previous code set was 30 years old,” says Mark Williams, principal, PwC Health Industries. “The code set wasn’t at the level it needed to be relative to new developments in healthcare. ICD-10 will certainly get us more current, and there is a lot more granularity to the code—it gives many more options on not only disease states but levels of disease states, and the origins of certain diseases or injuries.
“That additional granularity could provide benefits relative to measuring health outcomes and predictive modelling.”
Pat Zenner, a principal and clinical consultant for Milliman, adds that the clinical precision of the coding of some conditions can be used to improve condition management.
“Using asthma as an example, providers can send reminders to persistent asthmatics on appropriate use of controller medications. Electronic medical record (EMR) rules can be set up to prompt physicians to ask patients about a recent sudden onset of a worsening condition, and can incorporate clinical care guidelines based on a patient’s severity,” she says.
“ICD-10 codes can also be used to assess a population’s progress toward goals and treatment success, which can be used to identify areas for more effective treatment and compliance protocols. For some patient populations, disease management programs may be able to ‘screen out’ false positives and to better identify the population needing the highest levels of intervention.”
In addition, the higher level of granularity in ICD-10 codes makes it easier to improve drug management of conditions by identifying more severe conditions requiring specific drug therapy. This identification can help providers identify which patients are not on the recommended therapy.
“Care managers will also have access to encounter data that will help better plan care transitions and follow-up after emergency care. Knowing whether a patient admitted for status asthmaticus is a known mild intermittent or severe persistent asthmatic can help guide the care planning evaluation and post-discharge follow-up plan, such as the potential need for referral to a pulmonologist and a post-discharge follow-up call,” adds Zenner.
Evaluation and analysis
The list of benefits goes on: ICD-10 encounter codes may help in evaluating patient compliance in follow-up with abnormal findings and variations in patient compliance among provider practices; it will be able to help determine which healthcare management programs (eg, weight loss) are working and for some conditions, how well, how consistently, and how fast the program is working.
In addition, the new codes will provide a lot of information on practice patterns in a primary care practice. Analysis can determine the portion of patients with a subsequent encounter, and sequelae which may be indicative of over- or underutilization of services.
“ICD-10 will also be able to help be more precise in setting up preventive care systems,” adds Zenner. “With the specificity of the ICD-10 codes, physicians will be able to customize reminders to reschedule immunizations when care attempts failed due to illness. The codes will also document valid reasons for failure to provide immunizations, allowing a more accurate accounting of a practice’s immunization compliance.
“Analysis of the codes can even help focus efforts to improve immunizations rates; for example, by focused follow-up education for preventive service refusals.”
All of this has positive implications for risk managers, thanks to the likely improvements in record-keeping, quality and precision of care, monitoring of care and an increased ability to measure (and respond to) trends and outcomes. Handled well, the switch can only be good for an organization, but, warns Williams, there is potential for reputational damage from handling the process badly.
“The question is, are payers and providers on either side going to let each other down by not being able to hold up their end of the process—if that happens there’s certainly risk around reimbursement,” he says. “Providers are worried that their revenue and cash flow are going to be significantly impacted.
“Another risk is that during the transition period there will be some period of time where the data will not be clean—everybody is going to be coding differently,” he adds.
Zenner agrees that there will be confusion around the data immediately after compliance. “It is anticipated that there will be a lengthy ‘data fog’ where all of the models used to identify potential problem areas based on benchmark or historical data, may not be useful until they can be rebuilt with a sufficient history of ICD-10 billing,” she says.
A time of transition
Williams says it will be important to establish whether everybody is using the codes the same way, and organizations will need to be able to monitor and determine quickly whether their financial results are going to change and then adjust accordingly. He also expects changes on the insurance side as actuaries adjust to changes in their data.
Zenner agrees, saying that a big challenge relates to keeping things the same as they were under ICD-9. There is no one-to-one translation or direct correlation between ICD-9 and ICD-10. That means there will be compromises when converting ICD-9 based rules to ICD-10 based rules. “The action that happened under that ‘rule’ in ICD-9, may not happen in ICD-10 exactly as it did under ICD-9,” she says.
She adds that in the US, insurers and benefit administrators use
ICD-9 codes, based on provider claims/encounter data, in many important processes, including but not limited to: benefit administration definitions, authorization of payment for services, provider reimbursement schemes (case rates, bundled payments), subrogation/coordination of benefits identification, provider quality metrics/bonus schemes, risk adjustment (which can affect the insurer/benefit administrator’s payment in government programs and provider reimbursement/bonus payments), fraud, abuse and waste detection and risk stratification for disease/care management programs.
“Each one of these processes could end up with different results,” she explains. “Based on this and other factors, it is expected that at least for several months after the transition, there will be delays/inaccuracies in billing and delays/inaccuracies in payment. The downstream effects on patients and providers could be significant.”
To make things more complicated, the introduction of the new
ICD-10 codes happens at a time when risk managers already face multiple challenges, says Williams.
“There are many kinds of risk—reputational risk, financial risk, business risk—so risk managers are pretty busy. The thing about ICD-10, especially with the one-year delay in its implementation, is that it got laid on top of a lot of other mandates that have come through, so you’re going to be in the first year of the new health insurance exchanges and a number of other mandates that are coming down. It’s a lot for those risk managers to focus on.”
A smooth switch
The keys to transitioning successfully are planning and preparation. Earlier this year the Workgroup for Electronic Data Interchange (WEDI), an authority on the use of health IT to improve the exchange of healthcare information, announced submission of the latest ICD-10 industry readiness survey results to the Centers for Medicare & Medicaid Services (CMS).
The report discloses that the healthcare industry is not making the amount of progress needed for a smooth transition to ICD-10 in October 2014.
WEDI’s assessment of industry readiness is derived from survey responses collected from close to 1,000 providers, health plans and vendors during February 2013. Based on the milestones suggested in the revised North Carolina Healthcare Information and Communications Alliance (NCHICA)/WEDI ICD-10 Implementation Timeline, survey results show evidence that the industry is falling behind with ICD-10 compliance.
“While the NCHICA/WEDI timeline represented an orderly, consensus-based approach to compliance with all entities, it has become clear that many entities postponed their work until much later,” says Stanley Nachimson, director of the NCHICA/WEDI timeline initiative. “It remains to be seen how this postponement will affect the progress to compliance. Indications remain that significant numbers of industry participants have a considerable amount of work to do in a very short time.”
The most important steps to take in preparation for ICD-10 are knowing where the potential risks lie, developing risk mitigation strategies, and putting an early warning/monitoring system in place to identify when things start to go awry during the transition, says Zenner.
Williams agrees, and says that any risk manager who has not yet involved themselves in the ICD-10 switching process is already falling behind.
“We are under 12 months from implementation so a lot of the important decisions have not only been made but have been implemented, and testing is really going to be the focus for many months,” he says. “I’d say at least get involved in the testing effort and understand some of the results that are coming out of the testing effort. How confident are you that the organization is going to do well post-compliance based on how the testing is played out?
“You can still have an impact but the months are running short here. There’s not much time left.”
ICD-10, PwC Health Industries, WHO, NCHICA/WEDI