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Minimizing the ICD-10 Impact by Focusing on the Codes That Matter

February 26, 2015
by Rajiv Leventhal
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Consulting firm develops algorithm to determine the ICD-10 codes that matter to physicians
Fletcher Lance

Just recently, the House of Representatives’ Energy and Commerce Committee’s Subcommittee on Health held a hearing on the transition to ICD-10, which revealed that the majority of members are in favor of keeping the Oct. 1 2015 implementation deadline. While cost is still a hot topic for providers, it’s looking like its full steam ahead for implementation this year.

What’s more, training providers and staff on the eight-fold increase in diagnosis and procedure codes can prove especially challenging. To this end, Fletcher Lance, managing director and national healthcare leader of the Nashville, Tenn.-based North Highland, a global consulting firm, has been helping providers implement operational and organizational analysis and solutions that save money and increase efficiency.  While we know that ICD-10 contains nearly nine times the number of codes as ICD-9, it is not just the number of codes that should be of concern; it is their specificity, says Lance—the new coding system is significantly more specific than the existing one. Indeed, some ICD-9 codes have as many as 200 possible equivalents in ICD-10, so identifying the correct code is even more challenging.

Furthermore, after the Oct. 1 deadline, the Centers for Medicare & Medicaid Services (CMS) will not reimburse claims coded according to today’s ICD-9 standard. As such, North Highland has developed an approach—Codes That Matter—that prioritizes ICD-10 implementation activities by identifying those codes that are tied to the largest revenue streams at a given healthcare organization. Lance points to the well-known “Pareto Principle” that states that for most events, 80 percent of the effects come from 20 percent of the causes. In the case of transitioning to ICD-10, 80 percent of any given healthcare organization’s net revenue will come from only 20 percent—or, in most cases, a much lower percentage—of all diagnosis related groups (DRGs), Lance says.

To find the codes that matter, North Highland assesses multiple factors that contribute to the complexity and potential impact of the ICD-10 transition on physician and clinician productivity and organization revenues. This information is then used to identify a subset of ICD-10 codes that should be the initial focus of the transition and develop a prioritized roadmap of training and transition activities, explains Lance. “We find that, of the 68,000 codes that you’ll see in the hospital setting, maybe 300-500 codes matter, and often even less than that,” he says. “Not all codes are created equal; we can and have predicted which ones matter.”

When Lance, who has an extensive background in software and creating algorithms, started his data research, he would notice that the same five or six codes came up every time for a specialty such as orthopedics or cardiology. “I would cross reference it with payer and provider data, and that’s when it really became clear that it was always the same codes,” he says. “I then had it pressure-tested by a lot of skeptics, who found the same thing I did. Now it sits on the website.”

Lance adds that once these codes are known, you know the physicians who are driving most of them, making training much more targeted. “You can go to the physicians and talk to them, as they’re the ones generating the most business and codes. It’s not just identifying the codes, it’s the training and preparation of those folks that are generating them, as well as the support for them,” says Lance.

ICD-10 Concerns Remain

Lance doesn’t foresee another ICD-10 delay, as he thinks healthcare organizations are simply in “let’s get it over with” mode, but as the deadline nears, he still sees some issues that are present.  For one, if coding is inaccurate, incomplete or noncompliant, reimbursements from payers could be significantly reduced, delayed or denied completely. In that case, you’ll have to reopen the patient’s file, reexamine the records, identify the errors, fix them, and then resubmit the corrected claim. This translates into longer accounts receivable cycles with delayed or even denied reimbursements, potentially causing a significant reduction in revenues, notes Lance. As such, coding and clinical documentation improvement (CDI) specialists saw that there was inaccuracy even before the transition, but now, more of a focus continues to be placed on accuracy, Lance says.

Testing and physician engagement also are concerns, Lance continues. “It looks like most of the payers are testing, but some of the big ones are selecting who they’re testing with. So if you’re a smaller provider, how do you get your coding tested through the payer, through its entire life cycle? That’s a concern. There seems to be backlogs with Medicare as well—people want to test there, but there’s a build up,” he says. “Also with physician engagement, getting them trained is still a bit of an unknown, and some of the physicians we’re working with are not fully on board. That general readiness is something that has yet to be seen,” he says.

Overall, Lance thinks that the overabundance of mandates has worn the industry out. “People just don’t want another thing hanging over their heads,” he says. “At first there was a frenzy with money going to meaningful use, but now with Stage 2 and 3, who knows what’s going to happen? A lot of physicians aren’t doing too well with electronic health records (EHRs) either. I hear the ‘When does it end?’ question pretty often,” he says.