Leading up to the healthcare industry’s transition to the ICD-10 coding set on Oct. 1, 2015, there seemed to be a collective feeling of uncertainty on the part of providers—particularly physician practices that frequently expressed doubt about their readiness for the shift. What’s more, numerous pieces of legislation were introduced into Congress, several of which advocated a “grace period” where healthcare providers’ ICD-10-based claims submitted to Medicare and Medicaid would not be denied due to coding errors. This led to providers becoming even more leery if the transition would indeed occur on the set date, given that it was delayed three times previously. As such, many organizations were additionally unsure of the impacts that the transition would have on productivity and cash flow.
Despite all this perplexity and trepidation, the implementation deadline was not moved and the industry made it through Oct. 1 sans disaster. At the end of October, the Centers for Medicare & Medicaid Services (CMS) reported that claims have been processing normally since the transition, with 10 percent of claims being rejected and only .09 percent rejected due to invalid ICD-10 codes. However, Medicare claims take several days to be processed and, once processed, Medicare must– by law – wait two weeks before issuing a payment. Medicaid claims can take up to 30 days to be submitted and processed by states.
Now, approximately two months from the transition date, provider organizations have a better idea on where they stand with ICD-10. As such, over the course of the last month, Healthcare Informatics “took the pulse” of multiple providers and consulting firms to measure the impact that the change has had on the industry. For Part 1 of this two-part piece, HCI talked to executives from three consulting companies about what they’re seeing and hearing from their provider clients regarding the transition. Below are excerpts of interviews with: Ed Hock, managing director at Washington, D.C.-based The Advisory Board Company; Ingrid Moyer, senior advisor at Impact Advisors (Naperville, Ill.); and Scott Griffin, vice president, consulting services at Culbert Healthcare Solutions, a Woburn, Mass.-based firm.
What are the main things you are hearing from your clients so far regarding ICD-10?
Hock: First, let’s talk about the obvious—the sky did not fall on Oct. 1. On the IT side of things, it has gone incredibly smoothly with the here-and-there small instances of problems or glitches being quickly fixed. The flow of data within hospitals and to payers has been really successful, most recently denoted by CMS’s percentage of rejected claims being right around historical averages. That’s great news.
Griffin: The many CFOs we deal with are saying the transition was a non-event. There were minor glitches with the systems, and most of the early issues have been IT-related. There was really no way to ultimately test for things such as clean interfaces. You do verifications with the payers and ask them if they are ready, and you kind of have to take them for their word. You can only do so much testing. Those IT fixes have been resolved once Oct. 1 passed, though. There have been really no major issues that we have seen, and we have clients of all shapes and sizes.
Moyer: The implementation has gone well for our client site [the site, unnamed, has six hospitals and approximately 100 physician offices, says Moyer]. We set some different work queues set up since we wanted to monitor the go-live in multiple ways. We had a referrals authorization queue set up. Then there was another queue where we monitored claims that might have gone out with an ICD-9 code to see if those were going through. We found that in some of the areas, Medicare was paying some claims but not others. We found out in one area that there were some FTE [full-time equivalent] issues, and had we not been monitoring this, we wouldn’t be aware of these issues. Overall though, it did feel like a non-event.
Hock: What we are watching—and encouraging providers to watch—are other [things] that are popping up, such as the documentation of those sent claims. Just because we could get paid claims out the door doesn’t necessarily mean that the claim was documented sufficiently as it should have been. We expect that to be a troublesome part of ICD-10. Physician documentation is one of the areas hospitals have been working to prepare for most. It’s still too early to see the impact of that, but we have seen some examples of anecdotal evidence that would be troublesome for some organizations across the country.
What specifically about the documentation piece of this is so troubling?
Hock: Because of increased granularity, ICD-10 requires physicians to be more specific in their documentation so coders can code with the highest degree of accuracy, and so hospitals get paid for that. If that doesn’t happen, either providers won’t get paid like they should be because the true complexity of the procedure was not captured, or the claim will be rejected later in the process. Services could be deemed not-medically-necessary by payers because the full documentation wasn’t there.
We have seen some anecdotal issues with that. We talked to a hospital in the Northeast recently that has seen its query volume double in the weeks after the ICD-10 transition. By queries I mean the number of times a hospital staff has to ask doctors for additional clarity around their documentation. That was common under ICD-9, but it is indicative of the issue we are talking about. It has increased for some organizations in the aftermath of ICD-10.
So the final end solution is for physicians to document fully and completely the first time around so claims could get paid the right way. When done right, the issue of physician documentation shouldn’t be an overwhelming one. The terms required by ICD-10 are ones doctors are very familiar with and used to—they just may not be used to actually writing it in the chart for particular patients. Hospitals are training their physicians on this. Also, there is a big onus on hospitals to understand if they are lacking documentation. They need to be able to decipher what was missing and who they need to train on what.
Griffin: The biggest issue is not having the specificity in the codes that’s to be expected out there. That’s a learning curve for providers and it’s coming along a little slower from the clients that we have monitored. Most of that stems from education—not because the doctors don’t know, but being able to translate from theory to practicality.
That education piece is critical. A number of organizations didn’t do dual coding. Those who haven’t are hurting a little more since their providers did not go through the hands-on tactics. You really need to provide feedback back to them or they won’t pick up on certain things. We are stressing that you must have much more meaningful feedback to providers than ever before. Organizations say they give feedback on denials, but you cannot wait until the end of the month for that. You need to deal with issues such as denials as they come up.
How concerned are your clients regarding productivity, denied claims, and cash flow?
Griffin: There is still not a huge impact on cash, which is what CFOs want to know. Is cash still coming in? Do we have the dollars coming in that I budgeted for? Do I need to plan to use my reserves, my lines of credit that I had with banks? We are not seeing a whole lot of those things yet.
Hock: As I talk to revenue cycle leaders around the country, many are calmer than before, but are worried that if things such as insufficient documentation are not caught and rectified, hospitals stand to lose substantial money, either in overall revenue or timeliness that they receive that revenue. Hospital leaders across the country are eagerly watching these metrics over the next series of weeks.
Moyer: We planned [with our client site] for those cash flow issues, as we knew there would be a few weeks where Medicare would be holding money. Just recently, we started seeing some of the money trickling in. But for a smaller office setting that doesn’t have cash in reserve, it could be hard for them to sustain during this period. On the hospital side, we’re seeing a decrease in productivity. That’s something we were prepared for due to some of the valuations we did—we anticipated a 50 percent reduction in productivity.
Hock: We have data form 15 hospitals—large, medium and small. We have seen a 55 percent increase from September to October/November in discharged not final billed (DNFB)—the amount of time on average it took for a claim to be coded. The DNFB average rose from 3.84 days in September to 6.56 days in October to 5.96 days in November. This is a substantial uptick and we expect to see that come down as people get more in the habit of coding in ICD-10. The causes of the delays are all expected, though—we had projected a short-time 35-50 percent coder productivity decrease, so this is just above that prediction.
In September, for the same group of 15 hospitals, the average accounts receivable (AR) days was 38; in November 2015 so far, it is 40.7. That in itself is not a massive change, but it’s not insignificant. The best analogy is if your employer tells you that your salary is not going to change but instead of getting paid on the 15th, you’re not getting paid until the 20th. That’s a big issue. For a $365 million OPEX [operating expenses] hospital, every day is a million dollars cash that is either on the books or not, so if the hospital has issues with access to credit, this could be substantial.
What is most important to consider as the industry continues to move forward with ICD-10?
Griffin: You will want to look at the productivity of your coders, and charge entry. Many places still have charge entry when they take the information. That has been an issue—it’s taking much longer to enter information into the system because ICD-10 is alpha numeric, rather than all numeric like before. So people aren’t as productive right now.
Also, even though your denials are fine today, that doesn’t mean they won’t change in the future. You need to be specific by payer; sporadic issues might pop up that you don’t anticipate. Anything out of the ordinary is worth looking at in much more detail. Continually reviewing is a long-haul issue.
Moyer: It’s about how we will be using the data. From a clinical perspective, how that will mesh together from different providers will be interesting. As we share data, the important piece to watch will be how people are actually using the data, and if it will create the more effective care level that everyone is hoping for.