Minimize the trouble of ICD-10 transition

February 28, 2014

Test ICD-10 systems early and often in order to minimize errors during the transition.

The results are in, and they don’t all look good for the transition to ICD-10. Everyone covered by the Health Insurance Portability Accountability Act (HIPAA) is required to use the updated code set for diagnosis and inpatient coding on October 1. According to the Centers for Medicare & Medicaid Services (CMS), payers should have completed planning, budgeting and impact assessment by now, have revised provider contracts and policies, and have integrated ICD-10 systems. They should have completed internal testing and be well into testing with their partners. All that should be left to do is finish up testing and training.   

But not everyone is on time. 

  • Twenty-one percent of Managed Healthcare Executive readers last year said they are not ready for the change. 

  • Half of the healthcare organizations that responded to a separate poll conducted by KPMG LLP had not yet estimated the new coding system’s impact on their cash flow. 

  • An October 2013 ICD-10 readiness survey from the Workgroup for Electronic Data Interchange (WEDI) showed about 40% of health plan respondents had not fully completed their impact assessment. 

“If you don’t know what you have to do, how can you figure out how long it will take to do it?” asks Jim Daley, chairman of the board for WEDI and director, IT risk and compliance at BlueCross BlueShield of South Carolina. “No one should not know the impact ICD-10 will have on their organization by now. That’s being like an ostrich with your head in the sand.”

KPMG says those who have completed assessments are estimating upgrades to cost anywhere from $1 million to more than $15 million. And they still have a long way to go before being fully prepared for ICD-10.

“One thing that I see is that the testing of the systems hasn’t started or are just beginning,” says Wayne Cafran, a partner at KPMG who has been in the industry for more than 20 years. “That could be a big process to make sure you’re upgraded and can accommodate the data. I think that’s critical.”

WEDI survey payer respondents indicate that competing internal priorities and other regulatory mandates continue to be the top obstacles for planning and implementation. However, provider readiness concerns surpassed staffing concerns as the third highest obstacle.

Additionally, WEDI reports over two-thirds of health plans indicate that direct ICD-10 code processing will be their primary strategy, up slightly from the group’s February 2013 results. The number that planned to use a combination of direct processing and crosswalking dropped slightly, while a few payer respondents plan to use crosswalking as their primary ICD-10 transition. For providers, a small percentage plan to use crosswalking alone, but more than half say they will do direct ICD-10 coding. 

A study by the American Association of Professional Coders indicates that only 24% of the old codes can actually be crosswalked to ICD-10. For example, the new codes often require documentation of the left side or right side of the body-an entirely new data piece.

 

More procrastination 

Why the lack of readiness? ICD-10 was developed in 1992. The  Department of Health and Human Services (HHS) first proposed using it in 2008. The deadline for implementation was previously extended, but October 2014 seems like the final date. The code switchover was not something that was suddenly sprung upon the industry, experts say.

“There was a hope for another extension,” admits Cafran. “As it is not being delayed, people are starting to wake up.”

Part of the reason another extension was expected by many in the healthcare industry is because they already face a number of other huge transitions brought about by healthcare reform.

“The dialog we’ve been having from the health plan side of the equation has largely centered around other challenges they faced: getting ready for exchanges, shifting their business models to be more group oriented,” says Mark Jamilkowski, managing director of KPMG’s Health Actuarial Services Practice. “When you think of medical loss ratio requirements and shifts in accountability and reporting-these changes have shifted the business requirements of the data they use. So they’re looking more holistically at data architecture and that has pushed ICD-10 to the back burner.”

WEDI’s Daley agrees. 

“Providers are dealing with electronic health records and Meaningful Use requirements,” he says. “So many changes have to be accomplished in the same timeframe that ICD-10 is being pushed to the side or fighting for resources with other requirements.”

But representatives from CMS have clearly and publicly stated ICD-10 and its 68,000 codes would not be delayed again. So, what now?

 

Locate the risk

For healthcare organizations that are just starting to take the deadline seriously, it’s time to minimize the damage non-compliance will cause.

“For those just trying to get through, there are software tools that can run claims data in ICD-9 versus 10 and let you see where you’re vulnerable by service line,” says Cafran. “You could see those service lines that may be more directly impacted versus those that may stay the same or are a low risk.”

That type of information could allow organizations to pinpoint where they should focus their efforts to make the biggest impact. It’s a shortsighted plan, says Cafran, compared to those who have time to investigate all the processes that are affected by ICD-10 and get everyone prepared. For smaller organizations, especially, it could allow them to survive the transition and move forward.

"You shouldn't fall into the trap of thinking your vendor will do it for you."
- Jim Daley, BCBSNC

For large healthcare organizations, especially payers, ICD-10 will touch almost every corner of their systems, from business processes to individual employees’ spreadsheets. 

Last month, Florida Blue announced that it was doing Level 2 end-to-end testing for external use, which is on schedule with the CMS recommendations.

“If you haven’t done anything, and you’re a big organization, you better look at retirement,” says Daley. “If you’re big and you haven’t done anything yet, it’s too late. If you’re small, you may be okay, but you shouldn’t fall into the trap of thinking your vendor will do it for you. If you don’t even know what’s required, how can you verify your vendor is going to perform that function?”