Dollars at stake with ICD-10 transition

The lifeblood of healthcare finance is getting a transfusion on Oct. 1, 2013, when Medicare requires providers to shift their claims format from the current ICD-9 code sets to the much more complex ICD-10 system. Health systems that are not ready for the transition by that date are at dire risk of a revenue shutdown.

With about two years remaining before the switch, however, observers say the industry doesn’t appear to be moving forward very quickly.

Katie Carolan, vice president of operations for Baltimore-based HRS, sees “a combination of trepidation and not addressing the issue at all because electronic health records and other initiatives are taking priority.”

The financial incentives linked to American Recovery and Reinvestment Act stimulus funding and achieving meaningful use have preoccupied the C-suite and IT departments, but with the flip of the calendar to 2011, Carolan says, ICD-10 must get more attention.

“We have been seeing in the last 30 days a lot more interest in looking for support,” she said. “People are now recognizing its importance. It is a huge undertaking and they are putting this in their budget.”

The initial ICD-10 assessment process is important because it drives the rest of the project, Carolan said. For instance, training involves a lengthy, layered series of topics that take time to disseminate.

“The training for assessments is not just for the coders, but for clinical documentation, so physicians need to be involved as well,” she said. “Coders will have to sharpen their skills and greatly enhance their knowledge of anatomy and physiology. There is a huge training effort around this.”

Coders are facing an explosion of classifications, from 15,000 in ICD-9 to 110,000 in ICD-10. “If the coders and systems aren’t ready, everything will be unspecified,” Carolan said. “It will definitely impact their reimbursement.”

Indeed, the financial damage will be “widespread and fundamental” for those organizations not on ICD-10 by the deadline, said John Spect, vice president of sales for New York-based Vitech. What’s more, the coding shift puts further financial pressure on a provider community that is already being pinched by lower reimbursement, he said.

“If you’re a diagnostic provider, the Medicare payout is dwindling in a downward spiral – and ICD-10 will put a finer point on it,” Spect said. “Smart providers will find out how to optimally code and limit the impact, but most providers will be adversely affected if they don’t understand and leverage the code sets.”

ICD-10 will be ubiquitous in healthcare billing, Spect said, and “there will be severe financial repercussions for not getting it right for everywhere it touches.” Providers started getting their arms around it in 2010, he said, but “given that the impetus for the core system replacement will take two years, they are already behind the eight ball.”

Calculating risk

Denver-based Health Language has been working on vocabulary and coding standards for more than 10 years and has established a solid reputation for helping to standardize the healthcare industry’s diverse terminology. President and CEO George Schwend said the transition from ICD-9 to ICD-10 is one of the biggest projects his firm has worked on to date.

In studying the ICD-9/ICD-10 transposition, Health Language has developed a module to help providers figure out the financial impact of the coding changes. Brian Levy, MD, chief medical officer and senior vice president, said the web-based interface sits on top of the language engine and, by looking through from ICD-9 to ICD-10, finds areas of financial variance.

“The tool on the payer side lets you customize maps and run the scenarios to see the impact,” Levy said. “On the provider side, this tool lists the rules and care pathways of ‘9’ codes for, say, diabetes, and converts them to ‘10’. Once you have that list of codes, you can modify and customize those lists.”

Reimbursement amounts are different under ICD-10, and the Health Language tool shows the contrast, Levy said.

“If you’ve got a ‘9’ code and the reimbursement is $3,000 for that code, when you switch to ‘10’ it might be $500 less or $500 more,” he said. “This tool lets you know what those amounts are.”

Hospitals and physician practices can access the Health Language portal directly through a subscription, while vendors can provide the portal services under Health Language’s name or their own private label, Levy said.