ICD-10 changes could impact practice cash flow

September 25, 2016

The coding change hasn’t put a financial hit on most physicians, but that could change as of October 1.

Widely dubbed the Y2K of the coding world, last year’s conversion to the ICD-10 diagnostic coding system wasn’t nearly as expensive for practices as predicted. And reimbursements, thus far, haven’t declined as feared, physicians say.

“So far, we’ve had no issues with the transition,” says William Fox, MD, an internist in Charlottesville, Virginia. “There were many points along the process where things could have gone horribly awry,” he says, such as if the Centers for Medicare & Medicaid Services (CMS) had not been ready or if there had been serious software glitches with practice technology, like electronic health records (EHRs).

 

Related: 5 tips to prepare your practice for the end of the ICD-10 grace period

 

Coding could soon become more of an issue, however. Beginning October 1, nearly 2,000 updated codes will take effect when a long-standing code freeze expires. At the same time, a one-year grace period following the ICD-10 conversion ends.

During the grace period, Medicare Part B payers were required to waive specificity requirements as providers became familiar with the more detailed ICD-10 code set. The new codes are designed to create far more precise patient records that can be used to study population health trends and manage costs, among other goals.

After the specificity grace period ends, however, all bets are off. 

 

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“Payers now seem to be not complaining much about how claims are being coded.  It’s unlikely that will remain the case,” says Ken Bradley, vice president of strategic planning and regulatory compliance for Navicure, a claims management and payment solutions provider in Duluth, Georgia.

 

Much ado...

So what are the financial lessons learned from the switch to ICD-10, if any?

Though it hasn’t been costly yet, many practitioners realize they’ll need to put more emphasis on collections in the future.

Next: Causion ahead

 

In a December 2015 Navicure survey of 360 physician practices, half said they spent less than $10,000 on training and software updates for the conversion.  

“It was a lot of brouhaha over nothing,” says Jeffrey M. Kagan, MD, an internist in Newington, Connecticut and Medical Economics editorial adviser.  But there was certainly a hassle factor. Kagan says he had all of the ICD-9 internal medicine codes memorized and now has to look them up–but even that is relatively easy because the codes automatically populate in his EHR system when he enters a diagnosis. 

Even so, the increased specificity will take some getting used to, he says, and workers compensation claims are still handled under the ICD-9 codes. But financially, it hasn’t even been a blip, he says. 

For direct-pay practices it’s also been virtually a non-event, says Michael R. Freedman, MD, an internist and founder of Evolve Medical Clinics in Annapolis, Maryland. He uses a free software program (www.icd10data.com) to help his patients complete payer forms with the new codes. “We really don’t want the patients to have any hassle,” he says.

 

ICYMI: Even more ICD-10 codes on their way

 

Freedman uses online coding forms that are completed and put in an envelope the patient can put in the mail to payers. He’s not tracking reimbursement rates closely, but says he senses payers are reimbursing at nearly a 100% level. 

A jump in denial rates could prove far more perilous than the costs associated with the actual conversion, experts say. “Practices need to be watching key metrics like denial rates and physician productivity levels now more than ever,” says Bradley. “Whether payers are going to be looking harder at specificity and outright denying, or paying less, is something they have to be watching out for.”

For example, if practices do just the bare minimum on the new coding, only going out to the mid-range of the possible selections, payers may deny the claim or pay at a rate that is lower than what the actual illness or injury calls for, he says. 

“Payers will look at a claim and say, ‘This value has the potential to go out to 7 [character] positions. Why am I only seeing 4?’” he says. Payers may simply pay a generic fee rather than providing the greater revenue had it been coded to the furthest level, he says.

Being vigilant about coding to the highest degree of specificity possible and closely watching practice financials will give practices more confidence that they won’t face a cash shortfall in the near future, Bradley says. In fact, it could actually point practices to greater profitability.

“It’s about getting practices to become, if they’re not already, business savvy. As they learn how to use this data in better ways, it can help practices run more efficiently, whether they’re large or small,” he says.

Caution ahead

In the Navicure survey, two-thirds of respondents said they expected to improve revenue cycle management procedures in 2016, possibly a recognition that practices expect payers to increase claim scrutiny.

And the conversion could have been a disaster if the behind-the-scenes tech efforts hadn’t gone as smoothly, notes Brian Boyce, CPC-I, chief executive of ionHealthcare, a consulting firm in Richmond, Virginia, that provides coding services. “From the coders’ perspective, we’ve worked harder in the last year than ever before to meet these deadlines,” Boyce says. 

Next: Time to get specific

 

Even with that, some practices did experience hiccups and some were more ready than others, he says. Some were actually “too” ready, he says, because they started dual-coding charts for both ICD-9 and ICD-10, worried that the system might get rolled back early and practices would have to go back to the old system temporarily. That produced more work for staff, adding to the labor costs associated with the conversion.

 

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Boyce has seen data integration problems and says some practices began using the new codes too early because the dates of service were prior to the conversion.

He’s also seen a strain on coders as they learn the ICD-10 code set, which means it’s taking longer to code each patient encounter. Coders who used to do four charts per hour are now doing two or three, he says.

The productivity hit is bound to have an impact on practice overhead costs, and not just in the immediate learning-curve stage, he says. Increased specificity takes more time, even once the new codes are well known. 

“It’s going to take more time now because of the greater need to query providers to get more specificity in the documentation,” he says. “Every coder knows doctors don’t always have the time to be specific enough, but before it didn’t matter as much.  Now it does.”

 

Time to get specific

As October nears, Boyce is urging practices to remind providers to use the most specific language possible in their notes, because coders can’t upgrade a code that isn’t called for in the chart.

“We know physicians are trying to document quickly and get through the process, but the number one thing they could do better is to give better [illness] descriptions,” he says.

That means taking care to use proper terms–not saying “chronic” unless it’s truly called for, for example. And watch out for copying and pasting in EHRs-that can lead to conflicting and confusing information in charts, he says. It’s also a compliance issue that can bring sanctions for improper billing.

 

Side benefits

Some more tech-savvy physicians have been using the ICD-10 conversion as a reason to make some tweaks in the EHR system at Emergency Medicine Associates P.A.P.C. in Germantown, Maryland.

The changes contributed to a smooth transition process, says Erin Barber, CPC, associate director of billing and compliance, who led the group’s ICD-10 readiness effort.  The only real hiccup, she says, may have been over-readiness. The group trained very early to meet the first conversion deadline, so some reviewing was necessary as the date was postponed several times. 

Still, the group estimates it spent less than $500 per staff member to train for the conversion.

Next: Stay tuned

 

 

Stay tuned

Costs could still rise over the next year as payers work with the new codes, notes Stanley Nachimson of Nachimson Advisors, LLC, author of an American Medical Association study that projected far higher conversion costs than what most practices are reporting thus far.

Practices should still monitor their documentation costs, productivity costs and IT expenses closely as ICD-10 implementation progresses, he says. There were training costs, even if they were borne essentially by EHR providers and consultants who hosted free conversion classes, he says, and some reductions in productivity. He also recommends forecasting revenues to help identify potential shortfalls due to any increase in denials.

 

Related: ICD-10: What should you be doing in 2016?

 

While many of the costs were covered by third parties, the human productivity costs were real, says Navicure’s Bradley.  In the firm’s survey, 48% of practices said there was an initial decrease in productivity in October. 

Practices should also be checking individual providers’ coding patterns and denial rates throughout the process after the grace period ends, experts say, in order to flag trends early and spot providers or coders who are not coding to the greatest level of specificity possible.

“Physicians have to know what’s happening with their cash,” Bradley says. “As we learn to use this data in better ways, it can help practices be more efficient.”

It’s still unclear how payers will respond to coding that doesn’t go to the furthest level of specificity, but tracking that data on a per-provider level is going to be crucial to responding once the payers’ responses are clearer, he says.

Time spent with patients, denial rates and other such data is going to have to be at a physician’s fingertips to be able to continue running a financially successful practice, experts say.

“The data is becoming something practices can’t live without,” Bradley says. Will practices see an overall increase in claim volume? A decrease? These are numbers physicians need to know well, he says. Thus far, he has seen revenues increase because of the greater code specificity. 

While the ultimate goal of the increased coding specificity is to create better population health data and reduce overpayments from poorly-coded entries, getting there will take some time, experts say. 

“Hopefully, over time, this will lead to a better understanding of the effectiveness of clinical procedures in maintaining health and in the prevention of disease,” Bradley says.

Fox also is hopeful, but not convinced, that the conversion will create better records for use in public health research and ultimately, better practice management. For the most part, he says, the conversion has been smooth and positive.

“Presumably, it could have been a big issue.  So maybe it was just that little dose of fear that allowed everyone to buckle down and make sure they were prepared for this

“Still, I’m not convinced of what the societal benefits will be of better categorizing illnesses to this degree” he adds. “I’m curious about it and over time researchers will perhaps use this data, but I haven’t seen it yet.”