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The next ICD-10 hurdle: Prepare for payer scrutiny


What’s changing about coding in October, and what physicians need to do to prepare.

When the clock struck midnight on October 1, 2015, the healthcare industry shifted from the antiquated ICD-9 disease classification system to the more refined ICD-10. One milestone achieved. Can physicians assume it will be smooth sailing now that one major hurdle has been crossed?

Not quite. There is yet another hurdle to cross in the coming months-navigating the conclusion of the ICD-10 grace period-a year-long moratorium on retrospective denials of unspecified claims. 

CMS announced the grace period after it reached an agreement with the American Medical Association that had advocated for additional delays of ICD-10. During the grace period, which ends October 1, auditors won’t penalize physicians retrospectively for non-specific codes as long as the codes are in the correct family or group. However, this flexibility only pertains to Medicare Part B claims. The grace period doesn’t apply to instances in which a specific code is required for medical necessity purposes. 

Many physicians who have weathered the ICD-10 storm effectively continue to wonder whether problems lie ahead. “Payers haven’t actually said what will happen next, but I think the expectation is specificity and documentation accuracy,” says Deborah Grider, CCS-P, CDIP, CPC, a healthcare consultant at Karen Zupko & Associates who performs documentation audits for specialty groups and independent physician practices. “We’re already starting to see a trickle of denials from commercial payers for unspecified codes.”


ICD-10 Success-So far

Though experts say greater payer scrutiny could be on the way, for now, the transition-once predicted as a doomsday scenario-was barely noticeable. In fact, many physician practices flipped the ICD-10 switch and subsequently continued in a ‘business-as-usual’ manner.


Consider Brad Bibb, MD, MBA, a primary care physician. Bibb’s private practice is one of a five-clinic group located in rural areas of Arkansas. He works with one nurse practitioner and sees about 35 patients per day. “It was a complete non-issue for us. It kind of reminded me of Y2K. Everyone thought it would be a big issue, and it ended up being nothing,” he adds.

Given the small size of his practice, Bibb says he relied almost entirely on his EHR vendor when making the transition to ICD-10. Prior to ICD-10, Bibb switched vendors to ensure that the EHR could keep up with all of the regulatory changes, including ICD-10 and Meaningful Use. “Having an EHR vendor that is invested in you getting paid means they have to be up to date on all of this so I don’t need to worry about it. I couldn’t have devoted the time,” he adds.

Not only did Bibb’s EHR vendor provide all his ICD-10 training, it also includes a rules-based engine that helps prevent denials on the front end-something he says is critical because of the added specificity inherent in ICD-10. “I don’t have the resources in a small rural practice to hire people to do this type of monitoring,” he adds.

Like many EHRs, the technology Bibb uses in his practice essentially walks him through the code selection process, making it easier to achieve the necessary specificity. He hasn’t experienced any denials or delays in cash flow since the ICD-10 go-live.

Anecdotal stories published by the Coalition for ICD-10-a broad-based healthcare industry advocacy group-echo the fact that the transition has been positive for many stakeholders. “So glad it hasn’t been a nightmare like people anticipated,” wrote Carey Wagner, CMM, practice manager at California Cardiac Surgeons, on the Coalition’s website. 

Having sufficient time to prepare was critical to overall industry-wide success, according to a post-ICD-10 implementation survey conducted by the Workgroup for Electronic Data Interchange (WEDI). The survey found that both delays of ICD-10-one in 2013 and the second in 2014-improved providers’ abilities to test ICD-10 claims, resulting in a smoother transition


EHRs to the rescue

EHR technology also played a large role in physicians’ success. “I know of many physicians even in rural and small practices who say it has gone very smoothly. It makes me suspect that most EHR vendors were really truly prepared to help us through this,” says Michael L. Munger, MD.


Munger, a Kansas-based primary care physician, says his practice of 105 physicians and 25 nurse practitioners benefitted from its EHR, but still has work to do to capitalize on the technology. For the first month post-transition, he says, the volume of code possibilities in the EHR was overwhelming, making it difficult to maintain his workload of 25 patients per day. “It took longer at the point of care, or we were spending extra time at the end of the day and evening to get the right codes,” he says.

In response, some physicians in Munger’s practice reduced their workloads by one or two appointments per day while others simply worked through their lunch hour or into the evening to get the work done, he says. 

Brad Walsh, MD, says bookmarking codes within his EHR has been very helpful. He has bookmarked more than 100 diagnoses, many of which he uses often.

Productivity, volume of denials and cash flow have remained stable in ICD-10 at Walsh’s Arkansas-based practice, which employs three family physicians and one internal medicine physician. He sees between 16 and 20 patients per day. “We have continued to bill as we always had and continue to receive payments on time,” he adds.

Walsh has used an EHR since 2011. He suspects that practices without an EHR didn’t make the transition as smoothly. “If you’re still billing on paper and not submitting claims electronically-or if you had an EHR that didn’t keep up with this-ICD-10 would be a nightmare,” he adds.

Texas-based cardiologist Paul Roach, MD, agrees. “For organizations that have not adopted an electronic record, I could see how ICD-10 could create a huge disruption in the billing process,” he says.

Roach’s practice that includes 28 physicians and nine nurse practitioners is owned by a larger health system that assisted with ICD-10 training. “It has been going quite well,” he says. “I think there was a lot of angst and anticipation that it was going to be very cumbersome and create an extra documentation burden, but with the electronic records, it has been a non-event.”

Roach says their EHR vendor auto-populates diagnoses established during the initial patient visit. This saves time and helps enhance his productivity. He says being as specific as possible assists with research and data analysis. As payers begin to demand greater specificity as a pre-requisite for payment, it also helps to justify medical necessity and utilization of resources, he adds.


Arkansas-based primary care physician Lonnie S. Robinson, MD, says ICD-10 has had virtually no effect on his workflow. His practice, which employs eight family physicians and three advanced nurse practitioners, took out a line of credit in anticipation of cash flow problems, but hasn’t had to use it. Robinson continues to see about 25 to 35 patients per day. 

Working with a scribe has helped Robinson maintain productivity. The scribe is present in the exam room and prompts him for the additional documentation specificity required in ICD-10. “My goal is to resolve the documentation before I leave the room.”


smooth transition for payers

As with providers, payers have weathered the ICD-10 transition effectively as well. “Overall, the transition to ICD-10 been much smoother than anyone could have expected,” says Mike Denison, PMP, senior director at Change Healthcare, a clearinghouse that processes 8.8 billion transactions and manages $1.7 trillion annually for payers, providers, and vendors nationwide. “There were isolated issues, but there was also a heightened industry focus and sense of urgency to resolve any issues encountered.”

In the initial months following the October 2015 transition, the overall claim rejection rate for provider claims submitted through Change Healthcare was never more than 0.4% above the pre-ICD-10 transition baseline, says Denison. Overall payer rejections actually were slightly below the pre-transition baseline. He says claim rejections specific to diagnosis code edit rules occurred only 1.5% more frequently than they did compared to the pre-transition baseline.

“The healthcare industry went through a major code set update, but it was an update to a known and established standard [ICD]. I think that helped a lot,” he says.

The most common reason for clearinghouse-level medical claim rejections following the transition was that providers were coding the wrong version of ICD based on the date of service submitted, says Denison.


Jim Daley, IT director at Blue Cross Blue Shield of South Carolina, past chair of WEDI, and WEDI’s ICD-10 workgroup co-chair, says denials have been minimal. 

“There was a lot of work involved-and certainly there was a high cost to do this-but with the time allotted, it went off pretty smoothly,” he says. “ICD-10 is in the systems, it’s functioning, and now it’s mostly about fine-tuning.”

Blue Cross Blue Shield of Michigan created a command center to monitor all internal and external activity post-implementation, says Juanita Savage, RN, MBA, director of medical affairs, reimbursement strategy, and ancillary program management. Savage provided the following feedback via email:

“Claims volumes have come in as expected, and there are no claims processing issues to report. System changes and rules we put in place are working as designed. Currently, we are not receiving ICD-10-related questions from providers.” 

In fact, Daley says he hasn’t heard of any payers experiencing significant issues with the ICD-10 transition. “Payers, in particular, spent a lot of time preparing for ICD-10. They’re also accustomed to handling large mandates and implementation.”

Clare Krusing, press secretary at America’s Health Insurance Plans (AHIP), concurs. “The transition has been smooth so far,” Krusing wrote in an email. “Health plans had prioritized ICD-10 readiness and were prepared for the initial deadlines and subsequent ones thereafter. Since the official launch, they have been working with their vendor partners and providers to make sure the transition has been smooth.”

Perhaps the most significant payer challenge thus far pertained to Medicare Administrative Contractor (MAC) updates to National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs), both of which limit Medicare coverage to items and services that are reasonable and necessary for the diagnosis or treatment of an illness or injury (and within the scope of a Medicare benefit category).

“We had some issues early on where some of the medical policies didn’t include all of the ICD-10 diagnosis codes. We may still have some of those incomplete policies out there,” says Grider.

Shortly after implementation, the Centers for Medicare & Medicaid Services (CMS) released a clarification reminding MACs to translate all NCD and LCD coverage policies to ICD-10. CMS declined an interview with Medical Economics for this story. A spokesperson for CMS said in an email that the agency had no comment regarding the current state of the transition.

In a February 2016 blog post, CMS Acting Administrator Andy Slavitt reflected positively on the ICD-10 transition. “In the first month of implementation, we received approximately 1,000 inquiries and responded to 100 percent of them within three business days. We will never achieve perfection, but we will be visible and hold ourselves accountable for solving problems,” he wrote. 


The agency also published ICD-10 metrics for the fourth quarter of 2015 showing only 1.9% of total claims were rejected.


Preparing for 2017 and beyond

However, many fear that payers have used the last several months to perform data analytics so they can target providers who report large volumes of unspecified codes once given the opportunity to do so. Grider suspects that physicians may see an increase in the number of claims that are suspended with a request for additional documentation. When they submit this documentation, they could be opening themselves up for additional scrutiny, she adds.

If specificity audits do occur, they probably won’t happen immediately, says Daley. “I can’t speak for all payers, but I highly doubt there will be a big bump in specificity audits on October 1,” he adds. “We all want to make this work with the least amount of disruption. It’s painful and costly on both sides when claims are delayed or denied.” He thinks many payers will undertake a period of provider education before they begin penalizing audits or other actions.

Denison agrees that payers will probably not barrage physicians with specificity audits on October 1, 2016. 

“Requirements for increased specificity will likely be in the form of contractual policy changes and naturally evolve within emerging pay-for-performance payment models,” he says. “Any changes from a government perspective will be effectively communicated, and providers should be well aware ahead of time.”

At this point, many physicians and payers have begun to focus on the large number of new ICD-10 codes that go into effect October 1 of this year. CMS and the Centers for Disease Control and Prevention will add about 1,900 diagnosis codes and 3,651 hospital inpatient procedure codes to the ICD-10 coding system for healthcare claims in fiscal year 2017.

As the industry moves forward with ICD-10, Robinson says physicians must learn to adapt in an increasingly data-driven healthcare environment. “I think most of my colleagues would prefer to just take care of the patient and not worry about some of these nuances of coding and billing,” he says. “But it is our new reality.” 

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