ICD-10's Impact Reaches Far Beyond Coding: Examining the New Code Sets' Revenue Cycle Implications

By Alexa Arends-Marquez, RHIA, CCS, CDIP; Nicole Knight, LPN, CPC, CCS-P; and Dwan Thomas-Flowers, MBA, RHIA, CCS

The implications of ICD-10-CM/PCS (ICD-10) for coding operations are a common topic of industry discussion, but the impact of ICD-10 reaches far beyond coding alone. ICD-10 is embedded in the entire revenue cycle for providers. The conversion will impact almost every aspect of operations, data analysis, and reporting as well as a number of information technology (IT) systems that use diagnostic and procedural information.

Regardless of one’s perspective regarding the recent delay that pushed implementation of ICD-10 to October 1, 2015, knowing the role of ICD codes within each segment of the revenue cycle will assist stakeholders in utilizing the additional time to tweak existing project plans and exact a more efficient program for pre- and post-implementation success. A review of the numerous touch points in order to provide suggestions for success may serve as a welcome refresher.

Defining the Revenue Cycle in Healthcare

The revenue cycle is defined as “all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue.”¹ The revenue cycle includes multiple functions that must be performed at optimal levels by all involved providers, managers, and staff. The healthcare revenue cycle is dynamic and heavily regulated, and it continues to change. Adjustments to the reimbursement environment and modifications in the delivery system for healthcare services continue to have major impacts on financial performance. The entire revenue cycle must function in a streamlined fashion to be as effective as possible.

Revenue cycle processes are often described as having a front-end, middle, and back-end. In the past, the back-end was considered to be performed solely by billing staff. In today’s environment, with more payers instituting administrative hurdles, the process begins before the patient arrives.

ICD-10 at the Front-End

Broad categories of front-end revenue cycle include patient access and denial management. Scheduling, pre-certification, pre-registration, patient estimates, registration, and case management functionality will be profoundly affected in the preparation for ICD-10. While it is clear that coders will require additional knowledge, professionals with patient access must be educated as well. They will need to have a thorough understanding of ICD-10 to be able to determine what is required for a pre-authorization. Case management and utilization management systems and processes will need to be reconfigured. Patient eligibility, medical necessity, and payer-specific reimbursement policy verification must be restructured to utilize ICD-10 codes. Because ICD-10 often classifies diagnoses differently than ICD-9-CM, and the procedure coding system (PCS) is a completely new terminology, the conversion of complex payment methodologies from ICD-9-CM to ICD-10 could have an unintended impact on finances. Contract management is crucial.

Caught in the Middle

ICD-10 changes the landscape of coding, the effects of which will be felt in every arena of the revenue cycle. The ICD-10 code sets consist of many more codes than ICD-9-CM. Definitions will change, code sets will change from primarily numeric to alphanumeric, and the ability for payers to process claims will change.

The time it takes a coder to code an inpatient record is projected to increase 69 percent once ICD-10 is implemented.² The documentation required by physicians to be able to reach a valid code will have an impact on discharged not final billed (DNFB). ICD-10 requires a level of specificity that was only hinted at in ICD-9. Clinical documentation improvement departments will play a vital role in ensuring that physicians have the right tools at hand to document effectively. This one area will affect the number of charts on hold at facilities for documentation issues such as physician queries. The issue is not the amount of documentation that the provider will or will not accumulate, but the specificity of that documentation. This is especially critical in procedure coding. Education for the physicians, mid-level providers, and other clinicians is mission-critical for ICD-10. They must be informed of how to document to get the most specific code. Using the tools already available is a good way to facilitate this process. Building prompts into electronic documentation systems is one simple, yet effective, way to get physicians to document what is needed when it is needed.

Charging and pricing, physician documentation and buy-in, computer systems, electronic order entry, clinical documentation improvement, and computer-assisted coding are all affected by the implementation of ICD-10. Because of the ICD-10 delay, these effects will be felt even longer, for another year.

Based on previous timelines, much of the education has been completed but will have to continue for another year to strengthen revenue cycle operations. Although a delay is unfortunate for those that were on task, the good news is there is another year to practice. The HIMSS/WEDI ICD-10 Pilot Program reported a 63 percent ICD-10 coding accuracy rate for participating providers. The delay provides more time for dual coding to increase coder accuracy rates. Take advantage of another year to get systems in place to aid in documentation, work with vendors, get computer-assisted coding programs on board and tested, and improve and secure processes and personnel.

Bringing Up the Back

Back-end revenue cycle functions include two major categories: billing processes; and cash collections and reimbursement

Each of these areas has additional subcategories. Billing, as described here, includes late charges, electronic data interchange (EDI) editing and billing, DNFB accounts, transaction code sets, and any existing process redesign surrounding the billing functions. Cash collections and reimbursement covers cash acceleration, denials management, self-pay collections, electronic remittance and payment posting, third party follow-up, cost report analysis, contract management and reimbursement, and rate modeling.

For EDI editing and billing, existing clinical editing systems that identify and assist with correcting coding errors will be impacted. If these systems have been remediated, then the ICD-10 delay allows more time for testing. For example, perhaps E-code edits for External Causes have been activated. If they have not been pointed to the correct code set, however, there is a chance that ICD-10-CM codes from Chapter 4—Endocrine, Nutritional and Metabolic Diseases, may inappropriately cause a code claim to fail the edits. Additionally, there are many reasons that accounts end up on the DNFB status beyond the allowable bill hold days. Often a significant amount of the accounts are un-coded for various reasons. It is paramount that healthcare organizations not allow ICD-10 to inflate these numbers unnecessarily.

Appropriate staffing, process improvements, and efficiencies in the front-end and middle will decrease adverse impacts to DNFB management. Transaction code sets refer to Health Insurance Portability and Accountability Act (HIPAA) code sets, which were officially adopted for administrative simplification. On January 16, 2009, the Department of Health and Human Services published the final rule that included a provision to adopt ICD-10-CM/PCS as a replacement for ICD-9-CM. Thus, a back-end function may also include resolution of OCE and CCI edits.

Other important elements of back-end processing in which ICD-10 will play an important role are denials management and contract management. There is a strong likelihood that coding-related denials may increase during the early days of implementation. Frequently the codes in ICD-10 do not directly align with existing ICD-9 codes. Because case managers often begin the denials avoidance process by obtaining appropriate authorizations and approvals, this aspect is cyclical and is both a front- and back-end process. A review of existing contracts that list ICD-9 codes in the terms or infer the use of ICD-9 codes or MS-DRGs to determine payment is also required. Simply translating these codes to ICD-10 will not always work, as there are many times when clinical equivalency is not maintained via this process. This is especially prevalent within procedure code changes, as no diagnosis information is included in ICD-10-PCS.

Finally, accurate ICD-10 code assignment will not only be important for reimbursement but also for revenue analytics. Rate modeling and forecasting as well as internal and external reporting have become a routine part of revenue cycle operations. Assumptions and external metrics are at risk for inaccuracies if the data upon which they are predicated is flawed.

Relevant Revenue Cycle Recommendations

Although every potential impact is not addressed in this article, these key ICD-10 revenue cycle pressure points reveal areas that can be optimized before implementation to decrease the abrasion that a large change will cause to systems and clinical and business processes:

• Ensure that front-end staff is versed in ICD-10 role-based education to prevent errors from cycling through to the end
• Maintain and keep current on contracting and payer manual updates around pre-certification, authorization, and any changes to payer rules
• Strengthen denial management processes where denial outcomes are shared with all departments; focus on identifying where ICD-10 training gaps have created denials
• If no clinical documentation management program exists, now is the time to consider how to secure accurate, robust clinical information to facilitate quality code assignment, accurate severity ratings, and optimal continued patient care
• Existing clinical documentation programs will benefit from the additional time provided by the recent delay to help change documentation patterns and behaviors to be consistent with ICD-10 guidelines and conventions
• Address current backlogs and claims denials and clean them up prior to ICD-10 implementation
• Test and retest the changes to processes and systems

All sections must work in concert to achieve the best outcome. Health information management (HIM) professionals are suited to use their skills not only in middle revenue cycle functions where coding resides but to offer expertise throughout the entire revenue cycle as well. HIM professionals can serve as the thread that weaves the plan together.

The additional delay in the compliance deadline provides more time to validate that previous efforts were on target for ensuring healthcare organizations stay afloat amidst various reform initiatives. More robust education, documentation improvement efforts, and testing across all segments of the revenue cycle will produce a smoother transition to ICD-10-CM/PCS—regardless of the date.

Notes

1. Walker Keegan, Deborah et al. The Physician Billing Process. Medical Group Management Association, 2009.
2. Leppert, Michelle. “Coder Productivity in ICD-10-PCS.” ICD-10 Trainer. October 10, 2012. http://blogs.hcpro.com/icd-10/2012/10/coder-productivity-in-icd-10-pcs/.

References

Centers for Medicare and Medicaid Services. “Transactions and Code Sets Regulations.” April 2, 2013. www.cms.gov.

Healthcare Financial Management Association. “Evidence-Based Revenue Cycle Improvement.” 2010. www.hfma-socal.org/Education/117_Chapter%20Educational%20Program%20III.pdf.

HIMSS and WEDI. “HIMSS/WEDI ICD-10 National Pilot Program: Outcomes Report.” October 21, 2013. http://himss.files.cms-plus.com/FileDownloads/ICD-10_NPP_Outcomes_Report.pdf.

Padarthy, Sashi. “How ICD-10 Impacts Revenue Cycle Management.” Health Management Technology. July 2012. www.healthmgttech.com/articles/201207/how-icd-10-impacts-revenue-cycle-management.php.

Alexa Arends-Marquez (alexaarends0@gmail.com) is a coding manager at Parallon Business Performance Group in San Antonio, TX. Nicole Knight (nknight@medaxiom.com) is director of revenue cycle solutions at MedAxiom and works as a senior consultant. Dwan Thomas-Flowers (HIMprofexcel@bellsouth.net) serves as an independent executive-level HIM consultant specializing in ICD-10.