Denial Management in an ICD-10 World Starts Today

Maureen Fahey
Maureen Fahey, President of Consulting Services at Parallon.

Mary Bessinger
Mary Bessinger, Asst. Vice Presidnent of Clinical Revenue Cycle Consulting at Parallon.

Charles Rackley
Charles Rackley, Manager of Consulting at Parallon.

By Maureen Fahey, Mary Bessinger and Charles Rackley

Those of us in the healing profession respond to urgent situations spontaneously. October 1, 2014, will become a pivotal date in healthcare history. That’s when the transition from ICD-9 to ICD-10 becomes official, and will change the way providers, coders, staffers, payers, vendors, suppliers, clearinghouses, third-party billing services and anyone else covered by HIPAA go about their daily work. Yet two-thirds of providers are no closer to being ready than they were a year ago.

While the transition to ICD-10 will provide several advantages for improved patient care and disease management, the impact on IT systems and processes has induced a Y2K response. We hear that denial rates could increase by 100 to 200 percent; we worry about decreased cash flows and lost revenues; increased AR days by 20 to 40 percent; prolonged declining payments; and a near doubling of claim error rates.

To compound matters, CMS developed GEMs “crosswalks” to provide a path between ICD-9 and ICD-10 code sets. However, only 5 percent of ICD-10 codes are an exact match to ICD-9, requiring local interpretation and the potential for errors. And, it will be necessary during the transition period to operate both billing systems concurrently, depending on when services were rendered, and payer and provider readiness.

The key to mitigating losses from denials and delayed payments is awareness and preparation. The more prepared you are in terms of people, processes and technology today, the better you will be able to respond to the changes ahead.

Start with people. Some level of training will be essential not just for coders, but for physicians, nurses, front office, back office – anyone who touches the patient from registration through billing. Curricula are ready to deploy in early 2014, well in advance of the ICD-10 “go-live” date.

If you have a strong denial management operation in place, you’re already discerning root causes of denials, identifying gaps and taking remedial action. Process changes around ICD-10 will most dramatically affect the ability to differentiate which coding denials are ICD-10 driven. Be proactive for codes and procedures that have already been translated to ICD-10. Denial crosswalks and processes that address these concerns before a claim is filed can go a long way toward mitigating risk. 

Next, understand which tools and systems will be affected by the transition to ICD-10, and prioritize the opportunities. Changes may include simple measures such as field length and alpha character inclusion, while others may require additional data hooks for detailed financial and clinical analysis.

Comprehensive and trended reporting for financial metrics, especially denials management, will be crucial in performing a root cause analysis for any ICD-10-related denials, along with the usual uptick of denials in the new age of reimbursement.

Work closely with payers and vendors to ensure a seamless transition to ICD-10 billing and reimbursement. Prepare to utilize mapping technology to bill noncompliant payers post ICD-10 go-live and run tests to resolve any issues before the implementation deadline. And most importantly, analyze and understand your managed care agreements to determine services that are currently reimbursed using ICD-9 coding to determine and mitigate potential reimbursement impact once the transition to ICD-10 has occurred.

Maureen Fahey is President of Consulting Services at Parallon. She is responsible for building and delivering enterprise-wide consulting services that improve business performance. She has extensive experience in Fortune 25 companies, managed care companies and hospital systems, identifying strategic opportunities in a challenging post-reform environment.

Mary Bessinger is Assistant Vice President of Clinical Revenue Cycle Consulting at Parallon. She has decades of healthcare experience in hospital administration, HIM, revenue cycle and case management. She also has more than a decade of senior consulting and product management experience in the IT vendor market.

Charles Rackley is Manager of Consulting at Parallon. He has more than 12 years of healthcare experience, including extensive revenue cycle management and redesign as well as financial reporting management. Charles has also designed tools measuring both provider productivity and E&M code distribution patterns.