ANSI v5010

2. 2 February 2011: ANSI v5010 / ICD-10 Agenda

3. February 2011: ANSI v5010 / ICD-10 Introduction

4. 4 February 2011: ANSI v5010 / ICD-10 Introduction Key takeaways Overview of both ANSI v5010 and ICD-10 Why you need to care about both initiatives What next steps you should take after this call Speakers and ground rules Speaker introductions Questions This presentation will be available at bcbstx.com/provider

5. February 2011: ANSI v5010 / ICD-10 ICD-10

6. 6 February 2011: ANSI v5010 / ICD-10 ICD-10 Background and Overview The first major change in diagnostic coding in the U.S. in over 30 years ICD-9 is the primary method for codification of health care services for clinical and administrative purposes; ICD-10 is in use in more than 90 countries The �most significant overhaul of the medical coding system since the advent of computers� according to the WEDI Workgroup Health industry�s version of Y2K? (We wish it were that easy) Encompasses moving from 4-digit (inpatient procedure) or 5-digit (ICD-9 diagnosis) numeric codes (except for V and E codes) to 7-character alphanumeric codes with increased granularity in the new code structure and a different decision tree A complex compliance challenge that will impact 70% of our business processes and systems More complex than HIPAA compliance Will touch nearly every operational and IT process and dramatically influence data and financial reporting strategies Although many developed nations already have shifted to ICD-10, this will be the first major change in diagnostic coding in the U.S. in more than 30 years. The WEDI Workgroup calls it the �most significant overhaul of the medical coding system since the advent of computers.� Others have called it the health industry�s version of Y2K � without the hype that accompanied Y2K. I�m going to assume that you all know how ICD-9, the current coding system, is used by hospitals, clinics, physicians and payers everywhere to code in their diagnoses and to provide the basis for billing and claims. And so I�ll start by talking about what will be changed. The shift to ICD-10 essentially involves moving from a five-digit numeric code system to one with a seven-digit alphanumeric code � one that has embedded logic in the code structure, and a different decision tree. The result is that there will be many times more ICD-10 codes than there are ICD-9 codes � under ICD-9, we have 24,000 codes, and under ICD-10 we�ll have 150,000. The shift to ICD-10 will represent a complex, time-consuming and expensive compliance challenge, one that will be more complex than HIPAA and more pervasive than Y2K. It will touch nearly every operational and information technology process and dramatically influence data collection and financial reporting strategies throughout the industry. Although many developed nations already have shifted to ICD-10, this will be the first major change in diagnostic coding in the U.S. in more than 30 years. The WEDI Workgroup calls it the �most significant overhaul of the medical coding system since the advent of computers.� Others have called it the health industry�s version of Y2K � without the hype that accompanied Y2K. I�m going to assume that you all know how ICD-9, the current coding system, is used by hospitals, clinics, physicians and payers everywhere to code in their diagnoses and to provide the basis for billing and claims. And so I�ll start by talking about what will be changed. The shift to ICD-10 essentially involves moving from a five-digit numeric code system to one with a seven-digit alphanumeric code � one that has embedded logic in the code structure, and a different decision tree. The result is that there will be many times more ICD-10 codes than there are ICD-9 codes � under ICD-9, we have 24,000 codes, and under ICD-10 we�ll have 150,000. The shift to ICD-10 will represent a complex, time-consuming and expensive compliance challenge, one that will be more complex than HIPAA and more pervasive than Y2K. It will touch nearly every operational and information technology process and dramatically influence data collection and financial reporting strategies throughout the industry.

7. 7 February 2011: ANSI v5010 / ICD-10 ICD-10 Background and Overview A complex compliance challenge that will impact 70% of our business processes and systems Conversion could cost the U.S. health industry $1.64 billion over the next five years, according to CMS � a figure that could be substantially underestimated The Robert E. Nolan Company estimates total industry implementation costs to be $6 to $14 billion during a 2 � 3 year implementation period Several health care organizations have set budgets at $100 � $300M for ICD-10 planning and implementation A daunting undertaking in the midst of multiple other priorities and challenges (HCR, HIE, Provider EMR implementation) Benefits of ICD-10 conversion Will enable more accurate payments for new procedures, fewer rejected claims (once fully implemented), improved disease management, and harmonization of disease monitoring and reporting worldwide Will enable the U.S. to compare its statistics with international data to track the incidence and spread of disease and treatment outcomes The dollar costs of conversion could be significant. CMS, which initiated the requirement within the federal government, has projected that the conversion to ICD-10 could cost the U.S. health industry $1.64 billion over five years That figure that could be substantially underestimated, at least if you listen to some of the leading players in the industry. The Robert E. Nolan Company estimates total industry implementation costs to range from $6 billion to $14 billion during a two- to three-year implementation period. Several healthcare organizations have set budgets of between $100 million and $300 million for ICD-10 planning and implementation � and those are individual organizations. Moreover, ICD-10 implementation will be a daunting undertaking in the midst of multiple other priorities and challenges, both imposed by regulators and the market. For example, providers participating in Medicare fee-for-service program are about to deal with recovery audit contractors, or RACs, seeking to review medical records and perhaps claw back fees. During his campaign, President Obama supported electronic medical records, which makes their wide implementation much more likely. And all providers are facing unprecedented revenue pressures. The benefits of ICD-10 are sufficient. Will ensure more accurate payments for new procedures, fewer rejected claims, improved disease management, and harmonization of disease monitoring and reporting worldwide, ICD-10 also will enable the U.S. to compare its data with international data to track the incidence and spread of disease and treatment outcomes. The dollar costs of conversion could be significant. CMS, which initiated the requirement within the federal government, has projected that the conversion to ICD-10 could cost the U.S. health industry $1.64 billion over five years That figure that could be substantially underestimated, at least if you listen to some of the leading players in the industry. The Robert E. Nolan Company estimates total industry implementation costs to range from $6 billion to $14 billion during a two- to three-year implementation period. Several healthcare organizations have set budgets of between $100 million and $300 million for ICD-10 planning and implementation � and those are individual organizations. Moreover, ICD-10 implementation will be a daunting undertaking in the midst of multiple other priorities and challenges, both imposed by regulators and the market. For example, providers participating in Medicare fee-for-service program are about to deal with recovery audit contractors, or RACs, seeking to review medical records and perhaps claw back fees. During his campaign, President Obama supported electronic medical records, which makes their wide implementation much more likely. And all providers are facing unprecedented revenue pressures. The benefits of ICD-10 are sufficient. Will ensure more accurate payments for new procedures, fewer rejected claims, improved disease management, and harmonization of disease monitoring and reporting worldwide, ICD-10 also will enable the U.S. to compare its data with international data to track the incidence and spread of disease and treatment outcomes.

8. 8 February 2011: ANSI v5010 / ICD-10 ICD-10 Background and Overview The U.S. is converting from ICD-9 to ICD-10 because: ICD-9 is not sustainable and cannot provide the required detailed information ICD-9 is 29 years old; U.S. is the only industrialized nation still using ICD-9 Terminology and classification of some conditions are outdated and obsolete ICD-10 is an enabler for some health care reform initiatives ICD-10 is more granular and provides laterality New procedures and diagnoses can be easily incorporated Compliance is federally mandated to begin 10/1/2013 The marked granularity in the new coding is expected to have an enormous impact on both business processes and the industry at large

9. 9 February 2011: ANSI v5010 / ICD-10 ICD-10 Background and Overview Migration to ICD-10 means changing from 5-digit numeric codes (except for E and V) to 7-character alphanumeric code � with embedded logic in the new code structure and following a different decision tree to derive ICD-10 codes Laterality denoted (i.e., code structure denotes right vs. left appendage / side of the body) Chapters, categories, and titles have been restructured Conditions have been regrouped and new features added Combination diagnosis / symptoms codes have been created

10. 10 February 2011: ANSI v5010 / ICD-10 Transition to ICD-10 � Comparison of Changes

11. 11 February 2011: ANSI v5010 / ICD-10 Diagnosis Code Mapping Example

12. 12 February 2011: ANSI v5010 / ICD-10 Summary ICD-10 is much more granular ICD-10 is organized differently than ICD-9 There is no easy way to automate a crosswalk from ICD-9 to ICD-10 or vice versa The CMS GEMS (general equivalency mapping system) is NOT an automated tool or crosswalk; it is a translation tool only Even experienced coders and providers will need training in ICD-10 Providers will need to improve or change their documentation to allow coders to utilize the granularity of the new code set CPT codes, HCPCS, and revenue codes will still be used on claims

13. 13 February 2011: ANSI v5010 / ICD-10 ICD-9-CM vs. ICD-10-CM & ICD-10-PCS: A Comparison ICD-9-CM has two counterparts: ICD-10-CM, which codes diagnoses; and ICD-10-PCS,which codes procedures. When coding diagnoses, ICD-9-CM is numeric, with only the letters V and E used. There are between three and five digits, with no laterality. ICD10-CM coding, on the other hand, is alphanumeric with an alpha lead character. There are between three and six digits, plus a qualifier, and laterality. The additional characters and alphanumeric form allow much greater specificity, as you can see from this example. When coding procedures, ICD-9-CM has three or four digits, with a decimal point after the second digit. Coding is purely numeric. ICD-10-PCS coding has seven digits, with no decimal point. Coding is alphanumeric, with all codes starting with three alphanumeric characters. ICD-9-CM has two counterparts: ICD-10-CM, which codes diagnoses; and ICD-10-PCS,which codes procedures. When coding diagnoses, ICD-9-CM is numeric, with only the letters V and E used. There are between three and five digits, with no laterality. ICD10-CM coding, on the other hand, is alphanumeric with an alpha lead character. There are between three and six digits, plus a qualifier, and laterality. The additional characters and alphanumeric form allow much greater specificity, as you can see from this example. When coding procedures, ICD-9-CM has three or four digits, with a decimal point after the second digit. Coding is purely numeric. ICD-10-PCS coding has seven digits, with no decimal point. Coding is alphanumeric, with all codes starting with three alphanumeric characters.

14. February 2011: ANSI v5010 / ICD-10 ANSI v5010

15. 15 February 2011: ANSI v5010 / ICD-10 HIPAA Overview The Health Insurance Portability and Accountability Act of 1996 (HIPAA) defines standards that covered entities (health plans, clearinghouses and health care providers) must use when electronically conducting health care administrative transactions, such as claims, remittance, eligibility and benefits and claims status requests and responses. In addition changes were made and a new transaction approved for NCPDP: NCPDP D.0 Pharmacy Transactions, claims, eligibility, COB, referral/authorization NCPDP v3.0 Medicaid Pharmacy Subrogation Batch Standard (new HIPAA transaction) In addition changes were made and a new transaction approved for NCPDP: NCPDP D.0 Pharmacy Transactions, claims, eligibility, COB, referral/authorization NCPDP v3.0 Medicaid Pharmacy Subrogation Batch Standard (new HIPAA transaction)

16. 16 February 2011: ANSI v5010 / ICD-10 ANSI v5010 Overview ANSI v5010 is the new version of v4010 that addresses a variety of currently unmet business needs and inconsistencies within the transactions On January 16, 2009, the U.S. Department of Health and Human Services released the modifications to the electronic transactions regulation final rule impacting the following transactions referred to as v5010: Enrollment & Premium Health plan benefit enrollment & maintenance [ 834 ] Premium payment [ 820 ] Health care claims / encounters Institutional [ 837I ] Professional [ 837P ] Dental [ 837D ] Remittance advice [ 835 ]

17. 17 February 2011: ANSI v5010 / ICD-10 ANSI v5010 Overview Inquiry & Response Eligibility benefits inquiry and response (non-pharmacy) [ 270/271 ] Claim status inquiry and response [ 276/277 ] Referrals Authorization and referral request & response (non-pharmacy) [ 278 ]

18. 18 February 2011: ANSI v5010 / ICD-10 ANSI v5010 Overview Current versions of the standards used in health care transactions lack certain functionality required by the industry. Therefore, it is necessary for providers to prepare for new standards in order to continue submitting claims electronically. Standards refers to the Accredited Standards Committee X12 Version 4010 for health care transactions and the National Council for Prescription Drug Programs [NCPDP] Version 5.1 for pharmacy transactionsStandards refers to the Accredited Standards Committee X12 Version 4010 for health care transactions and the National Council for Prescription Drug Programs [NCPDP] Version 5.1 for pharmacy transactions

19. 19 February 2011: ANSI v5010 / ICD-10 Polling Questions � Set #1 Are you going through a major Hospital Information System or Practice Management System conversion for your v5010 upgrade? Yes / No / Considering it / Don�t Know  Have you completed business process changes internally to capture the additional information? None / Some / All Have your software vendors given information on v5010-compliant product delivery and installations? None / Some / Most / All Have you selected someone to lead your change process? Yes / No / Considering it / Don�t Know

20. 20 February 2011: ANSI v5010 / ICD-10 ANSI v5010/ICD-10 Migration � Important Dates

21. 21 February 2011: ANSI v5010 / ICD-10 Polling Questions � Set #2 Have you identified the business critical scenarios to be used for external testing? None / Some / Most / All What is your estimated date of completion of internal testing for v5010? Already completed / Jan � Mar 2011 / Apr � Jun 2011 / July 1, 2011 or after / Unknown What is your estimated date to begin external testing with trading partners? Jan � Mar 2011 / Apr � Jun 2011 / July 1, 2011 or after / Don�t Know Besides today�s session have you received v5010 education or information from any other health plan? None / Some / Most / All

22. 22 February 2011: ANSI v5010 / ICD-10 How is v5010 Different from v4010? Make sure we mention that this is technical document that means more to the Billing managers than to providers but we have invited a mix a of both so wanted to be sure we mentioned it. 4010 had inconsistent way of representing subscriber/patient information across transactions making it confusing for the covered entities when transitioning from one transaction to another In 4010, a child was considered as a dependent by default and could get treatment using parent�s health plan, but in 5010 environment, everyone to be admitted need to have unique ids from health plan In 5010, NPI must be same for all payers and taxonomy can�t be dictated by payers and the Billing Provider address must be the physical street address and always be most detailed level of enumeration as determined by the providerMake sure we mention that this is technical document that means more to the Billing managers than to providers but we have invited a mix a of both so wanted to be sure we mentioned it. 4010 had inconsistent way of representing subscriber/patient information across transactions making it confusing for the covered entities when transitioning from one transaction to another In 4010, a child was considered as a dependent by default and could get treatment using parent�s health plan, but in 5010 environment, everyone to be admitted need to have unique ids from health plan In 5010, NPI must be same for all payers and taxonomy can�t be dictated by payers and the Billing Provider address must be the physical street address and always be most detailed level of enumeration as determined by the provider

23. 23 February 2011: ANSI v5010 / ICD-10 How is v5010 Different from v4010? Removed amount segments in COB as that can be calculated Expanded the diagnosis and procedure code fields and added ICD-10-CM and ICD-10-PCS qualifiers in 5010. 5010 currently supports Principal Dx, Admitting Dx, Patient Reason for Visit and E-Codes. Clear remit balancing requirements Removed amount segments in COB as that can be calculated Expanded the diagnosis and procedure code fields and added ICD-10-CM and ICD-10-PCS qualifiers in 5010. 5010 currently supports Principal Dx, Admitting Dx, Patient Reason for Visit and E-Codes. Clear remit balancing requirements

24. 24 February 2011: ANSI v5010 / ICD-10 Why Do Covered Entities Need to Upgrade? Industry experience with the v4010 implementation uncovered some requirements and additional business needs that are addressed in v5010 While upgrading, be on the lookout for the latest mandated errata related to each of the transaction types Visit CMS and HHS websites periodically even after the v5010 upgrade to look for any business-critical future errata

25. 25 February 2011: ANSI v5010 / ICD-10 Why Do Covered Entities Need to Upgrade? Realize other benefits of v5010: Reduce transaction file rejections Improve accuracy of claims data Quicker turnaround in making payments to providers Decrease staff time used for information gathering and calls about eligibility, claim denials and appeals

26. 26 February 2011: ANSI v5010 / ICD-10 v5010 Transactions Impacted by Errata Type 1 TR3 Errata are substantive modifications, necessary to correct impediments to implementation, identified with a letter A in the errata document identifier. Type 2 TR3 Errata are typographical modifications, and identified with a letter E in the errata document identifier.Type 1 TR3 Errata are substantive modifications, necessary to correct impediments to implementation, identified with a letter A in the errata document identifier. Type 2 TR3 Errata are typographical modifications, and identified with a letter E in the errata document identifier.

27. 27 February 2011: ANSI v5010 / ICD-10 v5010 Remediation for Providers � Key Points Have you� Explored your business impacts? Included representatives or those with responsibility for Revenue Cycle, MIS, Accounting, Treasury, Risk and Vendor Management within your remediation team? Implemented the changed business and clinical processes in relation to the v5010 upgrade? Verified that your IT systems are / will be ready for v5010? Checked the readiness of your billing system to process transactions in the v5010 format? Come up with a backup plan in case your software vendors don�t provide you with v5010 compliant updates in time? Prepared yourself for external testing and production pilot? Reached out to your external partners, i.e. clearinghouses, payers, etc., on when they will be ready? Planned for a structured test process?

28. 28 February 2011: ANSI v5010 / ICD-10 Polling Questions � Set #3 Have you prepared yourself with the latest errata changes for v5010 transactions in addition to the Final Rule? Yes / No / Don�t Know What is your biggest challenge in meeting the v5010 compliance dates? Payers not ready / Vendors/Clearinghouses not ready / Resources / Other business priority How concerned are you about the ICD-10 and v5010 interdependencies? 1 = not concerned / 2 = somewhat concerned / 3 = concerned / 4 = very concerned / 5 = executive-level attention being given

29. 29 February 2011: ANSI v5010 / ICD-10 Timeline On this slide you see the compliance time line for ANSI 5010 and ICD-10. Of special note is the industry recognition that at least a year should be dedicated to testing prior to each compliance date. NCVHS, AHIP, BCA and WEDI among others have endorsed this industry wide approach. Of course, this reduces the actual implementation by 1 year. We should be thinking 1/1/2011 for ANSI 5010 and 10/1/2012 for ICD-10 for completion of internal business and ITG processes, training and system modifications. As learned from ANSI 4010 and National Provider ID, if the industry does not push toward this approach, a �train wreck� (pends, rejects, phone calls, frustration, etc.) will be waiting for us on the compliance date. On this slide you see the compliance time line for ANSI 5010 and ICD-10. Of special note is the industry recognition that at least a year should be dedicated to testing prior to each compliance date. NCVHS, AHIP, BCA and WEDI among others have endorsed this industry wide approach. Of course, this reduces the actual implementation by 1 year. We should be thinking 1/1/2011 for ANSI 5010 and 10/1/2012 for ICD-10 for completion of internal business and ITG processes, training and system modifications. As learned from ANSI 4010 and National Provider ID, if the industry does not push toward this approach, a �train wreck� (pends, rejects, phone calls, frustration, etc.) will be waiting for us on the compliance date.

30. 30 February 2011: ANSI v5010 / ICD-10

31. 31 February 2011: ANSI v5010 / ICD-10 Next Steps for Provider Participation with BCBS Pilot Program Be ready to become v5010 compliant by BCBS�s targeted pilot start in the second quarter of 2011 Once you are v5010 compliant by the above date, work with your clearinghouse to participate in pilot testing We have started working with your clearinghouses for production pilot testing If issues are identified, we will follow up with you directly and / or through the clearinghouse, to ensure you understand the changes needed

32. 32 February 2011: ANSI v5010 / ICD-10 Provider Impact of Non-Compliance BCBS will be unable to process any v4010 / 4010A1 transaction submitted on or after January 1, 2012 Delay in payment leading to disruption of cash flow to provider May become dependent on clearinghouse or trading partners� ability to step up and step down to transact successfully with health plans in v5010 standard Delay in timeline and schedule for the ICD-10 upgrade program leading to a possible suspension or rejection of both electronic and paper transactions with any trading partners beyond the ICD-10 compliance date

33. 33 February 2011: ANSI v5010 / ICD-10 ANSI v5010 / ICD-10 � Summary

34. 34 February 2011: ANSI v5010 / ICD-10 ANSI v5010 and ICD-10 Resources Where to go for additional information: Blue Cross and Blue Shield of Texas www.bcbstx.com/provider Centers for Medicaid and Medicare Services www.cms.gov Workgroup for Electronic Data Interchange www.wedi.org Washington Publishing Company www.wpc-edi.com