Presentation Transcript

1. Central Ohio HFMA

   March 21, 2014
2. Speaker Julie DiFrancesco Director, Healthcare Advisory Services McGladrey LLPCleveland, Ohiojulie.difrancesco@mcgladrey.com216.522.1139 Summary of Experience Julie DiFrancesco has more than 23 years of experience working with health care organizations nationally. Collaborating closely with hospital and health system CEOs and CFOs, she has developed and overseen large-scale finance, regulatory, revenue cycle, clinical operations and information technology initiatives. Julie has consulted on a number of health care-related topics, including Medicare and Medicaid regulatory matters, ICD-10, clinical documentation improvement, optimizing reimbursement rates and developing contractual service allowance models. She has served as an expert witness for regulatory matters and has spoken nationally for Healthcare Financial Management Association and American Health Lawyers Association. She has provided consulting services to a wide range of health care organizations, including academic medical centers, ambulatory surgery centers, community hospitals, health care systems, managed care groups and skilled nursing facilities. Education, Professional Affiliations and Credentials Healthcare Financial Management Association Area Agency on Aging – Member of the Board of Directors and Treasurer Bachelor of Science, accounting, University of Akron Master of Business Administration, healthcare administration, Cleveland State University
3. Agenda Introduction ICD-10 Management Case Study ICD-10 Case study – Revenue Risk Analysis
4. Polling Question For which type of organization do you work? Hospital / Hospital System Payer – Commercial or Government Physician Group Consulting/Audit Firm MAC Other
5. ICD-10
6. Background Through the Centers for Medicare and Medicaid Services (CMS), the federal government has mandated that ICD-10 diagnosis and procedure coding be implemented October 1, 2014; the implementation of these new standards represents a significant undertaking for hospitals and other providers
7. Rate of ICD-10 Adoption Internationally Source: http://www.who.int/classifications/icd/en
8. ICD-10: Advancing Healthcare… The Federal Government through the Centers for Medicare and Medicaid Services (CMS) is driving the health care industry to upgrade diagnosis and procedure coding standards (ICD-10) by October 1, 2014. ICD-10 Changes Implications Pervasive Impacts Diagnosis codes and procedure codes flow through mission critical operational systems and analytical tools Alignment of technology remediation with business and technology strategies Business process reengineering, training and change management is essential Comprehensive Benefits Quality Measurement Public Health Disease Surveillance Clinical Research Organizational Monitoring and Performance Reimbursement Significant Increase in Clinical Granularity ICD-10 (International Classification of Diseases version 10) The ICD is the international standard diagnostic classification for general epidemiological, health management purposes and clinical use ICD-10 CM & PCS is an upgrade of the U.S. developed Clinical Modification (ICD-9-CM) of Diagnosis and Procedure Codes, first adopted in 1979 ICD-10 CM (Diagnosis) is 3 to 7 characters and is alphanumeric ICD-9 CM (Diagnosis) is 3 to 5 characters and is alphanumeric >14,000 unique codes > 68,000 unique codes ICD-9 CM (Procedure) is 3 to 4 characters and is numeric ICD-10 PCS (Procedure) is 7 characters and is alphanumeric > 4,000 unique codes > 72,000 unique codes
9. The Basics of the ICD-10-CM Change An Example of Structural Change ICD-9 ICD-10-CM . . Category Etiology, anatomic site, manifestation Category Etiology, anatomic site, manifestation Extension X X X X X X X X X X X X An Example of One ICD-9 Code Being Represented by Multiple ICD-10 Codes . Type 1 diabetes mellitus with diabetic neuropathy, unspecified E 1 0 4 0 One ICD-9 code is represented by multiple ICD-10 codes . Type 1 diabetes mellitus with diabetic mononeuropathy E 1 0 4 1 . Type 1 diabetes mellitus with diabetic amyotrophy . E 1 0 4 4 Diabetes mellitus with neurological manifestations type I not stated as uncontrolled 2 5 0 6 1 . Type 1 diabetes mellitus with other diabetic neurological complication E 1 0 4 9 The industry expects that mapping ICD-9 and ICD-10 codes will be a complex task The ICD-10-CM diagnosis code set is a full replacement of the ICD-9 code set that will provide additional granularity for diagnosis and procedure codes. This additional granularity is the primary driver of value.
10. The Basics of the ICD-10-PCS Change An Example of Structural Change ICD-9 ICD-10-PCS . Section Body System Root Operation Approach Device Qualifier Body Part X X X X X X X X X X X An Example of One ICD-9 Code Being Represented by Multiple ICD-10 Codes One ICD-9 code is represented by multiple ICD-10 codes . Total hip replacement 8 1 5 1 The ICD-10-PCS is an American procedure coding system that represents a significant step toward building a health information infrastructure that functions optimally in the electronic age.
11. Technical Software Upgrades - In-House & Purchased Applications Electronic Transactions Care Management Medical & Treatment Policy Medical Management Reimbursement Business Operations Procedures Policies Transition Change Management Training What Are Some of The Impacts and Who Is Impacted? Stakeholders throughout the health care value chain will be impacted Laboratories Clearinghouses Payers Software Vendors 3rd Party Administrators Employers Suppliers Providers Members National Organizations It is anticipated that significant technology and process changes, in addition to industry adoption, will be required to achieve the intended benefits of ICD-10
12. The Expected Benefits of ICD-10 are Significant Today’s data needs are dramatically different than they were 30 years ago when ICD-9 was introduced. ICD-10 will advance health care in many ways, with benefits accruing across five major categories. The benefits are significant, but it will require investment in changes to processes and technology across operations
13. General questions for gap assessment How do you currently use ICD-9 codes? For each use, what is the process? For each use, what is the computer system/ application/database that you use? What reports do you generate that use ICD-9 codes? Do you report externally?  What is that process? Do you think that you may need additional staff due to the transition to ICD-10? How might your processes change?
14. Is the Sky Really Falling? Maybe…..maybe not
15. Polling Question Would you consider your organization An early adopter (have already begun dual coding, testing, education, etc.) Right on track (will meet at least minimum requirements by transition date) In a panic (no clear transition plan) In denial (hoping for a another delay, but if not our IT vendor says we are okay) Not sure
16. Quote from WEDI “Based on the survey results, all industry segments appear to have made some progress since February 2013, but have not gained sufficient ground to remove concern over meeting the October 1, 2014 compliance deadline,” said Jim Daley, Chairman, WEDI. “Unless all segments move quickly forward with their implementation efforts, there will be significant disruption on Oct 1, 2014.” Full survey results can be found at: http://www.wedi.org/docs/news/icd-10-survey-results-summary.pdf?sfvrsn=0
17. ICD-10/Process Improvements Remediation Revise EHR Templates Early Adopt Computer Assisted Coding CDI/HIM Enhancements Process Improvements Trading Partner Strategy Train Coders Level of Effort
18. What Should We be Doing? Establish an ICD-10 transition steering committee Should be cross-functional with specific subcommittees/ workstreams Meet on a regular basis and hold all members accountable Designate an ICD-10 PMO/point person Conduct a thorough gap assessment/impact analysis Collect data and information across all functional areas through interviews with key management and data Develop a detailed workplan to foster smooth implementation
19. Steering Committee Workstreams Physician/Coder training Allows the organization to customize the training to the impacted physicians/coders Enables a customized education plan containing the diagnosis driving the most risk to the organization Clinical Documentation Improvement Allows there to be focused awareness to the physicians driving the most risk Identifies the diagnosis/codes that the Clinical Documentation Specialists should view as priority Payer Management Identifies the payers most at risk with the conversion to ICD-10 Identifies the DRGs by payer which the organization should begin testing/translating within the 1st testing phase
20. Steering Committee Workstreams (cont.) IT Creates inventory of all IT software that currently utilizes ICD-9 Develops workplan for remediation Enables detailed testing Revenue Cycle/PFS Operational changes Front end/back end Denials management/payment discrepancies Finance Performs financial analysis Examines current cash and develops plan for potential interruptions in cash flow HR/Change Management/ Communication Organizes delivery of education Provides communication at all levels regarding status of ICD-10 transition
21. ICD-10 Education/Training Program Components
22. Education/Training Needs Staff and management members requiring ICD-10 education/ training based on interview feedback Level 1: General Awareness Level 2: Data Analytics/ Usage Level 3: Clinical Documentation Level 4: Code Selection Operational Leadership Information Technology Education/Training & HR Patient Access/Scheduling Finance/Compliance/ Decision Support Patient Accounting Research Managed Care Physician Practice Management Case Management and Clinical Areas Ancillary and Diagnostic Services Clinical Leadership Quality Management Compliance (Coder) HIM Clinical Documentation Improvement Specialists (CDS)
23. Case Study
24. How Can Data Analytics Help with the Financial Impact Analysis? Large volumes of ICD-9 coded claims can be translated and analyzed Data analytics can assist with forecasting financial impacts and assessing risk Top ICD-9 and 10 codes used, overall and by specialty areas Identification of high-risk ICD-9 and ICD-10 codes Identification of top DRGs and service lines forecast to be impacted in transition Data analytics can inform the ICD-10 transition team where to prioritize efforts Training Dual coding Computer-assisted coding Testing Business intelligence tools can drive the data analytics Enables a dynamic discovery process!
25. CMS GEMs vs. CMS Reimbursement Mappings Mapping Terminology Forward Mapping Backward Mapping ICD-9 ICD-10 ICD-9 ICD-10 GEMs Reimbursement Mapping ICD-9 CM ICD-9 CM ICD-10 PCS ICD-10 PCS 0B717DZ 0B717DZ Dilation of Trachea with Intraluminal Device, Via Natural or Artificial Opening Dilation of Trachea with Intraluminal Device, Via Natural or Artificial Opening 3179 3179 Other Repair & Plastic Operation on Trachea Other Repair & Plastic Operation on Trachea 0B718DZ 0B718DZ Dilation of Trachea with Intraluminal Device, Via Natural or Artificial Opening Endoscopic Dilation of Trachea with Intraluminal Device, Via Natural or Artificial Opening Endoscopic 9605 Other Intubation Respiratory Tract 9605 Other Intubation Respiratory Tract In situations where there are alternative mappings, the CMS reimbursement mappings provide the most common conversion based on real world data; plans may need to validate these mappings CMS reimbursement mappings (which can be thought of as a crosswalk) eliminate alternative paths for ICD-10 to ICD-9 mappings to enable scenarios, such as acceptance of ICD-10 claims with internal adjudication against ICD-9 codes
26. CMS GEM Example 1:1, Cluster, Combination, and Complex
27. ICD-9 to 10 Translator Process Maps Basic Custom Level Probability GEMs Encoder Translated claims Claims translator Validation is key! Claims impactassessment Default mapper Clinics DRG analyzer Hospital
28. Understanding the Process to Determine the Initial Revenue Risk is Key to Developing a Strategy Going Forward McGladrey has developed a standardized process for simulating and creating variance reports based on MS-DRGs comparing original ICD-9 coded claims to simulated ICD-10 and backward mapped ICD-9 coded claims. Data Preparation 12 months of Inpatient/Outpatient claims (March 2012 – February 2013) were selected from Hospital. These claims included the ICD-9 based codes, including the principal diagnosis code, secondary diagnoses codes and the ICD-9 procedure codes The McGladrey’s business intelligence platform incorporated the claims information to create ICD-10 simulated claims Projections were developed in total for the claims Mapping Diagnostic Tool Assumptions and Limitations
29. Crucial in Understanding the Revenue Risk is a Focus-driven Approach When understanding the ICD-10 revenue risk related to the organization, one must drive the detail out of the analysis. Therefore, the following process will explain the risk related to the transition: Identify the overall impact Dive into the financial service lines driving the highest risk Evaluate the DRGs with the most impact Overall Summary of ICD-10 impact Service lines driving the highest risk DRGs impacting the risk related to transition of ICD-10
30. Recommendation #1 Focus driven approach on the revenue being driven by the claims resulting in positive and negative impact
31. An Organization’s Revenue Risk is Driven from a Select Group of Codes Which are Affected by the Transition from ICD-9 to ICD-10 The overall change is viewed as minimal -$80,527. However, a more detailed analysis shows a total revenue risk of ±$6,678,549. Recommendation #1 Focus driven approach on the revenue being driven by the claims resulting in positive and negative impact (9% of claims)
32. Recommendation #2 Focus on top DRGs driving revenue risk with customized translation to identify revenue risks associated from the transition from ICD-9 to ICD-10
33. The Implementation of ICD-10 will Cause New Shifts within the MS-DRG Framework Recommendation #2 Focus on top DRGs driving revenue risk with customized translation to identify revenue risks associated from the transition from ICD-9 to ICD-10
34. The Implementation of ICD-10 will Cause New Shifts within the MS-DRG Framework (cont.)
35. The Implementation of ICD-10 will Cause New Shifts within the MS-DRG Framework (cont.)
36. Recommendation #3 A customized translation is needed to reduce the revenue risk related to the impacted unspecified codes
37. One Area of Major Concern with the Transition from ICD-9 to ICD-10 Will be Focused on the Unspecified Codes The overall change is viewed as a minimal positive change of $641,616. However, a more detailed analysis shows a total financial risk of $3,047,724. Recommendation #3 A customized translation is needed to reduce the revenue risk related to the impacted unspecified codes
38. Recommendation #4 Intensified understanding of impact ICD-9 codes as well as training related to highly impacted service lines (i.e. Orthopedic, Cardiovascular, Surgery and Medicine)
39. With an Understanding of the Total Revenue Risk, an Organization Needs to Strategize on Building Service Line ICD-10 Awareness Recommendation #4 Intensified understanding of impact ICD-9 codes as well as training related to highly impacted service lines (i.e., internal medicine, general surgery, cardiac surgery, obstetrics)
40. Recommendation #5 The required level of training will be customized based on the expected impact to the different practice areas, with focus on specialty groups considered at most risk and scheduled according to expected training needs
41. Identification of Impacted Physicians will Assist in Leading a Best Practice Clinical Documentation Solution Revenue impact related to physician reimbursement associated with 25 physicians Represent 48% of all revenue driven from physician reimbursement From March 2012 through Feb. 2013 Top 25 physicians (48%) All other physicians (52%) Recommendation #5 Focused driven physician training should be geared on high impact specialty groups considered at most risk and scheduled according to expected training needs
42. Recommendation #6 Partner with key DRG reimbursed commercial payers for claims testing and reimbursement methodology discussions to address potential changes in both revenue and benefit neutrality
43. Once an Organization Understands the DRGs most Impacted in the Conversion, Communicating/Testing with Payers will be Key to Maximizing Reimbursement Potential ~26% of total claims are being submitted to private payers Recommendation #6 Partner with key DRG reimbursed commercial payers for claims testing and reimbursement methodology discussions to address potential changes in both revenue and benefit neutrality
44. The McGladrey Advantage The Power of Being Understood.SM This is McGladrey.
45. McGladrey LLP 1001 Lakeside Ave. EastSuite 200Cleveland, OH 44114216.523.1900 800.274.3978 www.mcgladrey.com