Claim Denials Likely to Increase with ICD-10

[This post is adapted from the October 2013 issue of Wolters Kluwer’s Receivables Report For America’s Health Care Financial Managers]

With the looming ICD-10 conversion in October 2014, health care organizations are struggling to improve clinical documentation, coding accuracy, compliance, and workflow management. Most providers are expecting cash flow to diminish due to an increased level of claim denials. Much will depend on the ability of physicians and other clinicians to get acquainted with new reimbursement documentation requirements and guidelines, but just as much will depend on the readiness of the payers with whom providers contract.

We went to some industry insiders for their opinions regarding claims delays in the fall of 2014 after ICD-10 becomes effective. “I do expect increased claim delays and denials for so many reasons,” says Deborah E. Shapiro, President and CEO of WFS Services in Secaucus, NJ. “First, health care providers will be on target with their timing to start submission of ICD-10 codes in October of 2014. What I predict will happen is that both CMS and the payer industry will continue to lag in system upgrades to properly process these claims. This will result in many false denials initially as they struggle to cope with the new coding system. Second, despite all the training and all the dollars and lost hours of productivity, providers also will lag behind in properly coding claims so those that do get through the process will be denied,” she says.

Diagnosis Codes

Providers will still have to deal with diagnosis-procedure code mismatches, which will be made even more complicated by the proliferation of diagnosis codes, Shapiro notes. “For example, will an x-ray be covered if the diagnosis is for ‘break due to being hit by a golf ball’ as opposed to ‘break due to being hit by a soccer ball?’ Will all of the different types of balls one could possibly be hit with be easily coded?” she asks.

Lack of Expertise

Shapiro points out that it is likely there will be a lack of qualified coders to handle the new coding system. “We are looking at a terrible brain drain from the medical record coding industry. Many of those coders who grew up with ICD-9 are now declining to be retrained in the new coding system and will be retiring. The loss of experience in dealing with coding issues combined with a time when no one has expertise with ICD-10 will also contribute to the increase in denials,” she asserts.

This lack of expertise also applies to physicians. “I believe the physician community will have difficulties dealing with the new coding system once it becomes a reality. This difficulty will translate into improperly coded visits which will result, obviously, in denials,” Shapiro states.

Careful Transition Planning

“Much has been said and published to assist providers with meeting the challenges of converting to ICD-10,” Shapiro says. “Because this is a change that will affect practically the entire institution with the exception of maybe food services, the first step is to create a cross functional team that will help to ensure that all the bases are covered. The change primarily impacts the Health Information Management (HIM) systems area, so making sure that coders are trained, trained again, and retrained close to the time of the conversion is very important. Getting systems updated to accommodate the new coding must be on the timeline as well,” she says.

Things to Consider

Because of the major changes from ICD-9 to ICD-10, CMS has proposed some ideas, too. The agency suggests that providers consider the following when developing ICD-10 transition plans:

  • Authorization problems. As payers convert to ICD-10 coding, they may change criteria for prior authorizations and referrals. Be sure to communicate with payers.
  • Claim delays or denials. Increased data found in ICD-10 codes likely will lead to an increase in denials. Again, providers need to communicate with their payers to determine how ICD-9 codes will be converted and how it could affect reimbursement.
  • Increased fraud audits. Expect government audits to focus on clinical documentation to determine if it supports ICD-10 codes, which are much more detailed and specific. CMS recommends regular documentation audits after ICD-10 starts to make sure that documentation supports coding.
  • Changes in payment methods. Right now, there is not much information on how payment models will change with ICD-10 coding. This is why communication between providers and payers and clearinghouses is so important.
  • Impact of Accountable Care Organizations (ACO). ICD-10 codes will be a key part of ACOs. Resource allocation will be based on ICD-10 data.
  • No comparison between ICD-10 and ICD-9 standards. There will be a change in how to measure quality, efficiency, and effectiveness.
  • Impact of decreased coding accuracy. Providers should attempt to assess the effect of decreased coding accuracy on cash flow. Determine how long it will take coding staff to achieve a level of proficiency that is comparable to ICD-9 by assessing staff coding knowledge and monitoring coding accuracy during the initial implementation period, providing education and training as needed.
  • Documentation Improvement. Also assess the success of efforts to improve documentation to support patient care and accurate coding.
  • Update all forms. An important task is to make sure that all forms used in the organization are updated to reflect new coding requirements.
  • Training of medical professionals. All medical professionals must learn proper documentation to support the necessary coding.

Communicating with Payers

CMS has many resources available for health care providers to help them get ready for the change. As noted, providers have no control over the readiness of their payers. At the same time, it makes sense to try to communicate with payers about ICD-10. Here are some questions to ask your payers, as suggested by CMS in its November, 2012, News Update:

  • Who will be my primary contact at your organization for the ICD-10 transition?
  • Can we set up regular check-in meetings to keep our progress on track?
  • Are you prepared to meet the ICD-10 deadline of October 1, 2014?
  • Where is your organization in the transition process?
  • When will you be ready to accept test transactions?
  • What will we need to test with you?
  • Do you anticipate any changes in policies or delays in payments to result from the switch to ICD-10?