ICD-10 Implementation & Compliance

ICD-10 Implementation & Compliance HCCA Regional Conference Newport Beach June 2011

Agenda Today s Objectives Speakers Introduction ICD-10 Background and Introduction Medical Records Documentation Impact Benefits of ICD-10 Industry Trends Focus Areas Post ICD-10 Implementation Q&A - 2 -

GB Today s Objective Our goal is to engage in a dialogue about ICD-10 and how HCCA is facing off against this challenge. Our objectives are to: Provide you with an overview of key difference between ICD-9 and ICD-10 Understand industry challenges and concerns Focus areas to prepare you and your organization for ICD-10-3 -

GB/TA Today s Speakers Name Gloryanne Bryant Regional Managing Director HIM Kaiser Foundation Health Plan Inc & Hospitals Tracey Aegerter Principal Deloitte Consulting LLP Christopher Baratta Senior Manager Deloitte Consulting LLP Summary of Relevant Experience An RHIA (Registered Health Information Administrator), a RHIT (Registered Health Information Technician), Certified Coding Specialist (CCS) and a Certified Clinical Documentation Specialist (CCDS) with over 30 years of experience in the health information management (HIM) profession Has conducted numerous ICD-9-CM and CPT coding, DRG, MS-DRG and APC (OPPS) workshops for hospital based coders Given an array of presentations on data quality, medical necessity, compliance and clinical documentation improvement to management executives and healthcare administrators Over 14 years of health care experience focusing on strategic cost management, operational performance improvement and revenue cycle enhancement in integrated delivery systems, academic medical centers, and large multi-state provider organizations Regional leader for Deloitte s ICD-10 efforts and a core member of Deloitte s national ICD-10 team Recently completed ICD-10 assessments for large provider clients in academic and non-academic settings with both large inpatient and outpatient components Over 13 years of experience in managing full scale, end-to-end Provider Revenue Cycle projects for major academic medical centers and large, multifacility healthcare systems, medical and physician groups and DME clients Core member of Deloitte s national ICD-10 team Recently completed ICD-10 assessments for three large health systems in the West Coast - 4 -

GB ICD-10 Introduction The most widely used diagnostic taxonomy in health care is the World Health Organization s International Statistical Classification of Diseases and Related Health Problems (ICD). ICD is a coding system of diseases and signs, symptoms, abnormal findings, complaints, social circumstances and external causes of injury or diseases that is used internationally to classify morbidity and mortality data for vital health statistics tracking, used for research and in the U.S. for health insurance claim reimbursement. When a physician evaluates a patient, the physician collects subjective and objective data (the history and physical ) to diagnose the patient s condition and develop a plan for treatment which is documented in the record. That documentation then is translated into clinical codes. Once in place ICD-10 is expected to result in fewer miscoded, rejected and improper reimbursement claims. Readiness and preparations for implementation are key. No Impact on Use of CPT and HCPCS Level II Codes - 5 - SOURCE: http://www.who.int/classifications/icd/en/

ICD-10 Global Implementation Canada Began adopting in 2001 Over 5-year implementation ICD-10-CA for morbidity Coding is used for statistical purposes rather than for billing United Kingdom Adopted in 1995 Germany Adopted in 1998 ICD-10-AM for morbidity Implementation took 3 years Russia Adopted in 1999 China Adopted in 2002 Brazil Adopted in 1998 South Africa Adopted in 1996 France Adopted in 1996 Australia Adopted in 1998 Implementation took 2 years 2 years from decision to change to actual implementation was insufficient lead time to build the classification and educate users Countries who have adopted ICD-10-6 -

GB ICD-10 Sits Among the Top Issues the Industry Has to Weigh Given the challenges and trends, it will be challenging to achieve uniform adoption of ICD-10 across the industry by October, 2013-7 -

GB ICD-9-CM Coding Overview Codes in ICD-9-CM are based on the state of medical knowledge of the late 1970s* with periodic updates applied. As medical advances continue by leaps and bounds ICD-9-CM will continue to inadequately address the present state of medical knowledge - regardless of annual updates. The uses of coded data has expanded beyond the intended purposes of more than 30 years ago. The current ICD-9-CM system: Lacks sufficient specificity and detail, Is running out of space, and the limited structural design cannot accommodate advances in medicine and medical technology and the growing need for quality data, Is obsolete and no longer reflects current knowledge of disease processes, contemporary medical terminology, or the modern practice of medicine, Hampers the ability to compare costs and outcomes of different medical technologies, and Cannot support the US transition to an interoperable health data exchange in the US - 8 -

GB ICD-10: Advancing Healthcare The Federal Government through the Centers for Medicare and Medicaid Services (CMS) is driving the healthcare industry to upgrade diagnosis and procedure coding standards (ICD-10) by October 1, 2013. ICD-10 Changes 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 Significant Increase in Clinical Granularity ICD-9 CM (Diagnosis) 5 digit numeric ~ 14,000 unique codes ICD-10 CM (Diagnosis) 7 digits alphanumeric characters > 68,000 unique codes 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-9 CM (Procedure) 5 digit numeric ~ 4,000 unique codes ICD-10 PCS (Procedure) 7 digits alphanumeric characters ~ 72,000 unique codes - 9 -

ICD-10 Implication Pervasive Impacts - The intent is not for ICD-10-CM or ICD-10-PCS to replace CPT so practices that are describing patient visits, radiology, laboratory procedures, etc. in the ambulatory setting will continue to use CPT and its annual updates for describing the care that we provide in those settings - The potential impact of ICD-10 to health care providers includes multiple system upgrades and testing cycles, increased human capital needs, significant training, increased claim denials, delayed payment, lost or reduced reimbursement and impacts to cash flow, and more complex financial reporting. Comprehensive Benefits - Improved ability to measure health care services - Increased sensitivity when refining grouping and reimbursement methodologies - Enhanced ability to conduct public health surveillance - Decreased need to include supporting documentation with claims - 10 -

GB Healthcare Setting Setting ICD-10-CM ICD-10-PCS CPT/HCPCS Hospital Inpatient X X Hospital Outpatient X X Physician X X Laboratory X X Behavioral Health X X Long Term Care X X All Others X X - 11 -

GB 5010/ICD-10 Compliance Timeline December 31, 2010 Internal testing of Version 5010 must be complete to achieve Level I Version 5010 compliance December 31, 2011 External testing of Version 5010 must be complete to achieve Level II compliance October 1, 2013 Claims for services provided on or after this date must use ICD- 10-CM/PCS codes for medical diagnoses and inpatient procedures 2010 2011 2012 2013 January 1, 2010 Payers and providers should begin internal testing of Version 5010 standards for electronic claims January 1, 2011 Payers and providers should begin external testing of Version 5010 for electronic claims CMS begins accepting Version5010 claims. Version 4010 claims continue to be accepted January 1, 2012 All electronic claims must use Version 5010. Version 4010 claims are no longer accepted - 12 -

GB ICD-9-CM & ICD-10 Code Freeze Vendors, system maintainers, payers, and educators requested a code freeze There will be no updates to ICD-9-CM on October 1, 2013 as the system will no longer be a HIPAA standard. The ICD-9-CM Coordination & Maintenance Committee will continue to meet twice a year during the freeze The public will comment on whether new codes should be created during the freeze Any codes that do not meet the criteria of being a new technology or new disease will be held for consideration of inclusion in ICD- 10 after the freeze ends Date Oct 1, 2011 Oct 1, 2012 Oct 1, 2013 Oct 1, 2014 Description Last regular, annual updates to both ICD-9-CM and ICD-10 will be made only limited code updates to both ICD-9-CM & ICD-10 code sets to capture new technology and new diseases only limited code updates to ICD-10 code sets to capture new technology and new diseases regular updates to ICD-10 will begin - 13 -

Volume of Codes 80,000 70,000 60,000 50,000 40,000 Diagnosis Procedure 30,000 20,000 10,000 0 ICD-9-CM ICD-10-CM ICD-10 (WHO) ICD-9-CM ICD-10-PCS ICD-10 (WHO) - 14 -

GB The Basics of the ICD-10-CM Change (Diagnosis) The ICD-10-CM diagnosis code set is a full replacement of the ICD-9 code set that will provide additional granularity for diagnosis codes. This additional granularity is the primary driver of value. An Example of Structural Change ICD-9-CM. X X X X X Category Etiology, anatomic site, manifestation An Example of One ICD-9 code being Represented by Multiple ICD-10 Codes 2 5 0 6 1. Diabetes mellitus with neurological manifestations type I not stated as uncontrolled ICD-10-CM X X X X X X X Category. Etiology, anatomic site, manifestation One ICD-9 code is represented by multiple ICD-10 codes Extension The industry expects that mapping ICD-9 to ICD-10 codes will be a complex task 34,250 (50%) of all ICD-10-CM codes are related to the musculoskeletal system 17,045 (25%) of all ICD-10-CM codes are related to fractures 10,582 (62%) of fracture codes to distinguish right vs. left ~25,000(36%) of all ICD-10-CM codes to distinguish right vs. left. E 1 0 4 0 Type 1 diabetes mellitus with diabetic neuropathy, unspecified E 1 0 4 1 Type 1 diabetes mellitus with diabetic mononeuropathy E 1 0 4 4 Type 1 diabetes mellitus with diabetic amyotrophy E 1 0 4 9 Type 1 diabetes mellitus with other diabetic neurological complication... - 15 -

GB The Basics of the ICD-10-PCS Change (Procedural Coding System) The ICD-10-PCS procedural code set is designed to provide standardized terminology and expandability for procedure codes. X Section Example of ICD-10-PCS Structure X Body System X Root Operation ICD-10-PCS X Body Part X Approach X Device X Qualifier Each can be either alpha (not case sensitive) or numeric (numbers 0 9 are used) Letters O and I are not used to avoid confusion with numbers 0 and 1 Examples: 0FB03ZX Excision of liver, percutaneous approach, diagnostic 0DQ107Z Repair, esophagus, upper, open with autograft Advantages to PCS Provides detailed information on procedures Ample space for capturing new technology and devices Logical structure with clear, consistent definitions - 16 -

TA Medical Record Documentation ICD-10-CM codes are more robust, with up to seven digits of specificity, requiring numerous changes to current state. Example changes that a provider will need to implement with ICD-10-CM include: Laterality: ICD-10 introduces laterality to diagnosis coding Combination codes: ICD-10 greatly expands the use of combination codes, where a single code is used to classify 2 diagnoses or a diagnosis with an associated secondary process Episode of care: ICD-10 relies heavily on categorizing the episode of care as initial or subsequent Greater specificity: ICD-10 is much more specific in identifying disease and conditions and the documentation will need to reflect the exact diagnosis to take advantage of the improved granularity - 17 -

TA ICD-10 Documentation Specificity Example Patient Summary: Patient presents to the ED with a wound to the ear from a fall. Patient is experiencing palpitations due to under-dosing of Digoxin as his prescription ran out last week. Patient placed on IV Dig and sutures were necessary. Code Code Description ICD-9 Coding ICD-10 Coding 872.00 785.1 E885.9 18 S01.311A T45.526A R00.2 Z91.138 W1849xA 09Q0XZZ Open Wound of External Ear Palpitations Fall on Same Level Suture of Ear Laceration of the right ear w/o foreign body, initial encounter Under-dosing of anti-arrhythmic, initial encounter Palpitations Under-dosing unintentional Fall from same level, initial encounter Repair of the right external ear, external approach Added Specificity Needed for ICD-10: Type of wound Injury Foreign body or not Laterality of ear injury Episode of care Under-dosing & Under-dosing intentional or not Anatomical site of procedure Approach for procedure - 18 -

TA CMS GEMs vs. CMS Reimbursement Mappings CMS Reimbursement Mappings, which can be thought of as a crosswalk, eliminate alternative paths for ICD-10 to ICD-9 mappings to enable such scenarios as accepting ICD-10 claims but adjudicating internally against ICD-9. Mapping Terminology ICD-9 Forward Mapping ICD-10 ICD-9 Backward Mapping ICD-10 GEMs Reimbursement Mapping ICD-9 CM ICD-10 PCS ICD-9 CM ICD-10 PCS 3179 Other Repair & Plastic Operation on Trachea 0B717DZ Dilation of Trachea with Intraluminal Device, Via Natural or Artificial Opening 3179 Other Repair & Plastic Operation on Trachea 0B717DZ Dilation of Trachea with Intraluminal Device, Via Natural or Artificial Opening 9605 0B718DZ 9605 0B718DZ Other Intubation Respiratory Tract Dilation of Trachea with Intraluminal Device, Via Natural or Artificial Opening Endoscopic Other Intubation Respiratory Tract Dilation of Trachea with Intraluminal Device, Via Natural or Artificial Opening Endoscopic - 19 -

TA 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 healthcare in many ways, with benefits accruing across following major categories: Quality Measurement Data availability to assess quality standards, patient safety goals, mandates and compliance Higher quality information for measuring healthcare service quality, safety, and efficiency Public Health Improved disease and outbreak information Improved ability to track and respond to international public health threats Research Better data mining for increased analysis of diagnosis, treatment efficacy, prevention, etc Recognition of advances in medicine and technology Organizational Monitoring and Performance Enhanced ability to identify and resolve problems and ability to differentiate payment based on performance The benefits are significant, but it will require investment in changes to processes and technology across operations - 20 -

TA How to Determine Benefits Providers need to consider how the significant business & technology investment in the ICD-10 transition can demonstrate benefits to the organization. Clinical Financial Current Operations Enhanced clinical documentation and coding accuracy to enhance the assessment and monitoring of patient safety and quality indicators, as well as compliance with third-party payor coding and billing rules and regulations. Provision of higher-quality data due to improved medical coding accuracy and granularity Expanded use of data granularity for diagnosis, procedure and case mix groups to profile a patient s condition or track length of stay related to improving utilization management. Improved claims adjudication and provider reimbursement rates between provider and health plans due to appropriate payments for new procedures, and fewer miscoded and rejected claims due to greater specificity in ICD-10 codes. Increased cost savings through effective infrastructure planning. Cost savings can be realized by correctly predicting resource utilization, appropriate use of site of service and improved care delivery team communication. Technology/Innovations Become ICD-10 early adopter using ICD-10 data through mapping tools earlier than the compliance date to enable longer trend timelines Include clinical documentation requirements related to ICD-10 in the EHR build and preparing for meaningful use Enhance clinical documentation programs now to begin having clinical discussions with physicians about documentation elements required for ICD-10 without starting stand and deliver education programs Conduct financial model analysis to determine impact of mapping on current state reimbursement Use ICD-10 data to assess growth and strategy analysis prior to October 1, 2013 Understand potential payer business rule, eligibility, medical management and product changes Develop models to use ICD-10 to further evaluate costs and potential savings opportunities - 21 -

TA Industry Trends While Health Plans are in front of others, the industry as a whole is behind in preparations for ICD-10 remediation. Progression Toward Compliance Assessing Planning Remediating Health Plans ICD-10 5010 Providers ICD-10 5010 Large providers such as academic medical centers and teaching hospitals are beginning to assess the impact of ICD-10. State Government ICD-10 5010 Even with this trend, we expect an overall lag across the provider segment (particularly in outpatient settings) toward October 2013 readiness Other countries with less complex health care systems have required 5 years to implement ICD-10-22 -

TA Focus Area Operations Revenue Cycle Scheduling, financial clearance/counseling, registration, claims processing, and contracting Clinical Documentation, Coding, and Training Compliance: Regulatory affairs, coding requirements, and documentation standards Operational Processes Case management, marketing, decision support, credentialing, and Research / Clinical Trials Human Resources: Staffing, employee relations, contingent workforce planning, training, organizational effectiveness / change management Revenue Cycle Identify key revenue cycle functions that are currently using ICD-9 (i.e., scheduling, financial clearance, claims processing, denials management) Outline ICD-10 action steps and implementation approach, including: Staffing/Training Process/Policy and procedure redesign Communications Compliance concerns Operational Processes Identify current clinical use of ICD-9 (i.e., problem lists, EHR documentation) Engage leadership in impacted functional areas Identify data users impacted (i.e., case management, marketing, decision support) Document operational gaps, heat map, and identify linkages to technology and finance requirements Determine ownership for readiness activities Evaluate current policies and procedures Identify relevant management reports Clinical Documentation, Coding, and Training Determine workforce training required for ICD-10 preparation Estimate capacity of current workforce to support transition Review current clinical documentation and coding practices Identify alternative training programs and internal/external training resources required Review HR and training support infrastructure Develop program timeline and budget Determine who would need be trained based on assessment Determine the method of training Determine the training resources Physician Identify necessary updates to clinical documentation practices such as templates for EHRs to support data needs Consider use of computer assisted coding solutions for professional fee ICD-10 code assignment Physician training for clinical documentation requirements should be phased over next 3 years Link clinical outcomes data and quality reporting - 23 -

TA Focus Area Finance Payor Contracting Reimbursement, coverage, and contracts A/R Management Financial Reporting: Financial results and reporting, and decision support / cost accounting Financial Forecasting: Forecasting financial results, and net revenue Payor Contracting Understand payor approach to code mapping, APR DRGs and impact to reimbursement Evaluate potential changes to reimbursement formulas, contracts, etc. Understand change in net reimbursement based on changes in acuity and new codes Identify tools to enable payment modeling with new codes Understand current payment monitoring and compliance tools and practices Define future state under payment monitoring approaches and tools Draft contracting/negotiation plan Draft and prioritize list of payors (contracted and non-contracted) Confirm payors ability for reimbursement under ICD-9 and ICD-10 Confirm payor assumptions regarding cash flow during transition and long term A/R Management Advise on potential impact to coding productivity and DNFB/billing/payment changes Estimate potential impact to cash flow during transition and long term Identify dual processes and related reporting Receiving payable claims during the transition period from ICD-9 and ICD-10 codes Matching referrals that contain ICD-9 and ICD-10 codes Financial Management Working capital, debt covenants, and budgeting Financial Management Advise on the impact to Cash Flow and Working Capital, including advise on: Establishing additional reserves (if applicable) Managing working capital Drafting Capital and Operations Budgeting for next three years Identify dual processes and related reporting Advise on financial reporting and forecasting requirements during transition period from ICD-9 and ICD-10 codes Advise management in connection with its efforts to identify opportunities to improve cost accounting Advise on financial impact to Research and/or Intellectual Property - 24 -

TA Focus Area Information Technology Core Financial Systems G/L, financial reporting, and forecasting systems Clinical Systems EMR, ancillary systems, coding and computer assisted coding solutions Interfaces: Internal, and EDI Revenue Cycle Systems Patient access, coding, billing, and remittance processing Enterprise Analytics/Data Warehouse Systems: Business intelligence, operational reporting ICD-9 Systems & Data Current State Identify impacted applications and databases Determine data sources and flow (source, target, interfacing transformations, etc.) Identify impacted data warehouses and systems generating ICD-9 based reports ICD-10 Risks and Strategy Analysis Evaluate readiness/contracting implications Initiate communication with vendors to assess remediation plans and technical/vendor risks Determine ability to update in-house (non vendor maintained) systems Define systems at risk for 5010 and for ICD-10/dual ICD-9 capabilities Determine replace vs. remediate strategies Provide recommendations and co-developed plan for 5010 transition ICD-10 Transition Planning Estimate level of effort for in-house programmed systems and standalone databases Estimate level of effort for upgrading vendor systems Estimate level of effort for interface updates Develop Workplan and timeline for all IT components Develop estimated budget - 25 -

TA Impacts Post ICD-10 Implementation The impact of the ICD-10-CM transition will not end on the October 1, 2013 Because pended or denied claims are expensive, and are generally dealt with through a manual process, any increase in the number of claims not processed or paid will first decrease provider cash flow, then increase both provider workload and plan workload to process the denials. To reduce the risk of reduced cash flow, providers and staff need to know and understand the changes in documentation and coverage requirements well ahead of time to adapt in time for implementation. Productivity decreases short term when people are in training or learning a new skill. These slowdowns result in loss of productivity, including charge capture and reimbursement, and can affect the financial health of a practice. Anticipate a decrease in productivity by measuring and analyzing the impact of the transition prior to beginning the training process. Planning ahead also allows you to staggered training, helping to limit the impact on productivity. - 26 -

TA Next Steps and Summary Situational analysis Identify stakeholders Assess impact Formulate strategies, communication plan, and identify goals Develop education/training plans for employees at all levels Develop information systems/technology systems change implementation plan that includes testing and "go live" dates Plan for documentation changes - 27 -

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