the financial implications of icd-10 implementation · or recertification in the american college...
TRANSCRIPT
1
The Financial Implications of ICD-10 Implementation
CHA WebinarJanuary 21, 2014
Welcome
Liz MekjavichCalifornia Hospital Association
2
3
Continuing Education Offered for this Program
• Compliance — This program has been approved for 2.4 Compliance Certification Board (CCB) Continuing Education Units. Granting of prior approval in no way constitutes endorsement by CCB of the program content or the program sponsor. CCB program code # CAHA-043. (Note: CE recipients are solely responsible for retaining a copy for their records and for reporting credits to CCB)
4
• Health Care Executives — CHA is authorized to award 2 hours of pre-approved Qualified Education Credit (non-ACHE) for this program toward the advancement, or recertification in the American College of Healthcare Executives. Participants in this program wishing to have the continuing education hours applied toward ACHE Qualified Education credit should indicate their attendance when submitting application to the American College of Healthcare Executives for advancement or recertification.
• Nursing — Provider approved by the California Board of Registered Nursing, CEP #11924 for 2.2 contact hours.
Continuing Education Offered for this Program
3
5
• Full attendance, completion of online survey, and attestation of attendance is required to receive CEs for this webinar. CEs are complimentary for registrant. If additional participants under the same registration would like to be awarded CEs, a fee of $20 per person, will apply. Post-event survey will be sent to registrant and provide information on how to apply online for additional CEs.
Continuing Education Requirements
Program Overview and Introductions
Amber OttCalifornia Hospital Association
4
Faculty: Rajeev Desai
Rajeev Desai is a client partner at Syntel for their healthcare and life science business unit. As a client partner, Mr. Desai is responsible for managing Syntel’s healthcare provider sub-vertical. In addition, he serves as the practice leader for Syntel’s ICD-10 practice. Mr. Desai has over 27 years of experience and has worked across many industries including banking, manufacturing, energy and utilities and healthcare. He has spent the last 12 years engaged in the healthcare field.
7
The Financial Implications of ICD-10 Implementation
Presented by:
Rajeev DesaiSyntel – Client Partner – Healthcare & Life Sciences
(Provider Sub-vertical and ICD-10 Practice)
January 21, 201410:00 a.m. – 12:00 p.m., Pacific Time
5
Confidential ©2014 Syntel, Inc.
Agenda
9
ICD-10 end-to-end testingICD-10 end-to-end testing
11 Financial impact of ICD-10 on providersFinancial impact of ICD-10 on providers
Putting it all together — external partner testingPutting it all together — external partner testing
Risk analysis — working toward budget neutralityRisk analysis — working toward budget neutrality22
33
44
Confidential ©2014 Syntel, Inc.
Financial key considerations
What is the impact on reimbursements?
How do we ensure no increase in denial % and minimal impact to cash flow?
Do we have the risk of losing patient volume? If so, how do we mitigate this risk?
Can we equip our payer relationship team with better data and insights for effective payer contract negotiations?
Will our operations be ready when change happens?
How efficiently will our operations be running after the change?
How do we get a good return on investment? 10
10
6
Confidential ©2014 Syntel, Inc.
Section-1
11
11 Financial impact of ICD-10 on providersFinancial impact of ICD-10 on providers
Impact on reimbursements, denials, cash flows, productivity
Risk identification and analysis
Various approaches to mitigate financial risks
Confidential ©2014 Syntel, Inc.
Financial impacts on provider process(Denials, productivity, cash flows and reimbursements)
12
SchedulingPre
RegistrationFin.
Counseling Registration Coding Charge Capture
Billing Claims processing
Accounts Receivables
Payment Posting
Patient Access Medical Coding Financial Services
Eligibility verification
Enterprise scheduling
ABN notifications
Bed Mgt.
Transfers & referrals
Discharge documentation
Abstraction Rules
Coding guidelines
Code assignment
Charges,authorizations
Charge master maintenance
EDI enablement (837, 835,etc.)
Claims tracking and denials management
Payment options
Schedules, Co-pays
Medicare/Medicaid eligibility
Authorization
Payer Provider Contracts
AR days
AR aging
Payments & adjustments
835 RA
COB’s
Billing edits
Medical necessity
Contractual adjustments
Pro
cess
• Redesign system interfaces
• 6-10% Increase in claim error rates
• Reject / denial rates may increase by 100% to 200%
• Provider-payer processing errors
• Increased billing enquiries
Fin
anci
al I
mp
acts
• Shortage of experienced coding professionals
• Expected 50% drop in coding productivity due to learning curve
• New Coder hiring• Dual coding
• Spike of 10 to 20 days to accounts receivable.
• 20-40% increase in AR days, aged accounts
• Delayed payments
• Coding Backlogs• Changes in DRG
weights• Changes in Case Mix
Index• Changes in
Reimbursement Schedules
• Changes in Payment Policies
• Delayed Payment and Claims Adjudication
ReimbursementsDenials Cash FlowsProductivity
Denials Productivity Cash Flows Reimbursements Legends
7
Confidential ©2014 Syntel, Inc.
Reimbursement impacts in real world
13
Reimbursement Type and Risk Adjusted Payment method
High or Direct Impact
No Impact or Low Impact
Medium or Indirect ImpactKey
• Per Receipt (Capitation)
• Per Eligible Person
• Per Dollar of Charges
• Per Dollar of Cost
• Per Service(FFS)
• Per Day(per diem)
• Per Time Period
• (APGs) Ambulatory Patient Group
• (APCs) Ambulatory Patient Classification
• (MS-DRGs) Medicare Severity DRGs
• (AP-DRGs) All Patient Diagnosis Related Group
• (APR-DRGs) All Patient Refined DRGs
• Case Rates
ICD-10 Impact on Provider PracticeICD-10’s impact on the payment process varies according to the method of reimbursement used by Health Plan
Standard Methods Risk Adjustments
• (RUG-III) Resource Utilization Group
• (HHRGs) Home Health Resource Groups
• Inpatient rehabilitation Group
• (ACGs) Adjusted Clinical Groups
• (CDPS) Chronic Illness and Disability payment System
• (DCGs) Diagnostic Cost Group
• (MEG. ECG, ETC) Episodic Groupers called as Case Rate
Confidential ©2014 Syntel, Inc.
Reimbursement impacts in real world (cont.)
14
8
Confidential ©2014 Syntel, Inc.
15
Reimbursement impacts in real world (cont.)
Confidential ©2014 Syntel, Inc.
Risk identification and analysis
What risks exist?
What steps do you take to address the variance?
What do you monitor to know when the risk has been realized?
What reporting capabilities do you need to monitor?
How do you determine exposure?
How do you mitigate the risk?
How much exposure remains?
Controllable Uncontrollable
Identify Risk Scenarios
Assess Risk Scenarios
1
2Are the risks real and material?
3a
4a
5a
3b
4b
5b
Define Threshold
Model Risks
Implement Levers
Prepare Contingency
Reassess Risk
Reporting Capabilities
Note: Triggers such as regulatory updates (e.g. GEMs or DRG grouper upgrade) and new internal business rules (e.g. contract updates) may require a new round of scenario modeling
Scenarios are the cornerstone to uncovering the rest of the components in the risk management strategy
Proactive Measures Detective MeasuresOct 2014 16
16
9
Confidential ©2014 Syntel, Inc.
Modeling financial risk analysis is an iterative process
As time progresses, the financial analysis will be refined to include the most up-to-date intelligence regarding provider coding behavior and clinically correct ICD-10 business policies.
Define Scenarios
Model Scenarios
Quantify the
Financial Impact
Implement Levers
Refine Mappings,
Remediation
17
The ICD-10 Modeling
Cycle
Confidential ©2014 Syntel, Inc.
18
Modeling financial risk analysis is an iterative process (cont.)
Risk is reassessed via multiple iterations
The initial iterations of modeling, will be used to prioritize and inform mapping decisions, which will in turn create new mapping inputs for future modeling iterations.
Initial modeling iterations may also allow for refinement of Financial Analysis performed and refinement of risk scenarios to tailor financial analysis to the areas of ICD-10 risk specific to client’s business (and de-emphasize some areas of industry risk that may not apply to client’s payer contract or payment policies)
External decisions will also impact the modeling and need to be incorporated as data becomes available (examples include, revisions to the GEMs by CMS, release of new DRG grouper software, release of ICD-10 based HCC definitions, etc)
The availability of predictive data will impact the accuracy of financial modeling, it is expected that modeling accuracy will improve based on the availability of certain types of data (illustrated below)
CMS GEMsClient Selected
Maps
Provider Coding
Intelligence
Computer-Based Coding
As industry intelligence increases, modeling accuracy will follow
BestBestBetterBetterGoodGoodMinimumMinimum
10
Confidential ©2014 Syntel, Inc.
Various approaches to mitigate financial risks
19
Leverage historical ICD-9 claims data and create ICD-10 claims data using CMS GEMs mapping
Allows the organization to immediately understand the first hand financial impact
Less time consuming, if data is made readily available
Leverage historical ICD-9 claims data and create ICD-10 claims using custom code maps (ICD-9 to ICD-10)
Using the best clinically equivalent codes (from ICD-9 to ICD-10) providers will get critical insights in cases which will potentially disrupt their reimbursement revenues
Low to medium risk clinical scenarios can be considered using this approach
Confidential ©2014 Syntel, Inc.
20
Medical coders to natively code the charges in ICD-10 using the already existing clinical charts in ICD-9
By far the best approach to mitigate financial risk by appropriately sampling and prioritizing the high risk scenarios
Additional effort needs to be spent to dual code the inpatient charges
Various approaches to mitigate financial risks (cont.)
11
Confidential ©2014 Syntel, Inc.
Section-2
21
22 Risk analysis — working toward budget neutralityRisk analysis — working toward budget neutrality
Reimbursement structured model and framework
Operational key performance indicators
Confidential ©2014 Syntel, Inc.
Reimbursement structured model and framework
22
Tes
t D
eliv
ery
Iterations….nIterations 2
Initiation Risk Pooling Test Planning
Test DesignTest Closure
Key Activities: Finalized Risk ThresholdsReport formats Tool Customization Tool Deployment
Key Activities: Finalize Risk Pool Parameters Prioritized Data Defined Risk Pools
Key Activities: Test Methodology Test Data management
Key Activities: Test Suite (Test Scenario,
Test Case and Test data) for Risk Analysis
DiscoveryTool
Customization& Deployment
Finalize Risk Thresholds
Understand Requirements
Test Methodology
Test Scenario
Mapping
Test Case and Data Creation
Test Execution
Key Activities: Variance Reports
(Variance by DRG, LOB, Payer, etc.) Test Coverage Report Trend Analysis Report
Key Activities: ICD-10 Risk Analysis
Reports Test Summary Report
Analysis and Metrics Reporting
PrioritizationDefine Risk
Pools
Iterations….n
Iterations 2
Estimation
Scheduling
Init
iati
on
Data Assimilation
Execution
Defect Retesting
Metrics Reporting
12
Confidential ©2014 Syntel, Inc.
Operational Key Performance Indicators (KPIs)
23
Number of queries to physicians
Response time to queries
Query response type
Aged backlog queries
Percent of queries v/s Chart reviews
User Experience
Confidential ©2014 Syntel, Inc.
Operational KPIs
24
A/R days by payers – avg. time from billing to reimbursement
Aging of open AR by payer in days and dollars
First pass resolve
Number and type of rejects / denials by payer
Number of pendings for additional information
Liability insurance rejects
Discharged not final billed (DNFB)
Accounts Receivable
13
Confidential ©2014 Syntel, Inc.
Operational KPIs (cont.)
25
Coder productivity rates
Coding accuracy
Mismatch between hospital and physician data
Accuracy and quality of documentation
Coding & Documentation
Confidential ©2014 Syntel, Inc.
Operational KPIs (cont.)
26
Case Mix Index (CMI)
DRG Shift
Trending
14
Confidential ©2014 Syntel, Inc.
Section-3
27
33 Putting it all together — external partner testingPutting it all together — external partner testing
Risks and challenges
Mitigation approaches
Who you should test with, what to test now
Testing approaches and workflow details
Confidential ©2014 Syntel, Inc.
Risks & Challenges
28
1)Verify and validate the sending and receiving of transactions with various ICD-10 business partners (e.g., payers, vendors, clearing houses and federal agencies) ensuring interoperability amongst business partners
2)Ensure all external transactional and interface touch points are thoroughly tested individually before venturing into E2E testing thereby enabling maximum test coverage, minimum defect and highly accurate outcomes
Objective:
15
Confidential ©2014 Syntel, Inc.
29
Risks & Challenges (cont.)
What is the Risk if external partner testing is not performed before E2E testing ?
• Claims Management – Incapability to send ICD-10 claims and claims-based information to business partners can delay reimbursements received and thereby impact the A/R days and stakeholder relations
• Contract Management – Without proper ICD-10 testing with business partners, providers will not be able to negotiate the contracts accurately and could eventually impact future reimbursement
• Inaccuracy in verification of clinical scenarios in ICD-10 can render incorrect pre-authorization, hampering the quality of care and coverage
• Security and Privacy – Protected Health information (PHI) in the transactions being sent still needs to be secured as the core of ICD-10 changes deals with the medical conditions of patients
• Readiness – Business Partners’ readiness needs to be confirmed without which there can be negative impact on revenues and overall ICD-10 Implementation Budget
• Data – Incongruity in data shared amongst partners will affect reporting and trending analyses
• Delay in reaching the steady state will impact post 2015 plans to take advantage of ICD-10 specificity
Confidential ©2014 Syntel, Inc.
Risks & Challenges (cont.)
30
• Requires collaboration between various business partners
o Significant number of partners and process combinations
o Not feasible for most organizations to test with all business partners in the chain (providers, payers, vendor systems, intermediaries and clearinghouses)
• ICD-10 External Testing Readiness
o Requires multiple companies to be “ready” and have resources committed to test at the same time
• Inherent challenges in testing with business partners
o Limited control over partner readiness, including their test schedules and ICD-10 remediation logic
o Each business partners processing path is unique and may branch to multiple paths based on systems, intermediary services, product lines, etc.
o Multiple data formats and fields – specific to each business partner (interoperability)
Challenges
16
Confidential ©2014 Syntel, Inc.
Mitigation approaches
31
• Multi-phase approach to cover different test objectives and ensure predictable results
• Early involvement with high volume payers to identify, evaluate and predict the impact of
coding conditions that could generate an ICD-9 to ICD-10 DRG shift
• Conduct collaborative testing with a few strategically selected business partners and share
test findings and other key ICD-10 remediation information with other business partners
• Common understanding on coding process and coding values
• Automation based external testing
o Tool-based ICD-10 Testing Framework enabled with the ICD-10 test data preparation
o Leverage existing Interface Test Cases Repository (EMRs based, trading
partner related)
• Focused ICD-10 Governance and Program Management to de-risk the stakeholder
challenge
• Leverage lessons learned from 4010 to 5010 conversion
Mitigation Approach
Confidential ©2014 Syntel, Inc.
Who you should test with, what to test now
32
Various transactions, interfaces, data exchanges etc. needs to be tested first as a part of External partner testing with various entities or partners
1)Sequence – 1 to 6 involves all the testing that needs to be done in silo first before a legitimate claim is generated by Provider (like with labs, rad etc.)
2)Sequence – 7 involves testing with CMS, State, etc. after the process is completed (claims sent and response received, reconciled etc.) for quality reporting
3)Sequence – 8 involves testing with other care organizations present in the provider ecosystem
17
Confidential ©2014 Syntel, Inc.
Who you should test with, what to test now (cont.)
33
LAB
RADADT
Medical Coding
MED
Billing
OR
Quality Reporting
HOSPITAL
External LAB
HL7 (New Order)
HL7 (LAB Results)
External RAD
EDI 270/271
DICOM
HL7 (Pharmacy Order)
Excel/ Flat File
Future Electronic TransmissionJHACO, PQRI, Other Quality
Measures
Payer #1
HOSPITALHOSPITAL
Referring Hospital
• CCD / CCR• HL7• Scanned
Documents• Flat File
Clearing House
HL7 (New Order)
EDI 278 -Authorize
EDI 837 - Claim
EDI 835 - Remittance
CCD / CCR
Insurance Eligibility
EDI 837 - Claim
EDI 835 -Remittance
11
55
33
22
55
66
77
88
44
EDI 276/277Claim Status
Payer – Touch Points External – Ancillary SystemsGovernment Bodies Other Care Organizations
Note: The figure above has the list of few and generic types of vendors and partners of providers exchanging transactional data either in batch or real time, there could be more than these in the real world IT set up.
Confidential ©2014 Syntel, Inc.
Section-4
34
44 ICD-10 end-to-end testingICD-10 end-to-end testing
Sample test scenario and workflow
High level test approach
18
Confidential ©2014 Syntel, Inc.
Significance of end to end testing in ICD-10 program
35
End-to-end testing need:
• ICD -10 changes impact across multiple systems. Even though integration touch point between systems have been tested during integration phase, testing scenarios that cut through multiple systems along with all stakeholder involvement is vital for E2E testing
•Need for a patient lifecycle testing as ICD-9 diagnosis and procedure code form a core information in a patient medical record.
•Switch and date based implementation design complexity presses for a need for end-to-end testing
•Dual coding remediation strategy adopted for implementation necessitates an end-to-end testing to ensure smooth transition from ICD-9 to ICD-10 in the go-live period
Note:- These are just few of the many significant reasons as to why E2E testing is must
Confidential ©2014 Syntel, Inc.
36
Significance of end-to-end testing in ICD-10 program (cont.)
Why is E2E important?
• Error in processes and workflow used for ICD code entry in encounter/registration forms, super bills can cascade negative impact to other supporting business areas
• Reporting logic – error in reporting logic based on ICD diagnosis and procedure codes can lead to flawed forecasting and analytics
• Inability of the ICD remediated products/applications to function with the seamless data communication throughout the entire business cycle will disrupt the process flow and outcome
• 3rd party vendor products – interfaces between ICD-10 impacted products and applications not functioning accurately can lead to lack of coordination
• Inability of the systems to handle claims and billing volume will affect the performance of the systems
19
Confidential ©2014 Syntel, Inc.
E2E testing – sample test scenario with workflow
37
Pre-Condition:1) Planned visit for an existing patient2) Existing left foot radiograph results available
Test Scenario: 1) Outpatient visit for planned diabetic foot checkup
Confidential ©2014 Syntel, Inc.
E2E testing – high level testing approach
Test Scenario:
A 50-year old female came to the Outpatient clinic for a planned foot check up the patient has a history of smoking, type II diabetes, two previous myocardial infarctions and a permanent pacemaker. Patient treated as an inpatient, claims filed and sent to payer.
Analyze Requirements
Identify & Create Test Scenario
Create Test Cases & Test data
Test Execution
Defect Management &
Status Reporting
Sample Test cases
Activities
20
Requirement: Admit a patient, code the final diagnosis and file claim
• Confirm if the patient information can be submitted in the patient admission screen
• Confirm the final diagnosis coded • Confirm the claim has the correct
ICD-10 information
Validation of patient admission with the correct ICD-10 code and whether the claim file is generated with the appropriate ICD code
Business User responsibilityIT Team Responsibility
• Ensure interfaces for EMR, patient accounting and all downstream applications is established in test environment
• Perform smoke test to ensure stable environment• Execute the above test cases• EDI 837 created and sent to Clearing House/Payer• Raise the issues faced along with status
Test Case Test Data Expected Result
Capture patient encounter information &submit the details in admission screen
Patient ID, service type, admission date, clinicalconditions
Patient details should be captured successfully
Medical coding-validate the final diagnosis code entered
E11.621 Type 2 Diabetes mellitus with foot ulcer
The diagnosis code entered should be medically correct
E2E testing – high level testing approach (cont.)
• Validate the correctness of the test case & expected result • Validate test data – valid patient ID, diag/proc code
• Report the defects for the above failed test cases. Log the issues with development
• Track and communicate defect readiness for retest to business.• Generate the status for executed test cases & test metrics• Retest defects and ensure test cases generates the expected
result
• Sign off the status reports and provide go/no-go decision.
Identification of scenarios
39
40
Thank you
Rajeev Desai(678) [email protected]
21
Faculty: Catherine Mesnik
Catherine Mesnik is the finance director at St. Joseph Health, a 14-hospital integrated delivery system based in Irvine, Calif. In this role, she leads the ICD-10 finance team, as part of the Revenue Cycle Optimization division. She has over 15 years of experience in the health care industry, providing financial operations, business analytics and revenue cycle expertise to hospitals and medical groups. Ms. Mesnik is actively involved in the health care industry serving on the board of directors at WEDI (Workgroup for Electronic Data Interchange) and as the provider co-chair of the California ICD-10 Collaborative.
41
Leveraging ICD-10 to Improve Quality and Decrease Cost
Catherine Mesnik
Finance Director, St. Joseph Health
22
Degrees of Separation
43
Agenda
Industry Scan
The Holy Grail of
Healthcare Finance
Leveraging ICD-10 Codes
44
23
Where Should the Industry be Today?
45
Source: http://www.cms.gov/Medicare/Coding/ICD10/Downloads/ICD10SmallHospitalsTimelineChart.pdf
Financial Focus Today
46
Contract Remediation and Auditing Process• Understand how proposed contract language will impact revenue cycle
operations
Payer Partnerships• Plan for the financial and operational impact of clinical policy changes
o Benefit changes (Refer to payer’s clinical policies)
o Pre-Authorization process
• Plan for the financial and operational impact of contract changes
o Billing and follow up
o Denials and pending
• Leveraging payer relationships for outreach and support to physician groups
24
The HHS Call to Action
47
Source: https://www.federalregister.gov/articles/2009/01/16/E9-743/hipaa-administrative-simplification-modifications-to-medical-data-code-set-standards-to-adopt
The Holy Grail of Healthcare Finance
48
Decrease Cost
Increase Quality
25
Leveraging the Use of ICD-10 Codes
Analytics Population Management
Operational Workflow
49
- Big data- Discrete data fields
- Risk stratification- Referral process
- Analytics to action- Pull instead of push
Examples of Leveraging the Codes
• Capital expenditure requestso Robotic surgeries now have their own codes
• Service line analysiso Evaluating for current performance and future growth
• Readmissions analysiso Initial, subsequent and sequella
o Z codes = the reason for encounter
• Quality analysiso Specificity in fractures
o Complication codes50
26
ICD-10 Business Use Grid
51
ICD-10-CM Code ICD-10-CM Description Business Use
Z41.1 Encounter for cosmetic surgery
Ensure billing guidelines are followed
Z91.120 Patient’s intentional under-dosing of medication regimen due to financial hardship
Automate a social work referral for non-compliance due to financial hardship
Z68 Body Mass Index (BMI) Identification of high risk,potentially requiring additional outpatient services and referrals
Quick Tip: Review billing edits that point to ICD-9 codes today! The business use of these codes may be better quantified in ICD-10 codes.
Closing Thoughts
52
I skate to where the puck is going to be, not where it has been.
- Wayne Gretsky
27
Website References
WEDI http://wedi.org/
HIMSS ICD-10 Playbookhttp://www.himss.org/library/icd-10/playbook?navItemNumber=13480
Federal Registerhttps://www.federalregister.gov/articles/2009/01/16/E9-743/hipaa-administrative-simplification-modifications-to-medical-data-code-set-standards-to-adopt
CMS
http://www.cms.gov/Medicare/Coding/ICD10/ICD-
10ImplementationTimelines.html
CA ICD-10 Collaborative http://www.caicd-10.org/
53
Thank you
Catherine Mesnik(949) [email protected]
28
Questions
Online questions:Type your question in the Chat Box, hit enter
Phone questions:To ask a question hit *1To remove a question hit *2
Upcoming Programs
• Post-Acute Care ConferenceJanuary 30 – 31, Huntington Beach
• Hospital Compliance SeminarFebruary 13, Sacramento, February 19, Long Beach
• Rural Health Care SymposiumFebruary 26 – 28, San Diego
• California Congressional Action ProgramMay 4 – 7, Washington, D.C
• Hospital Finance & Reimbursement SeminarsJune, three programs
56
29
Thank You and Evaluation
Thank you for participating in today’s program. An online evaluation will be sent to you shortly.
Reminder: evaluation completion is required to receive continuing education credits.
For education questions, contact Liz Mekjavich at (916) 552-7500 or [email protected].
57