Three Scary Predictions about ICD-10’s Influence on the Revenue Cycle
What to Do Now to Mitigate Financial Risk Cheryl L. Toth, MBA Practices have many competing, high priorities these days: dealing with Electronic Health Records (EHR) implementation, qualifying for Meaningful Use, conducting diligence on the hospital’s employment offer, and, of course, transitioning to ICD-10. Right now, everyone in the office is (rightfully so) running around, cross walking codes, modifying dictation habits, and chasing down payer end-to-end testing dates. Meanwhile, back in the billing office, attention is slowly slipping away from the accounts receivable. Following up on overdue insurance balances, setting up patient payment plans, monitoring the A/R as they typically would are taking a back seat to ICD-10 and other “distractions.” This should concern you. A lot. Despite competing priorities, practices must take the time to plan ahead for a potential post-October 1, 2015 revenue hit. Ripped from the headlines, here’s why: “Implementation of ICD-10 May Cause Serious Cash Flow Problems for Providers.”1 This is according to many sources—most notably the Department of Health & Human Services (HHS). Enough said. If you don’t already have one, apply for a line of credit soon. Banks prefer to dole these out before they are actually needed. And come October 2015, you don’t want to be the 45th physician in line at the bank, pleading for help. You’ll rely on a line of credit less if you’ve got some cash squirreled away, so build a nest egg this spring and summer. Focus on cleaning up 90-day and 120-day insurance receivables—which typically have the highest payoff for the least effort. Hiring an experienced biller or collections specialist to conduct this cleanup on a project basis is money well spent. Having an extra set of hands frees up the billing team for transition planning and testing, as well as the potential deluge of claim denials and technology glitches after. Ask for a summary of follow-up results monthly. Set a goal to have the insurance A/R cleaned to the point that no more than 10 percent of all payer receivables are less than 90 days old on September 30 of next year. For past due patient accounts, launch a “spring collection campaign.” Seventy-four percent of patients said they were willing and able to pay out-of-pocket expenses less than or equal to $1,000, and 62 percent were willing to pay medical bills greater than or equal to $1,000. Thirty-seven percent of patients said that a lack of payment options was the reason they didn’t pay healthcare bills.2 Interpretation: Do a better job asking patients to pay, and give them more payment options. Instruct staff to focus on the highest balances first, and work accounts in descending balance order—not alphabetical order. Offer online bill pay through your vendor’s patient portal or a company such as TransFirst (www.transfirst.com) or PayPal (www.paypal.com). And make budget plan setting simple by offering patients automatic recurring payments. Like a Netflix subscription or gym membership, such payments are automatically charged to the patient’s credit card each month. TransFirst or PayPal also offer this feature. “A Fifty Percent Decline in Productivity” and “Expect that Staff Will Have to Spend More Time in Follow-up with Plans.” In its ICD-10 Implementation Guide for Small Practices, the Centers for Medicare & Medicaid Services (CMS) warns practices to expect more claim denials and an increased follow up time.3 Multiple reputable sources and studies predict significant slowdowns in staff’s ability to code a claim or case and get a claim out the door. ICD-10 pilot results presented at the Medical Group Management Association (MGMA) 2013 annual conference mirrored the experience of Canada’s ICD-10 transition: staff productivity drops 50 percent when staff attempted to identify the proper ICD-10 codes from physician documentation.4,5 Don’t deny these productivity predictions, and don’t wait until next summer to hire people. Staff up now, before the hospital snaps up the best candidates. And if you think outsourcing the billing is a solution—it’s not. Even under the best circumstances, the outsourcing process is painful. And what if the billing company isn’t fully prepared for ICD-10? Better to hire an additional part-time or full-time coder and/or billing office staffer capable of consistent denial management who will keep cash flowing come fall. “Docs Charting Falls Short of ICD-10 Demands.”6 While this information is not a complete surprise, it should be an eye opener for those who were hoping “someone in billing” would handle ICD-10, instead of the physicians. Actually, nothing could be further from the truth. Without the additional detail required by ICD-10, coders won’t be able to select the right code, resulting in backlogs of claims (read: unrealized revenue) and the need for staff to constantly follow up with physicians to obtain more detail. And don’t forget about prior authorization letters for surgeries after October 1, 2015, which must be written to justify medical necessity using ICD-10 terms and codes. Because prior authorizations are typically done three to four weeks before surgery, physicians will be pre-authorizing in ICD-10 at least three or four weeks ahead of the deadline. If surgeries are booked months in advance, your practice may be required to pre-authorize (and pre-certify) using ICD-10 as early as next summer. Revise dictation prompters and letter templates and check payer sites to determine how date of service and date of discharge affect which system to use for procedures scheduled close to October 1. For other ICD-10 resources, visit the Academy’s ICD-10 page at http://www.entnet.org/Practice/International-Classification-of-Diseases-ICD.cfm. Cheryl Toth, MBA, is a senior consultant and writer with Karen Zupko & Associates, Inc. Please note: After passage of Protecting Access to Medicare Act of 2014 (PAMA) the deadline for compliance is now October 1, 2015. References 1. Seidman M. ICD-10 and Version 5010. Bulletin. April 2012;31(4):11. http://bulletin.entnet.org/Assets/AAOBulletin/pdf/Bulletin_Apr_2012.pdf 2. McKinsey & Company. McKinsey on Payments. April 2009. http://www.mckinsey.com/App_Media/Reports/Financial_Services/US_healthcare_payments_Remedies_for_an_ailing_system.pdf 3. ICD-10 Implementation Guide for Small and Medium Practices. Issue brief. Centers for Medicaid Services 2013. Web. 1 Aug. 2013. http://www.cms.gov/Medicare/Coding/ICD10/Downloads/ICD10SmallMediumPracticeHandbook.pdf 4. McCann E. The ICD-10 Pilot That Was Just Plain ‘Scary.’ Government HealthIT. October 14, 2013 http://www.govhealthit.com/news/icd-10-pilot-was-just-plain-scary-coding-coders 5. Implementing ICD-10: A Canadian Perspective from the Front Line. Revenue Cycle Strategist. 2009:3. http://www.hfma.org/Publications/Newsletters/Revenue-Cycle-Strategist/Archives/2009/February/Revenue-Cycle-Strategist—February-2009-Issue/. 6. Pittman D. Docs Charting Falls Short of ICD-10 Demands. MedPage Today. April 12, 2013. Learn More Learn more revenue-cycle tactics and technologies at the Academy-sponsored workshop Kicking Revenue into High Gear. Attend an AAO-HNS Coding & Reimbursement workshop as soon as possible. Physicians should be practicing in ICD-10 regularly. Visit http://www.entnet.org/coding.
What to Do Now to Mitigate Financial Risk
Cheryl L. Toth, MBA
Practices have many competing, high priorities these days: dealing with Electronic Health Records (EHR) implementation, qualifying for Meaningful Use, conducting diligence on the hospital’s employment offer, and, of course, transitioning to ICD-10.
Right now, everyone in the office is (rightfully so) running around, cross walking codes, modifying dictation habits, and chasing down payer end-to-end testing dates.
Meanwhile, back in the billing office, attention is slowly slipping away from the accounts receivable. Following up on overdue insurance balances, setting up patient payment plans, monitoring the A/R as they typically would are taking a back seat to ICD-10 and other “distractions.” This should concern you. A lot.
Despite competing priorities, practices must take the time to plan ahead for a potential post-October 1, 2015 revenue hit. Ripped from the headlines, here’s why:
“Implementation of ICD-10 May Cause Serious Cash Flow Problems for Providers.”1
This is according to many sources—most notably the Department of Health & Human Services (HHS). Enough said.
If you don’t already have one, apply for a line of credit soon. Banks prefer to dole these out before they are actually needed. And come October 2015, you don’t want to be the 45th physician in line at the bank, pleading for help.
You’ll rely on a line of credit less if you’ve got some cash squirreled away, so build a nest egg this spring and summer. Focus on cleaning up 90-day and 120-day insurance receivables—which typically have the highest payoff for the least effort. Hiring an experienced biller or collections specialist to conduct this cleanup on a project basis is money well spent. Having an extra set of hands frees up the billing team for transition planning and testing, as well as the potential deluge of claim denials and technology glitches after. Ask for a summary of follow-up results monthly. Set a goal to have the insurance A/R cleaned to the point that no more than 10 percent of all payer receivables are less than 90 days old on September 30 of next year.
For past due patient accounts, launch a “spring collection campaign.” Seventy-four percent of patients said they were willing and able to pay out-of-pocket expenses less than or equal to $1,000, and 62 percent were willing to pay medical bills greater than or equal to $1,000. Thirty-seven percent of patients said that a lack of payment options was the reason they didn’t pay healthcare bills.2 Interpretation: Do a better job asking patients to pay, and give them more payment options.
Instruct staff to focus on the highest balances first, and work accounts in descending balance order—not alphabetical order. Offer online bill pay through your vendor’s patient portal or a company such as TransFirst (www.transfirst.com) or PayPal (www.paypal.com). And make budget plan setting simple by offering patients automatic recurring payments. Like a Netflix subscription or gym membership, such payments are automatically charged to the patient’s credit card each month. TransFirst or PayPal also offer this feature.
“A Fifty Percent Decline in Productivity” and “Expect that Staff Will Have to Spend More Time in Follow-up with Plans.”
In its ICD-10 Implementation Guide for Small Practices, the Centers for Medicare & Medicaid Services (CMS) warns practices to expect more claim denials and an increased follow up time.3 Multiple reputable sources and studies predict significant slowdowns in staff’s ability to code a claim or case and get a claim out the door. ICD-10 pilot results presented at the Medical Group Management Association (MGMA) 2013 annual conference mirrored the experience of Canada’s ICD-10 transition: staff productivity drops 50 percent when staff attempted to identify the proper ICD-10 codes from physician documentation.4,5
Don’t deny these productivity predictions, and don’t wait until next summer to hire people. Staff up now, before the hospital snaps up the best candidates.
And if you think outsourcing the billing is a solution—it’s not. Even under the best circumstances, the outsourcing process is painful. And what if the billing company isn’t fully prepared for ICD-10? Better to hire an additional part-time or full-time coder and/or billing office staffer capable of consistent denial management who will keep cash flowing come fall.
“Docs Charting Falls Short of ICD-10 Demands.”6
While this information is not a complete surprise, it should be an eye opener for those who were hoping “someone in billing” would handle ICD-10, instead of the physicians. Actually, nothing could be further from the truth. Without the additional detail required by ICD-10, coders won’t be able to select the right code, resulting in backlogs of claims (read: unrealized revenue) and the need for staff to constantly follow up with physicians to obtain more detail.
And don’t forget about prior authorization letters for surgeries after October 1, 2015, which must be written to justify medical necessity using ICD-10 terms and codes. Because prior authorizations are typically done three to four weeks before surgery, physicians will be pre-authorizing in ICD-10 at least three or four weeks ahead of the deadline. If surgeries are booked months in advance, your practice may be required to pre-authorize (and pre-certify) using ICD-10 as early as next summer.
Revise dictation prompters and letter templates and check payer sites to determine how date of service and date of discharge affect which system to use for procedures scheduled close to October 1.
For other ICD-10 resources, visit the Academy’s ICD-10 page at http://www.entnet.org/Practice/International-Classification-of-Diseases-ICD.cfm.
Cheryl Toth, MBA, is a senior consultant and writer with Karen Zupko & Associates, Inc.
Please note: After passage of Protecting Access to Medicare Act of 2014 (PAMA) the deadline for compliance is now October 1, 2015.
References
1. Seidman M. ICD-10 and Version 5010. Bulletin. April 2012;31(4):11. http://bulletin.entnet.org/Assets/AAOBulletin/pdf/Bulletin_Apr_2012.pdf
2. McKinsey & Company. McKinsey on Payments. April 2009. http://www.mckinsey.com/App_Media/Reports/Financial_Services/US_healthcare_payments_Remedies_for_an_ailing_system.pdf
3. ICD-10 Implementation Guide for Small and Medium Practices. Issue brief. Centers for Medicaid Services 2013. Web. 1 Aug. 2013. http://www.cms.gov/Medicare/Coding/ICD10/Downloads/ICD10SmallMediumPracticeHandbook.pdf
4. McCann E. The ICD-10 Pilot That Was Just Plain ‘Scary.’ Government HealthIT. October 14, 2013 http://www.govhealthit.com/news/icd-10-pilot-was-just-plain-scary-coding-coders
5. Implementing ICD-10: A Canadian Perspective from the Front Line. Revenue Cycle Strategist. 2009:3. http://www.hfma.org/Publications/Newsletters/Revenue-Cycle-Strategist/Archives/2009/February/Revenue-Cycle-Strategist—February-2009-Issue/.
6. Pittman D. Docs Charting Falls Short of ICD-10 Demands. MedPage Today. April 12, 2013.
Learn More
Learn more revenue-cycle tactics and technologies at the Academy-sponsored workshop Kicking Revenue into High Gear.
Attend an AAO-HNS Coding & Reimbursement workshop as soon as possible. Physicians should be practicing in ICD-10 regularly.
Visit http://www.entnet.org/coding.