Last month's column gave an introduction to ICD-10-CM, covering the value of greater code specificity available with the new system and the impact of diagnostic specificity on revenue, quality, outcome, and pay-for-performance measures. This month, we'll explore whether the transition to ICD-10-CM on Oct. 1 will have any real impact on hospital and physician payments and address preparation for ICD-10-CM implementation, including physician education and documentation challenges presented by electronic medical records (EMRs).
The impact on revenue
What will be the revenue consequences of the conversion to ICD-10-CM? Practically none.
Physician professional fees are not based on ICD-9 or ICD-10-CM codes, but rather on the American Medical Association's Current Procedural Terminology, 4th Edition (CPT-4) coding. Medicare has “cross-walked” its national and local coverage determinations for medical necessity to insure that medically necessary services will be the same whether coded in ICD-9 or ICD-10-CM. Likewise, no immediate substantive changes by commercial payers are expected. In any case, changes will require advance notification to clinicians by insurers.
The conversion to ICD-10-CM will have minimal impact on hospitals' Medicare inpatient diagnosis-related group (DRG) revenue. CMS has deliberately made certain that the transition will be as revenue-neutral as possible. An analysis for Medicare of the reimbursement impact of the transition to ICD-10-CM (conducted by 3M) demonstrated an across-the-board average change in hospital DRG revenue of −0.04% (net loss of $4 per $10,000) (11. 3M Health Information Systems. Estimating the Impact of the Transition to ICD-10 on Medicare Inpatient Hospital Payments. 2015. Accessible by download. ), which is statistically zero. Approximately 99% of cases will have no DRG change using ICD-10-CM. Numerous other industry studies have shown comparable minor positive or negative revenue shifts depending on patient case-mix (22. Youmans KG. Real World Experience in Recoding Charts in ICD-10. Accessible online. , 33. Barta A. ICD-10 gap analysis points to revenue neutral transition. Journal of AHIMA. 2015;86:66-67. Accessible online. ). Of note, virtually all the predicted revenue changes are intrinsic to the ICD-10-CM classification system itself and are not influenced by physician documentation.
There has been much unsubstantiated speculation that governmental and commercial payers will suddenly stop paying for claims that use unspecified ICD-10-CM codes. This myth has generated much anxiety, and a flurry of consultant fever has flourished on the unfounded fear of financial loss, not unlike the Y2K panic leading up to the arrival of the third millennium. The result has been lengthy, costly, and detailed ICD-10-CM physician education focused on specificity for specificity's sake alone, without consideration of the specificity that's actually pertinent for risk adjustment impacting reimbursement, cost, quality, and performance measures. Medicare has tried to reassure all providers (clinicians and organizations) that unspecified codes have many appropriate uses and these will continue with ICD-10-CM. ICD-10-CM includes unspecified codes for essentially all the conditions that ICD-9 does today (44. U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services. ICD-10-CM/PCS: Myths and Facts. June 2015. Accessible online. ).
Medicare has also repeatedly reminded clinicians that it will not make changes to reimbursement based on ICD-10-CM specificity for at least 2 years, because policy requires analysis of at least 2 years of claims data before making such changes. No major commercial insurers have announced any plans for immediate reimbursement changes based on ICD-10-CM specificity (55. Humana. ICD-10 Frequently Asked Questions and Answers. Accessible online. ).
Though some changes will surely come eventually, all clinicians will have advance notice, with ample time to modify their documentation practices in those few instances where it becomes necessary. In fact, we have already experienced some such changes for ICD-9 codes without disruptions, perhaps without even being noticed, and much greater specificity than required by payers has always been available for virtually all diagnoses in ICD-9 since its inception. Wholesale changes based on ICD-10-CM would be nonsensical, impractical, and unexpected.
Preparing for ICD-10-CM
While hospitalists generally need some basic information about ICD-10-CM, for real value, related education for physicians should focus on the limited number of diagnoses where greater specificity impacts reimbursement, quality, outcome, and pay-for-performance measures, such as those discussed in last month's column.
Even though ICD-10-CM does not unnecessarily complicate physician documentation practices, EMR systems may impose diagnostic constraints that prevent physicians from using their preferred or intended documentation terminology and greatly complicate what should be a simple task. Such systems may require physicians to choose from a long, sometimes incomprehensible list of ICD-10-CM code descriptions. Some physicians who have tried these complain they can't even find the diagnosis they need, like looking for the proverbial needle in a haystack.
Often these arbitrary lists do not allow code selections to accurately reflect severity of illness, to the detriment of physicians and hospitals. To avoid this dilemma and to satisfy compliance requirements of physician freedom and responsibility for diagnostic accuracy and specificity, an EMR must make provisions for physicians to customize diagnoses in free text and allow user-specific “favorite” lists of the physician's most commonly encountered diagnoses. Incorporation of dictation or voice recognition would be helpful options.
Clinicians should remain calm and maintain a focused, organized, and reasoned approach to physician ICD-10-CM education, emphasizing the high-yield, high-impact diagnostic specificity needed for risk adjustment impacting revenue, quality, outcome and pay-for-performance measures. This will yield the greatest return on investment of precious time and money.
Perhaps the biggest and most important challenge of ICD-10-CM implementation facing the whole health care system is related not to physician education but to an operational concern: ensuring a seamless transition of electronic claims submission, processing, and reimbursement on Oct. 1. Thorough preparation, testing, and correction of internal systems and communications back and forth with payers are of primary importance.
ICD-10-CM documentation requirements will not require much more from physicians than is already needed to allow correct coding to fully express the true severity of illness of patients. Physician education, especially for the inpatient setting, should focus primarily on the documentation and specificity of those conditions that have a real impact on severity of illness measures. Hospitals and physician practices should take a focused, organized, and reasoned approach to ICD-10-CM preparation, education, and implementation.