© 2013 McGladrey LLP. All Rights Reserved. March 21, 2014 Central Ohio HFMA.

© 2013 McGladrey LLP. All Rights Reserved.© 2013 McGladrey LLP. All Rights Reserved.

March 21, 2014

Central Ohio HFMA

© 2013 McGladrey LLP. All Rights Reserved.

Speaker

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Julie DiFrancescoDirector, Healthcare Advisory Services McGladrey LLPCleveland, Ohio [email protected]

Summary of ExperienceJulie DiFrancesco has more than 23 years of experience working with health care organizations nationally. Collaborating closely with hospital and health system CEOs and CFOs, she has developed and overseen large-scale finance, regulatory, revenue cycle, clinical operations and information technology initiatives. Julie has consulted on a number of health care-related topics, including Medicare and Medicaid regulatory matters, ICD-10, clinical documentation improvement, optimizing reimbursement rates and developing contractual service allowance models. She has served as an expert witness for regulatory matters and has spoken nationally for Healthcare Financial Management Association and American Health Lawyers Association. She has provided consulting services to a wide range of health care organizations, including academic medical centers, ambulatory surgery centers, community hospitals, health care systems, managed care groups and skilled nursing facilities.

Education, Professional Affiliations and Credentials• Healthcare Financial Management Association• Area Agency on Aging – Member of the Board of Directors and Treasurer• Bachelor of Science, accounting, University of Akron • Master of Business Administration, healthcare administration, Cleveland State University


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Agenda

Introduction ICD-10 Management Case Study ICD-10 Case study – Revenue Risk Analysis


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Polling Question

For which type of organization do you work?

A) Hospital / Hospital System

B) Payer – Commercial or Government

C) Physician Group

D) Consulting/Audit Firm

E) MAC

F) Other


ICD-10

55


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Through the Centers for Medicare and Medicaid Services (CMS), the federal government has mandated that ICD-10 diagnosis and procedure coding be implemented October 1, 2014; the implementation of these new standards represents a significant undertaking for hospitals and other providers

Background


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Rate of ICD-10 Adoption Internationally

Countries who have adopted ICD-10

Canada

• Began adopting in 2001

• Over 5-year implementation

• ICD-10-CA for morbidity

• Coding is used for statistical purposes rather than for billing

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

Germany

• Adopted in 1998

• ICD-10-AM for morbidity


France

• Adopted in 1996

United Kingdom

• Adopted in 1995

South Africa

• Adopted in 1996

Brazil

• Adopted in 1998

Russia

• Adopted in 1999

China

• Adopted in 2002

Countries who have adopted ICD-10Countries who have adopted ICD-10

Canada

• Began adopting in 2001

• Over 5-year implementation

• ICD-10-CA for morbidity

• Coding is used for statistical purposes rather than for billing

Australia

• Adopted in 1998


• 2 years from decision to change to actual implementation was insufficient lead time to build the classification and educate users

Germany

• Adopted in 1998

• ICD-10-AM for morbidity


France

• Adopted in 1996

United Kingdom

• Adopted in 1995

South Africa

• Adopted in 1996

Brazil

• Adopted in 1998

Russia

• Adopted in 1999

China

• Adopted in 2002

Source: http://www.who.int/classifications/icd/en


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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

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

Pervasive Impacts• Diagnosis codes and procedure

codes flow through mission critical operational systems and analytical tools

• Alignment of technology remediation with business and technology strategies

• Business process reengineering, training and change management is essential

Comprehensive Benefits• Quality Measurement• Public Health Disease

Surveillance• Clinical Research • Organizational Monitoring and

Performance• Reimbursement

ICD-10 Changes Implications

Significant Increase in Clinical Granularity

The Federal Government through the Centers for Medicare and Medicaid Services (CMS) is driving the health care industry to upgrade diagnosis and procedure coding standards (ICD-10) by October 1, 2014.

>14,000 unique codes

> 4,000 unique codes



ICD-10: Advancing Healthcare…

ICD-9 CM (Diagnosis) is3 to 5 characters and is

alphanumeric

ICD-9 CM (Procedure) is3 to 4 characters and is

numeric

ICD-10 CM (Diagnosis) is3 to 7 characters and is

alphanumeric

ICD-10 PCS (Procedure) is7 characters and is

alphanumeric


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The Basics of the ICD-10-CM Change

The ICD-10-CM diagnosis code set is a full replacement of the ICD-9 code set that will provide additional granularity for diagnosis and procedure codes. This additional granularity is the primary driver of value.

X X X X X.ICD-9 ICD-10-CM

X X X X X X XCategory CategoryEtiology, anatomic

site, manifestationEtiology, anatomic site, manifestation

.Extension

An Example of Structural Change

Type 1 diabetes mellitus with diabetic neuropathy, unspecified

E 1 0 4 0.

Type 1 diabetes mellitus with diabetic mononeuropathy

E 1 0 4 1.

Type 1 diabetes mellitus with diabetic amyotrophy

E 1 0 4 4.

Type 1 diabetes mellitus with other diabetic neurological complication

E 1 0 4 9.

Diabetes mellitus with neurological manifestations type I not stated as

uncontrolled

2 5 0 6. 1

An Example of One ICD-9 Code Being Represented by Multiple ICD-10 Codes

One ICD-9 code is

represented by multiple

ICD-10 codes

The industry expects that mapping ICD-9 and ICD-10 codes will be a complex task


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The Basics of the ICD-10-PCS Change

The ICD-10-PCS is an American procedure coding system that represents a significant step toward building a health information infrastructure that functions optimally in the electronic age.

X X X X.ICD-9 ICD-10-PCS

X X X X X X XSection

An Example of Structural Change

Total hip replacement

8 1 5 1.

An Example of One ICD-9 Code Being Represented by Multiple ICD-10 Codes

One ICD-9 code is

represented by multiple

ICD-10 codes

Body System

Root Operation

Body Part

Approach Device Qualifier

0SRB07Z Replacement of Left Hip Joint with Autologous Tissue Substitute, Open Approach

0SRB0KZ Replacement of Left Hip Joint with Nonautologous Tissue Substitute, Open Approach

0SRB0J7 Replacement of Left Hip Joint with Synthetic Substitute, Ceramic on Ceramic, Open Approach

0SRB0J8 Replacement of Left Hip Joint with Synthetic Substitute, Ceramic on Polyethylene, Open Approach

0SRB0J6 Replacement of Left Hip Joint with Synthetic Substitute, Metal on Metal, Open Approach

0SRB0J5 Replacement of Left Hip Joint with Synthetic Substitute, Metal on Polyethylene, Open Approach

0SRB0JZ Replacement of Left Hip Joint with Synthetic Substitute, Open Approach

0SR907Z Replacement of Right Hip Joint with Autologous Tissue Substitute, Open Approach

0SR90KZ Replacement of Right Hip Joint with Nonautologous Tissue Substitute, Open Approach

0SR90J7 Replacement of Right Hip Joint with Synthetic Substitute, Ceramic on Ceramic, Open Approach

0SR90J8 Replacement of Right Hip Joint with Synthetic Substitute, Ceramic on Polyethylene, Open Approach

0SR90J6 Replacement of Right Hip Joint with Synthetic Substitute, Metal on Metal, Open Approach

0SR90J5 Replacement of Right Hip Joint with Synthetic Substitute, Metal on Polyethylene, Open Approach

0SR90JZ Replacement of Right Hip Joint with Synthetic Substitute, Open Approach


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Stakeholders throughout the health care value chain will be impacted

Transition Change Management Training

Business OperationsProceduresPolicies

Laboratories

TechnicalSoftware Upgrades - In-

House & Purchased Applications

Electronic Transactions

Clearinghouses PayersSoftware Vendors

3rd PartyAdministrators

Employers Suppliers Providers MembersNational

Organizations

Care Management Medical & Treatment Policy Medical Management Reimbursement

It is anticipated that significant technology and process changes, in addition to industry adoption, will be required to achieve the

intended benefits of ICD-10

What Are Some of The Impacts and Who Is Impacted?


The Expected Benefits of ICD-10 are Significant

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Today’s data needs are dramatically different than they were 30 years ago when ICD-9 was introduced. ICD-10 will advance health care in many ways, with benefits accruing across five major categories.

Quality Measurement Increased data availability to assess quality standards, patient safety goals, mandates

and compliance

Reimbursement More accurate claims, more accurate denial and underpayment logic and followup, ability

to differentiate reimbursement based on complexity and outcomes

Public Health Improved disease and outbreak information

Research Better data mining for increased analysis of diagnosis, treatment efficacy, prevention,

etc.

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


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General questions for gap assessment

How do you currently use ICD-9 codes? For each use, what is the process? For each use, what is the computer system/

application/database that you use? What reports do you generate that use ICD-9

codes? Do you report externally? What is that process? Do you think that you may need additional staff due

to the transition to ICD-10? How might your processes change?


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Is the Sky Really Falling?

Maybe…..maybe not


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Polling Question

Would you consider your organization

A) An early adopter (have already begun dual coding, testing, education, etc.)

B) Right on track (will meet at least minimum requirements by transition date)

C) In a panic (no clear transition plan)

D) In denial (hoping for a another delay, but if not our IT vendor says we are okay)

E) Not sure


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Quote from WEDI

“Based on the survey results, all industry segments appear to have made some progress since February 2013, but have not gained sufficient ground to remove concern over meeting the October 1, 2014 compliance deadline,” said Jim Daley, Chairman, WEDI. “Unless all segments move quickly forward with their implementation efforts, there will be significant disruption on Oct 1, 2014.”

Full survey results can be found at: http://www.wedi.org/docs/news/icd-10-survey-results-summary.pdf?sfvrsn=0


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ICD-10/Process Improvements

NEGATIVE NEUTRAL POSITIVE

Financial Impact Objectives Reduced revenues No revenue impact

Improve revenues and operational efficiencies

Compliance Objectives Meet requirements Meet requirements Meet requirements

Example Project Activities

Level of Effort

Remediation

CDI/HIM Enhancements

Computer Assisted Coding

Revise EHR Templates

Train Coders

Process Improvements

Trading Partner Strategy

Early Adopt


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What Should We be Doing?

Establish an ICD-10 transition steering committee- Should be cross-functional with specific subcommittees/

workstreams

- Meet on a regular basis and hold all members accountable

- Designate an ICD-10 PMO/point person

Conduct a thorough gap assessment/impact analysis- Collect data and information across all functional areas

through interviews with key management and data

- Develop a detailed workplan to foster smooth implementation


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Physician/Coder training

Clinical Documentation Improvement

Payer Management

Allows the organization to customize the training to the impacted physicians/coders

Enables a customized education plan containing the diagnosis driving the most risk to the organization

Allows there to be focused awareness to the physicians driving the most risk

Identifies the diagnosis/codes that the Clinical Documentation Specialists should view as priority

Identifies the payers most at risk with the conversion to ICD-10

Identifies the DRGs by payer which the organization should begin testing/translating within the 1st testing phase

Steering Committee Workstreams


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IT

Finance

HR/Change Management/

Communication

Creates inventory of all IT software that currently utilizes ICD-9

Develops workplan for remediation Enables detailed testing

Performs financial analysis Examines current cash and develops plan for potential

interruptions in cash flow

Organizes delivery of education Provides communication at all levels regarding status of ICD-

10 transition

Steering Committee Workstreams (cont.)

Revenue Cycle/PFS

Operational changes Front end/back end Denials management/payment discrepancies


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ICD-10 Education/Training Program Components

Level 1: Awareness

Level 2: Data Analytics/ Usage

Level 3: Clinical Documentation &

Physician Education

Level 4: Code Selection

Target Audien

ce

Clinic, ancillary and other staff processing ICD-10 codes

Staff responsible for direct processing, analyzing, reporting and/or identifying specific ICD codes

Clinical providers who document in medical records for services rendered to patients

Coding specialists who assign ICD diagnosis and procedure codes from medical record documentation

Description

Basic understanding of ICD-10, interpretation of new code structure and use

Should include the following AHIMA sponsored courses: 1) ICD-10 overview:

deciphering the codes2) ICD-10 fundamentals of

general equivalence mappings (GEMs)

3) Basic training that involves coding for specific medical specialties and/or department focused requirements

Education focus is on:1) The complexity of ICD-10 2) Medical record

documentation to support the granularity of ICD-10 codes

3) Increase specificity in clinical documentation

4) Specialty specific coding changes for providers

Should Include the following courses: 1) AHIMA’s Clinical Concepts for

Coders Anatomy and Physiology Course

2) ICD-10-CM/PCS Overview: Deciphering the Codes

3) Intensive training with an ICD-10 certified trainer that involves applying the new coding guidelines

Medium

Learning management system Learning management system, AHIMA on-line and/or classroom

Learning management system, AHIMA on-line and/or classroom

Learning management system, AHIMA on-line and/or classroom

Delivery

On-line On-line and/or internal trainer On-line and/or internal educator On-line and/or internal trainer

Time

1 hour 2-4 hours 20-40 hours 120-160 hours


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Level 3: Clinical Documentation

• Case Management and Clinical Areas

• Ancillary and Diagnostic Services

• Clinical Leadership

Education/Training Needs

Staff and management members requiring ICD-10 education/ training based on interview feedback

Level 1: General Awareness

• Operational Leadership

• Information Technology

• Education/Training & HR

Level 2: Data Analytics/ Usage

• Patient Access/Scheduling

• Finance/Compliance/ Decision Support

• Patient Accounting

• Research

• Managed Care

• Physician Practice Management

Level 4: Code Selection

• Quality Management

• Compliance (Coder)

• HIM

• Clinical Documentation Improvement Specialists (CDS)


Case Study

2323


How Can Data Analytics Help with the Financial Impact Analysis?

Large volumes of ICD-9 coded claims can be translated and analyzed

Data analytics can assist with forecasting financial impacts and assessing risk- Top ICD-9 and 10 codes used, overall and by specialty areas

- Identification of high-risk ICD-9 and ICD-10 codes

- Identification of top DRGs and service lines forecast to be impacted in transition

Data analytics can inform the ICD-10 transition team where to prioritize efforts- Training

- Dual coding

- Computer-assisted coding

- Testing

Business intelligence tools can drive the data analytics- Enables a dynamic discovery process!

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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 scenarios, such as acceptance of ICD-10 claims with internal adjudication against ICD-9 codes

Mapping Terminology

ICD-9 ICD-10 ICD-9 ICD-10Forward Mapping Backward Mapping

ICD-9 CM ICD-10 PCS ICD-10 PCSICD-9 CM

GEMs Reimbursement Mapping

Other Repair & Plastic Operation on Trachea

3179

Dilation of Trachea with Intraluminal Device, Via Natural or Artificial

Opening

0B717DZ


Opening Endoscopic

0B718DZ


Opening

0B717DZ


Opening Endoscopic

0B718DZ

Other Intubation Respiratory Tract

9605

Other Repair & Plastic Operation on Trachea

3179

Other Intubation Respiratory Tract

9605

In situations where there are alternative mappings, the CMS reimbursement mappings provide the most common conversion based on real world data; plans may need to validate these mappings


CMS GEM Example

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1:1, Cluster, Combination, and Complex


ICD-9 to 10 Translator Process

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SourceData

Define Mappings 1#

Translate Codes 2#

Analyze Claims 3#

Encoder4#

DRG Analysis 5#

CMS GEMs Evaluate claims and ensure that the

correct ICD-10 code has been mapped to the claim based on the data available

Claims analytics Interface with

encoder

Analyze how the new ICD-10 codes

impact DRGs when they are

translated

Claims Analyze how your claims will

transition into the new ICD-10

structure

Evaluate coding

practices

Financial impact assessment• Top 25 reports• Service line impact

Users can choose between a

conservative basic map, a best practice

map or build their own custom map

• Top ICD-9 codes by usage and complexity

• Top ICD-10 codes by usage

• Prioritization analytics• Training tools

Further customize

default maps

GEMs

Hospital

Clinics

MapsBasic

CustomLevel

Probability

Defaultmapper

Claims translator

Claims impact assessment

Encoder

DRGanalyzer

Translated claims

Validation is key!


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McGladrey has developed a standardized process for simulating and creating variance reports based on MS-DRGs comparing original ICD-9 coded claims to simulated ICD-10 and backward mapped ICD-9 coded claims.

• 12 months of Inpatient/Outpatient claims (March 2012 – February 2013) were selected from Hospital. These claims included the ICD-9 based codes, including the principal diagnosis code, secondary diagnoses codes and the ICD-9 procedure codes

• The McGladrey’s business intelligence platform incorporated the claims information to create ICD-10 simulated claims

• Projections were developed in total for the claims

Data Preparation

Claims Simulation Tool

• Inpatient claims coded in ICD-9 are used as the source claims for this financial analysis

• GEMs published in October 2012 and November 2012 were utilized for procedure and diagnosis code mapping (ICD-9 to ICD-10 and ICD-10 to ICD-9).

DRG Assignment

• ICD-9 claims are assigned a v.30 MS-DRG as determined using TruCode’s grouping software

• ICD-10 claims are assigned a v.30 MS-DRG based on ICD-10 claim grouping information published by CMS in October 2012

Key Variance Reporting

• Source ICD-9 claims are forward mapped using CMS GEMs to simulate ICD-10 claims (NOTE: roughly 40% of all potential ICD-10 codes are not simulated using this method)

Mapping Diagnostic Tool Assumptions and Limitations

Understanding the Process to Determine the Initial Revenue Risk is Key to Developing a Strategy Going Forward


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ICD-10 Impact Summary

ClaimsTotal ICD-9

ReimbursementTotal ICD-10

Reimbursement Difference

24,552 $188,042,421 $187,961,894 ($80,527)

Overall Summary of ICD-10 impact

Service lines driving the highest risk

DRGs impacting the risk related to transition of ICD-10

When understanding the ICD-10 revenue risk related to the organization, one must drive the detail out of the analysis. Therefore, the following process will explain the risk related to the transition:

- Identify the overall impact

- Dive into the financial service lines driving the highest risk

- Evaluate the DRGs with the most impact

Crucial in Understanding the Revenue Risk is a Focus-driven Approach


Recommendation #1

Focus driven approach on the revenue being driven by the claims resulting in positive and negative impact

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The overall change is viewed as minimal -$80,527.

However, a more detailed analysis shows a total revenue risk of ±$6,678,549.

ICD-10 Impact Summary

ClaimsTotal ICD-9


Reimbursement Difference

24,552 $188,042,421 $187,961,894 ($80,527)

What is driving the risk

By Impact ClaimsTotal ICD-9


Reimbursement Revenue

Risk

Unchanged 22,543 $171,321,212 $171,321,212 $0

Negative 1,397 $12,204,616 $8,825,079 ($3,379,538)

Positive 612 $4,516,592 $7,815,604 $3,299,011

An Organization’s Revenue Risk is Driven from a Select Group of Codes Which are Affected by the Transition from ICD-9 to ICD-10

Recommendation #1Focus driven approach on the revenue being driven by the claims resulting in positive

and negative impact (9% of claims)


Recommendation #2

Focus on top DRGs driving revenue risk with customized translation to identify revenue risks associated from the transition from ICD-9 to ICD-10

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DRG Shift Summary

Total # of DRG Shifts

# of DRGs Impacted

Largest Negative Impact

Largest Positive Impact Average Variance

Total Reimbursement Impact

2009 297 $ -34,058.14 $ -32,924.43 $3,323.32 $ ±6,678,549

The Implementation of ICD-10 will Cause New Shifts within the MS-DRG Framework

The 10 most used DRGs with a shift

Original DRG New DRG Number of Changes Average Reimbursement Shift Total Reimbursement Shift

945 949 500 $ -3,936 $ -1,967,795

946 950 78 $ -19,056 $ -1,486,401

871 872 22 $ -5,326 $ -117,162

247 251 269 $ -306 $ -82,360

885 881 21 $ -2,962 $ -62,194

246 250 56 $ -945 $ -52,939

191 192 18 $ -1,293 $ -23,265

249 251 28 $ 573 $ 16,055

775 774 24 $ 705 $ 16,923

766 765 26 $ 1,790 $ 46,538

Recommendation #2Focus on top DRGs driving revenue risk with customized translation to identify

revenue risks associated from the transition from ICD-9 to ICD-10


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DRG DRG Description Service Line $ Value Change % Change Count

251 PERC CARDIOVASC PROC W/O CORONARY ARTERY STENT W/O MCC Cardiac Surgery $389,903 3.34% 150

4 TRACH W MV 96+ HRS OR PDX EXC FACE, MOUTH & NECK W/O MAJ O.R. General Surgery $101,041 1.01% 124

38 EXTRACRANIAL PROCEDURES W CC Vascular Surgery $76,144 30.69% 12

378 G.I. HEMORRHAGE W CC Internal Medicine $70,462 3.09% 172

39 EXTRACRANIAL PROCEDURES W/O CC/MCC Vascular Surgery $67,515 14.41% 20

775 VAGINAL DELIVERY W/O COMPLICATING DIAGNOSES Obstetrics $66,139 0.91% 1323

673 OTHER KIDNEY & URINARY TRACT PROCEDURES W MCC Urology $64,645 7.48% 23

250 PERC CARDIOVASC PROC W/O CORONARY ARTERY STENT W MCC Cardiac Surgery $60,826 9.06% 31

964 OTHER MULTIPLE SIGNIFICANT TRAUMA W CC Trauma $57,334 22.94% 33

12 TRACHEOSTOMY FOR FACE,MOUTH & NECK DIAGNOSES W CC ENT $55,470 10.02% 40

794 NEONATE W OTHER SIGNIFICANT PROBLEMS Neonatology $55,041 0.94% 391

766 CESAREAN SECTION W/O CC/MCC Obstetrics $51,905 0.31% 277

82 TRAUMATIC STUPOR & COMA, COMA >1 HR W MCC Trauma $49,146 6.88% 43

682 RENAL FAILURE W MCC Internal Medicine $48,758 0.39% 266

37 EXTRACRANIAL PROCEDURES W MCC Vascular Surgery $48,030 27.29% 7

Top 15 Positively Impacted DRGs

Total Revenue % of Total Positive Revenue risk

$1,262,360 38%

The Implementation of ICD-10 will Cause New Shifts within the MS-DRG Framework (cont.)


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DRG DRG Description Service Line $ Value Change % Change Count945 REHABILITATION W CC/MCC Rehabilitation ($941,710) 0.02% 504946 REHABILITATION W/O CC/MCC Rehabilitation ($276,030) -1.99% 82

853 INFECTIOUS & PARASITIC DISEASES W O.R. PROCEDURE W MCC General Surgery ($199,941) -1.91% 127329 MAJOR SMALL & LARGE BOWEL PROCEDURES W MCC General Surgery ($87,477) -5.18% 55811 RED BLOOD CELL DISORDERS W MCC Hematology/Oncology ($84,894) -3.86% 52

871 SEPTICEMIA OR SEVERE SEPSIS W/O MV 96+ HOURS W MCC Internal Medicine ($82,755) -0.09% 534

247 PERC CARDIOVASC PROC W DRUG-ELUTING STENT W/O MCC Cardiac Surgery ($77,353) 0.17% 270

974 HIV W MAJOR RELATED CONDITION W MCC Internal Medicine ($72,554) 1.83% 95

246 PERC CARDIOVASC PROC W DRUG-ELUTING STENT W MCC OR 4+ VESSELS/STENTS Cardiac Surgery ($63,861) -1.51% 59

957 OTHER O.R. PROCEDURES FOR MULTIPLE SIGNIFICANT TRAUMA W MCC Trauma ($63,506) -2.59% 77

163 MAJOR CHEST PROCEDURES W MCC Thoracic Surgery ($62,471) -10.45% 24

987 NON-EXTENSIVE O.R. PROC UNRELATED TO PRINCIPAL DIAGNOSIS W MCC General Surgery ($44,840) -14.30% 19

904 SKIN GRAFTS FOR INJURIES W CC/MCC Trauma-Other ($43,371) -8.05% 20

698 OTHER KIDNEY & URINARY TRACT DIAGNOSES W MCC Internal Medicine ($41,672) -1.19% 100

36 CAROTID ARTERY STENT PROCEDURE W/O CC/MCC Vascular Surgery ($40,056) -5.85% 13

Top 15 Negatively Impacted DRGs

Total Revenue % of Total Negative Revenue risk

($2,182,491) 65%

The Implementation of ICD-10 will Cause New Shifts within the MS-DRG Framework (cont.)


Recommendation #3

A customized translation is needed to reduce the revenue risk related to the impacted unspecified codes

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The overall change is viewed as a minimal positive change of $641,616.

However, a more detailed analysis shows a total financial risk of $3,047,724.

Unspecified ICD-9 Codes

Total # of Codes

Analyzed

# of Unspecified

Codes

# of Financially Impacted

Unspecified Codes

% of Financially Impacted/Total #

of Codes

10,548 713 169 2%

What is Driving the Risk

By Impact Claims Revenue Risk

Unchanged 544 $0

Negative 93 ($1,203,054)

Positive 76 $1,844,671

One Area of Major Concern with the Transition from ICD-9 to ICD-10 Will be Focused on the Unspecified Codes

Recommendation #3A customized translation is needed to reduce the revenue risk related to the impacted

unspecified codes


Recommendation #4

Intensified understanding of impact ICD-9 codes as well as training related to highly impacted service lines (i.e. Orthopedic, Cardiovascular, Surgery and Medicine)

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With an Understanding of the Total Revenue Risk, an Organization Needs to Strategize on Building Service Line ICD-10 Awareness

Department Summary

DepartmentICD-9

ReimbursementICD-10

Reimbursement Revenue Risk

Internal Medicine $45,549,047 $45,813,306 $1,285,041

General Surgery $38,336,472 $38,101,654 $1,348,274

Cardiac Surgery $13,287,058 $13,684,543 $1,197,985

Obstetrics $12,205,525 $12,357,545 $229,252

Neonatology $11,270,390 $11,287,606 $226,059

Orthopedics $10,545,371 $10,565,747 $189,752

Recommendation #4Intensified understanding of impact ICD-9 codes as well as training related to highly

impacted service lines (i.e., internal medicine, general surgery, cardiac surgery, obstetrics)


Recommendation #5

The required level of training will be customized based on the expected impact to the different practice areas, with focus on specialty groups considered at most risk and scheduled according to expected training needs

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Identification of Impacted Physicians will Assist in Leading a Best Practice Clinical Documentation Solution

Name ICD-9 ReimbursementICD-10

ReimbursementReimbursement

Difference1 $11,415,833.35 $11,339,931.63 ($75,901.72)2 $8,331,481.18 $8,310,590.11 ($20,891.07)3 $8,172,480.22 $7,005,829.56 ($1,166,650.66)4 $7,883,729.68 $7,972,523.40 $88,793.72 5 $7,781,728.72 $7,743,000.73 ($38,727.99)6 $7,651,268.32 $7,789,536.76 $138,268.44 7 $7,164,624.35 $7,252,516.46 $87,892.11 8 $6,888,487.39 $7,072,506.01 $184,018.62 9 $6,670,818.48 $6,719,459.65 $48,641.17 10 $6,649,733.70 $6,763,127.02 $113,393.32 11 $5,953,101.65 $5,948,376.78 ($4,724.87)12 $5,572,597.03 $5,577,371.15 $4,774.12 13 $5,334,495.55 $5,359,715.24 $25,219.69 14 $5,179,255.24 $5,331,862.83 $152,607.59 15 $5,154,861.73 $5,048,200.69 ($106,661.04)16 $5,039,099.70 $4,934,321.99 ($104,777.71)17 $4,804,126.64 $4,960,439.39 $156,312.75 18 $4,641,647.88 $4,691,304.87 $49,656.99 19 $4,622,942.81 $4,636,305.51 $13,362.70 20 $4,495,353.26 $4,625,073.24 $129,719.98 21 $4,462,274.84 $4,488,194.48 $25,919.64 22 $4,410,658.85 $4,639,214.20 $228,555.35 23 $4,366,660.77 $4,294,096.74 ($72,564.03)24 $4,333,027.37 $4,368,346.34 $35,318.97 25 $4,190,019.20 $4,287,357.65 $97,338.45

Summary of revenue risk for top 25 physicians

Average impact per physician

~$125,000

Total impact for physicians ~$3,000,000

Revenue impact related to physician

reimbursement

associated with 25 physicians

Represent 48% of all revenue driven from

physician reimbursement

From March 2012 through Feb. 2013

Top 25 physicians

(48%)

All other physicians

(52%)

Recommendation #5Focused driven physician training should be geared on high impact specialty groups

considered at most risk and scheduled according to expected training needs


Recommendation #6

Partner with key DRG reimbursed commercial payers for claims testing and reimbursement methodology discussions to address potential changes in both revenue and benefit neutrality

4242


43

Once an Organization Understands the DRGs most Impacted in the Conversion, Communicating/Testing with Payers will be Key to Maximizing Reimbursement Potential

~26% of total claims are being submitted to private payers

Insurance Name

ICD-9 Reimbursement

ICD-10 Estimated Reimbursement

BCBS $7,377,936.39 $7,447,167.04

Wellcare $7,405,127.49 $7,393,660.16

United $7,106,137.90 $7,144,039.24

Humana $4,128,268.49 $4,100,815.98

Aetna $2,673,042.55 $2,677,716.56

Cigna $1,390,325.98 $1,403,367.76

Coventry $110,986.52 $110,986.52

Other $18,443,164.59 $18,653,558.84

Recommendation #6Partner with key DRG reimbursed commercial payers for claims testing and reimbursement

methodology discussions to address potential changes in both revenue and benefit neutrality


44

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