With ICD-10 quickly approaching, there’s been lots of focus on the impact to Hospital Inpatient Coding and Reimbursement. “Analyze your data; Review DRG results and financial impacts; Work on documentation; Start now!” – those are the messages that are heard loudest. So when I talk with organizations about Impact Assessments for ICD-10, there is typically no question that they want a complete review of inpatient impacts, expected financial performance, and how they will perform under ICD-10.
Yet these same proactive organizations are often just as quick to discard the need for much analysis of outpatient performance under ICD-10. “ICD-10 will not affect outpatient procedure coding” – that’s a mantra you see everywhere, which restates the fact that CPT/HCPCS procedures will continue to be used instead of ICD-10 procedure codes for outpatient services.
However, what about outpatient diagnosiscoding under ICD-10? Before considering what will happen in October 2014, we need to look at the landscape now. At a minimum, just as it is now, it will not be possible to be paid at all under ICD-10 without correct diagnosis coding. Outpatient visits are subject to many unique editors and rules, two coding systems (ICD-9 and CPT/HCPCS) with specifics varying greatly by payer as to what codes are used or accepted, Outpatient Code Editors (OCE), and Correct Coding Initiative (CCI) rules. In addition, there are additional problem areas of medical necessity and Advance Beneficiary Notification (ABN), external referrals, National Coverage Decisions (NCD), Local Coverage Decisions (LCD), and individual insurance contracts to contend with as well.
If you ask an organization about who does outpatient diagnosis coding at their facility and you’ll typically find there are lots of departments and fingers involved. Worse, they often can’t tell you specifically who does the coding or how coding is accomplished for all of the types of outpatient visits to the facility, which includes ‘low charge outpatient’ services like Lab or Radiology Only visits, and clinic visits. Talk to CFOs about write-offs, adjustments, and claims that aren’t billable, and you’ll find outpatient billing is not even in the greatest health now– under ICD-10 outpatient financial health issues will be magnified.
Per MedPac’s report to Congress in March 2012 on Medicare Payment Policy, in 2010, the 4,800 hospitals participating in the Medicare system received $153 billion on about 10 million Medicare inpatient admissions and 166 million outpatient services. Hospital-based outpatient business grew by 8.8 percent over that period, contrasted with inpatient volume increase of 2.7 percent. Outpatient Medicare hospital volumes are about 16.6 times the inpatient volume; with today’s inpatient Medicare spending at $116 billion and outpatient spending at $37 billion, outpatient visits account for over 31% of total hospital reimbursement. For a component growing this exponentially, it isn’t hard to see that any impacts of diagnosis coding under ICD-9 and issues with current processes related to outpatient diagnosis coding aren’t going to disappear or improve under ICD-10 without concerted analysis and improvement efforts.
As a real world example of problems that will be magnified under ICD-10, if you talk with organizations about their problems with medical necessity coding, you hear:
- When physicians refer patients for everything from lab tests to hospital outpatient procedures, they still don’t provide good diagnosis information;
- Diagnosis codes have been outdated for many years or are just plain incorrect;
- They are unreadable;
- They are missing;
- No one follows up on codes that don’t meet medical necessity;
- There is no help available to front end registration staff when assigning diagnosis codes from provider text through medical necessity checking tools;
- ABNs aren’t used, signed, or patients aren’t billed for services that don’t meet medical necessity;
- Denials from Medicare and others due to diagnosis information aren’t reviewed and pursued;
- Software in the claim production process isn’t capturing issues with medical necessity because it isn’t properly updated, hasn’t been turned on, isn’t available; and
- There is no coding quality step that is involved with medical necessity checking so the organization doesn’t have clear ownership over data collection of correct diagnoses either.
In subsequent blogs, we’ll consider some of the issues and red flags for the hospital outpatient arena relative to ICD-10 in the hopes that this will lead to more discussion and planning for October 2014 ICD-10 Outpatient Hospital coding readiness.
Carle Nicklas
Strategic Advisory Services
Santa Rosa Consulting
carlenicklas@SantaRosaConsulting.com