Mind the Gap: How the ICD-10 Transition May Have Exacerbated Your Revenue Cycle Difficulties

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Over the past several months, we’ve come to some realizations we hadn’t previously about the recent ICD-10 transition: Many healthcare organizations who used the grace period leading up to ICD-10’s official arrival to prepare were blindsided by the little ways ICD-10 immediately impacted what they thought were small areas of their revenue cycle.1

By any measurement, and in any context, going from 13,000 of something to 68,000 of something is a big jump. When we’re talking about codes used to drive the payments and reimbursements of one of our country’s most crucial and complex industries — healthcare — it’s easy to see why the ICD-10 transition is considered one of the most important changes in the field in a generation. For the most part, it looks like the big-picture transition has gone very smoothly for almost all healthcare entities and payers — everyone is mostly using the right codes and not seeing a drastic rise in rejected claims or other issues.

As we work with our clients, however, we realize that many CFOs and others were not prepared for the ways the ICD-10 transition would take something small, like a slightly high rate of days in A/R or a couple of physicians that might not be as diligent about documentation as others, and exacerbate that previous non-issue into something that can really impact your revenue cycle.

Don’t Be in Denial About the Root Causes of Denials

Managing the lifecycle of your organization’s revenue involves looking at the important metrics that tell you how to effect change at the big picture-level. For instance, at the highest level, we all want to reduce rejected claim rates, naturally. So to learn how to do that, we would recommend our clients look at all the factors that contribute to high rates of rejected claims — days to billing, coder accuracy, physician queries, rate of response and more — and maybe even deeper to the sub-metrics that affect those metrics. Changes at the smallest level of your organization will work their way back up to effect that big-picture change that everyone at the executive level would like to see.  

While most CFOs know this and do a great job, sometimes with revenue lifecycle partners to assist with legwork and analysis, medical practices and other providers produce an overwhelming amount of data. The ICD-10 transition will only make it easier to gather more data from patients, so knowing where and how to look at the data is crucial to understanding what it all means to your bottom line.

Everyone looks at their denials, of course. This metric is directly related to claims and revenue, and everyone wants to see their denials at a relatively low level, ideally less than 4 percent of gross revenue. But if you’re seeing a rate higher than that, pre or post-ICD-10, or if you’re concerned that the ICD-10 transition may have exposed issues with your denials, it’s time to take a closer look at some more specific metrics. A deeper dive into your denials may include reviews of metrics such as:

  • Payer rule errors
  • Pended claims for additional information
  • Denials by reason codes that changed as a result of ICD-10
  • Clean claim and first-pass resolve rate
  • Total dollar value of your denials
  • Prior authorization issues2

Assessing whether you have an issue with any of these much more specific metrics can tell you where your denials problem might be occurring. A small thing like a slightly higher-than-desired denials rate based on incorrect coding under ICD-9 may have become a much larger problem under ICD-10 and could point to issues with coder education or physician documentation. Denials based on payer errors may have been easy to clear up in the past, but now face a longer backlog due to payers also weathering the ICD-10 transition, and we all know how every day can affect a revenue cycle.

You Should Look at Days in A/R Differently After ICD-10

Of course you’re looking at the number of days your claims spend in A/R. This basic revenue cycle metric, however, may have gotten more complex as a result of ICD-10. The new systems and processes are more sophisticated, and if your own revenue reviews aren’t equipped to look at the increased amounts of data, merely looking at days in A/R may not tell you much about ICD-10’s impact.

Consider looking more closely at metrics such as:

  • Daily and weekly revenue
  • First 30 days by individual payers
  • Total A/R by payer
  • Net revenue as a percentage of gross revenue
  • Cash on hand
  • Aggregate outstanding days

These could help you address A/R issues on a case-by-case basis with individual payers, assess whether ICD-10 is impacting your short- or long-term payments (or perhaps neither or both), and make determinations about how much error in either direction your organization can absorb during the transition.3

ICD-10 Transition Means You Don’t Need Liberal Bill Hold Parameters

We often see instances of revenue cycle gaps that happen over time, not as a conscious decision and not as a formal process, but a gap that starts with small shortcuts and widens with repetition.

Take your days to submission metric, for instance. This is from the time the service was rendered to the time the claim was released. Generally speaking, most healthcare organizations are relatively comfortable with a period of around seven days, give or take a few in either direction. Constantly writing off late charges or correcting bills to adhere to days to submission expectations can grow tiresome, though. It happens — clinicians can take time to get charges entered as well as complete documentation and the discharge summary, and it all takes time, so sometimes the easiest thing to do is to set more liberal bill hold parameters. With more time before bills need to be revised or written off, it can even artificially improve certain metrics in your revenue cycle.4

But now ICD-10 is here, and it’s time not only to stop accepting liberal bill hold parameters that can actually harm your revenue cycle, but to shorten our expectations for days to submission. ICD-10’s systems and specificity should allow for faster cycles from time of service to bill date in any healthcare setting once all members of your organization are comfortable with the transition. Setting the bar higher at the beginning of transition can prevent an unwelcome adjustment later. Organizations interested in breaking down their days to submission beyond a single metric can review things such as:

  • Reasons for claims rejections on clearinghouse submissions
  • Internal claims scrubbing results and reasons
  • Log of physician queries and response time to queries
  • Records awaiting physician query response
  • Records awaiting more clinical documentation
  • Records in suspense
  • Bills written off5

One of the major sub-metrics involved in days to submission is the number of physician queries and the response time to those queries for more documentation. These are commonly tracked under a facility’s Clinical Documentation Improvement setting, but should also be monitored in relation to increases in days to submission after ICD-10.

As we move into 2016, it’s clear that the ICD-10 transition didn’t cause a massive implosion of the healthcare industry. Organizations can begin looking at ICD-10 not as a stressful potential disaster, but as an opportunity to refine systems and improve patient experience by taking this time to really examine those small details that may have gone unnoticed under the previous system.

Physician Revenue Navigators is a leading healthcare revenue cycle management partner, supporting healthcare organizations in all aspects of a healthy revenue lifecycle, including coding, billing, contractual adjustments, collections, HIPAA compliance and more. Contact us to learn more about how we can assist your organization in ICD-10 training for your physicians and coders.

Show 5 footnotes

  1. “ICD-10 Grace Period News Leads 2015’s Top 5 Stories,” Dec. 16, 2015, http://revcycleintelligence.com/news/icd-10-grace-period-news-leads-2015s-top-5-stories
  2. “Preparing for ICD-10’s Impact On Your Revenue Cycle,” Oct. 1, 2015, http://www.beckershospitalreview.com/white-papers/preparing-for-icd-10-s-impact-on-your-revenue-cycle.html
  3. “ICD-10 Critical Metrics,” Oct. 5, 2012, http://www.wedi.org/docs/resources/wedi_impact_assessment_swg_white_paper_icd10_metrics_revised_111412-pdf.pdf
  4. “Prepare for ICD-10,” Ibid.; “ICD-10 Critical Metrics,” Ibid.
  5. “Correctly coding to prevent ICD-10 denials,” Dec. 14, 2015, http://medicaleconomics.modernmedicine.com/medical-economics/news/correctly-coding-prevent-icd-10-denials?page=0,0

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