Prepared for: Medical Group Management Association San Antonio. Presented by:

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1 ICD-10 Fire Hydrant Prepared for: Medical Group Management Association San Antonio Presented by: Merit Smith, Vice President Director, Health Care Practice Robert E. Nolan Company March 18, 2009

2 Topics for Tonight What does it mean to go to ICD-10? Why are we doing this? When is it going to happen? Show me the money What can we do to be prepared? Here s a generic ICD-10 implementation plan Thoughts about testing as part of implementing ICD-10 March 18, Page 2

3 Let s Get Started With a Question Consider this question When I am asked to understand a complex topic, I find that......differences between things are more important than similarities that may exist among them....it helps to focus on how things are alike rather than how they are different. Show of hands please Are we Splitters or are we Lumpers? Clue of what s coming: ICD-10 is a Splitter s Paradise March 18, Page 3

4 ICD-9 vs. ICD 10 Code Sets Current Code Set Purpose New Code Set ICD-9-CM Volumes 1 and 2 Inpatient and outpatient diagnosis coding ICD-10-CM ICD-9-CM Volume 3 Inpatient procedures ICD-10-PCS March 18, Page 4

5 ICD-10-CM Structure ICD-9-CM Approximately 13,000 codes Numeric (except for a few E and V codes) Three to five digits in length ###.## format (all numeric digits) Example Gestational Diabetes ICD-10-CM Approximately 68,100 codes Three to seven characters ICD-10 has a logical structure with clear, consistent definitions A##.AAAA format (six characters, the first being alpha, the next two are numeric, and the fourth through seventh can be alpha or numeric) Example Gestational Diabetes O March 18, Page 5

6 ICD-10-PCS Structure ICD-9-CM Approximately 4,000 codes Numeric Three to four digits in length ##.## format (all numeric digits) ICD-10-PCS Approximately 90,000 codes Alpha or numeric (excludes the letters O and I) Seven alphanumeric in length 999A9AA format Example Angioplasty Example Angioplasty: Dilation of Right Femoral Artery - Open Approach 047K0ZZ (1,170 codes to replace the ICD-9 code) March 18, Page 6

7 Myth: The Systems Changes are Easy Have you been told: We can change that field Our system is ICD-10 compliant? It is more than a field. From a technology perspective, the following need to be planned for, changed, and TESTED! Current Code Set Purpose New Code Set ICD-9-CM Volumes 1 and 2 ICD-9-CM Volume 3 Inpatient and outpatient diagnosis coding Inpatient procedures ICD-10-CM ICD-10-PCS Data Warehouse Screen Layouts Data tables, models, and definitions Code (application and report) Reports Interfaces (APIs, extracts, and feeds) Data Warehouse March 18, Page 7

8 Going to ICD-10 Means Three Things Changing the terminology of medicine the words we use to describe medical conditions Flow of Clinical Information Clinical Provider Coder Organization Changing the coding of these new terms into numbers that can be used in systems Changing all systems provider, payer, financial, legal regulatory, academic, that use coded diagnostic information Clinical Services Terming Coding Grouping Medical Record SNOMED Bill Payer Processes ICD, CPT, HCPCS Groupers DRGs, APCs 2003 Robert E. Nolan Company, Inc March 18, Page 8

9 Asthma: Words and Numbers Medical Terminology used in ICD-9 ICD 9 Coding "Terming" "Coding" Extrinsic asthma Asthma with stated cause Atopic asthma Childhood asthma Hay Platinum Hay fever with asthma Intrinsic astham Late onset asthma Chronic obstructive asthma Asthma with COPD Chronic asthmatic bronchitis Other forms of asthma Exercised induced bronchospasm Cough variant asthma Unspecified asthma Medical Terminology used in ICD-10 ICD 10 CM Coding "Terming" "Coding" Predominantly allergic asthma Allergic bronchitis NOS Allergic rhinitis with asthma Atopic Asthma Extrinsic allergic asthma Hay fever with asthma Idiosyncratic asthma Intrinsic nonallergic asthma Nonallergic asthma Mild intermittent asthma.2 Mild intermittent asthma, uncomplicated.20 Mild intermittent asthma, NOS.20 Mild intermittent asthma with acute exacerbation.21 Mild intermittent asthma with status asthmaticus.22 Mild persistent asthma.3 Mild persistent asthma, uncomplicated.30 Mild persistent asthma, NOS.30 Mild persistent asthma with acute exacerbation.31 Mild persistent asthma with status asthmaticus.32 Moderate Persistent asthma.4 Moderate persistent asthma, uncomplicated.40 Moderate persistent asthma, NOS.40 Moderate persistent asthma with acute exacerbation.41 Moderate persistent asthma with status asthmaticus.42 Severe persistent asthma.5 Severe persistent asthma, uncomplicated.50 Severe persistent asthma, NOS.50 Severe persistent asthma with acute exacerbation.51 Severe persistent asthma with status asthmaticus.52 Other unspecified asthma.9 Unspecified asthma.90 Asthmatic bronchitis NOS.90 Childhood asthma NOS.90 Late onset asthma.90 Unspecified asthma with acute exacerbations.901 Unspecified asthma with status asthmaticus.902 Unspecified asthma, uncomplicated.909 Asthma NOS.909 Exercise induced asthma.990 Cough variant asthma.991 Other asthma.998 Terms to Describe Additional Clinical Detail Exposure to environmental tobacco smoke Z58.83 Exposure to tobacco smoke in perinatal period P96.6 History of tobacco use Z86.43 Occupational exposure to environmental tobacco smoke Z57.31 Tobacco dependence F Tobacco use Z72.0 Terms Used to Describe Medical Conditions that are not Asthma Asthma with chronic obstructive pulmonary disease J44.-- Chronic asthmatic bronchitits J44.-- Chronic obstrustive asthma J44.-- Detergent asthma J69.8 Eosinpphilic asthma J82 Lung diseases caused by external agents J60 - J70 l Miner's asthma J60 Platinum asthma J 45.0 Whooping NOS R06.2 Wood asthma J67.8 March 18, Page 9

10 Just a Bit More Detail Medical Terminology used in ICD-10 ICD 10 CM Coding "Terming" "Coding" Predominantly allergic asthma Allergic bronchitis NOS Allergic rhinitis with asthma Atopic Asthma Extrinsic allergic asthma Hay fever with asthma Idiosyncratic asthma Intrinsic nonallergic asthma Nonallergic asthma Mild intermittent asthma.2 Mild intermittent asthma, uncomplicated.20 Mild intermittent asthma, NOS.20 Mild intermittent asthma with acute exacerbation.21 Mild intermittent asthma with status asthmaticus.22 Mild persistent asthma.3 Mild persistent asthma, uncomplicated.30 Mild persistent asthma, NOS.30 Mild persistent asthma with acute exacerbation.31 Mild persistent asthma with status asthmaticus.32 Moderate Persistent asthma.4 Moderate persistent asthma, uncomplicated.40 Moderate persistent asthma, NOS.40 Moderate persistent asthma with acute exacerbation.41 Moderate persistent asthma with status asthmaticus.42 Severe persistent asthma.5 Severe persistent asthma, uncomplicated.50 Severe persistent asthma, NOS.50 Severe persistent asthma with acute exacerbation.51 Severe persistent asthma with status asthmaticus.52 Other unspecified asthma.9 Unspecified asthma.90 Asthmatic bronchitis NOS.90 Childhood asthma NOS.90 Late onset asthma.90 Unspecified asthma with acute exacerbations.901 Unspecified asthma with status asthmaticus.902 Unspecified asthma, uncomplicated.909 Asthma NOS.909 Exercise induced asthma.990 Cough variant asthma.991 Other asthma.998 Terms to Describe Additional Clinical Detail Exposure to environmental tobacco smoke Z58.83 Exposure to tobacco smoke in perinatal period P96.6 History of tobacco use Z86.43 Occupational exposure to environmental tobacco smoke Z57.31 Tobacco dependence F Tobacco use Z72.0 Terms Used to Describe Medical Conditions that are not Asthma Asthma with chronic obstructive pulmonary disease J44.-- Chronic asthmatic bronchitits J44.-- Chronic obstrustive asthma J44.-- Detergent asthma J69.8 Eosinpphilic asthma J82 Lung diseases caused by external agents J60 - J70 l Miner's asthma J60 Platinum asthma J 45.0 Whooping NOS R06.2 Wood asthma J67.8 Medical Terminology used in ICD-10 ICD 10 CM Coding "Terming" "Coding" Predominantly allergic asthma Allergic bronchitis NOS Allergic rhinitis with asthma Atopic Asthma Extrinsic allergic asthma Hay fever with asthma Idiosyncratic asthma Intrinsic nonallergic asthma Nonallergic asthma Mild intermittent asthma.2 Mild intermittent asthma, uncomplicated.20 Mild intermittent asthma, NOS.20 Mild intermittent asthma with acute exacerbation.21 Mild intermittent asthma with status asthmaticus.22 Mild persistent asthma.3 Mild persistent asthma, uncomplicated.30 Mild persistent asthma, NOS.30 Mild persistent asthma with acute exacerbation.31 Mild persistent asthma with status asthmaticus.32 Moderate Persistent asthma.4 Moderate persistent asthma, uncomplicated.40 Moderate persistent asthma, NOS.40 Moderate persistent asthma with acute exacerbation.41 Moderate persistent asthma with status asthmaticus.42 Severe persistent asthma.5 Severe persistent asthma, uncomplicated.50 Severe persistent asthma, NOS.50 Severe persistent asthma with acute exacerbation.51 Severe persistent asthma with status asthmaticus.52 Other unspecified asthma.9 Unspecified asthma.90 Asthmatic bronchitis NOS.90 Childhood asthma NOS.90 Late onset asthma.90 Unspecified asthma with acute exacerbations.901 Unspecified asthma with status asthmaticus.902 Unspecified asthma, uncomplicated.909 Asthma NOS.909 Exercise induced asthma.990 Cough variant asthma.991 Other asthma.998 March 18, Page 10

11 Asthma Prediction Unspecified Asthma Asthma, NOS.909 We predict that clinicians will ignore the clinical detail of ICD-10 and continue to code in a broad manner. There are several reasons for this: Changing clinical skills is difficult There is no risk in using broad categories There is no clear clinical guidance on the clinical definitions that might be coded There is no economic benefit to detailed coding in fact, there is an economic incentive to not use detailed codes March 18, Page 11

12 Why Are We Doing This? Sometimes bad ideas gain momentum Essentially an inside Beltway Health Care Issue which has had different rationales at different times. Here are some (not in chronological order): Patient Safety Public Safety: SARS Better reimbursement Need to have data we compare to other nation s health data Needed to implement national EMR strategy Should be done once we have EMR Needed to develop / enforce EBM March 18, Page 12

13 More About Why We Are Doing This Generally favored by: Governments Academics Selected Providers Device Manufacturers System Vendors Consultants Key issue for these supporters: Getting high-quality data for decision making Avoiding delay in implementation Generally favored wink, wink by: Payers Payer Trade Groups Some Consultants Key issue for these supporters: Timing When Cost What Sequence How is cost funded Minimizing unintended consequences March 18, Page 13

14 The Paradox of Knowledge Granularity The more detail I know about clinical events, the less certain I am about what I know or said another way, more granular information reduces by the certainty of my knowledge. This paradox is premised on the concept of sample size. An effect of this paradox is that it will become more difficult to know about individual physicians and what knowledge we have will take longer to accumulate. This may make it more difficult and longer to use detailed information to change individual physician behavior. We may know more about physicians but not a physician. This makes it both easier and more difficult to implement protocols of care, Evidence Based Medicine, Pay for Performance, and other clinical buzzwords. March 18, Page 14

15 Benefits of Changing ICD-10 Change Diagnosis specificity Device specificity Procedure specificity Body part specificity Specifies laterality Benefit Refined grouping and reimbursement methodologies Increased ability to perform product line and benefit analysis Decreased need to include supporting documentation with claims Tightened patient stratification for wellness/dm/cm programs Ability to perform procedure outcome analysis Support public health surveillance initiatives March 18, Page 15

16 When Will We Do This? August 2008: CMS publishes Proposed Rule June 2009: Industry begins design documentation December 2008: December 2009: CMS/Industry begin ongoing education and outreach 3Q08 4Q08 1Q09 Industry builds and internally tests systems changes 2Q09 3Q09 July 2010: 2Q10 Covered entities must comply with Version 5010 (for some health care transactions) and Version D (for pharmacy transactions) and the Medicaid pharmacy subrogation transaction (Version 3)* 4Q10 1Q11 2Q11 January 2013: 4Q12 1Q13 March 18, Q11 4Q11 1Q12 2Q12 1Q14 2Q14 October 2013: The ICD-10 code sets rule established the compliance date as Oct. 1, *However, for Version 3.0, small health plans have an additional year and must comply on Jan. 1, Q12 1Q10 January 2012: Begin conducting external testing 3Q10 4Q09 2Q13 3Q13 4Q13 Page 16

17 Why Do Implementation Dates Change? They were set in an unrealistic manner in the first place. As reality intrudes on political decisions, implementation fades into the future. Dates are set through the Beltway Cycle Policy Legislation Regulation The Beltway Cycle creates multiple and compounding methods of delay. Effectively making ICD-10 decisions involves three different arguments, each of which can be delayed or traded off against other political / economic / clinical alternatives. Initiatives such as ICD-10 interact with other initiatives, delay can ripple. Example: 5010 AIG takes the funding... March 18, Page 17

18 Show Me the Money It is easier to estimate costs than benefits It is useful to think at the national level It is easier to see money spent today than money gained 8 years from now and it is useful to think at the level of what happens to one physician. This topic is fraught with the problem of mandates. The mandate idea is this: I (say Congress or HHS) tell you ( Dr. Fred ) to spend your money to do something that benefits me. This problem creates economic incentives to delay implementation and increases the politicalization of the issue. Federal mandates are prohibited by law, so much of Beltway argument becomes what is a mandate. This compounds delay. Bush 43 approach appeared to be to argue less about mandates and create a safety value by providing some nominal funding for the required change. March 18, Page 18

19 National Cost Estimates October, 2003 NCVHS Testimony Rand Implementation costs: $425M - $1.1B Benefits: $700M $7.7B Nolan Implementation costs: $5.5B - $14B Benefits not studied: October 2008 MGMA Sponsored Nachimson Study At three different practice sizes, approximate cost to implement expressed in terms of per physician is $28,500. These results are approximately (+/-10%) the physician costs in the October 2003 Nolan study adjusted for inflation. March 18, Page 19

20 The Nachimson Study Gives Insight to Functional Costs The Nachimson Study gives some insight into the functional costs that will comprise implementation costs. It does not talk in detail about longer term impacts on reduced physician productivity and decreased practice revenue. Cost Element Estimate % Total Education $46, % Process Analysis $48, % Changes to Bills $99, % IT Costs $100, % Increased Documentation $1,785, % Cash Flow Disruption $650, % $2,728,780 March 18, Page 20

21 Types of Financial Impacts Known Implementation Costs Training Staffing System changes Reduced staff productivity Known Unknowns Reduction in clinical revenue due to diverted physician time Increased transaction and inquiry costs between physicians and payers Unknown Unknowns Impacts of reduced physician access Data fog : confusion by using or converting ICD-9 to ICD-10 clinical history and knowledge March 18, Page 21

22 Practice Impact Economics of a Day of Practice Before ICD-10 After ICD-10 Family Practice Visits each Day Charge per visit $ $ Revenue per visit $ $ Revenue to Practice $2,146 $1,709 Physician Time per visit (National Ambulatory Care Survey, CDC) Total Physician visit time Physician Cost per 8 hour day $ $ Nurse Cost per 8 hour day $ $ Support Staff Cost per 8 hour day $ $ General Services Costs per 8 hour day $ $ Total Cost per day $2, $2, Operating Costs per visit $99.49 $ Net Income to Practice $56.99 ($406.92) Impact on Physician Productivity Minutes 2 minutes more per visit for history and coding and recording 42 1 minute more per visit for annotating record 21 10% of visits result in increased test and image review taking 1.5 min each 3.15 increased testing results in increased explanation at 5 minutes for 1/2 tests % of visits creates question with staff that takes 3 minutes 3 Impact on Physician Visit Time 74 Reduced Vists per day 4 Data used in cost/revenue and volume is from MGMA Cost Survey 2004 March 18, Page 22

23 What Information Resources Do We Have? Search for ICD-10 on Websites MGMA: AHIMA: HHS: AMA: Clinical Professional Associations Example: AAFP AHA: AHIP: BLUES: National Committee on Vital and Health Statistics: 3M: Ingenix: System Vendor Websites March 18, Page 23

24 Look Out For Slick consultants coming to town System Vendors selling ICD-10 Compliant Solutions Under estimating complexity and cost Under training clinical staff Under training administrative staffs Under involving physicians Over involving physicians Insufficient testing and exercise of new processes and tools March 18, Page 24

25 Generic ICD-10 Plan Build Organizational Awareness Recruit Key State Holders Form Leadership Team Identify Working Group Identify Key Issues People Process Technology Use of Data: Clinical and Financial Prepare Initial ICD-10 Plan Obtain Funding for Plan Establish Implementation Time Line and Version Two of Plan Executive Implementation Sequence Training / hiring / contracting Testing, testing, testing Pre-conversion Process Changes Cut over Post cut over remediation Manage post cut over productivity Physician Staff Monitor Financial and Operational Results March 18, Page 25

26 Testing Learning Succeeding Experience with developing / changing complex systems includes several risk reduction techniques: Component Testing Integration of Components Testing Volume Testing Using Regression Testing Cycles of Learning are critical to success. Over learning simple tasks leads to skill, speed, and confidence. Becoming really good with the most frequent tasks gives me time and space to deal with the unusual. March 18, Page 26

27 Component Testing What do we do with this task in order to have one visit / procedure? Example: Can we find the words? Select the most frequent type as your test Know what to expect (target) Make the change Assess result Modify and repeat Repeat, repeat, repeat, etc. Do it with different staffs to find role of human factors Now that this component works, what is the next component to test? Minimum % of components to test is the components that represent 85% transaction / revenue volume March 18, Page 27

28 Volume Testing Pick a random session / day Re-code and bill it with ICD-10 Compare result to expectation Find and fix problem Repeat the testing cycle until all known problems are resolved Pick another random session / day Repeat entire cycle as above Pick another random session / day Repeat entire cycle Pick a random two day period Etc. March 18, Page 28

29 Integration Testing Testing tasks that link with other tasks Example We have found the words. Can we find the numbers? We have the numbers. Can we create a bill? Same principles from components Focus on high-frequency events Test in volume until very comfortable that you can meet expectations Isolate errors or weakness at task level, focus on tasks with highest error rate, priority to up-stream or left hand most process March 18, Page 29

30 Minimizing Implementation Costs Component of Costs Managibility Minimize by Systems changes Low Where possible, collective approach to vendor professional services costs Training Moderate Share training costs via community / trade group programs Increase number of coders in local market to lower cost Testing Moderate Use efficient testing strategies Increase number of coders to lower cost Increase number of coders in local market to lower cost Post Conversion Productivity Moderate Target training to practical skills rather than coding theory Increase number of coders to lower cost March 18, Page 30

31 Informal Council Organize San Antonio for ICD-10 Facilities / Systems San Antonio MGMA Prepare Community Increase number of coders in community Local training programs Financial incentives for existing staff Organize System Vendors Inventory vendors Invite community briefings for their clients Develop vendor-specific workshops to reduce implementation costs Community-wide testing concept Seek funding from state, federal, and local sources March 18, Page 31

32 We Should Expect America s health care system will successfully make the ICD-10 transition. Front-line Primary Care Physicians will bear the brunt of the transition. Specialties will have fewer issues, but they may be more complex than productivity problems. The transition will take longer than is anticipated and be more difficult than can be anticipated. March 18, Page 32

33 What We Should Do... Go as fast as we can but not faster than we should. Allow adequate time for front-line physicians to understand and adjust their practice environments. Avoid Big Bang implementation. Build IT infrastructure before implementing ICD-10. Allow time for non-provider entities to understand and adopt required changes. Organize San Antonio to be successful with implementing ICD-10. March 18, Page 33

FirstCare Health Plans (FirstCare) is on track to be ICD-10 ready by the October 1, 2015 deadline.

FirstCare Health Plans (FirstCare) is on track to be ICD-10 ready by the October 1, 2015 deadline. Overview In July 2014, the U.S. Department of Health & Human Services (HHS) issued a rule finalizing October 1, 2015 as the new compliance date for health care providers, health plans, and health care