From the Consultant’s Corner 6/27/13

Covering Your Bases: Preparing for ICD-10 Cash Flow Impacts
By Brad Boyd

You know those routine chart audits you regularly complete as part of your billing compliance program to make sure patient encounters are coded and documented correctly? That audit process can be invaluable when it comes to your ICD-10 conversion.

Imagine for a moment your organization’s conversion to ICD-10. You’ve trained your coders and physicians on the new code set and even done some test runs. Despite this, 30-60 days after October 2014—right around the holidays—your organization experiences a dramatic drop in cash flow. After looking into the issue, you realize that you’re not getting paid as much as you once were. Gaps between current documentation and coding processes and ICD-10 requirements will impact reimbursement.

To avoid this situation, I suggest to medical group clients that they leverage their current claim auditing and coding education program to look for gaps between ICD-9 and ICD-10 coding and documentation requirements, as well as reimbursement impacts. Here’s how the process works. After you audit your current charts for ICD-9 compliance, you determine what the reimbursement would be for those charts. You then figure out what needs to be documented to achieve the same level of reimbursement if the charts were coded in ICD-10, revealing potential gaps that need addressing.

One way to close gaps is through physician and coder education. I also suggest you go a step further and share information about gaps with your vendors who are currently in the process of designing upgrades to ICD-10 coding and documentation tools. By providing feedback about gaps to vendors right now, you give them the opportunity to address those disparities, further ensuring tools and solutions that adequately meet your organization’s needs.

Despite thorough planning, your organization’s cash flow may still take a hit for a period of time after ICD-10 goes into effect. As a further “insurance plan” against money loss, I recommend communicating with your biggest payers and trying to negotiate a worst-case scenario cash flow plan. You must be careful when broaching this topic. I suggest being fully transparent about your approach to ICD-10 implementation, showing the payer that you’ve done your due diligence. This could involve sharing your risk assessment, project plan for mitigating any anticipated risks, training programs for clinicians and coders and governance structure for the implementation.

Once payers understand that you’ve done everything you can to prepare, they may be open to discussing a short-term, emergency payment arrangement based on historical information about service volumes. I firmly believe that setting up this type of back-up plan can help your organization ensure adequate cash flow for a period of time as you work through unexpected issues with the new code set.

Although October 2014 may seem like a long way off, it will be here before we know it. Most of the organizations I work with are making steady progress toward implementing the new code set, having completed an impact assessment and project plan. However, I have noticed that organizations often underestimate the need to consider the potential cash flow impacts of the switch. Taking the time to understand and prepare for changes in cash flow can help your organization put mitigation strategies in place to support a smoother transition with limited disruptions.

Brad Boyd is vice president of sales and marketing for Culbert Healthcare Solutions.