1. ICD-10 Conversion and Quality Presented November 10, 2010 Quality Leaders Forum Presented by: Seraphin Nicholson, MSE, MHSA

2. ICD Overview  ICD-9 codes will be replaced  Current codes are 30 years old  Diagnosis coding systems and data structure will change  Federally mandated, conversion must occur by October 2013  ICD-9 is obsolete  Current codes do not reflect current medical knowledge or advances in technology  Is running out of structural capacity  Inhibits the transition to interoperable health data exchange  U.S. is the only industrialized country not using ICD-10 codes  Scope of impact  All healthcare settings and providers  All health plans and payors  All IT solutions using or storing diagnosis and procedure coding

3. Code Changes  The ICD-10 code set is a full replacement of the ICD-9 code set. This new structure provides additional granularity for diagnosis and inpatient procedure codes and has a different structure: # of CodesICD-9ICD-10 Total codes16,000155,000 Diagnosis codes13,00068,000 Procedure codes3,00087,000 Structure Change ICD-9ICD-10 Diagnosis.. Procedures..

4. Code Changes, cont.  This new granularity offers greater specificity for diagnoses and procedures.  For example, under ICD-9, 250.61 is a diabetes mellitus patient, not states as controlled, with Type I neurological complications.  Under ICD-10, this could be coded as:  E10.40 Type I diabetes mellitus with diabetic neuropathy, unspecified  E10.41 Type I diabetes mellitus with diabetic mononeuropathy  E10.44 Type I diabetes mellitus with diabetic amyotrophy  E10.49 Type I diabetes mellitus with other diabetic neurologic complications

5. Financial Impacts of Code Changes  Hospital revenue may significantly be impacted by code changes  For example:  ICD-9 code 31.99 “Other operations on trachea” currently groups to DRG 168 “Other respiratory systems O.R. procedures w/o cc/mcc” with CMS weight 1.3026 and pays $6,513  ICD-10 0B717DZ “Dilation of trachea with intraluminal device via natural or artificial opening” will group to MS-DRG v26.0 “Major Chest Procedures w/o cc/mcc” with CMS weight 1.7662 and pays $8,831

6. Provider & Staff Impact  Provider impact  New framework of thinking about disease states  More details need to be documented in chart  Massive expansion of categories to be familiar with  Hospital-based support personnel  Coders: new scheme, increased information needed to code validly  Finance & billing office: new scheme, payor conversion problems and disparities, overlap during aging of old scheme, new fee schedules and financial models  Health IT: support of new data formats, handling of old data and reports, legacy systems that will not convert

7. Consequences  Some consequences of ICD-10 conversion include:  Decreased coding productivity  Increased provider queries  Increased delays in reimbursement  Discontinuity in data structures will impact related analytics, trending and associated decision-making  Revenue cycle performance will likely:  Increase in unbilled receivables  Increase in accounts receivables  Slowed and/or reduced cash flows

8. Long Term Value & Benefit  Public Health  Better disease epidemiology information including signs and symptoms, risk factors and co-morbidities  Research  Better data for mining and improving predictive accuracy  Health Reform  Supports pay for performance  Supports determination of episodes of care and high risk pool patients  Reimbursement  Reimbursement based upon complexity and outcome

9. ICD-10 & Quality  Improved Quality Measurement  Data availability for quality metrics, patient safety and compliance  Clinically robust pathways can be based upon detailed codes  ICD codes used for measuring quality  HealthGrades, AHRQ, NCQA are just a few of the many organizations that use ICD codes  Increased granularity in ICD-10 codes will help payors and providers more easily identify patients in need of disease management and more effectively tailor disease management programs

10. ICD-10 & Quality, cont.  Organizational Monitoring and Performance  ICD-10 offers providers and payors better data in support of their efforts to improve performance, create efficiencies and contain costs  RAND believes the coding error rates will be less than what is currently experienced under ICD-9-CM codes because of the improved logic and standardized definitions of ICD-10-PCS and the more accurate clinical terms in ICD-10-CM 1  Increased code specificity will:  Make it easier to compare reported codes with clinical documentation  Check for consistency between diagnosis and procedure codes  Check for illogical combinations of diagnoses 1 RAND Corporation. “The Costs and Benefits of Moving to the ICD-10 Code Sets.”

11. ICD-10 & Quality, cont.  Replacing ICD-9-CM with ICD-10-CM and ICD-10-PCS will provide higher-quality information for measuring healthcare service quality, safety, and efficacy. This will in turn provide better data for:  Quality measurement and medical error reduction (patient safety)  Outcomes measurement  Clinical research  Clinical, financial, and administrative performance measurement  Health policy planning  Operational and strategic planning and healthcare delivery systems design  Payment systems design and claims processing  Reporting on use and effects of new medical technology  Provider profiling  Refinements to current reimbursement systems, such as severity-adjusted DRG systems  Pay-for-performance programs  Public health and bioterrorism monitoring  Managing care and disease processes  Educating consumers on costs and outcomes of treatment options

12. ICD-10 & Quality, cont.  Moving to the new code sets will also permit improved efficiencies and lower administrative costs due to replacement of a dysfunctional classification system. This in turn allows:  Increased use of automated tools to facilitate the coding process  Decreased claims submission or claims adjudication costs  Fewer rejected and improper reimbursement claims  Greater interoperability  Decreased need for manual review of health records to meet the information needs of payers, researchers, and other data mining purposes  Decreased need for large research organizations to maintain dual classification systems (one for reimbursement and one for research)  Reduced coding errors  Reduced labor costs and increased productivity  Increased ability to prevent and detect healthcare fraud and abuse

13. ICD-10 & Quality, cont.  In a 2004 cost/benefit analysis for the Department of Health and Human Services, the RAND Corporation quantified some of the benefits of improved data derived from ICD-10-CM and ICD-10-PCS. RAND concluded that the benefits far outweigh the costs of implementation, estimating the dollar value of the benefits in the following categories:  More accurate payment for new procedures  Fewer rejected claims  Fewer fraudulent claims  Better understanding of new procedures  Improved disease management 2 2 RAND Corporation. “The Costs and Benefits of Moving to the ICD-10 Code Sets.” March 2004. Available online atwww.rand.org/pubs/technical_reports/2004/RAND_TR132.pdf

14. Compliance  HIPAA 5010 Transaction Sets  Required to enable transition to ICD-10  Effective date 1/1/2012  Based on transaction date, not date of service  ICD-10  Effective date 10/13/2012  Based on date of service (all OP settings) and discharge date (all IP settings)

15. Meaningful Use & ICD-10 Relationship  Must pursue HIPAA 5010/ICD-10 at the same time as EMR adoption to receive meaningful use incentive payments  Meaningful Use Stage 1 Criteria:  Maintain an up-to-date problem list of current and active diagnoses based on ICD-9-CM or SNOMED CT  The Office of the National Coordinator (ONC) under HHS has stated that later criteria will require utilizing ICD-10 or SNOMED CT for problem list documentation.

16. Bottomline  The rule is final and HHS does not intend to delay the compliance date  Health Reform and ARRA-HITECH legislation both strengthen the need for ICD-10  Meaningful use criteria  Administrative simplification provision in health reform  Noncompliance will jeopardize reimbursements and critical business and clinical operations

17. Questions? Seraphin Nicholson snicholson@caph.org 510-874-7221