10 ICD-10 regulation myths demystified

By Michael F. Arrigo
08:08 AM
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At the AHIMA National Convention in Chicago, attendees had one eye on the Presidential election and one on the conference. Now that the election cycle is over, healthcare regulatory compliance activities have picked up. For the benefit of all HIPAA Covered Entities, healthcare IT vendors, and related staff who know work must continue on the PPACA, ARRA and HITECH Act, and ICD-10, AHIMA is working hard to address myths about the regulations. AHIMA speakers shared some of their best insights. The least obvious insight is about the second-order effects the regulations cause because of their inter-relationships. 

1. GEMs are free and you get what you pay for

Sue Bowman, MJ, RHIA, CCS, Director Coding Policy & Compliance at AHIMA explained, “ICD-10 conversion is not just a technology upgrade. It is a business process transformation, as well as an educational and clinical transformation. You have to look at policies, procedures, staff etc. as well as IT." We discussed myths that cloud understanding of the ICD-10 conversion. We agreed that ICD-10 complexities mystify many buyers of healthcare IT solutions. People want to believe there is a magic solution to ICD-10 conversation challenges. Unfortunately, there is no magic box. Many misunderstand that the free General Equivalence Mappings (or “GEMs”) are only guidelines. The GEMs are not intended to substitute for ICD-9-CM and ICD-10-CM/PCS directly. “GEMs are a terrific tool in the public domain to help with database conversions but they are not intended for coding medical records,” continued Bowman.

You get less than what you pay for with GEMs-only solutions that do not include clinical aspects of real-word usage. Ironically, vendors who base their ICD-10 solution on GEMs-only are charging customers for something that is available free from CMS. Unfortunately, GEMs-only solutions won’t work. They fail to resolve a substantial gap between hypothetical examples and real world clinical application. Challenges arise because unmapped codes affect key business and operational functions such as medical policy writing for health plans, provider contracting, claims processing, and analytics. For health care providers, GEMs-only based revenue cycle management solutions fall short, as will electronic medical records, encoders and other IT products.

2. ICD-10 WHO? Some vendors still not using U.S. specific version

There is similar misunderstanding among some vendors about the intricacies of the U.S. ICD-10 coding system, which is different from that used elsewhere. First, the U.S. will use ICD-10 PCS for procedure coding, billing of inpatient procedures, and for reimbursement. Other countries don’t. Second, the ICD-10 CM diagnosis code set is deeper in its specificity. Alarmingly, even some software vendors who are converting their products to ICD-10 don’t appreciate these differences. “A practice management vendor told me earlier this year that they were ready for ICD-10 in the U.S. because they downloaded ICD-10 from the World Health Organization web site, (“WHO”) rather than using ICD-10 CM and ICD-10 PCS,” continued Bowman. The World Health Organization collaborated with the U.S. on a specific version for use in the U.S. It isn’t the same as the WHO version used in other countries

3. EMR, claims vendors will not make your organization ICD-10 compliant

Misinformation and misunderstanding about ICD-10 is a real problem. Ultimately, businesses, not vendors, are responsible for mitigating risks in the ICD-10 transition. I heard from more than one healthcare CIO who stated he believed his healthcare IT vendor would make his organization ICD-10 compliant. CIOs who miscalculate do not realize that even a competent vendor cannot accomplish this for any payor or provider. In the end, the HIPAA Covered Entity is responsible for ICD-10 compliance, not the vendor.

4. U.S. military is accountable for ICD-10 CM and PCS transition, too

Some believe that the U.S. Military doesn’t have to worry about ICD-10 because it doesn’t bill for healthcare services. In fact, according to LTC Rich Wilson, Director of Patient Administration Systems and Biostatics Activity (PASBA) for the U.S. Army, the army is evaluating methods to create an ICD-10 transition framework. The Military Health System (MHS), along with the entire U.S. healthcare system, will transition to ICD-10 for diagnosis and inpatient procedure coding effective on 1 October 2014. 

5. ICD-10 terminology tools today address diagnosis, not procedure coding

According to Derek Baird, vice president of sales and provider solutions for Health Language, “we are ready for ICD-10 CM now. We see very little demand for ICD-10 PCS." Health Language senior vice president Marc Horowitz noted to a prospect on the AHIMA show room floor that there was “…an important new agreement…” After the AHIMA conference, Wolters Kluwer announced that it is acquiring Health Language. Interface Terminology (“IMO”) team members Kathryn Perron, Debra Field, and June Bronnert stated that they have three people working part-time on ICD-10 CM and ICD-10 PCS, however “…very little work has been done…” on ICD-10 PCS.

6. Dig deeper for true impacts via an ICD-10 assessment

When a HIPAA Covered Entity digs deeper, only then can it uncover the real challenges. “One multi-facility health care provider said it had 1,000 impacted systems for ICD-10, and a payor said that, until conducting an assessment, they had systems that were impacted – that no one knew were there,” Bowman said. Similarly, health plans have believed, prior to their ICD-10 impact assessment, that ICD-10 was simple. “All you have to do is accept an ICD-10 code from a provider if you are a payer, however, a lot of payers initially adopted a strategy to comply with HIPAA then use GEMS to convert to ICD-10," Bowman continued. "Now as health plans uncover the intricacies, they are changing their tune. They are realizing opportunity to change their strategy to benefit from the richer data in the ICD-10 codes."

7. Electronic medical records are a container for standardized ICD-10 data

Project linkages between EMR vendor assessments, clinical documentation, and coding need to be strengthened in ICD-10 transition efforts. ICD-10 will be the method for expressing inpatient data from encounter and diagnosis to procedure, claims and remittance, readmission and comparative effectiveness data. 

8. ICD-10 won’t necessarily create new EMR vendor license revenue

One securities analyst at the AHIMA conference opined hopefully that ICD-10 would be a source of additional software license revenue for EMR and vendors whose revenues might otherwise peak after most of the industry achieves Meaningful Use Stage 1. Ms. Bowman and I agreed, however, that this is a misperception. The rumor that EMR vendors will charge for the upgrade is just that: a rumor. We believe standard EMR vendor contracts state that government mandated upgrades must be made available to customers who pay maintenance fees at no additional cost. If you aren’t certain, check the contract your organization has with your medical record vendor.

9. RAC audit risk can be mitigated by ICD-10 CM for outpatient claims

The Centers for Medicare and Medicaid Services (CMS) use Recovery Audit Contractors (“RAC Audit”) for recovering “inappropriate payments” for Medicare services. According to the American Hospital Association, of all the denied dollars involving RACs, 96 percent were complex denials.

• The average dollar value of an automated denial was $521.
• The average dollar value of a complex denial was $5,839.
• Of the automated denials, hospitals reported 73 percent involved outpatient services.

Despite the fact that outpatient and ambulatory services will continue to be billed in CPT, the diagnosis that must be included in the clinical documentation must be expressed in ICD-10 CM if the date of services is on or after October 1, 2014. If ICD-10 CM is not used, future RAC audits will increase the risk of denial of claims, even for ambulatory procedures. Among participating hospitals in the AHA survey, $4.3 billion in Medicare payments were targeted for medical record requests through the first quarter of 2012.

10. Adaptive design can provide a new view on disruptive regulations

One of the highlights of this year’s AHIMA conference was the AHIMA Thought Leader Lecture Series. Speaker Dr. John Kenagy, MD is one of the great minds focused on healthcare value creation. His adaptive design and continuous learning insights illuminated these key points:

• Disruptive innovation or adaptive innovation is a choice.
• Adaptive innovators thrive by developing new opportunities. “It’s not best practice; it’s new value...” Kenagy said.
• Previously successful Mindsets, Methods, Strategies and Structures (“M2S2”) stall new adaptive opportunities, he continued. 
• As Kenagy said, one of the biggest barriers to innovation is the perception that “It’s almost impossible.” His rebuttal to this perception: “…if it is almost impossible then there is a chance that it is possible, however, because of this perception 95 percent of companies fail to create new value.”
• Organizations can increase the adaptive capacity of current resources to create new value. “You will always know what to do if you capture the knowledge of everyone in the organization,” Kenagy said.

In conclusion, applying Kenagy’s methods when considering the insights above, one can start to see key see inter-relationships between the regulations:

• The most important inter-relationship is between ICD-10 and the PPACA, which requires that demonstrable outcomes be shown which will be supported by the adoption of ICD-10-CM and ICD-10-PCS, since the new classification system will provide the ability to describe and report on diagnoses, procedures and outcomes at a much greater level of detail and specificity.
• Since demonstrable outcomes will drive reimbursement, the linkage between ICD-10 and revenue cycle management has three effects. 

1. For providers, more detailed documentation will be required to demonstrate medically necessary procedures, which will be compared to new, more fine-grained medical policy at health plans.
2. Health plan medical policy will be driven by, and expressed in, ICD-10 based clinical concepts.
3. A new reimbursement paradigm driven by demonstrable outcomes, rather than fee for service, will require robust ontologies that help navigate between ICD-9, ICD-10, and CPT codes.

• Since many healthcare organizations and healthcare IT vendors find ICD-10 transition to be exceedingly complex, they are starting to rely on terminology vendors for assistance.
• Since inpatient revenue cycle management vendors must comprehend billable procedure codes expressed in ICD-10 PCS, ICD-10 CM terminology alone will not be enough.
• If you are seeking terminology solutions, ask yourself whether the terminology vendor you select can deal with both ICD-10 CM for diagnosis coding and ICD-10 PCS for procedure coding. If they are struggling now, where will they be in 23 months?
• There are additional inter-relationships between:

o ICD-10 and interoperability in health information exchanges.
o ICD-10 and CORE Operating Rules.
o ICD-10 and insurance exchanges.

Michael F Arrigo is managing partner of the healthcare practice at No World Borders a management and Health IT consulting firm that helps hospitals, health plans, and self-insured employers improve their planning and outcomes for ICD-10, the Affordable Care Act, the HITECH Act, information and insurance exchanges, and other initiatives.