As physician practices across the country are preparing for ICD-10 adoption and with it, dramatic changes in their operations, most of them are asking, "Will we be ready?"
There's no doubt that ICD-10 adoption is a complex undertaking , but practices should consider the cost savings and improved efficiencies that can result. Because ICD-10 creates more specificity in coding, it's a vital tool for practices. With greater specificity, practices will find it easier to compare costs, quality of care, outcomes and varied protocols and diagnoses. ICD-10 can also be helpful when used alongside business intelligence tools, particularly Comparative Analytics (CA), because practice groups should be concerned not just with their own performance but how their performance compares with their peers.
CA enables organizations to benchmark performance against peers using current data - as opposed to relying on published data that is months or years old and does not reflect current industry trends.
Knowing your key performance indicators (KPIs) is a good first start when building your data analysis before and after the ICD-10 transition to gauge its effectiveness. KPIs like denial rates, daily charges, procedure code utilization, top denial reasons and work Relative Value Units (RVUs) are all important. ICD-10 will generate multiple positive outcomes, including fewer rejected or fraudulent claims, improved understanding of procedures, more accurate payment and enhanced disease and chronic care management.
It's also important to assess the ability of your business intelligence tools to spot both hot spots and areas of excellence. We all need tools that focus our efforts in labor-stressed back offices. Effective analysis of KPIs by location, doctor, practice, specialty, etc. can help you find and address hot spots or necessary areas of improvement.
ICD-10's enhanced structure, clarity and detail will help curtail the number of vague and incorrect claims. Using CA can help you find your "areas of excellence" or people, processes and best practices that a medical practice can replicate enterprise-wide to improve overall performance. This is the basic foundation of CA - not just how well you are doing but where improvement may be needed within your own organizations.
What About Audits?
That is just the first step in the comparative challenge, and unfortunately, where most practices stop. Again, the underlying question to ask is not "How are we doing?" but "How do we compare to our peers in the market, addressing issues around billing, competition, shrinking margins, payer relations and audits."
According to a Dec. 4 article in Government IT News, "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 Oct. 1, 2014. If ICD-10 CM is not used, future RAC audits will increase the risk of denial of claims, even for ambulatory procedures."
Let's look at audits from another perspective. Another way Medicare and the other payers find audit targets is by comparing individual practices to the comparative norms. With E&M code utilization, for example, Medicare auditors look for outliers in various specialties and localities in assessing level one to level five average percentage usage. If an outlier appears (i.e., higher percentage than the average in your peer group), then that is a more likely target for an audit. That is not to say you should not code appropriately; just that if you are an outlier, you should be prepared to document the reason for higher than average- visit level coding.
Measure & Manage
Bringing ICD-10 adoption together with business intelligence like CA can only help a practice in achieving compliance, lowering its risk for an audit and measuring how efficiently it's running. Organizations need to collect, measure and manage key internal business metrics, but also need to compare it against peers to gain meaningful performance insights because if you can't measure it, you can't manage it.
John Stanton is vice president/consulting for RemitDATA, a leader in reimbursement, utilization and productivity data and analysis, in the outpatient healthcare market.