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December 2015

ICD-10 Flexibility Raises Questions
By Lisa A. Eramo
For The Record
Vol. 27 No. 12 P. 16

Designed to provide physicians with a margin for error, a CMS/AMA joint announcement may create confusion and increase anxiety levels.

Although many hospitals and physician practices seemed to have weathered the ICD-10 storm effectively, the jury is still out in terms of how payers will process and adjudicate claims. As of press time, most providers had only begun to submit ICD-10-coded claims. In addition, some providers—particularly those who continued to resist ICD-10—may be struggling with documentation and code assignment in ICD-10.

The good news is that although all covered entities were required to move to ICD-10 on October 1, physicians and other providers paid under the Medicare Fee-For-Service Part B physician fee schedule have a certain level of flexibility related to ICD-10 reporting. A joint announcement made by the Centers for Medicare & Medicaid Services (CMS) and the American Medical Association (AMA) on July 6 states that there is a 12-month period during which flexibility will be granted for the claims auditing and quality reporting process.

The announcement surprised many in the industry. After years of contentious debates, CMS and the AMA seemed to have reached an unlikely compromise, acknowledging the fact that many physician practices simply wouldn't be ready for an October 1 launch. In its joint announcement, CMS states the following: "The reason we focused on claims billed under the Part B physician fee schedule is because many physicians are in small practices that need additional flexibility to gain experience with the ICD-10 coding set."

Though helpful in theory, the announcement lost momentum soon after it made the news. "We saw the joint announcement as a really important step forward in easing provider fears of wide-scale claim rejections for nonspecific codes," says Robert Tennant, MA, director of HIT policy at the Medical Group Management Association (MGMA). "However, very quickly, those hopes were somewhat dashed because the agency almost immediately put out a clarification that really indicated the flexibility would be offered on the back end of the claims processing, not the front end."

The CMS clarification to which Tennant refers indicates that contractors conducting medical reviews (ie, Medicare administrative contractors, recovery auditors, zone program integrity contractors, and the supplemental medical review contractor) during the 12-month period could not deny claims solely for the specificity of the ICD-10 code as long as the code is in the correct family of codes (ie, the correct ICD-10 three-character category) and there is no evidence of potential fraud. This flexibility applies to both automated and complex medical reviews.

Although CMS and the AMA likely had good intentions when granting the flexibility, Tennant says providers are still unclear in terms of what CMS will require. "I think a lot of providers believe it means that a nonspecific code will be accepted by Medicare, and it appears that's not what the grace period is going to necessarily permit," he says.

According to the CMS announcement, providers must submit a valid ICD-10 code at all times—that is, a code that includes the requisite number of characters. For example, C81 (Hodgkin's lymphoma) is not a valid code because it requires an additional fourth and fifth character. Some ICD-10-CM codes require sixth and seventh characters as well.

The flexibility also doesn't apply to prior authorizations or prepayment denials related to a national coverage determination (NCD) or a local coverage determination (LCD). Essentially, CMS may deny a claim because it includes an ICD-10 code that isn't consistent with an applicable coverage policy. CMS says this could occur if the NCD or LCD requires laterality, and the physician reports an unspecified code.

Another important aspect of the CMS/AMA joint announcement is that it's limited in terms of the insurers to which it applies. According to CMS, the flexibility applies only to Medicare fee-for-service claims. It excludes Medicaid, commercial payers, and Medicare Advantage plans. These payers must determine on their own whether they'll offer similar audit flexibilities.

In an ICD-10 FAQ posted on its website, United Healthcare clearly states that the CMS announcement does not apply to its own operations. However, in the same sentence, it also states that the "kind of flexibility" discussed in the FAQs is already part of its original ICD-10 implementation efforts, making it somewhat unclear as to how the payer will handle specificity requirements.

"There's no legal requirement for a health plan to follow this flexibility guidance offered by Medicare," Tennant says. "With that said, I do hope that Medicare and the commercial plans take the approach of not looking for any opportunity to reject the claim but rather work with providers and allow some code specificity flexibility on the front end of the process, while at the same time working with providers to submit the required codes."

During a panel discussion at the MGMA Annual Conference in mid-October, both United Healthcare and Humana emphasized the fact that although they were taking a flexible approach to code specificity, this flexibility would not be permanent. "Physicians still need to be vigilant about identifying the most granular code that they report," says Tennant, who hosted the panel.

Alleviating Physician Anxiety
Sue Bowman, MJ, RHIA, CCS, FAHIMA, a spokesperson for the ICD-10 Coalition and senior director of coding policy and compliance at AHIMA, says the flexibility is another example of the many ways in which CMS has provided assistance to physicians to ease their transition. "While this announcement hopefully provides reassurance that Medicare audits won't use a lack of code specificity as an opportunity to deny claims, CMS still has to ensure payment is appropriate and that only medically necessary services are reimbursed. This is regardless of the coding system in use," she says. "The goal is to have complete and accurate documentation as well as the most appropriate codes. The CMS/AMA announcement doesn't change that goal."

Though it did introduce some level of confusion among physicians, Bowman says the ICD-10 Coalition supports the CMS/AMA joint announcement regarding flexibility in the claims auditing process because it fundamentally reduces physician anxiety. She suspects that, in the long run, physicians will realize that ICD-10 isn't as difficult to use as they might have imagined. Bowman notes that additional education about documentation and coding requirements may be necessary to dispel any lingering myths or misconceptions about the guidance.

"As time goes on, the significance of this Medicare policy around code specificity will likely decline," she says. "After the transition to ICD-10, physicians are probably going to find that it's not really any harder to pick the right code within a family than to pick the wrong code. So why not pick the right code to begin with?"

But what about hospitals? Why aren't they allowed this same level of flexibility, and might the flexibility afforded to physicians have a detrimental effect on hospital documentation and medical necessity?

Bowman says CMS probably didn't extend the flexibility to hospitals because of the diagnosis-related group (DRG) payment system by which hospitals are reimbursed. "A small difference in the code could change the DRG assignment," she says. "Physician payments are driven more by CPT."

Debora Bohlen, CPC, MMHC, administrative director of the ICD-10 transition at Vanderbilt University Medical Center in Nashville, Tennessee, says providers in each of its 159 hospital-owned clinics welcomed news of the CMS/AMA joint announcement. However, she remains skeptical. Despite Vanderbilt's diligent planning for ICD-10 physician education, she says there's always a chance that a provider won't take the time to drill down into the most accurate code simply because he or she knows that a penalty is unlikely. "It could lead to more queries," she says. "If the hospital isn't sure, then it's going to need to ask the physician for more information—especially for procedures."

Vanderbilt explored various options to mitigate physician resistance well before the implementation, and Bohlen says the CMS/AMA announcement didn't—and won't—alter its approach to physician readiness.

During educational fairs throughout 2015, coders at Vanderbilt met with each provider individually for a 30-minute session during which the provider's most frequently reported codes were mapped from ICD-9 to ICD-10. At that time, coders explained each change (and the documentation that would be required), and also bookmarked certain "favorite codes" in the charge capture system of Vanderbilt's homegrown EMR. Once a code was bookmarked, a provider could easily access that code without having to type in certain descriptors.

Throughout the summer, Vanderbilt rolled out ICD-10 using a staggered approach after each clinic received ICD-10, mapping codes back to ICD-9 for claims processing. "We were trying to think of any way to mitigate bottlenecks in patient flow. We really wanted patients to be able to move through the system smoothly," Bohlen says.

The hospital also established a coder hotline so physicians can contact an on-call coder 24/7 when ICD-10 questions arise.

Physician Uncertainty
However, not all organizations or practices were as forward thinking, nor did they embrace ICD-10 with such gusto. Now well into ICD-10, physicians continue to be concerned even despite the flexibility. "The level of provider frustration prior to go-live was as high as I've ever seen it. ICD-10 was one component of that," Tennant says. "Post go-live, that level of frustration has somewhat dissipated due to a smooth claims adjudication process thus far."

One reason for this frustration is that the industry still doesn't know how carriers will ultimately process and pay for unspecified codes. Another reason is that some carriers haven't explicitly described how they will process ICD-10 claims in general. For instance, four state Medicaid agencies (California, Louisiana, Maryland, and Montana) received waivers from CMS so they could crosswalk ICD-10 claims back to ICD-9.

"This is a big deal. The provider will be submitting a claim in ICD-10 according to the law. The Medicaid agency will take the claim and crosswalk the code back to ICD-9. Then they'll adjudicate it," Tennant says. "It's not a perfect match. Some estimate that there could be as many as 20% of codes that cannot be crosswalked. So what does the state Medicaid agency do when there's not a good match or it doesn't crosswalk very well? They're going to reject the code."

Tennant fears some smaller commercial carriers will follow suit and crosswalk ICD-10 codes back to ICD-9 for adjudication purposes. "If that's the case, then why are we even going to ICD-10? We could have just stuck with ICD-9," he adds. "It's my understanding that the larger commercial carriers are coding natively."

Given these and other uncertainties, some experts say it's unclear whether the flexibility will actually help physicians at all. "It might benefit physicians if all of their claims were audited retrospectively, but we know that this isn't the case. That's obviously a good thing," Tennant says. "It may help a small percentage of folks who are experiencing these retrospective audits."

MGMA plans to tap into members' experiences with ICD-10 through various surveys over the next couple of months to see whether the flexibility has actually helped relieve physician anxiety and what other challenges have remained. "There are a substantial number of smaller practices that still aren't ready," says John S. O'Shea, MD, senior fellow at the Heritage Foundation's Center for Health Policy Studies. "If these practices are going to continue to submit ICD-9 codes, I don't see how this policy will change anything or help them."

O'Shea says the fundamental problem is that ICD is used for both clinical and billing purposes. "There's no reason why we need to have a complex disease classification system linked to the billing system," he says. "Even though ICD may be a good research tool, I feel that research and medical billing should be 'delinked' and that we should have a better, less burdensome system for billing."

In the absence of overhauling the billing system, dual coding—allowing providers to choose whether they wanted to report ICD-9 or ICD-10 codes—could have been a viable option, O'Shea says. "CMS says it can't accommodate dual coding, but I'm puzzled by that," he says. "CMS needs to be able to process ICD-9 codes for a period of time while providers continue to submit bills for services rendered prior to October 1."

Playing Catch-Up
The time for debating alternative options for ICD-10 has come and gone. The question now is: Will physicians ultimately get up to speed? It's true that the CMS/AMA joint announcement will relieve some of the auditor scrutiny; however, for the most part, physicians need to move full speed ahead in terms of ensuring coding and documentation accuracy.

Tennant says much of the advice that MGMA provided to physicians prior to ICD-10 go-live remains relevant:

• Identify workarounds to submit ICD-10 claims, if necessary. If your software wasn't properly updated for ICD-10, contact your payers to see whether you can use an alternate method, such as submitting through the health plan's Web portal. "If you don't submit claims, you don't get paid. If you don't get paid, you don't stay in business," Tennant says. "It would be ironic if practices did go out of business when the whole point of ICD-10, according to the government, is to improve patient care."

• Monitor your claim rejection rate closely.

• Establish a line of credit, if necessary. Practices should have done this long ago; however, it's not too late to reach out to lenders. This process may take a few weeks or more, depending on the dollar amount, so be prepared for a somewhat delayed process, Tennant says.

• Create a clinical documentation improvement program. "Even if you know the ICD-10 codes, you still need the documentation to support those codes," Tennant says.

• Contact the CMS ombudsman when questions arise. William Rogers, MD, can be reached via e-mail at ICD10_ombudsman@cms.hhs.gov. "We know Dr. Rogers quite well at MGMA," Tennant says. "He's extremely sharp and an influential physician. CMS couldn't have picked a better person to oversee the transition."

O'Shea would like to see CMS study ICD-10's impact on physician practices of all sizes. "This is a perfect research opportunity for Med PAC [Medicare Payment Advisory Commission], the GAO [Government Accountability Office], or an independent group," he says. "If the data show that smaller, independent practices are going into debt because of denials or delayed payments, CMS should step in and offer assistance."

— Lisa A. Eramo is a freelance writer and editor in Cranston, Rhode Island, who specializes in HIM, medical coding, and health care regulatory topics.