Reimbursement: The fourth horseman of the ICD-10 apocalypse

Reimbursement completes the quartet as reported in this article posted by HIM-HIPAA Insider, February 10, 2014.

4th HorsemanThere before me was a pale horse and its rider was named Reimbursement.

Meet the final horseman of the ICD-10 Apocalypse and probably the one that keeps your C-suite up at night: Reimbursement.

The three previous ICD-10 horsemen directly affect the fourth. If your Accuracy is poor, you are over- or undercoding, which leads to incorrect reimbursement. Forget a code and you lose money. Report the wrong code and the auditors may come knocking for the money back.

Of course, you can’t be accurate if Documentation is lacking, incomplete, or unclear. Physicians may not document everything you need to select a code. And then you send a query and wait.

The longer you spend tracking down the physician for a query response, the lower your Productivity becomes. If bills don’t get out the door, money doesn’t come in.

Let’s look at some arbitrary apocalypse math to illustrate the cycle. These are obviously not real numbers. Every coder is different, every facility and office’s case mix is different, and everyone’s reimbursement is different.

Mary codes 10 inpatient records a day and those records represent $10,000 in reimbursement daily. If Mary’s productivity declines 20% simply because she is unfamiliar with ICD-10, $2,000 in revenue is not coming in each day.

If Mary’s productivity declines another 20% because she’s waiting on answers to queries, that’s another $2,000 a day not coming in. So far we’re down $4,000 a day (and a cumulative $20,000 for the week). That’s two days’ worth of revenue we’re losing from one coder. Multiply that by the number of coders at your office or facility and the number can get very scary, very quickly.

Susan currently codes 20 outpatient records a day, representing $20,000 a day in revenue. Susan’s productivity only declines by 5%, resulting in a loss of $1,000 a day and $5,000 a week from lost productivity. That looks pretty good compared to Mary. At least at first glance.

Susan, however, is only accurate 50% of the time. That means the other 50% of the records she codes are wrong. Wrong codes on the bill often result in either overpayment or underpayment.

Let’s say Susan consistently undercodes. In some cases, the physicians don’t provide the documentation she needs, so she constantly defaults to unspecified codes. In some cases, unspecified codes are perfectly fine. Outpatient coders may use them more for fractures because the physician may be waiting on x-rays to determine which bone is broken and what type of fracture the patient has.

The ICD-10-CM Official Guidelines for Coding and Reporting also tell us that a physician shouldn’t conduct medically unnecessary diagnostic testing in order to determine a more specific code. So if the patient has pneumonia, but the physician doesn’t know the causative organism, report an unspecified code instead of doing more tests to figure out the organism.

Susan also misses codes, which again decreases revenue. At least if her coding is audited, we shouldn’t face takebacks.

Let’s say Susan’s coding inaccuracy results in a loss of 25% of appropriate revenue. That works out to $5,000. Add the $1,000 a day lost to productivity declines and we’re down $6,000 a day and $30,000 a week. (If you want to be very concerned, that translates to $1,560,000 a year.) Again that’s one hypothetical coder. How long can you keep your doors open with that kind of reimbursement shortfall?

One thing that is out of our control is the accuracy of the payers’ systems. Do they have everything programmed and mapped correctly on their end? Have they updated all of their systems to accept ICD-10 codes? Have they translated all of the necessary policies and coverage determinations to reflect ICD-10 codes? Will our system talk to theirs?

ICD-10 is not just a coding change. It affects everything. Physicians need to document better. Coders need to learn a new system quickly AND accurately. IT has to make sure the information flows within the organization and also to payers. Payers need to make sure they are ready for the transition as well.

It really will take a healthcare village to make this work and defeat the Four Horsemen of the ICD-10 Apocalypse.


This article originally appeared on HCPro’s ICD-10 Trainer blog.

Join Our Newsletter

Get Updates Direct to Your Inbox. Gain access to a rich library of articles, white papers, webinars, podcasts and more. Register today to receive eMDs Insights newsletter.

Specialty *
State *