Solutions for the Health Industry

They say knowledge is power. In the case of ICD-10, two pieces of information will give providers the power to cut through any unwanted financial waves generated by the transition to the new diagnosis and procedure coding system on Oct. 1, 2015.

  1. Focus on Frequently Used Codes

    Critics of the switch to ICD-10 from ICD-9 often cite a new diagnosis or procedure code that captures unusual reasons that patients seek medical attention from a healthcare provider. They use humor to dismiss the effectiveness of ICD-10 and generate fondness for the old system. It’s true that the switch to ICD-10 from ICD-9 will increase the number of diagnoses and procedure codes from 24,000 to 155,000, and it’s true that some of the new codes are a bit unusual.

    But the fact is, most providers typically will use only about 100 of the 155,000 codes. The vast majority of providers will generate 90% of their revenue from the 100 codes that are specific to what they do. Providers must identify those specific codes and become expert at using them. Only then should providers concern themselves with the thousands of other codes they may never use. And, if providers do need one of these codes, books are always available for reference.

    This fact highlights the need for effective coder training. Providers must train their coders to focus on the ICD-10 codes most relevant to the types of patients they treat and to the bulk of the revenue that’s generated. Providers that don’t take that approach may face a serious revenue shortfall because of delays in cases being billed and claims being paid. Coding errors that result in a delayed bill or claim paid for a rare or unusual patient case won’t have the same negative impact on revenue.

  2. Reduce Average Days to Final Billing

    In addition to knowing the 100 codes most relevant to their respective operations, providers also must know another number to make the transition to ICD-10 as smooth as possible.  That number is “days not final billed,” or days that a bill waits to be sent to an insurer to be adjudicated.

    Providers should benchmark their days not final billed. The industry average for hospitals is 14.4 days, which I believe is unsatisfactory. That means, after a patient is treated and discharged, a hospital on average doesn’t send that patient’s bill to his or her insurer for payment for more than two weeks.

    That number likely will rise after Oct. 1, 2015, as providers learn how to process bills using ICD-10. To prepare, providers should work to lower that number now. For example, if they can reduce it now to 12 days, if that time increases by two because of the ICD-10 learning curve, the provider will be back at 14 days with no change in cash flow. Even better, if providers can reduce the number by more than two days, even if the ICD-10 transition causes an increase, they may still be ahead of where they were prior to the transition.

    Providers should take advantage of the additional 12 months of ICD-10 preparation time by learning two important numbers: The 100 codes that will capture 90% of their revenue, and their days not final billed. Both are key performance indicators that providers should monitor and master to ensure a smooth financial transition after Oct. 1, 2015.

Joshua Berman

About the author

Joshua Berman is director of analytics and ICD-10 at McKesson. Joshua is a seasoned health care technology professional with deep revenue cycle experience. Joshua has managed application development from collections to compliance, proprietary software, billing, enterprise wide implementations, and electronic data interchange.

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