JUNE 28, 2011 / Issue 25
Featured Article
The 7 biggest ICD-10 challenges for payers (in no particular order)

 By Steve Sabino
2013 is right around the corner. Are you ready for the biggest coding challenge of your life?

1. Dealing with the sheer complexity of the transition
The scope of change association with the ICD-10 transition will impact virtually every functional area of the health plan. ICD-10 is not an IT issue but rather a broad-based business re-engineering initiative. The fact that no single one-for-one crosswalk exists and many popular ICD-9 codes will have multiple options in ICD-10 requires involvement and cooperation across many business areas of the plan.

2. Maintaining revenue neutrality
How does the payer maintain levels of reimbursement consistent with the diagnosis/severity and services provided? The expansion of codes and increased granularity will make reimbursement modeling and methodologies critical.

3. Maintaining acceptable “first pass” rates on claims
Experts are projecting that auto-adjudication rates may drop 10 to 25 percent during the first year of ICD-10 adoption. This will drive increases in administrative costs and impact plan medical cost ratios.

4. Maintaining current levels of service
Plans will be resource constrained through 2014. Many of the same plan subject-matter experts will be engaged in the ICD-10 transition and healthcare reform initiatives and will be unable to perform their normal job activities, which could force plans to increase staff or contract outside services.

5. Remediating third-party and surround code
Many payers have third-party or internally developed programs that are core to their operations. These products and “surround code” may not have been routinely upgraded and may require substantial remediation to transition to ICD-10. In some instances, remediation may be impossible or not cost effective, which could drive new purchases and/or implementations in an environment of substantial change.

6. Maintaining regulatory reporting environments
Because of the timing of ICD-10 go-live, there will be a period of one to two years of “data fog” where plans will have to support both ICD-9 and ICD-10 for all analytics and reporting. Estimates are that up to 75% of operational and retrospective analysis and reporting will have to be re-engineered to support ICD-10 in an environment of already-constrained resources.

7. Maintaining an educated, competent work force
Staff members will need high levels of ICD-10 education to develop new policies, procedures and business rules to support claims adjudication, medical policy and management, reimbursement methodologies, benefits and provider contracting.

About the author
Steve Sabino is president of DST Health Solutions, LLC.
To learn more about DST Health Solutions:

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