Preparing for the Conversion to ICD-10

14 April 2014 Health Care Law Today Blog

With the ICD-10 implementation date delayed once again until October 1, 2015, providers who were previously unprepared for the transition or had only begun their transition planning have an extra year to address the upcoming changes in an attempt to minimize any potential disruption to their organization. 

As part of the implementation planning, it is imperative that providers review their managed care and commercial payor contracts and ensure that these address the transition because, despite considerable discussion regarding the transition in the professional communities, there remains great uncertainty as to whether the transition to ICD-10 will be smooth or rocky. Neither providers nor payors know what the result will be, nor does either side know whether any initial distortions will result in positive or negative financial impact for payers or providers. It is unclear whether the new system will result in additional payments flowing from payors to providers or reduced payments in the form of inappropriate denials or adjustments.  

At a minimum, managed care and payor contracts should include language in which the parties agree that any financial impact will be neutralized, with the parties agreeing to use good faith efforts to work together to make adjustments in a reasonable time frame so as to minimize the financial impact to either side. In our experience, this is a concept most payers agree with and are willing to memorialize in their contracts. This approach, however, relies on a post-transition review and may result in a significant time lag between when an impact is detected and when systems are corrected and cash flow normalizes. As a result, providers should consider approaching payors and agreeing in advance upon certain procedures for handling the transition prior to its occurrence, in an attempt to ensure a collaborative approach that may minimize the impact once the transition occurs.

Strategic Provisions

As an example, below are strategic provisions which may be included in contracts that will help with ICD-10 transition preparedness:

  1. Provide for an opportunity for the provider to review any new policies and procedures to be implemented by payors in connection with the ICD-10 transition prior to their effective date, allowing for any objections and or suggestions to be discussed prior to implementation.
  2. Establish a date for an initial meeting with the payor within a short time period following the initial billing and adjudication of claims under ICD-10, during which meeting the parties can first assess the early results of the coding changes.
  3. Create a special notice process for any ICD-10 related policies that may be implemented by a payor, ensuring that notice will go directly to people within the organization who can review and act upon it.
  4. Establish in advance a procedure for regular meetings to review payment disparities resulting from the transition. Such meetings could be triggered based on a threshold impact or other method, which should be agreed upon in advance.
  5. Include a provision for interim financial adjustments to be made in the event it becomes apparent that distortions to payment are resulting from ICD-10 for either party. This might include an across the board payment withhold or a temporary payment increase, depending on who is affected, with the goal of addressing the distortions on an incremental basis and resulting in less interruption to either party.

By approaching payors early, and establishing a cooperative process to address the transition, both sides may minimize the impact of the inevitable transition by eliminating potentially costly delays and disputes in the future.

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