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Healthcare Practice Strategies - Fall 2015 - Claim Denials: Prepare Your Strategy for ICD-10

Oct 23, 2015

The Centers for Medicare and Medicaid Services estimates that claim denial rates could soar 100 percent to 200 percent in the early stages of the ICD-10 rollout. At the practice level, this could result in a significant amount of re-work and lost productivity, as well as a major hit to cash flow.

Ultimately, practices may see a multitude of denied charges — from tests that don’t meet medical necessity to procedures that are rejected or denied due to a lack of specificity.

Watch for Coding Mismatches

The reasons are pretty straightforward: With a change in diagnosis codes to the more specific ICD-10 coding, mismatches are apt to occur with medical necessity and provider payment guidelines. It will be an ongoing process as payers work through their payment determinations for the new codes.

Common denials that are likely to occur in ICD-10 include:

Technical denials — These denials center around flaws in the sending, receiving and processing of the claim. Hopefully, you have performed end-to-end testing with as many payers as possible during the lead-up to implementation to ensure that accurately coded claims are being sent. Moving forward, proofread all claim packages, including the originating documents, and clarify entries or codes that appear confusing. Expecting payers to fix errors and sort out conflicting entries is a recipe for denial.

Logic-based denials — Denials may also occur when the ICD-10-PCS or CPT procedure codes don’t logically match the corresponding ICD-10-CM diagnosis code. For example, ICD-10 codes now require reporting of laterality (the side of the body affected by the condition). So a problem occurs when a procedure to treat carpal tunnel syndrome on the right hand does not match the diagnosis of the left hand (or is left out completely). Practices with more sophisticated software may be able to rely on claims scrubbers to catch these errors. However, coders will need to pay close attention to ensure that the laterality distinction is specified in the medical record.

Denials for unspecified codes — ICD-10 gives payers the opportunity to revise entire coverage policies. Here, updated Local Coverage Determinations (LCD) and National Coverage Determinations (NCD) may be more specific in terms of what payers will and will not cover — and practices will need to absorb this new information. Practices should closely review contracts with commercial payers and be ready to revisit these contracts based on ICD-10.

Plan for Problem-free Reimbursement

To increase the likelihood of clean claims under 1CD-10, practices will need to have a strong denial management strategy in place. Consider these smart moves for heading off problems:

Invest in expertise. To get clean claims out the door, practices may want to consider bringing in additional medical coding or billing staff or outsourcing these functions. The Healthcare Financial Management Association (HFMA) notes that managing claim denials will likely require an added level of expertise and may no longer simply be something that can be handled by a nonclinical person in the billing office. In its report Readying Your Denials Management Strategy for ICD-10, HFMA notes that questions regarding medical necessity or the medical documentation supporting a particular code will require input from physicians and nurse specialists.

Crunch the numbers. Closely monitor both the amount and age of outstanding balances by payer and measure them against a baseline to spot any trends that may impact practice revenue. Medical groups that file claims electronically should also contact their clearinghouse for trending data on denials and underpayments.

Analyze the denial. Identify your most common denials to see if there are identifiable patterns. Was it a matter of insufficient documentation, or was there inaccurate and incomplete coding? If there was an error, did it occur at the coding/submitter stage or upstream? Likewise, is the denial payer-specific, or is it occurring across two or more payers?

Don’t Get Overwhelmed

Documenting carefully and paying attention to the details will certainly ease the transition to the new code set. Just to be sure, establish a financial reserve that will see you through three to six months of payment delaysas the inevitable improperly coded claims work their way through the system.

CMS Provides Interim Relief

The Centers for Medicare and Medicaid Services has taken several steps designed to ease the transition to ICD-10. In particular, it promises that claims will not be denied simply because the wrong ICD-10 code was used.

In a recent guidance document, CMS officials wrote: “While diagnosis coding to the correct level of specificity is the goal for all claims, for 12 months after ICD-10 implementation, Medicare review contractors will not deny physician or other practitioner claims billed under the Part B physician fee schedule through either automated medical review or complex medical record review based solely on the specificity of the ICD-10 diagnosis code as long as the physician/practitioner used a valid code from the right family."

Likewise, CMS has established an advance payment mechanism to address payment delays caused by administrative problems. The official guidance notes: “When the Part B Medicare Contractors are unable to process claims within established time limits because of administrative problems, such as contractor system malfunction or implementation problems, an advance payment may be available. An advance payment is a conditional partial payment, which requires repayment, and may be issued when the conditions described in CMS regulations at 42 CFR Section 421.214 are met.

“To apply for an advance payment, the Medicare physician/supplier is required to submit the request to their appropriate Medicare Administrative Contractor (MAC). Should there be Medicare systems issues that interfere with claims processing, CMS and the MACs will post information on how to access advance payments.”

Healthcare Practice Strategies - Fall 2015

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