Extended Compliance! Re-Strategize and Achieve 'Financial Neutrality'
New compliance date & additional timeline for ICD 10 - boon or bane for the industry - is a long drawn debate. One group speculates that ICD-10 will never be realized and there will be a direct shift to ICD-11. The other says that ICD-10 is inevitable. I am with the latter and not too optimistic about industry getting a double promotion from ICD-9 to ICD-11, either. But, be it ICD 10 or ICD 11, the industry more or less understands how to manage the implementation, however, one thing which many are not thinking enough about is revenue impact of the new code set and establishment of necessary checks & balances to ensure financial neutrality.
While the general implementation approach is structured - starting with assessment & drilling down to testing - fleshing out the impact of transition on operational revenue is new to organizations. This exercise is critical and mandatory as it directly impacts cash flow and is a potential risk to Medicaid finances - resulting in under or over payments.
Organizations must be proactive in estimating changes to cash flows and strategically plan to protect any revenue losses before, during, and post compliance - compliance with negligible financial impact should be the ultimate objective. I strongly feel that extended timeline should be leveraged not by stopping or slowing down around ICD 10 transition, but by becoming more aggressive in diagnosing financial risks and defining a 'revenue-neutral' plan to address variances. Some checkpoints that organizations should consider include-
Determining revenue impact by provider/system facility, service line, clinical conditions, product types and geography
Impacts to reveal the shift in benefit segmentation & variance in member liabilities
Clinical variance with new codes on medical policies, medical necessity check, and managed care contracts that impact claims pend/denial/payout decisions
Inaccurate coding that can pile up claims back log ratio
These verification activities find their base in historical data modeling and organizations need to define a mechanism that can analyze these pieces across the value chain of their operations. You can refer one of my earlier posts around the same issue on ICD 10 Hub here - http://www.icd10hub.com/blog/index.php/2011/07/what-goes-along-with-financial-neutrality/
Long story short, achieving revenue neutrality is really a monster challenge, and will not be easy unless organizations remain on track to make use of the extended timeline more strategically & aggressively.