Practice Makes Perfect: Despite new ICD-10 flexibility from CMS, medical practices must still protect cash flow

This month, the Medical Group Management Association released the results of a questionnaire that ranked members’ most pressing practice-management challenges. In this edition of “Practice Makes Perfect,” we’ll tackle No. 5 on that list: preparing for the transition to ICD-10 diagnosis coding.

As the Oct. 1 ICD-10 compliance date draws closer, physician practices are becoming increasingly concerned about the readiness of their internal processes and external trading partners. Despite the CMS’ recent policy modification—not denying claims based solely on the specificity of the ICD-10 diagnosis code—developing appropriate contingencies will continue to be important to safeguard the practice during this transition.

While this new approach to coding granularity will be helpful, practices should still identify key vulnerabilities in their revenue-cycle process and employ effective solutions. Potential concerns include the following:

Concern: Practice management/billing software. Billing software readiness is a critical vulnerability for many practices. The new flexibility around code specificity will not help if the practice software is unable to submit any ICD-10 codes. Recent MGMA research suggests that as many as 1 in 5 practices submit claims using the older Version 4010 claim format—one than cannot accommodate an ICD-10 code.

Contingency: After reaching out to these vendors, if it’s still not clear whether they will be able to supply the required software, consider switching to another vendor’s product. (Just know that it will take time to select, install and test.) If new software is not an option, look at contracting with a clearinghouse or billing service that offers a Version 4010 “workaround” or review your ability to submit claims via payer Web portals or on paper. Although inefficient, these methods may provide a short-term solution and ensure that your revenue stream continues to flow.

Concern: Coding claims correctly. Regardless of who assigns diagnosis codes to claims, if the encounter documentation does not contain all of the necessary information, it may be difficult to identify the appropriate ICD-10 code. Remember that although the CMS has indicated that it will accept unspecified codes after Oct. 1, each commercial health plan will be determining its own code-specificity policy.

Contingency: Practices should dual code a selection of claims between now and Oct. 1 to identify any challenging clinical scenarios, and allow time to educate clinicians on the new ICD-10 documentation requirements. For employed coders, it is best to confirm that they will not be leaving the practice any time around the compliance date and to restrict vacation leave. For contracted professional coders, determine if they have been certified as ICD-10-proficient by one of the coding associations. If not, it will be essential to identify alternative coders or firms that can support your transition to ICD-10.

Concern: Cash flow after Oct. 1. ICD-10 is expected to impact cash flow as the result of an increased number of pended/denied claims, coupled with decreased clinician and coder productivity.

Contingency: Tightening patient-eligibility verifications and patient financial-responsibility collections, and “clearing the decks” of all claims with a date of service prior to Oct.1 will provide the practice with much-needed capital. Further, consider holding off on major purchases or investments around the compliance date, and consider establishing a line of credit at your local financial institution.

Limited industry testing gives practices little confidence that the transition to ICD-10 will be seamless. The new flexibility offered by the CMS will help, but pinpointing organizational vulnerabilities and identifying contingencies remain critical if practices are to move past Oct. 1 with a minimal impact on their operations. Lean on the MGMA and other industry resources to handle this complicated transition in the coming months.


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