Business Readiness Testing Approach for ICD10 Transition Impact on Claims for US Healthcare Provider

Executive Summary

Various combinations of ICD 10 procedures and diagnosis codes are grouped together to form a single group known as Diagnosis-related group (DRG). A specific payment is associated with a DRG that helps the patient in terms of insurance reimbursements. This is the most common methodology used during inpatient claims. This document will describes that with the transition of ICD-9 codes to ICD-10 codes, “how the charges will change”, “what new changes payers have to introduce into their claim systems”,” how it will differ for outpatient and inpatient”.

The business needs and risk mitigation must be tightly integrated in the release management process, the objective is to deliver high risk components first to provide a longer testing duration.

Introduction

US Health care industry comprises of many entities such as Life sciences, economic system, Information technology, Community, government and most important people or in medical terminology “Patients”. There are four major pillars that define the basis of this industry namely patient, health care provider, life science and the most important one, Payer.

Currently in the US Healthcare Industry, ICD-9 codes are used for identifying and reporting diagnosis and procedures. As per the new regulation from the HHS department, they are migrating to the updated ICD-10 code set. This transition will present huge business as well as technical challenges.

Health care industry is divide in many sectors and there are inter dependency between them.it is a kind of aggregation of different sector like  Life sciences , economic system, Information technology, Community, government and most important peoples or in medical terminology “Patients”.

In 20^th century it is one of the fasted growing sector where opportunity and services are equally available. It’s a never ending process and evolving in nature.it has a direct connection between people. In a broad sense there are four important pillars that will define the basis of this industry namely as patient, health care provider, life science and at last but most important Payer.

If you go by statics every country is spending a lot of amount in health care industry right now and it has been increasing on year on year basis. Currently world’s major USA is spending 20% of their GDP in health care services. While India is spending nearly 4% of their GDP in healthcare while china is investing 7% of their GDP. This document is all about the claims and reimbursement amount that will be impacted by the transition from ICD 9 to ICD 10. This document will give you brief idea about how this change will impact the DRG generation, Claims and reimbursement and claim denial process. We will also cover the impact on the US citizens, revenue changes for Payers and Health care Providers. DRGs have been used in the US since 1982 to determine how much Payer has to pays the hospital for each "product", DRGs may be further grouped into Major Diagnostic Categories (MDCs).

Problem Statement:

·         Potential disruption to patient care and challenge in defining the test strategy/roadmap of multi-vendor based enterprise applications across multiple facilities especially for HIM coding applications.

·         Inadequate availability of testing staff, systems expertise, program management capability due to multiple high priority projects running at the same time.

·         Lack of centralized testing office to manage schedule, effort, resources, and standardized practices across test management and defect management processes.

·         All the existing application were working on ICD 9 codes, vendor required a seamless transformation from ICD 9 to ICD 10 without impacting other deliverables and observe the impact on claims.

·         Integration of multiple application starting from Registration till charge validation.

Solution Proposed:

As a part of testing this complex remediation and its impact on Claims, we can suggest an optimal testing approach i.e. Business Readiness Testing (BRT). Following this approach, we can ensure the integrity and parity between medical policies, benefits and finances of the payers and health care providers.

What BRT means?

Business readiness testing means testing that all supporting processes are in place. In BRT we will conduct operational readiness (Pre-release) of an application or product               .It comes under quality management systems. This type of testing support functional part of the application which is very critical in production environment.

As per business readiness testing approach we have tested the interconnection of application and to make sure a business system is tested and fit for purpose before implementation in a ‘live’ business environment. Compliance acceptance testing was one of the greatest feature for business readiness testing that we have used.

Along with business readiness testing we may also suggest repeatable testing to reduce the cost and provide better benefits to business.

Repeatable testing is done to identify the possible defects. We will test the systems again and again with different set of test data to ensure that the application is not breaking anywhere. We will apply multiple round of testing and may repeat the whole test suite.

Organizations must have the ability to choose the right amount of testing, balancing cost and risk. We may further understand in this document, how to examine business readiness decision-making criteria by identifying and prioritizing business risks and testable parts.

We have Developed a comprehensive business readiness approach roadmap to guide the overall ICD-10 testing program including mid-course correction in order to meet the ICD-10 compliance date.

Created Testing COE with centralized PMO to monitor the program and enabling effective test governance. Leveraged co-sourced delivery model to design and execute over 5000 test cases across System, Integration and E2E phases.

Introduction of ICD 10 codes and Procedures:

According to WHO there is a classification of medical diagnosis and procedure. These diagnosis and procedure are the real action item of the entire health care industry. Diagnosis codes are used to track the health condition of the patient starting from the beginning till the patient is discharges from the hospital.to simplify the entire the process WHO assigned number  to each diagnosis code and procedures and hence it became the universal medical codes and  needs to be followed worldwide.

ICD stands for International classification of diseases.ICD-10 is the current or tenth version of this series. Sometimes it is also refer as ICD-10 CM codes.ICD-10 is more powerful and effective as compare to its last version ICD-9 CM codes. During this transition all the services, process and system that were supporting ICD-9 CM now have to support current IC-10 CM codes to implement and improve services in a better way. Many countries has already implemented ICD-10.the code set which is developed by WHO has approximately 14,400 different codes through which we can track many disease, injuries, and other kind of medical problems.as a part of further classification we can again subdivide this code and it can reach till the count of 16000.Still the WHO is working on different set of codes to increase it further. The US health care industry is very particular about these codes. Apart from these classifications they have their own set of code which is also known as ICD-10 PCS.

Previously US health care was using the 9^th version of ICD procedure codes.  ICD-10- PCS has a seven character alphanumeric code structure that provides a unique code for all substantially different procedures, and allows new procedures to be easily incorporated as new codes. ICD 10 Procedures codes are basically used for inpatient cases and few important outpatient services like ambulatory service and emergency cases and surgical operation.

When we are transiting from ICD 9 to ICD 10 it will have high impact on claims. It is not necessary that the amount which is reimbursed by the insurance provider to the hospital or client cannot be same this time. Because the ICD 10 has a variety of codes as compare to ICD 9.

What is claim and how it will generate?

In US health care industry there is a complete life cycle of claims. From its generation till the claims is settle by the insurer to the patient or hospital care provider. Medical billing is a process in which claims need to be generated and submitted to the insurer and then insurer will decide how much amount needs to be paid based on the category in which the patient is registered. For several decades, medical billing was done almost entirely on paper but after the revaluation of IT the claims generation process become very easy. In order to assess the medical bills which is generated by the hospital care provider needs to be managed by some organization like American Medical Billing Association in USA.

Claim generation is an interaction between Hospital care provider and Insurance Company.

How Claims generated through ICD 9 code till now?

Physician need to report the ICD 9 – CM diagnosis code to the patient during coding in the system. Once the codes and procedures are assigned to the patient the data will flow from upstream to Billing or claims generation application. Once the claims is generated it needs to be verified by the claim management team. Following steps are followed as per the US health department.

• 1)       The Medicare Administrative Contractor (MAC) will review and determine the coverage of codes.
• 2)       MAC will not determine the amount CMS will pay for the services and facilities used by the patient.
• 3)       MAC will use the codes to assign discharge values   to the appropriate Medicare Severity Diagnosis Related Group (MS-DRG).
• 4)       At a later stage the MS-DRG will drive the reimbursement amount payable to the patient.

The main objective of all the hospital and insurance service provider is to mitigate the financial risk of ICD 10 transition. When the MS-DRG will shift between ICD-9 to ICD-10 the corresponding claim will also change. Some of the plan member may increase the coverage facility because of the new diagnosis code and procedure code implementation. The most important factor to decide the DRG and reimbursement claims is the order and priority of the diagnosis codes.

Once all the operation/coding/and medical diagnosis completed on the patient it will be discharged from the hospital and aftermath the process of claims generation will be started. The claims generation and settlement process is different based on patient type. For inpatient the service will be differed from the outpatient/emergency/surgical cases.

While coding the Inpatient the diagnosis codes and procedure codes are grouped in a specific set known as Diagnosis Related Group (DRGs).These grouper are the most important part of claim generation and payment process. During ICD 9 same process has been followed to generate the claims and but at that time the grouper was generated on the basis of priorities of DX codes entered and procedure performed  on the patient.

By October 1 2015 the implementation of ICD 10 will take place in USA. Following major changes will come into picture.

• 1)       Updated and more accurate medical terminology.
• 2)       Enable literally for physicians.                                                                 
• 3)       It has the capability to add more codes
• Provide more detailed clinical documentation for injuries, conditions and diseases.

Changes in ICD 10 claims generation and examples of Coding:

Change in Sequence:

Scenario

There are multiple instances where change in sequence can affect the amount of claims and even DRG value. In the below mentioned scenario there are two codes one is malignancy and second one is Anemia with neoplastic.

Anemia with neoplastic disease is sequenced differently in ICD-9 than in ICD-10. But in ICD-10 malignancy should be coded before the Anemia with neoplastic. This sequence will provide the higher imbursement amount.

Multiple ICD 10 codes:

Scenario 1

For ICD-9 code diagnosis code 568.89(other specified disorder of peritoneum), there are two ICD-10 codes available K66.8 and K68.9.If the coder will code the case with K66.8 there will be no MS-DRG shift hence there will no change in reimbursement amount.

However if the coder will code K68.9 then the MS-DRG will shift and there will be a potential upside change in reimbursement amount.

Scenario 2

For ICD 9 diagnosis code 5722 (hepatic encephalopathy), there are 6 possible ICD 10 translations are available i.e. K7291, K7041, K7111, K7201, K7211, K7290. Reimbursement amount will increase if we are using K7041 or K7290 as an ICD 10 code.

Potential downside in Reimbursement amount:

It is not necessary that the reimbursement amount will always increase, there are some cases where the amount may decrease as well.

Scenario

 For ICD-9 code 530.82 there is only one translation in ICD-10 K22.8 (other specified diseases of the Esophagus). If the coder will code K22.8 as a diagnosis code the reimbursement amount may decrease.

How we applied our Methodology:

As a part of business readiness testing approach we have validated all the applications across the vendor by designing multiple set of test cases based on different set of HIM coding test data. We have tested the particular patient types with a combination of diagnosis and procedure codes to validate the changes in DRG generation and claims.

 A simple test data sheet is generated with patient demographics and other details including the combination of HIM coding data. After registration of the patient we place certain orders and then discharge the patient for coding as per the process flow defined for health care providers. The coding for a patient can be done in various applications but at the end CRS (coding and reimbursement) system will be the same.

After assigning priority to all diagnosis code and procedure codes the DRG gets populated and based on the sequence of codes reimbursement amount gets generated. Since we have prioritize our testing and tested the application as a whole it becomes very easy to identify the possible change in reimbursement amount. Apart from that the testing team is aware about the ICD 9 codes hence it became easy for a user to easily do the comparison.

4 major impact of transition on which we applied our testing approach.

•          Planning to mitigate negative impacts.
•          Managing the process of migration
•          Ensuring the business remediation and due diligence
•          Manage tools and expertise to maintain the change and reduce the financial loss.
•  

Ensuring the business remediation and due diligence

Changes to hospital service provider practice management system to accommodate the ICD-10 codes are potentially a large expense. Depending on the contract between hospital system and vendor, the system upgrades may be included in ongoing maintenance. The system upgrades may be completed by the vendor when they install the upgrades for the version 5010 HIPAA transactions. Some vendors may charge for the upgrades. Provider need a contract to determine if regulatory updates are included in their maintenance.

Following due diligence criteria taken care while doing the business readiness testing and business remediation process.

1.     Can current system accommodate the data format changes for the ICD-10 codes?
2.     Will there be a charge for the upgrade?
3.     When will the upgrades be available for installation?
4.    When will the upgrades to system be completed? So that the hospital can start system and integration testing for the specific module.
5.   If existing system is unable to accommodate the ICD-10 codes or vendor is not upgrading the system for ICD-10, healthcare provider likely need to purchase a new system. If it needs to purchase, plenty of time and required research different systems and determine the best system available. Provider should also think about budget for the costs of a new system.

How business readiness testing approach helps us to solve above mentioned challenges

Since we have already performed ICD 9 testing for the specific healthcare provider, we were well equipped and confident about the changes. By applying system readiness testing we ensured the customer that system is ready to accept ICD 10 codes and if not then what changes that vendor need to do?

     The other aspect of business readiness testing approach to maintain the bridge between vendor – customer and      service provider to insure all kind of charging fees or upgradation fees and there is a continuous check between vendor and service provider to insure all the installation and patches on time.

By applying system integration testing we can thoroughly check the behavior of the application during end to end testing scenarios. We have designed the testing by applying BRT in such a way that all the aspects should be covered.

Planning to mitigate negative impacts

The ICD-10 transition introduces number of risks that impact the providers, payers as well as the patients.

Risks such as financial risks, Knowledge Transfer risks, Coding errors, etc.

Due to the change in the diagnosis codes from ICD-9 to ICD-10, the DRG calculation may take a hit and that in turn affects the payments involved. In many cases, the sequencing of the diagnosis will change due to this transition and may result in a changed DRG weightage.

To avoid such alterations and risks, we need to understand and analyze the high risk claims well before this transition happens. And that has been our approach while testing for ICD-10 transition.

We have considered all such claims and designed our test scenarios in that manner. For every such claim, we have analyzed ‘what types of patient it is applicable to?’, ‘what kind of diagnosis and procedures were involved’, ‘what are the corresponding ICD-10 codes that will be applicable for that case’, and all those possible risks that may arise post the actual transition.

Managing the process of migration

Professional need to have the ICD-10 codes implemented and report them in all transactions for encounters or discharges based on the designated date. Meeting this compliance date requires healthcare provider to begin work and analyzing their systems and identifying the necessary changes. ICD-10 implementation work overlapped with the implementation work for the version 5010 HIPAA transactions. Following are the major focus areas where provider needs to focus from transition perspective.

      Administrative Transactions:

Before ICD 10 transition, all the machines and soft wares are designed to handle ICD9 codes but they are not ready to accept ICD 10 codes. There are many systems and work processes where provider need to review for possible modification or upgrade to ICD-10. Following are the areas where administrative reform and upgrade required.

Clinical documentation

The increased specificity of the ICD-10 codes requires more detailed clinical documentation in order to code the diagnosis to the highest level of specificity. Whatever clinical documentation that providers has used so far will become insufficient since the granularity of the ICD 10 data will increase and it will add more details in the patient demographics section.

 Encounter forms or “superbills”

 Current encounter forms or superbills listing hospitals practice’s frequently used ICD-9 codes need to be updated for ICD-10. The increased specificity of ICD-10 will make these forms more complex and lengthy.

Practice management system

Hospital’s practice management system needs to be upgraded to accommodate the data format of the ICD-10 codes.

 Electronic health record or electronic medical record system

 Healthcare provider needs to update their electronic health record or electronic medical record system needs to be upgraded to accommodate the ICD-10 codes.

 Quality Reporting

 Any quality reporting currently do needs to be updated to ICD- 10. Provider needs to consider how these reports are generated and if it involves a system or work process that needs to be updated.

 Public Health Reporting

 Any public health reporting currently do needs to use ICD-10 codes after the compliance date. Health care provider need to review how these reports are generated and if it involves a system or work process that needs to be updated.

Contracts

Any contracts that providers have with payers need to be reviewed to determine the impact of moving to ICD-10. 

Manage tools and expertise to maintain the change and reduce the financial loss

Regardless of the remediation approach a health system takes, the first critical step is understanding the threat landscape. Among the top risks is the potential impact of an ICD-10 transition on the provider’s revenue cycle. The greatest threats to reimbursement neutrality are the potential DRG shifts between ICD-9 claims and corresponding ICD-10 claims.

To minimize risk, the provider must first understand the changes associated with ICD-10. Most providers will have already received training in the ICD-10-CM and PCS code sets and realize they are moving from 16,000 codes to some 150,000 codes. For example, ICD-9 encounter codes (V codes) for rehabilitation are no longer acceptable as a principal diagnosis; coders are instructed to assign the medical condition as the reason for the encounter when coding in ICD-10. The sequencing rules of several diagnoses have changed as well, with many of these alterations automatically resulting in changing reimbursement. Anemia with neoplastic disease, for instance, is sequenced differently in ICD-9 compared with ICD-10-anemia is sequenced first in ICD-9, but malignancy should be the principal diagnosis in ICD-10. This sequencing change may result in a different DRG weight. The problem, in general, stems from the increased granularity of ICD-10, which significantly increases the coding options that may change the DRG weight. Factors that may trigger a DRG shift include mistakes by inexperienced coders and insufficient physician documentation at the point of care. In some cases, the financial impact may be unavoidable, requiring a provider’s team to reopen conversations with payers. Identifying reimbursement risk and establishing priorities for remediation can prove a daunting task.

Conclusion

                Business readiness testing helped health care provider to seamlessly Implemented the transition from to

                ICD 10 cutting across multiple application and service areas. This approach can help in future as well target    

                Any kind of new remediation or conversion happening in service provider area.

Author -- Ravi Upadhyay

The power of Cloud Computing

The power of Cloud Computing  Point of view on

IBM Smart Cloud

Executive summary

There is huge requirement for internet based computing, shared resources, data used by the organization and information which need to be used by the firms. The need based upon on demand services and data models. Many of the organizations in the world are struggling with their data holding capacity or storage problem along with shared services and infrastructure.

Now a days organization want a specific or dedicated center for data/infra/services so that they can use them for their smooth work. The main objective of this document is to provide the overview of cloud computing and to discuss approach designed by IBM called “IBM Smart Cloud”.

Abstract

IBM is offering set of cloud computing service that is based on public/private/hybrid models. Cloud computing can really reduce the management effort for any organization.in today’s world most of the companies are switching their traditional dedicated service and now moving to open and shared infrastructure and pay as one uses it. With the help of hardware virtualization, service-oriented architecture, and autonomic and utility computing we can reduce the cost and other efforts. Companies can scale up as computing needs increase and then scale down again as demands decrease. IBM Smart cloud is offering service in different sectors like Infrastructure as a service (IaaS), software as a service (SaaS) and platform as a service (PaaS). IBM started its experiment for cloud computing in the year of 1960 and developed virtual machine for software testing and development.

                                           Figure 1: Application services models

IBM is offering cloud computing services in the below mentioned sectors in an aggressive manner.

1.     Cloud based collaboration,
2.      Development and test
3.      Application development
4.      Analytics, 
5.      Business-to-Business integration
6.      Security

This paper will give the brief information about how IBM Smart cloud can help the business. As an offering from IBM they are providing variety of services to the customers. They are giving entry points, control and integrated values. Their system has the capability to support new and existing infrastructures investments to provide seamless execution of work. Smart Cloud can provide the service even if the existing system is working on middleware applications. IBM has designed three umbrellas to support their cloud solutions as mentioned below.

1.  Smart cloud foundation
2.          Smart cloud services
3.          Smart cloud solutions

IBM offers services under variety of model such as public/private and hybrid but they are not strictly distinct.

IBM Smart Cloud Models

IBM has designed their models based on customer needs. IBM offered the flexibility to the customers to design their own models based on their requirements, it also offer the combination of models to suffice the need of the customers. Following are the traditional models that are offered by IBM.

•         Private  models
•      Public   models
•         Hybrid   models

Again private models are divided in multiple categories where the ownership is provided between multiple stakeholders. There are certain private models where the customer has full rights for its operation and ownership. In others models where customer has the ownership rights but the operation part is handled by the IBM or any other provider. In some cloud services IBM has the rights for its operation and ownership. But as per the latest business scenarios majority of the cloud users are using hybrid models to suffice their need.

Public Smart Cloud model

A public model where cloud infrastructure and data storage service are available for general public or large scale industry or group. In these kind of platforms ownership and authorizations are maintained by the organization. IBM Smart cloud enterprise is the best example of these kind of services. Smart cloud will provide this models at a subscription rate or at no cost since these kind of models are basically for training or public service purposes.

Private Smart Cloud model

A private model where the cloud infrastructure is exclusively for a specific organization or service provider. And that service provider has all the rights for centralized service management and economies of scale. In private models the service provider has greater access control than public players. Because of latency, security, or regulatory concerns most of the service provider adopted this kind of models.  In private cloud infrastructure data center can be hosted by the third party based on the need.

Hybrid Smart Cloud model

These models are nothing but a combination of private and public models. There are certain customers which needs different models for different service areas like data center storage and infrastructure management. In these kind of models the ownership can be distributed between service provider and IBM based on their need.

Problem Statement: Where we can actually fit IBM Smart Cloud

Whenever you are managing production environment there is a need of capacity planning and optimization.it will help to reduce the cost and burden of the project but it is a very complex and challenging process. When the customer is using virtual environment like VMware this process will become more complex.

 Statistical analysis of the key bottlenecks and an understanding of the system capacity is much needed.

Case study: Image management of branches with VMware using IBM Smart Cloud

VMware was using different offices to support their branch operation and they need infrastructure   support to complete this requirement because they want a reliable and constant desktop experience. They want to integrate their software and hardware requirement both in a seamless manner. The SmartCloud Desktop Infrastructure solution is based on a joint reference architecture with VMware that supports a wide range of hardware and software. By using IBM Smart Cloud Desktop Infrastructure the VMware has the flexibility choose what you need to meet your unique business requirements while giving your employees more flexible, secure and productive ways to work. This solution simply, securely and cost effectively addresses the requirements of branch office employees while maximizing worker uptime and efficiency.

Where wide area networks are robust and reliable, VMware View with VMware vShield and vCenter Operations Manager for View enable organizations to do more with less and to adopt an automated, policy driven approach to managing end users in their branches.

                        Figure 2: IBM desktop infrastructure Solution

By using VMware View physical appliances from the VMware Rapid Desktop Program, IT organizations that need a more distributed virtual desktop infrastructure (VDI) model can move the infrastructure closer to end users to optimize application response times and improve performance. IT can, in turn, remotely manage, patch and back up user information in the data center. Many use cases defined in the solution require persistent user information across sessions. The biggest cost savings, both in terms of capital expenditures and operating expenditures, can be achieved by using “stateless” desktops. VMware View has a feature called “persona management” which maintains user data and profile persistence across stateless sessions.

Conclusion

Transitioning to a virtualized environment from traditional desktops can be a time-consuming effort. It often requires specialized skills that are not readily available in-house. Implementations must be carefully managed to support a wide variety of users, applications and complementary software to help provide the security and management functions necessary to succeed.

References:

   https://www.vmware.com

      www.ibm.com/casemanagement

       IBM Smart Cloud  -  Wikipedia

Author - Ravi Upadhyay