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Small providers may struggle as ICD-10 ‘grace period’ ends

While the transition to new coding system has gone well, physician practices may get hit with claims denials if they’ve been lax in code specificity.

With Saturday marking the one-year anniversary of the implementation of ICD-10 codes, healthcare organizations must now focus on some new requirements that went into effect on October 1.

While the transition from ICD-9 version codes universally is considered to be an unqualified success, the ICD-10 grace period has ended, and the Centers for Medicare and Medicaid Services no longer will be accepting unspecified codes on Medicare fee-for-service claims. The year of coding flexibilities that CMS agreed to last year in cooperation with the American Medical Association has expired and will not be extended.

However, as the agency pointed out in guidance issued in August, the end of the ICD-10 grace period should not be a big deal for providers, as many commercial health insurers did not offer providers any coding flexibility, requiring them to use specific ICD-10 codes. Besides, CMS stated, healthcare organizations “should already be coding to the highest level of specificity” and “should code claims to the degree of specificity supported by the encounter and the medical documentation.”

Further, Sue Bowman, senior director of coding policy and compliance at the American Health Information Management Association (AHIMA), contends that the grace period only applied to Medicare fee-for-service claims from physician or other practitioner claims billed under the Medicare Fee-for-Service Part B physician fee schedule.

The grace period “did not apply to hospitals, so it doesn’t affect anything hospitals are doing going forward on October 1, and even from the physician standpoint it was limited in its impact because it only applied to post-payment reviews,” says Bowman, who adds that “most people have been having to do the highest degree of code specificity over the past year anyhow, regardless of the flexibility.”

Starting October 1, CMS review contractors will “use coding specificity as the reason for an audit for a denial of a reviewed claim” and they will “notify providers of coding issues they identify during review and of steps needed to correct those issues,” the agency says.

Similarly, Debi Primeau, president of revenue cycle consultancy Primeau Consulting Group, believes that the end of the ICD-10 grace period is “not a big deal for acute-care hospitals, which have done retrospective and/or concurrent audits,” but it “may be a bid deal for smaller physician groups and individual practices.”

Primeau contends that physician groups and practices “have not really been aggressively auditing to identify whether their physicians are using unspecified codes.” She also highlights the fact that many practices do not have coding professionals but are instead utilizing drop-down boxes in their electronic health record systems to choose codes.

“If they are hurried and don’t really understand codes, these practices may be choosing unspecified codes, and because many of these organizations have not yet performed coding audits, they really don’t know if there is a problem or not,” adds Primeau, who highly recommends coding and documentation audits. “What we’re talking about is identifying opportunities where you can focus on denial prevention versus denial management.”

Overall, Bowman says she doesn’t expect adverse consequences as a result of the end of the ICD-10 grace period. Nonetheless, Mary Beth Haugen, CEO of Haugen Consulting Group, is not as optimistic.

“We’re assuming with that change we’ll see an increase in denials,” says Haugen. “I think everybody is vulnerable.” She recommends “really aggressive audits” and that providers review their frequently used codes to determine if they are still using unspecified codes. “We could see a significant hit.”

Primeau’s concern going forward is health insurers—not just Medicare but commercial payers, who may begin to adjust medical policies based on the new specificity offered by ICD-10. “They have been collecting data for a year, and now is their opportunity to go back and identify where some of these unspecified codes have been used and to start denying claims,” she adds. “There are a lot of commercial payers out there, and they’ve been data mining. They’ve seen bills that have been submitted for the last year, know what’s going on, and who is and is not submitting unspecified codes.”

For its part, AHIMA is encouraging healthcare organizations to continue to monitor their documentation and work to improve it when necessary, Bowman says.

In addition, she notes that CMS has lifted the partial code freeze, and as a result, thousands of new ICD-10 diagnosis and procedure codes have been added for fiscal year 2017, which began on October 1.

Also See: Thousands of new ICD-10 codes slated for October release

“Be aggressive in knowing what the code changes are,” advises Bowman. “For hospitals, they really have to know all of them—that’s what coders have to do. On the physician and individual healthcare provider side, they only have to worry about the diagnosis codes. They don’t have to worry about the procedure codes. Only hospitals have to worry about the new procedure codes. And for physician practices, they usually have a subset of new codes that they would need to be concerned with, depending on their specialty and patient population.”

This backlog of ICD-10-CM and ICD-10 PCS codes is a one-time occurrence, asserts Bowman, who adds that while there is “somewhat of a bigger educational challenge because there are so many new codes,” going forward the industry will return to the “normal amount of code changes” on an annual basis.

Likewise, CMS states in its guidance that the annual update to codes is not a new process, as “codes were regularly updated on an annual basis until a freeze was established to assist providers and health plans to prepare for ICD-10.”

Haugen concludes that it’s critical that coders are educated on all of the code updates for fiscal year 2017. At the same time, Bowman says reassuringly that “coders, by and large, are used to having to learn about new codes,” even with the larger-than-normal volume of coding changes they’re assimilating this year.

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