At the Margins

What the new ICD-10 grace period means for you

Physician practices nationwide just breathed a collective sigh of relief.

On Monday, the Centers for Medicare and Medicaid Services (CMS) announced a set of measures to ease the transition to ICD-10 later this year—including issuing payments for incorrect codes on professional claims in some circumstances.

What does this mean for you and your organization? Let’s dig into the details.

What exactly did CMS say?

The newly released initiative explains that CMS now plans to reimburse physicians under Medicare Part B for claims with incorrect ICD-10 diagnosis codes. To qualify, the claims must have a valid ICD-10 diagnosis code, which falls generally in the same category as the correct code. If Part B Medicare contractors cannot process claims due to administrative problems within a set timeframe, CMS may authorize advanced payments to doctors.

This transition will extend for one year after the October 1, 2015, implementation deadline.

Additionally, CMS will extend the same ICD-10 code flexibility to physicians or other eligible professionals so they are not penalized under the Physician Quality Reporting System, the Value-Based Payment Modifier program, or the meaningful use program. The flexibility will apply to all quality reporting during program year 2015.

What does this mean for my organization?

First and foremost, this is good news for physician practices. There’s been growing concern that smaller practices don’t have adequate resources to prepare for the transition and are falling behind. This gives them some breathing room to get up to speed. It’s also good news for hospitals that own physician practices. This portion of their revenue stream now has additional flexibility for the first twelve months of ICD-10.

Keep in mind that this CMS guidance and flexibility only applies to professional claims, so inpatient hospital claims will still need to be correctly coded on October 1 in order to avoid denials or incorrect reimbursement.

In addition, I anticipate that this one-year transition period might create additional complexity for organizations as they try to get their physicians to fully document to a level of ICD-10 specificity on their inpatient claims. If their physicians’ reimbursement stream has this extra flexibility, there could be adverse incentives for these providers to transition quickly to the ideal level of specificity.

How do I keep my physicians on track?

Given this disconnect between providers’ personal reimbursement and your organization’s financial goals, how do you keep physicians engaged in accurate documentation?

Like most organizations, you’ve probably already spent countless hours educating your physicians to prepare for the stricter code set under ICD-10. I know it’s tempting to think that all those hours are enough.

However, fighting physician fatigue and conducting ongoing physician education remains critical to success after October 1. While this grace period gives physician practices some breathing room, it still behooves all providers to code correctly under ICD-10 sooner rather than later.

To motivate them to improve their documentation, it’s essential to demonstrate how what they write matters—not just to the organization, but to them individually through publicly reported quality data. To that end, top-performing institutions are targeting their high-risk, high-impact physicians with custom education in a one-on-one setting.

Ready to revolutionize your mid cycle?

Two key imperatives will define success in an ICD-10 world. First, it’s critical to have an analytics tool that gives you clear visibility into your performance and allows you to benchmark against your peers. Most importantly, you need a tool that provides ICD-10 benchmarks sooner than those from CMS.

Second, you’ll need to engage and train physicians in documentation improvement through the transition and beyond. That's why the Advisory Board offers support at all stages of the education process, from planning to implementation. Check out our ICD-10 Conversion Services to learn more.