Big question for medical laboratory managers is whether Medicare, private health insurers, and medical claims clearinghouses can make a smooth changeover when processing lab test claims using ICD-10 codes

Conversion to ICD-10 is now only 56 days away! Physicians are not the only ones with a large stake in the conversion from ICD-9 to ICD-10 that takes place October 1, 2015. Clinical laboratories and anatomic pathology groups will be watching to see whether physicians include appropriate ICD-10 codes on lab test forms for Medicare patients.

The Medicare program requires appropriate ICD codes on medical laboratory test claims for Medicare patients. That is one reason why clinical laboratories and anatomic pathology are financially vested in a smooth conversion process. All Medicare Part B claims for medical laboratory tests must be submitted with an appropriate International Classification of Diseases (ICD) code provided by the physician who ordered the lab tests. The Medicare program will not reimburse lab test claims without an appropriate ICD code. No code, no payment to the lab, even though it did the test.

Mark Roth, Physicians Choice Laboratory Service Vice President of Operations, and a speaker at this year’s Dark Report Executive War College, predicts ICD-10 implementation will increase claims denials by 20%.

“People really need to plan ahead for [reduced] cash flows in October and November,” Roth told Dark Daily. “If your Medicare denials go through the roof, all your commercial payer denials are probably going to go through the roof as well. Extending your DSO (Days Sales Outstanding) from 45 to 55 days has a material financial impact.”

Mark Roth

Mark Roth, Vice President of Operations at PCLS Laboratory in Charlotte, North Carolina, expects claims denials to increase 20% for clinical laboratories and pathology groups in the early months of ICD-10 implementation. (Photo copyright LinkedIn.)

Providers Not Prepared for Transition to New Codes

With the October 1, 2015, conversion deadline fast approaching, healthcare providers and insurers are under the gun to complete system upgrades, training, testing and undertake necessary changes to workflow processes. The switch means roughly 14,000 ICD-9 codes will be replaced by 69,000 ICD-10 codes covering new diseases and procedures.

What should be worrying pathologists is that only a small number of physician practices say they are prepared for the impending deadline. Roughly 33% of physician practices responding to a Medical Practice Insider and QuantiaMD survey said they would not begin transition work before the end of 2015’s first quarter, 20% were holding off until the second quarter, and 22% planned to push the October 1, 2015, deadline to the limit by waiting until July to begin prepping for code migration, according to a Medical Practice Insider article.

Roth recommends clinical laboratories begin reaching out now to client physicians with a request that they begin showing both ICD-9 and ICD-10 codes on claims as a way to begin adjusting to the new nomenclature.

“The key is going to be figuring out who are going to be your biggest offenders and getting those to do it correctly as soon as possible,” Roth told Dark Daily. “Our laboratory is on track to be up and running the beginning of September, so we can have people practice with ICD-10 codes. Hopefully, by October 1 we are ready to go. Our lab’s billing team will hold lab test claims until we have the right set of codes from the ordering physicians. That is because we want to avoid the back-and-forth denials with payers during this transition to ICD-10.”

Roth says ICD-10 implementation will be a “nightmare” for any lab that still relies on paper requisitions. “Those labs should convert as many of their processes to electronic as possible,” Roth told Dark Daily. “Fixing paper requisitions is going to be almost impossible. Electronic tools will be essential.”

Experts Disagree Over Estimated Costs of Transition to ICD-10

Conversion costs have been a major sticking point for many physician practices and a hot button issue for healthcare analysts. The authors of an American Health Information Management Association (AHIMA) analysis and Nachimson Advisors have battled over their widely divergent cost estimates.

In 2014, Nachimson Advisors made headlines by announcing the cost of implementing the ICD-10 code set would be nearly three times what was predicted by a landmark 2008 study, also produced by Nachimson Advisors. Their new study showed a cost range from $22,560 to $105,506 for small physician practices, a price tag challenged in Journal of AHIMA, a publication of AHIMA. The analysis authors suggested actual implementation costs for a three-physician practice would be “dramatically lower than initially estimated” due to free or low-cost vendor solutions. The American Medical Association (AMA), which sponsored the Nachimson Advisors reports, has stood behind their work.

New Codes Replace ‘Outdated, Obsolete Terms’

Though many physicians view ICD-10 as yet another unfunded government mandate, the updated codes are expected to provide healthcare professionals with more precise documentation and granular data, information that will increase in importance as the healthcare industry transitions to value-based payment models.

The U.S. Department of Health and Humans Services (HHS) had twice extended the original October 1, 2013, ICD-10 compliance deadline after provider groups expressed concerns about their ability to meet the date and the serious claims payment issues that might ensure.

HHS states the conversion is necessary because the current ICD-9-CM code set contains “outdated, obsolete terms that are inconsistent with current medical practice, new technology and preventive services,” according to a July 2014 press release from Centers for Medicare & Medicaid Services (CMS).

Possibly one of the bright spots for the coming conversion to ICD-10 are the efforts by officials at the Centers for Medicare & Medicaid Services to help ease the process. On July 6, CMS and the American Medical Association issued a press release titled: CMS and AMA Announce Efforts to Help Providers Get Ready for ICD-10. It described the following actions by CMS to ease the transition, saying, “CMS also detailed its operating plans for the ICD-10 implementation. Upcoming milestones include:

• Setting up an ICD-10 communications and coordination center, learning from best practices of other large technology implementations that will be in place to identify and resolve issues arising from the ICD-10 transition.

• Sending a letter in July to all Medicare fee-for-service providers encouraging ICD-10 readiness and notifying them of these flexibilities.

• Completing the final window of Medicare end-to-end testing for providers this July.

• Offering ongoing Medicare acknowledgement testing for providers through September 30th.

• Providing additional in-person training through the “Road to 10” for small physician practices.

• Hosting an MLN Connects National Provider Call on August 27th.

• CMS will name a CMS ICD-10 Ombudsman to triage and answer questions about the submission of claims. The ICD-10 Ombudsman will be located at CMS’s ICD-10 Coordination Center.

Finally, with the implementation date just 11 weeks away, it does not appear that either the Department of Health and Human Services or Congress will take action to delay the use of ICD-10. Administrators of clinical laboratories and pathology groups should use the remaining time wisely to ensure a smooth transition from ICD-9 to ICD-10 in a way that protects cash flow to the best degree possible.

—Andrea Downing Peck

Related Information:

CMS and AMA Announce Efforts to Help Providers Get Ready For ICD-10

Political Storm May Send ICD-10 Compliance Safe Harbor

Deadline for ICD-10 Implementation Allows Health Care Industry Ample Time to Prepare for Change

75 Percent Doctors Holding Off on ICD-10

How ICD-10 Will Benefit Physicians

Nachimson Advisors Refutes ICD-10 Implementation Cost Claims

Nachimson Advisors Respond to Criticisms of ICD-10 Study on Physician Costs

ICD-10 Cost Estimates Increased for Most Physicians

HHS Proposes One-Year Delay for ICD-10 Implementation: Is This Good News for Clinical Pathology Laboratories?

Providers, Payers and CMS Gear Up for ICD-10 Implementation, but Will They Be Prepared for Launch by October 1, 2014?