Alert! ICD-10 Conversion Is Now 56 Days Away and Could Put Financial Squeeze on Clinical Laboratories and Pathology Groups

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.” (more…)

Medicare Officials Raise Issue of Fraud as Greater Use of Electronic Health Records Increases the Number of Claims Upcoded to More Complex CPT Codes

Issue does not directly affect clinical laboratories and pathology groups, but puts spotlight on some hospitals and physicians who frequently use these codes.

Could increased use of electronic health records (EHR) systems be causing more hospitals and physicians to commit fraud because of upcoding? That’s the assertion of certain federal health officials. They attribute the increased proportion of Medicare claims for more complex and more expensive services by some providers to be, in some part, acts of fraud.

Most pathologists and clinical laboratory managers will notice the irony in these allegations that providers are upcoding services to Medicare patients in fraudulent ways. After all, the federal government is currently paying billions of dollars in financial incentives to encourage providers to implement and use certified EHR systems with the goal of lowering healthcare costs, while improving patient outcomes.

OIG Audit Findings Are Source of Fraud Allegations

Insinuations of provider fraud came after the public learned of findings of an audit done by Health and Human Services’ Office of Inspector General (OIG). The OIG determined that payments for more complex Level 5 E/M services increased by 21% between 2001 and 2010. During that same period, payments for medium-complexity patient services decreased by 11%.

For all of 2010, the Centers for Medicare and Medicaid Services (CMS) paid out $33.5 billion for E/M billings. This was about one-third of Medicare Part B payments for physician services. These numbers were part of a story  published in Modern Healthcare.


Now that much larger numbers of physicians and hospitals are using electronic health record (EHR) systems, Medicare has noticed a steady increase in the proportion of claims submitted at higher and more complex codes, increasing reimbursement. In response to one federal government audit, Kathleen Sebellius, Secretary of Health and Human Services (r) and Attorney General Eric Holder (l) held a joint press conference to announce to healthcare providers that there would be stricter audits of providers who are using billing codes for complex patient visits with greater frequency. (Photo by Manuel Balce Ceneta, copyright Associated Press.)


Experts Predict Shortage of Clinical Laboratory Labor Will Create Need for More Sophisticated Laboratory Information Systems

Recent reports show why labs need more robust laboratory information systems (LIS), including a shrinking workforce, new requirements to connect to EMRs in hospitals and physicians’ offices, and the development of health information exchanges.

Clinical laboratories nationwide are realizing they need new and more powerful laboratory information systems (LIS) as they seek to process larger volumes of medical laboratory tests with a shrinking number of medical technologists and clinical laboratory scientists.

In response to the critical shortages of MTs, CLSs, and other laboratory scientists, most clinical laboratories are beefing up automation in all areas of the lab. From the high-volume core chemistry/hematology laboratory to microbiology and histology, laboratory automation systems are becoming ubiquitous. But all this lab automation increases the need to use information technologies to manage both automation and the flow of specimens through the laboratory.

A report published earlier this year by Kalorama Information of Rockville, Maryland, actually links the shortage of skilled medical laboratory staff as one of the most important factors in fostering growth in the LIS market. Researchers estimated the size of the LIS market at $800 million and predicted that it would grow about 6% annually for the next few years.

As pathologists and clinical laboratory managers know, labor accounts for more than 60% of the cost of producing medical laboratory test results. The Kalorama report stated that laboratory automation and better information management systems can reduce the number of manual procedures and tasks in the typical medical laboratory, In turn, this helps optimize labor efficiency, said the report titled, Laboratory Information Systems (LIS / LIMS) Markets. (more…)

Hospital Laboratories Take Note: Medicaid will Cease Reimbursing for Hospital-Acquired Conditions in 2012

Medicaid policy takes effect on July 1, 2012, and mirrors existing Medicare policy

Medicare was the first government program to announce that it would not reimburse hospitals for certain hospital-acquired conditions. Pathologists will be interested to learn that the Medicaid program is now prepared to institute a similar non-reimbursement policy. This fulfills a Dark Daily prediction that other government and private health programs would copy this Medicare policy.

As of July 1, 2012, Medicaid will no longer reimburse hospitals for treatment of certain hospital-acquired conditions (HAC). The Centers for Medicare and Medicaid Services (CMS) published its final rule on June 6th as a way of aligning Medicaid’s HAC policies with those of the Medicare program. The new Medicaid HAC rule becomes a baseline policy on top of which States can still attach their own HAC reimbursement restrictions.

Clinical Laboratories Beware: Many Payers May Not Be Ready for HIPAA 5010 on January 1, 2012

Bigger challenge will be adoption of ICD-10 across entire U.S. healthcare system in 2013

Two disruptive events in the world of coding, billing, and claims reimbursement are about to engage the full attention of clinical laboratories and pathology groups. First is implementation of HIPAA 5010 forms for claims submission by all types of healthcare providers. This is scheduled to occur on January 1, 2012—just seven months away!

Second is implementation of ICD-10 codes. Federal law currently requires all payers and providers to begin using ICD-10 on October 1, 2013. On that date, the existing ICD-9 codes will no longer be used.