Leveraging Collaboration to Assess ICD-10 Readiness and Reduce ICD-10 Operational and Financial Risks

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1 Leveraging Collaboration to Assess ICD-10 Readiness and Reduce ICD-10 Operational and Financial Risks MHDC Lunch & Learn December 13, 2012 Melinda Reno, Principal, Deloitte Consulting LLP Selma Ferhatbegovic-Fede, Senior Manager, Deloitte Consulting LLP LaTonya O Neil, Senior Manager, Deloitte Consulting LLP loneal@deloitte.com

2 Objectives Discuss benefits of ICD-10 Collaboration Define how collaboration efforts can generate value Discuss how and where collaboration fits within the ICD-10 remediation plan Share initial industry findings on early stage collaboration efforts Preview Deloitte s ICD-10 Collaborate Tool As used in this document, Deloitte means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain ser vices may not be available to attest clients under the rules and regulations of public accounting. 1 MHDC Lunch & Learn

3 Setting the context: ICD-10 testing objectives The overall objective is to assess that business outcomes in ICD-10 are similar to those in ICD-9; with variances understood and accepted The key objectives of ICD-10 testing are to demonstrate: Technology Validity Are the technology changes and integration points valid? Payment Consistency Are ICD-10 claims payments consistent with ICD-9 payments? Are variances understood? Operations Consistency Are auto-adjudication rates and claims pend/deny/pay metrics as expected? Business Consistency Are benefits, clinical policies, care management programs, etc. working as expected? External Interaction Consistency Are interactions and results with trading partners, TPA s Networks, Clearing Houses, Providers as expected? 2 MHDC Lunch & Learn

4 Testing for ICD-10 presents different challenges, requiring an enhanced execution approach Key Challenges Dependencies on availability and predictability of external parties Testing scope is significant and must be prioritized Key challenges Risk to the organization must be fully understood Complexity and potential volume of issue triage will stretch limited resources Testing Approach Principles 1 Outcomes Focused Iterative Cycles The lack of delivery predictability can only be mitigated by a flexible, iterative approach 2 Risk-Based Approach An approach toward prioritizing each cycle of testing based on what is critical to the business 3 4 Test Data Plan Determines the volume of test data required and the level coding accuracy necessary in each testing cycle based on focus Analysis Based Scenario Definition Defines the key performance indicators at risk for disruption (i.e. financials, pend rates, reporting and reimbursement for government sponsored programs, etc.) 5 Leverage Trading Partner Relationships Engage your high priority external partners as soon as they are available and actively include them in testing 3 MHDC Lunch & Learn

5 Collaboration with external partners can help meet ICD-10 testing objectives ICD-10 has varying degrees of impact across the entire health care delivery lifecycle Testing Focus Area Technical validity Payment consistency Objectives of ICD-10 testing Are the technology changes and integration points valid? Are ICD-10 claims payments consistent with ICD-9 payments? Are variances understood? Role of collaboration Validate the information flow and technical interactions with external entities (e.g., trading partners, TPA s Networks, Clearing Houses, Providers etc.) is working as expected Identify variances seen with pricing vendors that perform pricing functions for out-of-network claims. Insights into potential variances in natively coded claims from providers Operations consistency Are key operational indicators like auto-adjudication rates and claims pend/deny/pay metrics as expected? Review validations performed by claims editing vendors and ICD-10 code related edits that may adversely impact key operational metrics Business neutrality Are benefits, clinical policies, care management programs, etc. working as expected? Are provider reimbursement predictive models accurate? Determine if appropriate triggers get invoked based on the combined ICD-9 and ICD-10 episode of care Collaboration can help inform of potential operational and financial impacts of ICD-10 transition and validates readiness across the full value chain 4 MHDC Lunch & Learn

6 How do you jumpstart collaboration?

7 Jump starting ICD-10 collaboration Collaboration is an exchange of information between payers and providers to support testing and facilitate a transition to ICD-10 Step 1: Define Test Scenarios and Data Needs Employ a risk-based approach to determine effective coverage of core business processes based on operational and financial exposure Step 2: Identify and Reach Out to Key Collaboration Partners Review provider network considering criteria such as volume/cost of claims, geography, existing relationship, and coding methodology Step 4: Execute & Collaboratively Analyze Test Results Collaboratively review results of prioritized test scenarios to analyze business outcomes and understand potential variances Step 3: Exchange Effective Test Data Leverage knowledge of SMEs to input critical test data into test scenarios for risk coverage across the enterprise 6 MHDC Lunch & Learn

8 Identifying and prioritizing test scenarios for collaboration testing To determine the most suitable test data to use, we should consider types of test scenarios planned for external testing as well as what their priority should be Test scenario considerations for collaboration testing Is the scenario assessing information flow and technical interactions needed promptly after the ICD-10 compliance date with external partners (e.g., trading partners, clearing house, etc.)? Is the scenario comparing payment consistency with vendors that perform pricing functions for claims (e.g., out-ofnetwork claims pricing) or providing insights into potential variances in claims from providers? Is the scenario comparing operations consistency through business processing performed by external parties (e.g., claims editing vendors with ICD-10 codes that may impact operational metrics)? Is the scenario comparing business neutrality for areas supported by external parties (e.g., Fraud and Abuse and Care Management triggers for payers, reimbursement expectations for providers)? Scenario Priority Considerations Test Scenarios Grouped by Priority Group 1 Critical to Test Group 2 Important to Test Group 3 Could be Deferred Leverage the priority of the test scenarios to select the type of test data needed to meet the objectives of ICD-10 external testing. Collaboration with your partners assists with this prioritization 7 MHDC Lunch & Learn

9 Selecting test data for collaboration testing Identifying and prioritizing your test scenarios is critical for understanding the data needs from your partners. Different types of data can be produced and yield varying insights depending on the scope and focus of testing Test Scenarios Grouped by Priority Group 1 Critical to Test Group 2 Important to Test Group 3 Nice to Have Test Data Considerations Manufactured Test Data Natively Coded Test Data Translate existing ICD-9 claims to ICD-10 claims using CMS GEMs or customized smart maps Use of automated tools and crosswalks Collaborating with partners to exchange ICD-10 data from real medical records and transactions Use of clinical coders at existing providers The use of manufactured vs. natively coded data for testing should be evaluated and effectively selected based on the need to simulate close to production outcomes for prioritized test scenarios 8 MHDC Lunch & Learn

10 Targeting the right partners for collaboration Evaluating specific components of relationships with partners can help to identify the right providers and payers to engage for collaboration Shared Matching Factors Volume, type, and dollar amount of claims Group 1 Critical to Test Group 2 Important to Test Group 3 Could be Deferred Match Partners to Scenarios Geography Existing relationship Provider-specific Matching Factors ICD-9/ICD-10 coding method State of EMR system Clearinghouse and 3rd party vendor readiness Payer-specific Matching Factors Submission method Payer readiness Collaborating in strategic alliances to execute prioritized scenarios often leads to meaningful testing and builds confidence for ICD-10 readiness 9 MHDC Lunch & Learn

11 ICD-10 collaboration considerations ICD-10 is highly invasive to current business models and technology systems - collaboration of this magnitude, on something this complex, requires broad planning Understand the risks before starting ICD-10 collaboration Impact to external stakeholders and strategic objectives Exposure of invalid or inconsistent test results Inconsistent collaboration approaches across the industry leading to potential for disorder with partners Role for, dependency on, and readiness of other 3rd Party vendors Collaboration requires preparedness of internal capabilities Confidence on the readiness, reliability and validity of internal systems Adherence to security requirements for data transfer, encryption, masking and deidentification When selecting collaboration partners, leverage existing trading partner relationships and local/regional communities for identifying and tracking partner readiness The ability to establish early collaboration and effectively orchestrate collaboration with trading partners will mitigate key risks and reduce potential financial exposure 10 MHDC Lunch & Learn

12 Collaboration case study: valuable insights Early stages of collaboration provided results that were not predicted and indicated that there are implications to ICD-10 that could only be resolved through collaboration. Provider Feedback from Collaboration Findings: We will incorporate the cases that has caused us coding issues as part of our training program for ICD-10 It is taking us about twice as long to code claims in ICD-10 than ICD-09 The collaboration on the financial impact of ICD-10 is of mutual benefit as we assess and plan for the financial impact of a much more complex and expanded code set The information has been valuable. It has been interesting to see the impact of both coder variation and coding guideline changes that will potentially impact our DRG assignments going forward. Health Plan Lessons Learned: Assume only 50% ~60% of the selected hospitals will participate Coding claims is labor intensive, ~600 claims take a 3 month turnaround Need to be prepared to show value to provider for their effort ( what s in it for them? ) Prepare data and choose data elements that help the provider pull Medical Records Bring in resources with DRG grouper expertise, have access to coders 11 MHDC Lunch & Learn

13 Deloitte ICD-10 Collaborate Tool overview

14 How can organizations simplify collaboration? Collaboration is complex and healthcare organizations are dependent on external parties in the health plan delivery lifecycle for the exchange of test data Clearing Houses Payers Providers Trading Partners Analytical Vendors Collaboration is reliant on external partners and is critical for ICD-10 readiness Rental Networks Care Management i10 Collaborate Tool can be used to simplify the exchange of data in preparation for ICD-10 readiness 13 MHDC Lunch & Learn

15 i10collaborate tool: background and overview Deloitte s i10collaborate Tool assists important collaboration functionality to help our clients make informed decisions and mitigate risk for the ICD-10 transition i10 Collaborate Tool Data exchange Assists data exchange of ICD-9 and ICD-10 information between payers and providers prior to their internal systems being ready and capable of testing externally Native coding Allows native coding of ICD-10 claims from real medical records that were used to code ICD-9 claims and performs validation of code versions Central repository Serves as a central repository for payers and providers to both store ICD codes and limited claim information for sharing with collaboration partners in multiple exchange cycles Analytics Provides dashboards with analytical reports and trend analysis for payers and providers to provide insights on coding patterns as well as DRG and MDC shifts 14 MHDC Lunch & Learn

16 i10collaborate tool: framework for effective collaboration The i10collaborate tool provides functionality to support payers and providers in collaborating effectively and gaining insights through the multiple phases of the claim adjudication lifecycle in the ICD-10 world Set up i10 Collaborate Upload ICD-9 Claims Code ICD-10 Claims Adjudicate and Upload Results View Analytics and Reports Deloitte Payer/Provider Provider Payer Payer / Provider Deloitte sets up the i10cllaborate tool for the organization and their collaboration partner User uploads ICD- 9 claims file either via 837 file upload or via upload of a flat file Provider views ICD-9 claim and natively codes ICD- 10 claim through user interface User can also map ICD-9 claim into ICD-10 claim using the GEMs Payer downloads the ICD-10 claims and adjudicates them on their systems Payer uploads adjudication details Tool generates DRG Shift Analysis Report Payer reviews analytics and reports and shares with their collaboration partners Deloitte can provide support and advise throughout many steps of the collaboration process 15 MHDC Lunch & Learn

17 i10collaborate cleansing module: payer loaded ICD-9 claims The i10collaborate tool s system architecture was designed including a cleansing module to reduce risk of PHI exposure outside of the payer and their corresponding provider partner Test claim 837 file (ICD-9) Claim Claim Test claim 837 file (ICD-10) Payer environment Process ICD-10 claim and submit results Un-cleanse ICD-10 claim file I10 Collaborate Cleansing Module PHI Deloitte environment i10collaborate Claim ICD-9 Load claims into i10collaborate Claim ICD-10 Cleansed claim 837 files Portal with Database and Reporting Features ASP Model PHI I10 Collaborate Cleansing Module Provider environment Records with PHI Source claim 837 file (ICD-9) Claim Recode the claim in ICD-10 using i10 Collaborate Source ICD-10 claim with paid info (flat file) Store cleansed PHI records Claim Records without PHI 16 MHDC Lunch & Learn

18 This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation. Member of Deloitte Touche Tohmatsu Limited