Don't forget the revenue cycle in your ICD-10 planning

by Healthcare IT News

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While estimating the cost of an ICD-10 transition may be scary, medical practices should perhaps be more worried about what could happen to revenue. Oct. 1, 2014 could be the start of longer accounts receivable periods and more denials.

The good news is that healthcare providers can take steps to manage these factors, according to John Britt, RN, Director, and Deb McReavy, RN, Director, Kforce Healthcare Solutions.

Healthcare providers can start by looking at how many days patient accounts are in A/R. Maybe the current cycle is fine. But if a few days are cut from A/R now, that creates some breathing room that will be appreciated after Oct. 1.

Another timing issue arises with the discharged not final billed (DNFB) rate. Again, what's normal now might add unnecessary delays to reimbursements. So improved billing efficiencies could give healthcare providers some control over cash flow.

Then it's time to look at denials. If healthcare providers can improve their denial rates — even the lowest rates — then that's extra cash coming in before Oct. 1 that can be added to the contingency fund.

If nothing else, healthcare providers need to measure financial performance so they can tell if cash flow isn't normal after Oct. 1. More specifically, they will want to know what's contributing to financial problems. That can't happen if they don't know what's normal.

And the Affordable Care Act (ACA) will change the definition of normal. While the healthcare exchanges (HIX) and their health plans are attracting attention now, the ACA is going to turn to cost savings to make healthcare more affordable.

"Healthcare reform relies heavily on data and on ICD-10 to incentivize providers to lower their costs," according to Albert Oriol, chief information officer at Rady Children's Hospital San Diego. Healthcare payers will be using ICD-10 data to justify paying providers less.

Even if they don't, physicians worry that healthcare payers will have very different fee structures. So even if that ICD-9 code that triggered a $1,000 reimbursement maps perfectly to an ICD-10 code, that might not trigger a $1,000 reimbursement.

Erik Newlin, co-chairman of the ICD-10 Transition Workgroup at WEDI and Director of National Standards Consulting at Xerox, tells EHR Intelligence that he doesn't see any sign of healthcare payers cracking down on providers. "I really think this is something that will help us gradually move forward towards more appropriate payment for the work that’s being done."

But what's going to be considered "appropriate?"