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Client Advisory:

Impact of the ICD-10 Delay

April 2, 2014

On Monday, March 31, 2014 the Senate approved HR 4302 which provides a temporary fix to the sustainable

growth rate (SGR) for one year, preventing automatic cuts to Medicare’s physician compensation. This bill,

also called the “doc-fix,” also included a provision that requires a delay of the ICD-10 implementation from the

existing regulatory mandate of October 1, 2014, until at least October 2015. The bill was signed into law by

President Obama yesterday. The impact of this delay is far-reaching across the entire healthcare industry. As

a Cognosante client, we want to assure you that you can count on us for the most up-to-date and

authoritative guidance as the industry adjusts to the change in the law.

When will we know if the date has changed?

At this point, the existing regulatory mandate for ICD-10 implementation on October 1, 2014 is inconsistent

with the new law. Until such time as CMS promulgates corrective regulation specifying a new compliance date

we only know that a new date cannot be prior to October 1, 2015. We’ll keep reaching out to our customers to

ensure everyone has current and up-to-date information regarding the change in the compliance date.

What should we tell providers if asked about the delay?

Keep the lines of communication open. Reinforce your commitment to comply with the regulatory

requirements, and let them know you are moving forward with your readiness initiative. If possible, extend

testing opportunities and try to get more providers – especially small providers – to participate. Encourage

providers to continue to remediate their processes and systems for ICD-10 compliance. Be the first place they

go for up-to-date information on the status of the roll-out. Keep your web content and outbound messaging

fresh, making sure to correct any existing materials that reference the old compliance date. Don’t wait for the

announcement of a new date to acknowledge that the previous date is no longer valid. You don’t want to lose

their trust in your material when they come to you for information.

What should we tell others within the organization?

The message conveyed to internal staff members should be the same as to the providers. We continue to

work toward ICD-10 compliance. We will provide updates regarding the revised compliance date as

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information becomes available. We are taking advantage of the delay to improve our systems and processes.

We want you to test your system to make sure it is ready.

What should our organization be doing while we await a final determination?

As previously stated, we cannot change or lessen our efforts to be compliant with ICD-10. We must continue

to move forward with educational sessions and communications to the provider community. With the

additional time that has been granted, organizations should utilize this time to ensure their systems are able

to transmit transactions, adjudicate claims and receive confirmation of the transaction (End-to-End, or “E2E”

testing). In addition, training regarding documentation and coding should continue as well as ongoing process

improvement efforts to take advantage of lessons learned thus far, including efficiency and best practices from

the industry.

What are the immediate risks of the compliance date delay?

The long-term impacts include the loss of the information to be gained by ICD-10, and the prospective

enhancements to functionality offered by the more detailed diagnosis and procedure information. Immediately,

however, there are some risks to the investments made thus far:

An abandonment of ongoing ICD-10 remediation tasks, which would cause significant rework as the new

deadline approaches.

The loss of subject matter expertise via the migration or departure of knowledge experts and thought

leaders.

Impacts to downstream systems and future projects that relied upon the availability and increased

message content of ICD-10. Many of these projects may already be underway, in which case the impact

of the delay should be assessed and remediated.

As the ICD-9 code set is no longer being updated, this archaic system may increasingly go out of synch

with modern medical technology and improvements to the categorization and specificity of illness and

injury.

What are Cognosante’s recommendations for the immediate future?

We recommend responding to the postponement as a risk event, with managed completion or closure of

individual project tasks and a “re-baselining” of planned activities according to the new reality.

Expand time-constrained remediation efforts to include under-resourced ancillary systems and

processes such as Predictive Analytics, Utilization Review, Third Party Liability, and Fraud, Waste and

Abuse.

Testing capabilities can be refined and enhanced. For organizations which were struggling to meet the

2014 deadline, the postponement offers a chance to catch up, which makes the risk of a wait-and-see

approach that much more hazardous. A focus on minimal compliance could be transformed to look for

operational improvements offered by the new code set. (See more on this topic below.)

Don’t allow memberships or product licensing to lapse. Remain engaged in the ongoing industry

collaborative efforts to improve the accuracy of healthcare data reporting and claims determination.

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Urge state agencies to adopt ICD-10 for Worker’s Comp, Liability, and No-Fault insurance reporting.

These operations are largely unaffected by the HIPAA law, and many states lagged in adopting the new

code set. This would have left providers needing to send one set of codes to public and private health

plans, and another set of codes to non-group health plan carriers. There’s time to fix this now.

Is there any way we can turn the delay to our advantage?

Absolutely.

Risk considerations and time and resource constraints have led most projects to adopt a “stand-still” approach

to ICD-10 remediation: First, do no harm. Can we pay claims at the same level? Can we process claims at the

same rate? What’s the minimum we must do to be compliant? Under the postponement, the added time, and

the ability to proceed forward with testing efforts already underway, allow organizations to consider a new

posture: optimization. Make the codes work for you and your providers. For example…

Cognosante’s “Policy First” remediation approach means you have the ICD-9 codes that actually drive

your system edits and processing rules captured, with ICD-10 equivalents defined and reviewed by your

medical policy team. The primary purpose of this effort has been to document the way your processes

actually work now, and how they will work under ICD-10. Now you have time to look at those policies

with an eye for opportunity.

o Review the policy information, then use that assessment to enhance prior authorization

filtering, payment policies, and remittance advice rules.

o Are you giving providers enough information on their 835 or EOB? Or are you using generic

codes that only result in phone calls?

o Do you ask for medical documentation repeatedly for a particular situation, only to approve 99%

of the submissions? Maybe there is a better way to trap that 1% than to force routine billing to

go through a time- and labor-intensive process.

Take the expertise you’ve gained to pursue payment reform initiatives. Whether it’s called pay-for-

performance, value-based purchasing, medical homes, or accountable care, moving away from costly

fee-for-service reimbursement calls for a deep understanding of the data. Not just the format of the

data, but what it means. Your ICD-10 effort has raised that awareness in your organization. Use it.

Take the knowledge you’ve gained in your ICD-10 analysis and carry it forward to any system

reprocurement efforts that might be underway. By now, you understand that it’s not enough that a new

system support the format of the code set. It needs to know what the codes mean, and allow you to

configure it for smoother operations. Use the deeper understanding that ICD-10 has given you to push

those new systems to higher performance.

Leverage that expertise and the processing insights you’ve gained to explore the new possibilities of

data analytics. There are some amazing tools being developed and deployed, and Cognosante will be

bringing those new capabilities to its customers. Interested? Let’s talk.

Note that none of these recommendations need to wait for ICD-10 to be implemented, or even a new

compliance date to be announced.

For more information, speak to your project team, or contact Susan Ackley, Director of Health Data

Standards, (o) 480-481-5932 (c) 480-225-0051 susan.ackley@cognosante.com