Fee-for-value, ICD-10 will change the rules for reimbursement
Supplier success in a post‐reform healthcare market depends on many factors, including a fundamental and thorough understanding of the foundation of healthcare reform. This is part of an ongoing series designed to help Repertoire readers understand the implications of reform.
When Medicare was instituted in 1965, it reimbursed hospitals and physicians based on bills submitted after treatment – or retrospectively. Today, charges for physicians and outpatient services continue to be reimbursed retrospectively.
But that’s changing, as payers phase in prospective pay and fee-for-value (as opposed to fee-for-service).
Prospective pay isn’t new. In 1983, the federal government introduced the Prospective Payment System for inpatient stays, which allowed hospital administrators to know before treatment how much their facility would be reimbursed for a particular illness, or diagnosis. Payments are based on rates determined by geographic region, diagnosis and procedure.
The Patient Protection and Affordable Care Act introduced significant changes to payment systems. Accountable care organizations and patient-centered care models – that is, patient-centered medical homes and patient-centered specialty practices – are becoming more popular across the country. Providers in these organizations are reimbursed based on how well they coordinate care and manage outcomes for their population of patients. Under an outcomes-based approach, providers receive incentives for keeping patients healthy and out of the hospital setting. Their focus shifts from the fee-for-service model to a fee-for-value model. It’s an effort to increase the quality of care while reducing overall costs.
Coding system
The five codes most relevant for suppliers to know are CPTs or Current Procedural Terminology codes; ICD, or International Class of Disease codes; the “Hikpiks” codes, or Healthcare Common Procedure Coding System; DRGs or Diagnosis Related Group codes; and APC, or Ambulatory Payment Classification codes. Two of the most common codes associated with reimbursement are CPT and ICD.
The CPT code is a five-digit number describing the medical, surgical or diagnostic service provided. The physician provides a CPT code after making a diagnosis and determining the treatment. The American Medical Association owns the copyright on CPT codes and publishes annual updates. Annual revisions take effect on or after January 1 of each year. (The AMA publishes a book of codes each year, which can be purchased through the organization’s website.)
Coding can get complicated when one considers that products support treatment for more than one condition. This is especially true in the lab. Identical lab tests can carry different CPT codes, depending on whether they are quantitative, qualitative or immunoassay-based (measuring a specific biological substance, such as an antigen).
The ICD-9 code is a four-digit number, which indicates the medical necessity for the procedure performed. It describes the symptom, injury, disease or condition. ICD-9s are maintained jointly by the National Centers for Health Statistics and the Centers for Medicare and Medicaid Services, and are modified annually. (A complete list of ICD-9 codes can be found on the CMS website.)
For a provider to get paid, the CPT and ICD-9 codes must be related on a claim. The diagnosis must support the medical necessity of the procedure. In other words, payers would reject a claim for a spirometry test – indicated by the CPT code – if it was prompted by a patient complaint of back pain – indicated by the ICD-9.
In 2011, the top five ICD-9s in the United States were the following:
Code Description Total
99.04 Packed Cell Transfusion 1,276,743
38.93 Venous Cath Nec. 796,314
39.95 Hemodialysis 613,003
88.56 Coronary Arteriogr-2 Cath 475,048
37.22 Left Heart Cardiac Cath 456,050
The next generation of ICD codes – ICD-10 – was originally set to launch on Oct. 1, 2013. After determining that many providers were not ready for this new program, CMS delayed the launch until Oct. 1, 2014. This has once again been pushed back, and the move from the current 14,000 ICD-9 code sets to new 68,000 ICD-10 code sets is scheduled for Oct. 1, 2015.
ICD-10 codes will provide greater detail for medical procedures and describe precisely what was done to the patient. This will expand the number of codes used by caregivers, allowing additional space to add new procedures as needed. ICD-10 will use current standardized medical terminology, which means that each term has the exact same meaning across the code set. The transition to ICD-10 will be required for everyone covered under the Health Insurance Portability and Accountability Act, or HIPAA.
Expect some confusion
With the Affordable Care Act adding newly insured patients to the system, and ICD-10 being implemented concurrently, providers may be confused. Will they be ready for these new code sets? Many facilities are looking to increase staff to handle this new workload, and they are searching for technology solutions to make this process easier. There is a need for qualified coders.
How can the distributor sales rep help eliminate their customers’ confusion, as they make the transition to ICD-10s? Several ways:
- Refer physician practices to the latest version of ICD-10 code books, available for purchase at www.aapc.com.
- Point out that many caregivers have moved to electronic medical records or other forms of health information technology, and these systems are preparing for the ICD-10 transition.
Do your best to stay out of the coding conversation. Better to allow the coding experts within the facility to navigate this area, rather than provide inaccurate information to your customers.
MDSI – the parent company of Repertoire – has developed the Healthcare Reform Navigation Series, an online program designed to make the task of preparing your organization for 2014 and beyond easier. This series will help you and your team with online courses that explain many of the key elements integral to understanding reform and the transformation from fee‐for‐service to fee‐for‐value. The program includes a 12-month schedule of topics and live sessions with industry experts.
To learn more about the Healthcare Reform Navigation Series, contact Scott Adams, corporate vice president, at (800) 536-5312 or sadams@mdsi.org.