Becker's Hospital Review

56 FINANCE ICD-10 Aftershocks: 4 Challenges Every CFO Can Expect By Kelly Whittle, MS, Principal, ICD-10 Advisory and Whittle Advisors, LLC I f any individual in the C-suite will feel the effects of ICD-10 most prominently, it will be the hospital CFO. As the organization's financial manager, the CFO pos- sesses an incredible amount of re- sponsibility to maintain cash flow and revenue — both of which will be put to the test post-ICD-10 go- live. CFOs may find themselves caught in the middle of growing denial rates while also trying to em- ploy additional coders, CDI special- ists, denial managers and others. It's a precarious place to be, and CFOs must start planning now to address these challenges. is article provides four ICD- 10 aershocks for which CFOs must be prepared. 1. Significant productivity loss throughout the revenue cycle It's not a matter of whether productivity aershocks will oc- cur in ICD-10 — it's a matter of where and for how long. Our recent analysis suggests even the most prepared hospitals will experience an initial decrease in productivity across several roles in the revenue cycle, including coders, billers and claims man- agement. is decrease could be as much as 35 percent for cod- ing and last through January 2016. Coder productivity should increase steadily in 2016 and level off around 25 percent, but may never truly regain ICD-9 efficiencies. Billers and claims management roles are also likely to expe- rience performance deficits. Clinical documentation specialists will be tasked with clarifying and improving physician docu- mentation to address ICD-10 specificity needs. According to Mark Hepler, corporate vice president and chief CFO of Munson Healthcare in Traverse City, Mich., "ICD-10 elevates the visibility of clinical documentation quality and its importance to the fi- nancial health of an organization." Finally, as providers, clearing- houses and payers navigate the new waters of ICD-10, an early spike in claims denials may also occur. By June 2016 — when we predict organizations will be hit hardest — some will experience an increase in A/R by five days or more. How might this translate to days in A/R and other oper- ational indicators? For an average healthcare system, this equates to millions and millions of dollars in reduced cash flow. Note that these numbers have been calculated based on hospitals already dual-coding and practicing in ICD-10. Hospitals that have not yet dual-coded may take far longer to recover. How to prepare: Devote extra time and resources to any coding backlogs now. You'll want to clear up these bottlenecks before new ones emerge post ICD-10 go-live. Secure funding for additional staff members through June 2016 and perhaps even beyond. Model the impact to A/R in order to have enough cash on hand or to develop other contingency plans. CFOs must be able to calculate these numbers quickly and regularly. 2. Short-term denial increases expected If CMS predictions hold true, short-term spikes in denial rates of 100 to 200 percent are entirely plausible. Complicating matters will be additional denials from commercial insurers. ese rates will be unlike anything the industry has ever seen before, and they could send denial management teams into a state of overload. Revenue cycle success during the first months of ICD-10 will be determined by how quickly organizations can respond to and manage claims denials. How to prepare: Mitigate denials now. Start with your most common denials in ICD-9, as these will likely be your top denials in ICD-10. Complete a root-cause analysis to determine where to focus. Are these denials due to coding errors, insufficient docu- mentation, or both? If documentation is insufficient or typically delayed, is it because of several physicians or only one? Also look at high-dollar, high-volume service lines, as these could have the biggest impact on the organization's bottom line. 3. Cash flow and revenue hits Denials and delayed payments will directly affect revenue and cash liquidity, both of which are necessary for business growth and expansion of service lines. Without this liquidity, hospitals could face mergers, staff cuts and more. Despite test- It's not a matter of whether productivity aftershocks will occur in ICD-10 — it's a matter of where and for how long.

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