How will ICD-10 affect health care’s revenue cycle?

Businesses come in all shapes and sizes. They may be restaurants, bookstores, marketing firms or law offices. They can even be hospitals and doctors' offices. When it comes to those two, they have guidelines and federal laws that regulate how they operate and who they interact with. Their cash flow comes and goes from a variety of people and organizations, which means health care providers need ways to manage their revenue cycle. However, the upcoming switch to the 10th version of the World Health Organization's International Statistical Classification of Diseases and Related Health Problems – better known as ICD-10 – will require a revision of these businesses' financial plans.

How will ICD-10 affect hospitals' cash flow?
On Oct. 1, ICD-9 codes will be replaced with the most recent version, which will consist of two parts – one for all health care providers and the other strictly for hospitals, the U.S. Centers for Medicare and Medicaid explained. The WHO changed the way diseases are coded in medical documents and expanded the list from 14,000 codes to 69,000 for better accuracy. Ideally, ICD-10 will simplify the reporting process and make entering diagnoses easier through a more direct classification system.

Without the proper training, ICD-10's extra codes could cause headaches for doctors.Without the proper training, ICD-10's extra codes could cause headaches for doctors.

You may be asking why, if ICD-10 focuses mainly on how to code health conditions in computer systems, will it affect the revenue cycle. While the classification doesn't directly relate to finances, it does affect payments.

The revenue cycle contains all aspects of patient care, starting with scheduling and pre-registering and ending with payments, according to the Oregon Health & Science University. This also includes entering information into computer programs, submitting claims to insurance companies, managing finances and collecting payments. Now, health care providers must also adjust their revenue cycles for reimbursements from the meaningful use program. ICD-10 affects all parts of this system, Alexa Arends-Marquez, Nicole Knight and Dwan Thomas-Flowers, who all work in revenue cycle management, wrote in their article in the Journal of the American Health Information Management Association.

  • Front-end
    The people who first come in contact with patients must have a firm understanding of ICD-10 to be able to collect the necessary information from the person scheduling an appointment. Processes for patient eligibility and payer-specific reimbursement policy verification must be restructured to work in accordance with the new classification program. Because ICD-10 differs from ICD-9, the wrong codes could impact payments.
  • Middle
    Here is where health care providers enter the codes to correctly classify patient diagnoses. However, they'll have to pay much closer attention to what they're putting into the software, as definitions change with ICD-10. According to a study from UASI, Texas State University -San Marcos and the University of Cincinnati University Hospital, entering data may take 69 percent longer with ICD-10 than with ICD-9. The new classification will also affect patients categorized as "discharged not yet billed," which doctors may use to code during long-term stays, as specific codes are needed for ICD-10.
  • Back-end
    This part of the revenue cycle is where the billing, payment processing and reimbursements take place. Each of these procedures requires the correct coding so that patients and insurance companies are billed properly. Some of these systems have their own codes, and the appropriate ICD-10 number is necessary to ensure payments and billings are correct.

Coding impacts all parts of the revenue cycle, which means that if hospital staff isn't using ICD-10 correctly, they could be making decisions that are detrimental to the facility's financial plan.

What can hospitals do to manage the revenue cycle?
Because of the changes that are being made to the health care system with ICD-10, hospitals must also have people who are trained in the proper code classifications and revenue cycle management. However, the job used to be much simpler, and one person could do most of the back-end work. Now, medical facilities are working multiple employees into their financial plans, Healthcare Finance News explained. They require people who are specialized in separate areas of the revenue cycle to complement one another and ensure the cash flow of the business is being managed correctly. Unfortunately, not everyone has the skills to do so.

"We have to find people that are self-motivated, curious and not concerned with taking risk, people that are going to lean in and have high emotional intelligence," Margaret Schuler, OhioHealth's director of the revenue cycle, told the source.

Revenue cycle employees must be able to collaborate with one another, as well as have the financial savvy to manage an operation's cash flow.

Just as doctors need to collaborate on the floor, they'll also have to work together on ICD-10.Just as doctors need to collaborate on the floor, they'll also have to work together on ICD-10.

Hospitals may also consult financial services for help in transitioning to ICD-10 and maintaining their revenue cycle. There are third-party vendors who are fully knowledgeable in the new classification and have the capability to help businesses with ICD-10's implementation, according to LinkedIn contributor Jim Yarsinsky. They will reduce times awaiting payments, ensure resources are used efficiently, improve patient care and eliminate input errors. Revenue cycle management companies will also take on administrative duties so health care providers can focus on the patients, ICD-10 Monitor contributor Alex Tate explained. They check that proper coding is used and ensure hospitals are compliant with company and federal regulations. Vendors don't want any claims to be denied for patients and hospitals, which means they will take extra care to make sure codes are correct.

If health care providers are unable to correctly implement ICD-10, they may face problems with their cash flow. Their payments and reimbursements could go down or encounter obstacles if patients' cases aren't coded correctly. Despite the method that hospitals choose, they must ensure that their staff is knowledgeable about ICD-10 and trained to use the classification in their systems. While it may take some time to get medical facilities running smoothly, ICD-10 will simplify the cash flow process in the long run.

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