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The Upside to ICD-10: Defense Against Audits

Audit Concerns

US Congressional offices informed the ICD-10 Coalition that physicians have been calling in concerned that the increased specificity in the ICD-10-CM codes will lead to an increase in recovery audit contractor (RAC) audits. Physicians have been concerned about increasing audits unrelated to ICD-10 for some time. The recovery audit looks back 3 years from when a claim is paid to verify proper payment. In the event of negative findings with recoupment demands, additional worry over costly and lengthy legal processes, appeals, and repayment are major concerns faced by physicians.

Hospitals also share an aversion to audits. Hospitals already face more audits of payment claims under ICD-9, including by RACs, resulting in additional administrative overload, and costly appeals through an already overburdened legal process. Various organizations have been working with CMS to improve the RAC program and ensure fair and proper payment to hospitals for medically necessary rendered care. Much work is also underway to ensure that hospitals are educated on preventing unfair and unreasonable payment denials and how to best navigate through Medicare appeals process after a negative RAC finding.

A Different Perspective – ICD-10 May Help Avoid Audits

However, the notion that ICD-10 may exacerbate or trigger bothersome audits with negative outcomes may be unfounded since ICD-10 is designed to have an “audit-protective effect.” More thorough and complete clinical documentation with more specific codes may actually better justify medical necessity and payment. In some instances, ICD-10 may even shorten the audit duration and perhaps even reduce frequency.

Because ICD-10 codes are derived from medical documentation and RAC auditors review the medical record to substantiate the code, the main challenge for providers will be to document thoroughly, accurately, and appropriately. Since ICD-10-CM only has a limited impact on physician payment (e.g., medical necessity, coverage), much of the specificity of the ICD-10-CM codes will not affect physician payment one way or another, and therefore is not expected to trigger an audit.

As such, ICD-10-CM specificity is more likely to help physicians avoid an audit than trigger additional audits. ICD-10 should protect providers from audits due to its specificity and laterality documentation requirements. As an example, if a patient breaks both wrists and a procedure is performed to repair each wrist, the ICD-10-CM codes can explain why there are 2 procedure codes. However, in ICD-9-CM, a review might be triggered because the diagnosis codes would not reflect that both wrists were fractured so there would be two of the same procedure code for each injury. This scenario would likely trigger an alert for audit under the assumption that the codes have been entered erroneously.

Industry Will Need Time to Settle

At the risk of minimizing the risk of audits, be aware that there will be many other issues to work through after the ICD-10 conversion rather than an immediate focus on audits. There will need to be an “ICD-10 settling in period” in the industry before any audits can be reasonably performed. After the first few weeks of industry “ICD-10 end to end” testing in production environment, the main focus of HIPAA covered entities will be on remediation. Payers will also be focused on ensuring that all their business and operational systems are functioning. Providers will initially be focused on successfully submitting ICD-10 coded claims.

Ensuring You Can Submit ICD-10 Codes is Key

On the cutover date, ensuring that your entity has the ability to submit ICD-10 codes is going to be the most basic, yet most critical functionality requirement. If you’re not able to submit any type of claim using ICD-10 codes (electronic or paper), you will not have the infrastructure to be paid for your services. To help address concerns over submitting ICD-10 codes, some practical considerations for ensuring you can submit ICD-10 codes are noted below:

  • Above all else, you must first be capable of submitting claims for services rendered (electronic preferred).
  • Once you’ve confirmed this capability, strive to submit clean claims without data errors by auditing your coders now for accuracy and by supporting them in their continued learning. Strive for a 95% coding accuracy rate or higher.
  • Keep in mind that the payers are not necessarily checking for your coding accuracy during the cutover date. Payers are leaving it up to the providers to ensure that their ICD-10-CM/PCS codes are complete, accurate and serve as a reflection of their clinical documentation.
  • Payers will be focused on paying the claims based on the codes that have been submitted —whether or not the claim contains all of the correct codes for diagnosis and procedures will be the responsibility of each coder and biller from each provider organization.
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