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The software that powers post-acute care
This educational presentation is provided by
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THE INDUSTRY LEADER… FOR ALL THE RIGHT REASONS
SHARON HARDER President C3 Advisors, LLC c3advisors.com
ABOUT THE PRESENTER
WILL 2015 BE THE YEAR OF ICD-10?
• The transition is scheduled for October 1, 2015
• Delayed in mid-2014 and the transition date was reset
• Additional delays are unlikely • Home health and hospice providers should be
prepared to make the transition this year
HOW IS ICD-10 DIFFERENT?
• ICD-9 is 30 years old and outdated • Originally designed to facilitate statistical analysis • There isn’t enough detail to describe severity or
complexity of some diagnoses • ICD-9 Codes have up to 5 digits – ICD-10 Codes
can have 7 characters and start with a letter
• ICD-10 Codes contain elements to describe: ! Diagnosis category ! Etiology ! Anatomic site ! Severity
• Because it is far more inclusive, ICD-10 Codes will be used to:
! Improve measurement of quality of care and outcomes ! Initiate pay for performance ! Evaluate resource utilization based on level and duration of
service ! Help control expenditure growth
HOW IS ICD-10 DIFFERENT?
WHAT WILL CHANGE? • EVERYTHING . . . . .
! Policies and processes ! Forms ! Third party payer contracts ! Training plans ! Coding ! Qualifications of case managers, coders, billers and
field staff ! Clinical documentation ! Authorizations for service ! Claims ! MAC diagnosis or disease-specific LCDs ! The number of ADRs, rejections for inaccuracies and
outright claim denials.
WHAT DOES IT MEAN FOR MY AGENCY? • Changes in staff productivity
and expense ratios • Timing of claim submissions and
payment • More pre-payment reviews and
payment delays that will mean decreased cash flows
• Operational expenses will likely
go up, and cash will come in more slowly, creating a financial squeeze for many providers
• Profits will likely suffer for many and that may affect the ability to borrow for ongoing operations
ICD-10
Revenue
Expenses
Cash Profit
Productivity
CLINICAL IMPACTS
• Compensation issues
• Training issues
• Productivity issues
• Recruiting issues • Accuracy
REVENUE CYCLE IMPACTS As coding and clinical productivity decline, claim submission delays can cause slowdowns in cash flow. Many in the industry have suggested that, as payers grapple with their own system and accuracy issues, claim rejections will increase. Many expect more Additional Development Requests and subsequent denials following medical review. This will, in turn, cause revenue decreases at a time when reimbursement rates are already on the decline.
GET READY – GET A PLAN
• Five easy financial and operational planning steps
1) Understand current performance metrics and potential process bottlenecks that are hindering optimal performance
2) Implement immediate improvements in KPIs to minimize future disruption
3) Plan and train for productivity challenges that will be experienced by the coding team, clinicians and billers
4) Plan for contingencies
5) Be prepared for cash flow disruption
KEY PERFORMANCE INDICATORS • Average days to RAP release
• Average days to final bill
• Number of claim errors – T status claims
• Number of Additional Development Requests
• Claim denials
• Days revenue outstanding
• Late documentation indicators – by clinician and physician
AVERAGE DAYS TO RAP
• Average days before a home health episode RAP can be submitted should be < 7 days
• Process gaps that may need to be addressed: o Intake – completion of demographic information
o Intake – eligibility assessment and MSP review
o OASIS – same day completion of assessments
o OASIS reviews – coding and completion reviews within 24 hrs o 485/Plan of Care – completed and submitted to the physician
within 48 hrs
DAYS TO FINAL BILL • Average number of days between the end of an
episode or monthly period to the point of final billing should be no more than 10 days.
• Many agencies fall down on this performance indicator.
• Process gaps that may need to be addressed: o Timeliness and adequacy of clinical documentation o Receipt of signatures on required documentation such as the
F2F, 485/POC, and supplemental orders
CLAIM ERRORS AND REJECTIONS • Claim errors should be less than 5% of claim
submissions.
• Most claim errors will be due to coding mistakes between ICD-9 and ICD-10.
• Other common claim errors will be the usual suspects such as HIC numbers, policy numbers, DOB, NPI numbers etc.
• For process improvements, look to data entry
improvements at the point of admission or intake.
DENIALS • Outright payment denials should be less than 2%.
• Many predict many more denials based on pre-payment reviews that will focus on coding inconsistencies.
• Start now to focus on documentation and other inconsistencies that have historically presented problems, such as documentation in support of medical necessity, particularly for patients with long lengths of stay.
• Look at other internal processes such as those around documentation of verbal orders and, of course, Face to Face.
DAYS REVENUE OUTSTANDING • Manage Days Revenue Outstanding (aka DSOs) which
should be the organization’s total accounts receivable from all sources at the end of a period divided by the average daily revenue over the preceding 90 day period.
• If your agency is heavily devoted to Medicare, Days Revenue Outstanding should be around 35 days
• DSOs may start to creep up where there is more managed care.
• If you don’t currently monitor and measure A/R, start now.
DUAL CODING • For episodes beginning after August 1st, all agencies
should plan on coding both in ICD-9 and ICD-10 because of the billing and OASIS calculation requirements.
• In the meantime, we recommend that all agencies and hospices identify to 30 to 50 top diagnoses codes that are used for patients that have been on service in the last 6 months.
• Practice using those codes and make sure that the billing group is able to reasonably make the transition between the ICD-9 values and their ICD-10 counterparts.
DOCUMENTATION • Conduct a review of all current clinicians and their
documentation habits.
• In conjunction with the clinical operations team, assess the timeliness and level of accuracy that each clinician is achieving.
• Address timeliness and accuracy gaps now before things become more complicated.
CONTINGENCIES • Third Party Payer systems - check requirements for
Medicaid and other third party payers in terms of howthey want claims to be submitted.
• Make sure that the billing team is aware of therequirements and that the software vendor is preparedto address the claim submission rules for each paysource.
• For awhile agencies and hospices will have to dual codedue to Medicare episode date spans and claim splitrequirements.
• Dual coding – August 3rd for HH.
DATE SPAN ISSUES - OASIS • There are three factors that will affect both OASIS
and claims for home health services
1) The claim From date which is the start date for the episode
2) The OASIS assessment completion date as shown in M0090
3) The claim Through date
SOC OASIS
• SOC OASIS must be completed within 5 days of the SOC.
• M0090 determines which grouper will apply.
• If the SOC and M0090 dates are before October 1st, the HHRG/HIPPS value will be determined based on ICD-9 codes used in the OASIS.
• If the episode spans into October, the final claim will be required to have ICD-10 coding even though the OASIS and the RAP may be coded under ICD-9.
OASIS – START DATE < 10/1 WITH A COMPLETION DATE > 10/1
• Example is an episode that starts 9/28 with an OASIS completion date of 10/2
• ICD-10 coding will be used on the OASIS to assign the HHRG/
HIPPS value
• The RAP will be billed with a From and Through Date of 9/28 using ICD-9 coding
• Assuming that the episode is not a LUPA that ends on or before 9/30, the EOE claim will be billed with the same ICD-10 codes that are on the OASIS
OASIS – OCTOBER RECERTS
• In the case of a recert, the M0090 date could be up to 5 days before the episode start.
• If the M0090 date is before October 1st, ICD-9 coding will be used for the OASIS and for calculation of the HHRG/HIPPS value even though the dates of service may start in October.
• Both the RAP and the EOE claim will require ICD-10 coding at the time of submission.
OASIS – REFERENCE CHART
ASSESSMENT TYPE
RAP FROM &
THRU DATE
OASIS M0090 DATE & OASIS VERSION
EOE CLAIM THROUGH
DATE
OASIS DIAGNOSIS
CODING
RAP CODING
EOE CODING
SOC/ROC 9/28/15 9/30/15 OASIS-C
11/26/15 ICD-9 ICD-9 ICD-10
RECERT 9/28/15 9/25/15 OASIS-C
11/26/15 ICD-9 ICD-9 ICD-10
SOC/ROC 9/29/15 10/2/15 OASIS-C1
11/26/15 ICD-10 ICD-9 ICD-10
RECERT 10/2/15 9/28/15 OASIS-C
11/30/15 ICD-9 ICD-10 ICD-10
CLAIMS GUIDANCE – MLN MATTERS
• “If you are not ready, your claims will not be paid.” (MLN Matters SE 1239 Revised)
• Remember that, as October 1st approaches, you
will not be able to “mix and match” ICD-9 and ICD-10 Codes on claims and if the wrong version is selected, the claim will be placed in “T” status (i.e. Returned to Provider).
• Also, remember that the coding will be based on the Date of Service – NOT the date of claim submission.
DATE SPAN ISSUES – HH RAPS
From MLN Matters SE 1408 Revised – Bill Type 3X2
• For HH RAPs, the claim coding will depend on the one date that is provided on the RAP which is the episode start date.
• For episodes that begin on or before September
30th, ICD-9 codes will be used for the RAP.
• For episodes that begin on or after October 1st, ICD-10 codes will be required for the RAP.
DATE SPAN ISSUES – HH EOE Claims
From MLN Matters SE 1408 Revised – Bill Type 32X
• “Allow HHAs to use the payment group code derived from ICD-9 codes on claims which span 10/1/2015, but require those claims to be submitted using ICD-10 codes.”
• The THROUGH date will be the guiding factor
• What this means is that for full episodes that begin on or after August 2nd, you could – and probably will – be billing with both ICD-9 codes (on the RAP) and ICD-10 codes (on the EOE bill)
DATE SPAN ISSUES – OUTPATIENT
From MLN Matters SE 1408 Revised • Bill Types 34X and 74X for HH Outpatient and
Outpatient Therapy
• Split Claims – Providers will split the claims so that all ICD-9 codes remain on one claim with Dates of Service through September 30th with ICD-10 codes placed on a second claim for all Dates of Services on or after October 1st
• The From date governs this rule
DATE SPAN ISSUES - HOSPICE
• From MLN Matters SE 1408 Revised • Bill Types 81X and 82X • The Split Claims Rule will apply – Hospice providers
will split the claim so that all ICD-9 codes will remain on one claim with Dates of Service on or before September 30th with a second claim with ICD-10 codes for Dates of Service on or after October 1st
ACCESSING CAPITAL
Sources of additional capital
o Credit Lines – Asset Based Lending o SBA Loans o Alternative Lenders o Cash Advances o Peer to Peer Lenders
CREDIT LINES • Typically structured as asset based lending with a
focus on cash flow and collateral strength
• A percentage of total A/R is available as a borrowing base with credit concentration limits
• Heavily dependent on operational history and asset strength
• Usually requires guarantees and will tie up all owned assets even if the maximum borrowing limit is not reached
Small Business Administration
• These are bank loans that are guaranteed by the SBA with loan amounts under 7(a) of up to $5 Million.
• Working capital loans can be structured for up to 7 years.
• Closing can take over 90 days due to the paperwork involved.
• If there are tax liens or personal credit issues, the SBA application process with be extended with a significant chance of rejection.
• Once an SBA loan is “on the books,” it is difficult to arrange additional financing without first paying off the SBA obligation.
Alternative Lenders
• More appetite for credit risk
• Much higher fees and costs than traditional lending with APRs that can reach 25% to 30% for term loan arrangements
• Sometimes structured as “purchases” of receivables
• The greater the perceived risk, the higher the rate
CASH ADVANCES AND PEER TO PEER
• Cash advances, sometimes called factoring, can be much faster to arrange and much more costly than other types of financing with factoring fees that range from 30% to 60%.
• Peer to Peer lending arrangements are relatively new and designed to allow individuals to loan funds to businesses that need financing.
• Peer to Peer lending arrangements are typically structured as term loans with varying lending thresholds.
SUMMARY
• Thinking about the ICD-10 transition should not be limited to the clinical team.
• There are many financial aspects of the transition that must be addressed through multi-disciplinary planning activities.
• If your home health agency or hospice doesn’t have a plan for dealing with the financial and operational aspects of this important change, now is the time to start working toward a strategy for remaining financially and operationally viable
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