Healthcare News & Insights

ICD-10 might not have an effect on Medicare reimbursements

A new report says ICD-10 won’t have a huge impact on hospitals’ Medicare payments, but that doesn’t mean there won’t be other financial issues from the transition. 

456112683The news should come as some relief for providers who’ve been concerned about ICD-10’s impact on revenue and payment from the Centers for Medicare & Medicaid Services (CMS).

Some providers worried that changes in the new code set and documentation requirements would have a negative effect on their Medicare reimbursement. But a recently published study from the Journal of the American Health Information Management Association (AHIMA) says there may not be as much to worry about as originally feared.

ICD-10 Medicare impact

AHIMA researched how reimbursement for inpatient claims would differ between ICD-10 and ICD-9.

The report notes that, despite ICD-10’s increased specificity, the billing levels Medicare uses for payment (the Medicare Severity – Diagnosis Related Groups) still reflect billing standards for ICD-9. However, the researchers hypothesized that ICD-10’s other differences, such as classifications for various diagnoses, could still have an adverse impact on reimbursement.

To test their theory, researchers simulated ICD-10 data by tapping into Medicare’s database of 2013 inpatient admissions, and translating claims into their ICD-10 equivalents. AHIMA looked at data from more than 10,000,000 admissions from more than 3,000 acute-care hospitals.

Although the report excluded data from other types of hospitals, the results are still mostly positive for providers.

Ultimately, the study found the various payment increases and decreases in reimbursement for different claims evened out in the long run. The transition to ICD-10 only reduced overall payments by 0.04%.

Reasons to be cautious

Researchers believe it will be at least two years after ICD-10’s implementation before enough data is collected that reimbursement rates can be recalculated to ICD-10’s specifications.

That means providers will see more or less the same Medicare payments until roughly 2018, when there should be enough ICD-10 data for CMS to reevaluate its payment procedures.

Unfortunately, while ICD-10 itself may not vastly change your reimbursement, the initial transition into the system could still cause financial problems for hospitals.

It’s still reasonable to expect your coders and physicians productivity to fall as they become accustomed to documenting and coding with more specificity. It’s also expected that the transition will delay payments as payors scrutinize claims for errors.

As a result, hospitals will want to plan ahead for any dips in revenue or productivity during the initial months under ICD-10.

For some, that may mean putting aside extra funds as a financial cushion before October rolls around. For others, it may mean temporarily outsourcing part of your billing needs or hiring more coders to keep your billing efficient.

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