Healthcare News & Insights

SGR and ICD-10 postponed: Good news or bad news?

A new law is adding yet another “doc fix” to delay Medicare pay again. Also delayed, for reasons no one really understands, is the ICD-10 start date. 

469194137The Centers for Medicare & Medicaid Services (CMS) has been criticized for years for using the Sustainable Growth Rate (SGR) formula to pay healthcare providers because it’s flawed.

Congress has been trying to repeal the SGR and find a better solution for years. Failure to find a solution this year would mean a 24% Medicare pay cut for physicians. However, once again, because it was unable to reach a compromise, Congress has delayed the pay cut with a “doc fix” for the 17th time.

Its new law, the “Protecting Access to Medicare Act of 2014” will freeze physician pay, delay the pay cuts and postpone ICD-10’s implementation until 2015.

Things fall apart

The trouble started earlier this month when, in the midst of passing the SGR repeal through the House of Representatives, a Republican committee member proposed an amendment to the bill which would delay the Affordable Care Act’s (ACA) tax penalty mandate for uninsured individuals.

What does Obamacare have to do with the SGR bill? That’s what a lot of doctors and legislators were wondering, too. Most perceived the amendment as just one more unnecessary political move to hurt Obama and gut the ACA.

Many still hoped, despite the questionable amendment, Congress would find a compromise that would pass the SGR bill before the pay cuts took effect in April, but that didn’t happen.

Instead, Congress pivoted and focused on passing a bill to delay the pay cuts and give them more time to find a permanent solution, despite many legislators’ acknowledgement that this solution is “not ideal.”

Caught in the crossfire

So where does ICD-10 fit into all of this?

In reality, it probably shouldn’t be a part of the issue at all.

However, included in the patch bill was a mandate that stated the Department of Health and Human Services can’t make ICD-10 as the standard code set until Oct. 2015 — a whole year after it was supposed to be implemented.

Even worse: In the midst of the frantic effort to delay the pay cuts, Congress never even discussed the ICD-10 delay or what effects it might have on the healthcare industry.

What are those effects?

CMS is predicting that the delay could cost the system between $1-$7 billion. Joe Lavelle, a healthcare consultant, predicts that, depending on the size of the facility, this delay could set hospitals back by as much as $3 million.

What now?

A lot of physicians and hospital administrators are waiting to hear CMS’ response to the delay. They’re curious to see how the agency will answer questions about when the definite implementation date will be, if it’ll be possible to make ICD-10 coding voluntary in the meantime or if ICD-10 is going to be scrapped entirely since ICD-11 was set to begin in 2017.

The bright side of this story is that facilities now have more time to prepare for ICD-10’s implementation. Many facilities have already invested a lot of resources into training for the switch and now, providers, carriers and coders will all have more time to solidify their use of the system.

Facilities should take advantage of that time to continue training. If possible, hospitals should also consider “dual-coding,” where both systems are used to code a procedure and then a practice ICD-10 audit is performed to check coding accuracy.

What is certain is that, until CMS says otherwise, healthcare providers should try to keep up their ICD-10 prep momentum. The system switch is still coming, even if the question of “when” is a little more ambiguous than before.

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