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ICD-10, Electronic Medical Records, Analytics May Work Only 65% Of the Time – Or Not at All

The Health Information Technology for Economic and Clinical Health (HITECH) Act – part of the American Recovery and Reinvestment Act (ARRA) – provides incentives for the adoption of electronic medical records (EMRs) and related technologies.  The Centers for Medicare and Medicaid (CMS) mandated change to a new HIPAA diagnosis and procedure coding standard, ICD-10 originally by October 1, 2013 and now by a new date specified by CMS.  Many don’t yet see the inter-relationship between between EMRs and ICD-10.  Without coordination between EMR and ICD-10 the clinical documentation of medical necessity that determines claims payment, hospital revenue cycles will be at risk, because the EMR is a container for the ICD-10 codes.  And, most health care companies have hundreds of systems that will be impacted by ICD-10.  Some hospitals run on a 2% profit margin.  Payment reform incentives and penalties based on quality measures – reported in the future using ICD-10 – present unprecedented risk and opportunity to this margin.  A one percent shift in revenue cycle management (RCM) reimbursements is worth $2.6 Billion to our health care economy.

Yet today we find that 35% on average of an organization’s current EMR,  supporting analytics, RCM, documentation and processes will not have the specificity for the new ICD-10 code sets.

This means hospital billing and reimbursements, claims auto adjudication rates, and other health care metrics stand to be negatively impacted.  Meaningful use (MU) of EMRs is an exercise in language.  It translates the vocabulary that physicians use into codes – like ICD-10.  Furthermore, the supporting analytics aren’t tuned to report on ICD-10 CM and ICD-10 PCS (CM for diagnosis and PCS procedure) codes.

 Clinical documentation improvement (CDIs) aren’t usually geared toward this issue.  ICD-10 brings new “many to many” ways of expressing a fracture of the tibia, for example and the procedures to treat.  Most hospital systems we work with have many more ancillary systems in radiology, etc. that are also impacted, and the EMR isn’t the core system of record (yet) for everything that goes on in a hospital.
If you ask a hospital or hospital CFO if they are prepared live on 65% of their income, it gets them thinking more seriously about ICD-10.  ICD-10 may cause an EMR and supporting documentation to only work part of the time, or perhaps not at all.  Health care providers should ensure that the EMR vendor is on track toward ICD-10 compliance, however they should not rely on their EMR vendor as the panacea.  We recommend that health plans and providers seek an independent third party to assess their major HIT systems and vendors.
Update 3/31/2012
The ARRA legislation is separate from the Patient Protection and Affordable Care Act (PPACA) being reviewed by the Supreme Court.  At this time, therefore the HITECH Act is not at risk of being rescinded.
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