When the Supreme Court hears Florida v. HHS, which contests  President Obama’s Patient Protection and Affordable Care Act (PPACA) known as health care reform, the U.S. Supreme Court is set to issue one of the most important decisions in its history.

If PPACA is repealed it will be interesting to see if it is repealed in whole or in part.  The Supreme Court of the United States (SCOTUS) may excise the individual mandate requiring health insurance coverage, or it could strike it down entirely.  There is an excellent discussion regarding a case that both sides are expected to use known as Wickard v. Filburn on Forbes and other cases entitled “The 10 Cases You Must Know To Understand The Obamacare Case“  Widely read conservative Hoover institution has a post today referring to ACA as “An Unconstitutional Misadventure” however it only addresses the individual mandate component of PPACA.  Let’s look at some of the proposed benefits in terms of efficiencies.  The biggest danger may be that popular press only review the impact of the Affordable Care Act in its simplest form, without reviewing several efficiencies that are embedded.

Note: our intent is to provide a non-partisan view of the HIT impacts, which are separate from the highly politicized consumer impacts.

You have no doubt read that the biggest resistance to PPACA is in response to consumers being required to buy health insurance.  The Constitutionality of this provision regarding the Commerce Clause of the Constitution is being heard because some believe that it over-regulates consumers for the apparent national good.

Many don’t realize that other legislative measures such as The Health Information Technology for Economic and Clinical Health (HITECH) Act, enacted as part of the American Recovery and Reinvestment Act of 2009 are separate from PPACA.

From a clinical data and efficiency perspective, the HITECH Act is focused on creating efficiencies:
• Meaningful Use of Electronic Medical Records ($27 billion plus in stimulus funds to wire up the hospitals and physicians in this country so that health records are electronic enabling efficiencies, analytics, etc. as well as standards for health care data interoperability which are desperately needed in health care to modernize it and remove paper.  Estimates are $77 billion in cost savings over time for EMRs.)
• Health Care (Payment) Reform (using comparative effectiveness research [“…compare the effectiveness of different treatments for the same illness…”] to apply what the industry calls ‘quality measures’ to change physician payments from per procedure [FFS or fee for service] to pay for performance).  In essence this means that if a physician or hospital meets certain benchmarks of quality and patient population health they can receive more reimbursements for Medicare patients, and health insurance companies who support these health care providers can receive incentives as well.
• Health Information Exchanges (ability to share information across multiple physicians, hospitals, and geographies, realizing efficiencies and enabling some of the provisions of payment reform), although HIEs are impacted by PPACA because Health *INSURANCE* exchanges are viewed as the mechanism by which consumers will purchase insurance. HIEs that exchange information about population health may have actuarial impact and pricing impact on the policies offered by Health INSURANCE Exchanges.

There is less uncertainly about a mandate that is separate from PPACA.   We  provide services to clients who must transition to a new medical coding standard called ICD-10. ICD-10 is a HIPAA mandate. Although CMS has delayed ICD-10 it is appears certain that this mandate will go forward.

The World Health Organization (WHO) sets this standard, and it was mandated prior to Obama’s election by Health and Human Services (HHS) Centers for Medicare and Medicaid (CMS) that it had to be used in this country.  But CMS just announced a postponement in this mandate from October 1, 2013 to a future, yet to be specified date.
We’ve  taken on some ambitious speaking engagements this spring covering these areas. One where we’ll be presenting is the American Academy of Professional Coders (AAPC) in April is entitled, “How ICD-10 and Payment Reform impact Hospital Revenue Cycles.”

Follow the discussion on Twitter at http://www.twitter.com/marrigo using hash tags #PPACA and #SCOTUS as well as here on our blog.  Discussions available for health plans, hospitals and other providers at http://www.linkedin.com/groups?gid=1777488&trk=hb_side_g

Related Posts:

Patient Protection and Affordable Care Act (PPACA) Will Not Save Costs

Meaningful Use Assessment

ICD-10 Implementation Consulting Best Practices

ICD-10 Postponement Opens the Door to ICD-11?

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ICD-10 Will Force Clinical and Organizational Integration

The ICD-10 transition in the U.S. (World Health Organization,( or WHO) international classification of diseases, ICD-10 version CM for diagnosis codes and related ICD-10 PCS for procedure coding) will have the effect of forcing coders, nursing staff, case management, as well as physicians upon each other in ways that most organizations have yet to consider.  And, for health plans and hospital systems to have any chance of keeping reimbursements  somewhat neutral, they will have to talk about the intersection between the revenue cycle of the hospital and the medical policy and business rules of the health plan under ICD-10.

True ICD-10 readiness in a health care provider or health plan is dependent on all parties being aligned at the same go live date.  Coordinating the ICD-10 transition requires a sharp eye in the project management office (PMO) as well as experienced analytics and revenue cycle professionals who work closely with the clinical and operations departments.   One of the things that has not been highly regarded in the past is the role of the coder.

RAC View vs. Clinical Documentation and ICD-10

In our recent review of hospital revenue cycle and analytics companies, we find that many are focused on marketing their solutions for “RAC” or recovery audit trails.  RAC was mandated by Congress through the 2003 Medicare Modernization Act and uses auditors to review Medicare Part A and B provider reimbursement claims for billing errors.    The interoperability between administrative, clinical, and financial systems has in the past been the nexus of the  revenue cycle management process.  That is because clinical integration minimizes the likelihood of future claims being flagged for review.   An underlying area that supports this is proper documentation to support  “medical necessity” and avoid utilization management reviews by contracted health plans.

We find that most analytics and revenue cycle companies are ignoring or underestimating the future role coordinated medical coding will have, the transition to ICD-10, and the clinical documentation and processes on the revenue cycle.  The ICD-10 transition will re-write the book on revenue cycle management (RCM).  RAC audits and Electronic Medical Records (EMRs) will be subject to a new paradigm with ICD-10.

Re-Aligning the Organization Away from ICD-9 to ICD-10

If a health care provider is having difficulty with RAC audits under ICD-9, we can predict that their clinical documentation challenges in the transition to ICD-10 will be harder for them.  Consequently, case management staff may be challenged with review of medical records for medical necessity because auditors will randomly select clinical rationale (criteria) for justification of the level-of-care.  The risk is that claims may be revisited and denied going back many years.  Health care provider staff must ensure that the criterion for each year where there is a denial is being appealed are using the criteria for that year.   ICD-10 introduces a new wrinkle in RAC audits.  When the criteria shift from being expressed in ICD-9 to ICD-10, there will be new challenges to abstract the level of care policy used prior to October 1, 2013 and the policy used after that date.  Therefore a RAC that spans October 1, 2013 will force provider staff to navigate policy, diagnosis and procedures in two different coding systems.

Changes in Analytics, Medical Policy and Clinical Intelligence

“Evidence-based clinical decision support” will be revised under ICD-10, and staff will need to be prepared to support potential audits under ICD-9 prior to October 1, 2013 and under ICD-10 diagnosis and procedure coding after that date.  Health plans will be revising business rules for what to pay, pend, and deny.  Similarly hospital systems will need to change their health-information technology approach to admit / discharge / transfer (ADT).

Clinical Benchmarks will Change under ICD-10

Clinical benchmarking will also change under ICD-10.  Disparities in vendor systems and varying readiness for a shift in the diagnosis and procedure coding that drives the core reimbursement algorithm, or Diagnosis Related Groups (DRGs), as well as assumptions around level of care (LOC), inpatient rehabilitation services and skilled nursing will exacerbate this problem for unprepared RCM vendors and their hospital clients.  There are four to six significant organizations that publish quality measures for health care providers and health plans.  All of these measures will be reported using ICD-10.  This includes Medicare Advantage HEDIS 5-Star Ratings for health plans, and CMS Value Based Purchasing for Medicare Advantage patients at hospitals.   These quality measures will offer a carrot – increased CMS reimbursements of one to five percentage points.  Quality measures will also offer a stick – reduced payments from CMS for the lowest performing health plans and hospitals.  That alone re-defines what is important in measuring revenue cycle for providers since the shift of a percentage point in top line revenue could mean the difference between profit and loss for hospitals that already operate on thin margins.

Multi-site Hospital Systems Have Additional Need for Integration

In particular, multi-site hospitals that do not have a clinically integrated revenue cycle system, or that use disparite multi-vendor systems will be exposed to more risk in RAC.  This is because the need to aggregate, report, and analyze claims data across multiple years of history to defend audits across the health system’s data and the continuum of care creates more complexity across multiple systems.

Vendor Independent ICD-10 Assessments

Organizational readiness and clinical alignment should be assessed by a competent third party ICD-10 consulting services vendor, and tested prior to October 1, 2013 to provide adequate attestation of readiness under HIPAA.  A credible ICD-10 assessment should include the clinical documentation and supporting processes for hospitals, and for health plans a review of medical policy.  Clinically integrated documentation and medical policy will drive Accountable Care in the future and must be a cornerstone of a successful ICD-10 implementation.  ICD-10, Accountable Care, and Payment Reform supported by quality measures will drive change in the Revenue Cycle Management and Health Care Analytics business.  An ICD-10 assessment using clinical scenarios and thorough testing will be the best way to ensure that health care providers and health plans are prepared.  Vendors who are prepared will thrive.  Vendors who are not will struggle.

- Michael Arrigo is Managing Partner of No World Borders.  We welcome your comments to this blog

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