Medical Necessity, Denials and ICD-10

While working with one of our customers on our Denials Intelligence, I was asked about ICD-10 and its impact on denials.  I have a position on this that I would love to share.  I see three issues related to, denials caused or increased.

Inpatient Coding

Currently, ICD-9 is primarily used for inpatients to group DRGs and denial risk is limited to payers that use ICD-9 for reimbursement.  So, providers will document.  Coders will code.  Groupers will group.  The potential breakdown will occur where the documentation or coding is not specific enough to create a groupable DRG.  In “denial speak”, that should be a Claim Adjustment Reason Code (CARC) “A8”.  I assume if you have those in your data now, you will have those and more with ICD-10.

Outpatient Coding

Ditto for inpatient coding with the complexity of medical necessity.  ICD-9 codes are used in the outpatient setting primarily for medical necessity.  I am guessing that few payers, outside of government, perform automated medical necessity checks.  Those claims subject to medical necessity must pass either National Coverage Determination (NCD) or Local Coverage Determination (LCD) edits to be paid.  While the ICD-10 grouper has been around for over three years, we have not seen the LCD and NCD tables yet.  They are expected to be released in April, 2014.  If you are getting these denials now, in denial speak that should be a CARC “50”.  I assume if you have those in your data now, you will have those and more with ICD-10.  I would be interested to know what other CARCs payers are using to indicate lack of medical necessity.

Contractual Terms

On occasion, payers will have terms that are specific to ICD-9 diagnosis or procedure codes.  This is another source of potential ICD-10 denials.  Providers will have to work with payers to determine which ICD-10 codes are replacing the ICD-9 in the contracts.

Conclusion

A wise man recently said to me, “If you expect your denials to double under ICD-10, then you better cut them in half now.”

For more information on ICD-10 readiness and Denials, please visit our website.

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