Insurer Updates Operations to Meet Coding Mandate

The U.S. government’s upcoming requirement that the medical community update its systems to handle the revised coding of diseases and associated symptoms, findings, and causes has insurance companies across the country reviewing their operations. Priority Health turned to CSC for help evaluating what the transition would involve.

The U.S. Department of Health and Human Services has mandated the new International Classification of Diseases (ICD-10) code set, which has more than 150,000 codes, be in place by October 2013. Michigan-based Priority Health expects the change will impact more than 2,100 of its programs. Another key issue is that the government hasn’t finalized its ICD-10 plans for reimbursement for Medicare, the U.S. health insurance program for people 65 and older, and Medicaid, the U.S. means-based health program.

“We suggest a balanced, straightforward approach as insurers move to ICD-10, taking into consideration potential business benefits along the way,” says Daryl Dickhudt, a principal for CSC’s Global Healthcare Services Group. “Organizations need to engage the business side in the process; it’s not just about the technology. Otherwise they could overspend and perform a lot of work now that might be obsolete or misdirected later as plans become clearer.”

Complying with a global process

The World Health Organization (WHO) and 10 international centers jointly developed ICD to provide a common way to classify and track morbidity and mortality statistics throughout the world. The new version, which incorporates changes in medical knowledge, significantly expands the number of codes used for diseases and injuries from the previous version, ICD-9.

To confirm that Priority Health follows the best path, the company asked CSC to provide a blueprint to follow as it transitions to the new code set, and an inventory of key systems and processes that will be impacted by the new standards. CSC also provided a cost and resource model. The health insurer’s network includes 100 acute-care hospitals and more than 12,000 doctors and other health care providers. More than 600,000 people in Michigan use the insurer with more than 8,500 employers offering Priority Health to their employees. To serve its customers, the insurer uses an integrated claims transaction system that manages member, provider, and product information for core business functions, along with numerous other systems to support core functions.

Transitioning to ICD-10 involves major changes to the systems and processes that support health plan operations. To determine the impact of ICD-10 on an organization’s business and technology, CSC uses a custom toolkit that includes an assessment framework, checklists and interview guides, report templates, ICD-10 crosswalk and analytic tools, and an estimating tool. In addition, CSC’s healthcare experts address business strategies, related operational aspects, and potential long-term benefits.

Identifying the impact

Under its ICD-10 project, Priority Health asked CSC to identify the technical and business challenges the insurer would face as it complies with the new standards and develop a compliance strategy and roadmap for implementation. Priority Health’s goals included identifying areas for improvement using the expanded ICD-10 code detail; documenting ICD-10’s impact on systems and business operations; developing a set of action plans that prioritize impact areas and provide a roadmap for further implementation; and estimating the cost and effort associated with achieving compliance, including compliance and risk management plans for key applications and trading partners.

CSC’s healthcare specialists conducted detailed reviews of system compliance guides and extensive interviews with Priority Health’s business and technical subject matter experts, as well as interviews with trading partners and third-party software vendors.

When finished, CSC found that ICD-10 will directly impact 31 percent of Priority Health’s applications and 37 percent of the insurer’s interfaces, extracts, and reports. With the implementation roadmap, Priority Health can now plan resource allocation and minimize business interruptions as it prepares to adopt the new standards. The insurer chose CSC for this assessment work, says Dickhudt, because of the company’s healthcare expertise, including its experience with provider organizations.

“Knowing and understanding the provider side was important to them,” he says. “We understand what providers are trying to get out of ICD-10 and how they’re viewing this change.”

Discovering improvement opportunities

Even though insurers have to comply with the new standards, because the new code set will allow greater detail and flexibility in describing diagnosis and procedures, the change can also provide an opportunity to improve business processes, such as claims processing efficiency, and potentially lower health care costs.

“Because ICD-10 will provide greater granularity, insurers can improve their operations, such as make their disease management programs more specific, and gain a better understanding of what’s happening with members relative to their health conditions,” says Dickhudt. “It will also enable them to eliminate potential fraud and waste.”

Priority Health, a nationally recognized health insurance company, has a 5-star rating by Medicare beneficiaries – the only plan in Michigan to receive the rating two years in a row. Consistently gaining high marks takes ingenuity. Thus it’s not surprising that Priority Health wants to take advantage of the benefits ICD-10 offers to further improve their programs and enhance the unique strategies they’ve developed as a market leader.

“We worked with them to lay out a strategy for provider engagement and communication, and a plan to address some of the unique provider reimbursement methods that would be available through ICD-10,” he says. “Even though it is just the early stage, we laid the groundwork so they can tackle and take advantage of ICD-10’s capabilities.”

For more information on how CSC can help you achieve compliance, please contact us.