Revenue Neutrality in ICD-10: How Will You Know?

June 5, 2015 / By Charlie Bernstein

No one likes surprises, especially when it comes to financial performance. In order to reduce unexpected results, many hospitals and payers have decided to address the issue up front. You can call it risk reduction, revenue neutrality, or negotiated reimbursement, but in all cases the goal is to reduce the financial impact ICD-10 has on your organization.

Over the past few months, we have heard from providers indicating that they are negotiating risk reduction into their future contracts with payers. One provider we spoke with is facing a 1% threshold between ICD-9 and ICD-10. Others are looking at + or – 0.5% variance. We’ve even had a customer contact us indicating that they are looking at a revenue neutral solution between claims from the two code sets.

So at this point you’re thinking, “That’s great, but these organizations are probably doing dual coding.” Or maybe, “Dual coding requires too much time for our coders.” Believe it or not, none of these organizations are planning on dual coding. In fact, payers will only be getting ICD-10 based claims.

In order to determine what reimbursement would have been, ICD-9 based reimbursement will need to be derived from ICD-10 claims. This is the quickest, least resource-intensive approach to identify the difference. ICD-10 claims can be cross-walked back to ICD-9 and grouped to MS-DRGs or APR-DRGs. The DRG-based reimbursement can be reviewed between ICD-9 and ICD-10 for variances.

Tools exist to do this work. Utilizing the CMS ICD-10 Reimbursement Maps provides a consistent cross-walk for both payers and providers. Utilizing spreadsheet analysis or specific financial analytic tools can take the cross-walked claims and identify where variances occur by DRG, by specialty or overall. So, if you want to pursue risk reduction with your payers or providers, these options could work for you.

Charlie Bernstein is a product marketing manager with 3M Health Information Systems.

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