File Structure and Codes Changes: Will Your Plan Administrator be Ready?

Over the next 3 years there will be significant changes in electronic file structures and code sets that are critical to the ongoing administration of health benefit plans.   If your plan administrator isn’t ready when these changes go into effect, you could face serious, if not show-stopping, impacts on your plan’s operations.

File Structure Changes (“5010”):  It is a HIPAA requirement that certain electronic health care administrative transactions be standardized.  These transactions include medical claims, explanations of payment, eligibility data transfers and claims status notifications.  The current set of standards (version 4010a), lacks some necessary functionality and is being updated to a new set of standards (version 5010).   The new standards, which are mandated by the Department of Health and Human Services (DHHS) for an effective date of January 1, 2012, include improvements in file structure and content.

Assuming your current administrator is functioning in an electronic world, these transaction files are used extensively to administer your plan.  For example, they are used to communicate between your administrator and the provider network, as well as among a variety of other “trading partners” such as electronic data interchange (EDI) clearinghouses and medical management vendors who identify employees eligible for specific interventions and programs.

The 5010 requirements represent a significant effort and your plan administrator should currently be well into implementation.  This has an impact not only on their systems and business processes, but also in their ability to coordinate and communicate with their file trading partners. So, for example, if they are not successful in implementing 5010 by the mandated deadline, they will not be able to receive (and ultimately pay) electronic claims from providers.   In addition, the 5010 file content changes include the ability to use the ICD-10 code set (discussed below) and are actually a pre-requisite to ICD-10 implementation.   January 2012 is not far away and the new standards will require a significant investment in time and resources to implement and test.

Diagnosis and Procedure Code Changes (“ICD-10”):  The International Classification of Diseases (ICD) is a code set used for reporting health care diagnoses and procedures. As overseen by the World Health Organization, the ICD code set was updated in 1990 to version 10 (“ICD-10”), which has been adopted by all developed countries in the world, except the United States.  The U.S., which uses this code set more intensively in the administration of health care services than most other countries,  is still using version 9 (“ICD-9”) due to the complexity and expense of transitioning to ICD-10.

The current ICD-9 code set is no longer sufficient because of expanded and more specific indicators added to disease classification and health care delivery in the past 2 decades.   For this reason, DHHS has mandated that all HIPAA Covered Entities must convert to the ICD-10 code set by October 1, 2013.

The transition to ICD-10 affects every organization along the health care value chain that has processes and systems using diagnosis and procedure codes, including plan administrators, providers, clearinghouses and many vendors.  It is not a simple upgrade from one version to another; it is a complete overhaul of the code set.  The ICD-9 code set has about 16,000 codes, where in ICD-10 there are 155,000 codes. Plus, the structures of the codes themselves are changing in length as well as character positions and meaning.  The implications will ripple through health administration business processes and systems to such an extent that, if not in compliance by the mandated implementation date, an administrator may not have the ability to process claims or manage clinical programs.

Just to complicate matters, mapping between ICD-9 and ICD-10 is not direct.  The relationships can be one-to-one, many-to-one and one-to-many.  And for some, there is no code to map to at all!  There is currently no standard map nor cross-walk available to be used by all entities.  A mapping structure has been produced by CMS (which oversees Medicare and Medicaid) and other organizations are currently working on reviewing the CMS tool to determine if it meets current needs; additional mapping tools will likely need to be developed. While work is being done on mapping, each organization will need to understand their operations in sufficient detail to adopt or develop a mapping methodology that fits their business needs and processes.   The objective will be to develop a functional map that results in revenue neutral changes to provider reimbursement and overall costs.

Provider readiness to comply with ICD-10 requirements also needs to be monitored closely.  Transition to ICD-10 will require that providers complete more detailed documentation in order to use the more specific code set.  It also means provider offices will need to adapt processes and systems to accommodate the new codes.  This could place a significant burden on providers that many will find difficult to meet.  Whether your plan uses a directly contracted or rented network, the plan administrator has some accountability for the performance of the network.  If providers are not ready to move off of ICD-9 when plan administration transitions to ICD-10 it could lead to serious lags in claims payments, or outright claims denials.

If your plan administrator has not already started to work on this transition, they are already behind.  This multi-year project can be very complex and require significant resources to implement.  It can be organized in the following steps:

1. Assess Organizational-wide Impact:  A complete review of all business processes, systems, policies/procedures, reports, etc. to document how the ICD code set is used, where changes are required, the nature of needed changes and resources needed for implementation.  This assessment should be completed in 2010.
2. Develop Implementation Work Plan:  An enterprise-wide work plan, which actually extends outside the organization to trading partners, must be developed.  This should include identification of the work activities, resources and timelines to implement changes to processes, systems, documentation etc.  This work plan should be developed by the end of 2010.
3. Implement and Test Changes:  This step will extend over multiple years and engage staff in making the changes outlined in the work plan.  It will also need to include ongoing communication with external trading partners to ensure that their ICD-10 transition is on-track.  Extensive testing of the changes, both internally and with external trading partners, is essential to ensure that business workflows, system processes and exchanges of information function without errors or unintended consequences (particularly on reimbursement and costs).
4. Go Live and Post-Implementation :  A transition period will likely be required for ongoing tracking of processes and outputs to ensure the implementation has been a success.  During this period, there may need to be the ability to receive claims that are in either ICD-9 or ICD-10 (because there will likely be providers and other organizations lagging in their implementation efforts).

What Should a Self-funded Employer, Trust or Association Do?  Talk with your plan administrator and find out where they are in their planning for both the 5010 and ICD-10 transitions.  There is concern that some administrators may not survive these transitions due to the scope of the project and resources required to be successful. Don’t get caught by an unprepared administrator.

It is within your right, and an obligation you have to your beneficiaries, to ask your plan administrator for details on how they are approaching this work, whether they have the organizational and technological resources to be successful and if planning has started. If they have not yet started working on the 5010 project, there could be financial and service implications.  If they have not started the ICD-10 project, there is still time to be successful, but they shouldn’t delay any longer.  Their success will be your success.  But, if they are failing, your tracking of their progress should provide sufficient time for you to avoid making their failure your failure.

About The Author

Paul Goldberg & Associates, LLC, provides project management and process improvement services to healthcare and healthcare related organizations.  They are currently completing an enterprise-wide ICD-10 assessment for a large TPA in the Pacific Northwest.   Paul can be reached at 206.372.5158 or

paulg@pgoldbergconsulting.com.

More information can be found at www.pgoldbergconsulting.com.