Delay of Game – Medicare Reimbursement Rate Cuts, ICD-10 Pushed Back — Again

Throughout the early spring of 2014, there was considerable abuzz around Capitol Hill regarding the anticipated cuts in Medicare reimbursement related to the sustainable growth rate, or SGR. Crisis, which was to be expected from the proposed 24{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} cut in rates, was averted with the passing of The Protecting Access to Medicare Act of 2014 on March 31. Of equal importance, however, is that a provision was included within this act that calls for a further delay of the conversion to ICD-10, to at least Oct. 1, 2015.

For months, providers across the nation were left wondering what, if anything, the government would do to control these rate cuts. While many in the industry disagree with the nature of the fix, it is now something that all must react accordingly to. This article will explore in a bit more detail the implications of the SGR patch, the delay of the ICD-10 provisions. and the impact of this delay on your practice.

With the March 31 deadline of the previous SGR patch set to expire, the House and Senate debated their own possible solutions. While many bills were brought to the table, including one that called for a repeal of the individual mandate of the Accountable Care Act, no real headway was being made. With this, and facing mounting pressure from the American Medical Assoc. (AMA) about a permanent versus temporary fix, a last-minute deal was struck that would include a further delay of ICD-10. This delay was included to help appease those that were opposed to another temporary patch to SGR, the 17th since 1997.

While the fix itself will be welcomed by the provider community, it is the nature of the fix that is facing some scrutiny. The AMA has been lobbying for a permanent fix to the SGR for some time, since this has just become an annual exercise that must now again be repeated in 12 months. Sen.Tom Coburn, a Republican from Oklahoma opined, “we’re not fixing the problem today. We’re taking a big old can and kicking it down the road…” So, while it appears that a fix is in place today, this is something that we will again need to address in the near future.

On Jan. 5, the Department of Health and Human Services (HHS) announced a formal transition to the International Classification of Diseases — 10th edition: more commonly referred to as ICD-10. The transition to ICD-10 will be required for all “covered entities” as defined by HIPAA, not just those practices dealing with Medicare or Medicaid. Additionally, it will be broken down into two primary components: ICD-10-CM for diagnosis coding and ICD-10-PCM for inpatient procedure coding. It should be mentioned that the current CPT codes for outpatient services will not be impacted by this transition.

Originally, the transition to ICD-10 was to take effect on Oct. 1, 2011, however, on successful appeal, this was pushed back to Oct. 1, 2013. On April 9, 2012, a new proposed deadline of Oct. 1, 2014 was announced by HHS.

As recently as Feb. 27th, 2014, CMS had announced that there would be no further delays to the ICD-10 implementation. This was in response to calls from the AMA for such a delay — the two organizations being at odds over the implementation for some time.

In a recent survey prepared by the MGMA, it appears that the AMA’s concerns were warranted.

Based on these results, released in February of 2014, the following should be noted — and considered cause for concern: Approximately 80{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of respondents noted that their practice-management software still needed to be upgraded, if not replaced altogether; only 10{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of respondents have started conversion testing; and 60{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} stated that they have not been approached by their insurance carriers about software testing dates.

It appears that these results did not go unnoticed and became the ultimate driver behind the implementation delay.

The most recent delay of ICD-10 is sure to raise much discussion and debate within the industry. While this is a very recent development and the dust has not yet settled, there are certain impacts that are already known.

First, we will address the positive impact of the delay. With the new conversion deadline of Oct. 1, 2015, at the earliest, many of the concerns raised in the recent MGMA survey referenced above have additional time to be addressed.

This is most specifically targeted toward the additional time providers will now have to begin implementing testing databases and allow themselves the much-needed practice time that is critical for a conversion of this magnitude. This will ultimately lead to allowing for more time to address any conversion issues that may arise.

In terms of negative impact, the one generating the most interest at this time is how serious the industry will take the conversion given all of the recent delays. The MGMA may very well have similar survey results a year from now if those in the industry start to believe that the delays will keep coming — similar to the 17 annual SGR patches that have taken place. In the meantime, conversion costs for those in process will just continue to mount.

For the time being, providers can breathe a sigh of relief knowing that Medicare reimbursement rate cuts and the conversion to ICD-10 have been delayed. However, the inevitableness of each has just been postponed.

In the meantime, we recommend that you remain proactive in this front, by reaching out to your carriers and designing a plan to ensure adequate pre-implementation testing is carried out. Where we will be a year from now? Only time will tell.

James T. Krupienski, CPA is senior manager at Holyoke-based Meyers Brothers Kalicka, P.C., Certified Public Accountants and Business Strategists; (413) 536-8510; www.mbkcpa.com