By Dr. Suman De

Over the last few months,
I have posted two articles about the pending transition to ICD-10 – my previous posts (here and here) focused on the impact that ICD-10 will have on the healthcare industry as a whole. Recently I have been digging further into the financial neutrality issue. During this search, I have come to understand some more nuances of it. Though many payers are reviewing their historical claims data to predict the possible DRG shifts – this analysis is just the preface of the financial neutrality concept. As we consider ways to achieve financial neutrality for ICD-10, it certainly becomes important to recognize that two other concepts – clinical neutrality and operational neutrality – directly relate to reaching this goal.

With the transition to ICD-10, payers will certainly leverage the added granularity to improve their existing policies, adjudication rules and benefit categories. So, now certain services will be covered and paid, while others will no longer be covered and might be pended or denied if the claim is filed. These decisions will be crucial during the transition from ICD-9 to ICD-10 because any loss or misinterpretation of information about clinical issues will invariably distort the ability to ensure neutrality with respect to claims payouts. We also know that payers do leverage certain software (DCG/MEG/DxCG/CRGs) to predict their member expenditures or prospective provider reimbursements for members with multiple, combination or complicated conditions. These prediction software systems (which are all in ICD-9 as of today) will be migrated to ICD-10. Lack of clinical coherence in their transformation process will invariably alter the coverage group and risk pool definition, along with the member risk profiling and stratification statistics – all of which will ultimately impact the bigger goal of achieving financial neutrality at an enterprise level.

Operational neutrality is to be defined as the claim’s lifecycle having the same operational outcome regardless of whether the claim was processed using an ICD-9 code or an ICD-10 code, so that there is not much impact in productivity and business continuity. In the previous section we explained that the underlying necessity to assure clinical neutrality was essential to truly achieving financial neutrality. But, how does operational neutrality contribute to achieving financial neutrality? As an answer to this, financial neutrality can never be only analyzed from a functional perspective (e.g. provider reimbursement, Medicare revenue, care management and more). It’s an approach where all cost factors associated with ICD-10 need to be addressed and neutralized to an acceptable level. Any element that alters the operating costs of organizations and impacts the financial stability (regardless of the neutrality being assured on the payout or related functional perspective) should be considered in estimating and for neutralizing the financial impact on organizations. Thus it’s just the other aspect of the financial neutrality, which needs to be looked at equally with all other initiatives that contribute to achieve the same goal.

Though many plans have started evaluating the financial impact of ICD-10, the aspect of relating the clinical and operational neutrality for achieving financial neutrality still lies in a grey area and seems to be a food for thought.

About Dr. Suman De

Dr. Suman De is Senior Associate consultant for the healthcare domain at Infosys Technologies, a leading global IT services and products organization with annual revenue of approximately $5.38 billion in 2010.

Dr. Suman has over 5 years of experience in healthcare domain and specializes in the development and implementation of IT-enabled business solutions for Health Insurance and Managed Care organizations. Dr. Suman’s core area of expertise is in-depth understanding of the impact of the HIPAA 5010 and ICD-10 implementation over the critical payer business areas such as member services, benefit design, claims processing, contract management and medical management.

Dr. Suman is an active participant in numerous industry initiatives, and organizations- AHIMA, WEDI SWG for ICD-10 etc. Dr. Suman has been a speaker at 4th WEDI 5010, ICD-10 Implementation Forum at ST.Petersberg, FL. Currently engaged with a large National Payer as a ICD-10 consultant in its Financial Neutrality Assessment & Financial Neutrality Testing Strategy project.

Dr. Suman is a registered clinician with a degree in medicine and holds a MBA degree in Healthcare from TISS, Mumbai.