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Four Things to Know About ICD-10 and Prior Authorization

March 26, 2014

Article

Does your practice have an ICD-10 transition plan? Don't forget about prior authorizations.

When most practices think about the shift from ICD-9 to ICD-10, they think of changes to physician documentation, diagnosis code selection, and software upgrades. But ICD-10 is going to have a big impact on the pre-authorization process too. Here's why, and what to do about it.

Looking for more information on preparing your practice for the ICD-10 transition? Learn what to expect and how to be ready for Oct. 1 from our experts at Practice Rx, a new conference for physicians and office administrators. Join us May 2 & 3 in Newport Beach, Calif.

1. ICD10 training and testing must be completed at least one month prior to Oct. 1.

Unlike pre-certification, which is performed by phone or Internet with a payer, and completed a few days or weeks before a procedure, pre-authorization (also known as prior authorization), is a written process. Prior authorization involves the physician writing a letter to the payer, requesting written approval for the procedure. This written approval can take weeks to months to obtain.

That means procedural specialties must be trained and have all their ICD-10 transition tasks completed weeks, if not months, before Oct.1.

"Don't assume you have until Oct. 1 to master the new system," warns Kim Pollock, RN, MBA, CPC, and senior consultant with KarenZupko & Associates. "If prior authorization is typically done at least three or four weeks ahead of a procedure in your office, staff must begin sending authorization letters using ICD-10 codes in early September at the latest. If your procedure schedule is booked months in advance, your practice may need to begin pre-authorizing in ICD-10 as early this summer."

Action: Review training schedules and set deadlines that ensure all staff are trained well in advance of Oct. 1 for any procedures needing pre-authorizations scheduled for Oct. 1 and beyond. Develop and implement new pre-authorization planning forms and processes, and test them; especially if your procedures are scheduled months in advance. Call payers and verify that if you are pre-authorizing a case in August, for a procedure date of Oct. 5, that they are ready to receive the diagnosis codes in ICD-10.

"A coding manager recently told me that a Blues plan instructed her to pre-certify procedures in ICD-9, then submit the claim in ICD-10, because the procedure date was after Oct. 1," relays Pollock. "Payers are likely to have varying policies; be sure you clarify them several months in advance of Oct. 1."

2. Prior authorization will require new "letter templates."

Most physicians have a standard method for dictating their prior authorization letters, based on "letter templates" or a checklist of components that they dictate to justify medical necessity. "Because ICD-10 is the new language of medical necessity for most payers, the prompters that physicians use will need to change," says Pollock.

It's old news that doctors must change the way they document in the medical record, in order to provide the granular detail required for ICD-10 code selection. This same level of granularity will be needed for prior authorization letters. Simply put, physicians must know ICD-10 well enough to provide staff the right details for pre-authorization. "For instance, they will need to dictate laterality, sequela, and use the new terminology in ICD-10," explains Pollock.

Action: Prepare physicians for this change now. "Review existing letter templates and dictation prompters as part of ICD-10 training," Pollock recommends. "As you review your code crosswalks, take note of where additional detail will be needed." For example, laterality and new combination codes will require physicians to dictate new information. And some specialists - orthopaedists, for instance - will need to use classification systems that many haven't used since residency, such as the one for fractures.

3. No pre-authorization = no reimbursement.

Pollock cautions, "If a payer requires prior authorization for a procedure, and the practice doesn't obtain and enter the authorization number on the claim form, the claim won't be paid. You'll get an Explanation of Benefits (EOB) that says 'No prior authorization,' which will then require the billing team to appeal and follow up - it could delay payment for weeks or months."

For procedure-based specialties, that could turn cash flow into a cash trickle pretty quickly. And unfortunately, fewer and fewer payers offer retroactive authorizations - which means if the physician performed the procedure or service without getting authorization, the practice won't get paid at all.

Action: Be crystal clear about which payers require prior authorization for the procedures and services you perform most frequently. Then contact the payers that represent the largest portion of your payer mix first about their ICD-10 planning and transition deadlines. If your time is limited, it's prudent to prioritize payers that comprise the bulk of your bottom line.

4. Not all payers will require pre-authorization and reporting in ICD10.

"Worker's compensation carriers and motor vehicle accident payers aren't HIPAA-covered entities and at this point in time are not required to switch to ICD-10," says Pollock. "Make sure staff knows which payers will accept pre-authorization in ICD-10, and which ones will continue to use ICD-9.

Action: Create a spreadsheet of all payers and assign staff the task of contacting them to get the details about how pre-authorization will be handled. How far in advance of Oct. 1 will they be able to accept ICD-10 for pre-authorization? Should the practice pre-cert in ICD-10 then submit the claim in ICD-10? Which payers won't be moving to ICD-10 at all?

A surgical-group client of ours smartly began such a spreadsheet in December, and made it accessible to the entire billing team, on the practice's computer network. Each time someone contacts the payer for any reason, they ask and/or verify the information already collected. All staff are empowered to update the spreadsheet, and initial and date the entry, in case there are questions.

With all the predictions of cash flow disruptions in the coming ICD-10 transition, you can't afford to make easily avoidable mistakes. Be prepared ahead of Oct. 1 with training, dictation prompters, letter templates, and processes to ensure pre-authorization is done correctly in the new diagnosis code system.

Cheryl Toth is a senior consultant and writer with KarenZupko & Associates, Inc. She may be reached via editor@physicianspractice.com.