Regional medical center goes through an ICD-9-CM conversion to ICD-10-CM impact analysis for key contracts

The client need

Worried about revenue loss due to the conversion, a regional medical center reached out to Baker Tilly to assess the potential financial impact of moving from the current ICD-9 code platform to the ICD-10-CM platform on DRG assignment for specific health plan contracts.

The Baker Tilly solution

To quantify the potential impact of the conversion of coding platforms, calendar year 2014 claims were analyzed and the top 10 DRGs by volume were identified. The top 10 DRGs for the selected payers represented 36% of the total inpatient volume. The primary ICD-9 diagnosis code and procedure code were reviewed for all of the cases within the high volume DRGs and mapped to ICD-10 codes. A determination was then made as to whether the case could potentially map to a different DRG based on the ICD-10 codes.

The results

Of the inpatient cases that were analyzed, 1,024 cases representing 32 percent in expected revenue were projected to be at risk for DRG re-assignment.  2,660 cases representing 68 percent in expected revenue should not be at risk with the ICD code conversion. To prepare for the conversion to ICD-10-CM codes, Baker Tilly recommended that a sample of test claims, particularly for the problematic DRGs noted in our analysis, should be generated and sent to the applicable payers to confirm ICD-10 readiness and ensure that claims would process correctly.

Taker a deeper dive into our analysis

55 percent of the cases at risk, fell into DRGs 775 (Vaginal Delivery without complicating diagnoses) and 313 (Chest Pain). These cases represented approximately $3.0M in expected revenue.  In addition, all cases with DRG 101 represented approximately 150 cases, and $800k in expected revenue are also at risk. We performed a more detailed review of the cases currently mapped to DRG 775, recoded them from ICD-9 to ICD-10, and then determined which specific DRGs they would map to based on the new ICD-10 codes. The majority of the changes were to DRGs with higher weights and; therefore, we project would result in higher reimbursement.  Based on our diagnosis code crosswalk methodology, the estimated net impact of the changes was approximately $400k in additional revenue based on the new DRG and FY2015 DRG weights.

For more information on this topic, or to learn how Baker Tilly healthcare specialists can help, contact our team.