Claims denial rate lower under ICD-10 in first full quarter

Claims denials in the first quarter following the transition to the ICD-10 coding system last October 1 were below historical baselines, the federal agency recently announced.

CMS Acting Administrator Andy Slavitt wrote in an article “Lessons Learned: Reflections on CMS and the Successful Implementation of ICD-10,” presented a chart (see below) showing that claims rejection and denial rates in October – December 2015 quarter were lower than historical rates.

Out of an average of 4.6 million claims submitted per day, only 1.9% were rejected in Q4 2015, slightly under the 2.0% historical baseline. Total ICD-10 claims rejections in the last three months of 2015 were 0.07% of submitted claims, well under the 0.17% expected by CMS.

The CMS data is the latest to show that the ICD-10 transition has been smoother than some healthcare professionals had expected. There are a number of possible reasons for this, including a one-year claims denial amnesty for submissions containing non-specific medical codes.

In his CMS blog post, Slavitt credits the successful implementation of ICD-10 on a number of strategic actions taken by the agency, including:

Focusing on the customer. Slavitt said CMS made a point of “listening and learning about the issues small physician practices were facing” in converting to ICD-10. This led to CMS offering numerous educational and training resources, as well as comprehensive external testing of Medicare claims.

Heavy use of metrics. Slavitt writes, “It’s not glamorous, but daily spreadsheets and scorecards keep complex implementations on track. Once we hit October 1, there were critical metrics to track. … Rather than waiting for the phone to ring, the CMS team created a scorecard and heat map to locate and track issues as they occurred.”

Working with stakeholders. CMS overcame resistance from healthcare associations to last year’s ICD-10 transition by soliciting input and collaboration. Slavitt writes, “Because we listened to and collaborated with our partners, we were able to address concerns and multiply our ability to get resources to physicians. Several physician groups went from being very concerned about our approach to leading the charge on implementation.”

Demonstrating accountability. CMS gave hospitals and private practices a place to take their questions and concerns about ICD-10, naming an ICD-10 ombudsman and committing to a three-business-day turnaround on queries from providers.

It’s probably not a coincidence that CMS’s strategy for the ICD-10 transition contains elements considered crucial to providers navigating the transition to value-based care – a customer focus, collaboration, accountability, and use of analytics to measure progress and improve quality.

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