ICD-10 Discussion Document July 19 , 2013

1. InsightDriven Health ICD-10 Discussion DocumentJuly 19, 2013

2. ICD-10 Overview - The Imperative and Our Understanding The ICD-10 Mandate: • ICD-10 is a reality. The CMS deadline for compliance is October, 2014. • ICD-10 transition is a reality and requires “all covered entities” as defined by the Health Insurance Portability and Accountability Act of 1996 to accept and transmit ICD-10 diagnosis and procedure codes. • The Payer market has embraced the ICD-10 mandate and is aggressively implementing remediation strategies to update their IT systems and business processes to support the mandate. • Providers may see a significant impact on their net revenues and/or cash collections if ICD-10 is not implemented effectively. • ICD-10 is not just another IT Project – planning and implementation for ICD-10 Remediation is an Enterprise effort, and requires leadership and effort from Clinical Delivery, Business Operations and IT, at a minimum. Hospitals Need a Solution and Resources to Accelerate their ICD-10 Remediation: • Achieving “Meaningful Use” is consuming Hospital IT resources – production support costs are over budget with IT spend increasing 80-180 basis points as a percentage of operating expenses. • Planning and Preparation: involving team members from across the Enterprise. • Train and Educate all impacted personnel on the new coding and documentation requirements. • Evaluate Applications & HIS Suppliers to define Upgrade/Remediation plans & resources. • Design, Test, Train and Activate all impacted systems…and Deploy by October, 2014. 2

3. ICD-10 Overview - History of ICD-9 to ICD-10 • For the last 30 years, the United States has used ICD-9 • CMS-0013-F mandates the implementation date of ICD-10 on October 1, 2014 • ICD-9 codes will not be accepted for services provided on or after October 1, 2014 • Prior to October 1, 2014, it is necessary to submit claims using ICD-9 codes • ICD-10 consists of two components • ICD-10-CM Diagnosis classification system • ICD-10-PCS Procedure classification system for inpatient hospital use • Prior to ICD-10 adoption, providers must be compliant in 5010 transactions • Due to the limitations of ICD-9; the need to move to ICD-10 • ICD-9 codes existing today are approximately 24,000 • ICD-10 codes will include approximately 140,000 codes

4. ICD-10 Overview – Increased Specificity looks like this… ICD-10-CM Many possible codes ICD-9-CM 821.01 Fracture of femur, shaft, closed

5. ICD-10 Overview - ICD-10 Implementation Myths Myth: Health Information Management (HIM) will handle all implementation needs Myth: Short time to implement . We can wait till 2013. Myth: Our system vendors will handle the implementation. Myth: Reimbursement will not be impacted. Reality Reality Reality Reality • All individuals involved in revenue cycle and clinical areas will be impacted • Physician and staff training needs will be large and complex in some instances • Systems/processes outside of HIM control such as Case Management, Utilization Review, Contracting, Quality reporting are all impacted • System reconfiguration and testing for claim submission and overall report generation is immense • Clinical/Financial systems implemented prior to 2013 should be ICD-10 ready • Vendors will only address technical aspects of their application • Workflow integration with other applications will fall to the system users • Expect increased complexity of medical necessity claim edits • Medical severity DRG’s may increase in number due to improved clinical information being reported • Coders, Physicians, and Payors will be adjusting simultaneously to a new coding methodology. Expect initial delays/, requests for further information

6. ICD-10 Overview - How Prepared are Providers for ICD-10? Accenture interviewed several large academic provider clients to determine their ICD-10 preparation. The majority of the providers are currently in the remediation stage. ICD-10 Implementation Lifecycle Status • Most of the large academic providers have begun or completed the following activities: • Adoption of a “dual coding” period in facilities prior to go-live during which HIM staff will code records both in ICD-9 and ICD-10. • Training is scheduled to support use of ICD-10 codes to enable retention through use. • Plans to add HIM coding staff, either through staff augmentation or hiring to address potential backlogs. • Translation of most commonly used diagnosis codes by specialty associations for use in physician practices. • Adoption of Computer Assisted Coding (CAC) and Clinical Documentation Improvement (CDI) programs. • The biggest challenge to progress is related to competing health reform priorities. • Those in remediation were preparing plans for testing with vendors and payors in late 2013 and early 2014. • Only one Provider is ready to test in 1Q13.

7. ICD-10 Overview - How Prepared are Medium-to-Small Providers for ICD-10*? According to a recent HRAA survey of 120 hospital leaders, a portion of medium to Small providers are not sufficiently preparing for a smooth Transition to ICD-10 • One-in-Five have not begun education or training practitioners for the shift to ICD-10 code-set • 45% have not begun ICD-10 CM training for their coding staff • 55% have not begun ICD-10 PCS training for their coding staff • About half of these hospitals are not in-tune with the official CMS ICD-10 Transition timelines • More importantly, 31% do not plan on dual coding prior to October 1, 2014 • And 72% have no intention of submitting any ICD-10 claims to their payors for testing *Sources: http://ehrintelligence.com/2013/07/15/aha-hospitals-will-be-ready-for-icd-10-in-october-2014/ http://www.healthcare-informatics.com/news-item/survey-small-mid-sized-hospitals-slow-icd-10-implementation 7

8. ICD-10 Overview - Critical Success Factors for Achieving ICD-10 Include • Physician Readiness 1 • Complete and accurate physician documentation to support ICD-9 and ICD-10 codified data. • Adoption of Clinical Documentation Improvement program to help with physician engagement. Achieve Revenue Neutrality through Operational Preparation 2 • As coordination is KEY - Strong ICD-10 Program Management needs to be in place to drive the implementation across the various work streams • Adoption of “Dual Coding” period. • Knowledge transfer/education provided to key leadership/teams staged according to fully integrated program plan development and execution. • Detailed contracts with other providers, payers and vendors with clear identification of timing, integration and conversion/translation applications. • IT System(s) Readiness 3 • Fully integrated IT and other systems currently containing ICD-9 codes across all hospital, vendor, payer and other integrated systems (electronic and other). • Comprehensive modeling and integrated functional testing plan across the continuum of care.

9. ICD-10 Overview - Anticipated Impact Areas Network Management

10. ICD-10 Overview - Universal Benefits of ICD-10* ICD-10 incorporates much greater specificity and clinical information to improve capture of healthcare information, which has the following benefits: • Greater coding accuracy and specificity • Higher quality information for measuring healthcare service quality, safety, and efficiency • Improved efficiencies and lower costs • Reduced coding errors • Greater achievement of the benefits of an electronic health record • Recognition of advances in medicine and technology • Alignment of the US with coding systems worldwide • Improved ability to track and respond to international public health threats (e.g. SARS, H1N1) • Enhanced ability to meet HIPAA electronic transaction/code set requirements • Increased value in the US investment in SNOMED-CT • Space to accommodate future expansion • *Source: AHIMA Website – http://www.ahima.org/icd10/value-icd-10.html

11. ICD-10 Overview - Impacts of Not Implementing ICD-10 Failing to meet the October 1, 2014 mandate to transition to the ICD-10 medical code set could have serious fiscal and reporting consequences. • CMS will no longer accept the ICD-9 code set for services provided on or after October 1, 2014. Failure to fully transition to the ICD-10 code set will result in loss of CMS revenue. • Non-compliance with Outpatient Code Edits, including Medical Necessity Edits • Inaccurate / incomplete clinical metrics and pay-for-performance reporting that does not meet peer standards • Loss of contracts / elongated contract negotiations for renewals • Erroneous quality reporting to regulatory and third party agencies • Inaccurate / Incomplete cost management reporting • Potential adverse impact on clinical workflows / patient care referrals generated from clinical data

12. ICD-10 Overview – Expected Budget Risks Needing Mitigation for ICD-10 • Insufficient Cash-On-Hand • Unexpected depletion in cash reserves • Decrease in Coder Productivity • Underestimation of Scope • Personnel and/or Skills Shortages • Interruption of Operations • Contractual Challenges • Unexpected Challenges with Technology or Systems • Inadequate Contingency Planning • Inability of strategic partners to achieve concurrent compliance

13. ICD-10 Overview - Questions ?