After its first, successful Medicare ICD-10 transactions test, CMS appears ready to accept the majority of ICD-10 claims.

This achievement should remove a large chunk of doubt over the healthcare industry’s readiness to convert from our outdated ICD-9 coding system to ICD-10, the world’s standard. It will also weaken anti-ICD-10 lobbying arguments.

Between January 26 and February 3, 2015, CMS conducted its first, eagerly awaited, end-to-end fee-for-service ICD-10 testing.  Of the nearly 15,000 test claims  processed, 81% of the claims were accepted through CMS’ systems. The test group of 661 providers included physicians, hospitals, and DME providers.

Of the 14,929 test claims received, 81% of the claims were accepted. 19% of claims were rejected for the following reasons:

• 3% – Invalid submission of ICD-9 diagnosis or procedure code
• 3% – Invalid submission of ICD-10 diagnosis or procedure code
• 13% – Non-ICD-10 related errors, including issues setting up the test claims (e.g., incorrect NPI, Health Insurance Claim Number, Submitter ID, dates of service outside the range valid for testing, invalid HCPCS codes, invalid place of service)

Overall, the testing provided strong evidence that CMS systems are ready to meet the October 1, 2015 federal deadline for ICD-10 implementation by the healthcare industry. Only one internal issue was found, related to home health claims with dates that spanned the October 1 implementation date, that were not processed correctly.

What does all this mean to the healthcare provider?

CMS noted that the majority of rejections were related to test conditions such as dates of service. Providers should remain concerned for two reasons:

• 1 out of 5 claims rejected would represent a significant impact to any provider’s cash flow.   When you recognize that the 81% success rate was achieved by self-selected testers who believed they were ready to proceed, it’s not hard to imagine that the readiness of other providers may be significantly less, and that potential cash flow impacts could be higher for them.
• The level of technical rejections indicates flaws in some providers’ testing methodologies.   Because accurate testing is a critical part of risk mitigation for the provider, all providers should take special care with their testing plans.  They should give particular focus to scenarios where the testing workflow differs from the normal claims submission process.

One final area of concern is that CMS’ success rates are based on the number of claims actually submitted to them.   It is not clear if any providers had internal issues that caused them to fail to actually generate claims for submission. Based on previous test events, we know that this volume can be significant.

For providers who did not have the opportunity to test with CMS during this test period, two more end-to-end testing weeks will be held before the October 1, 2015 compliance date for ICD-10. CMS is offering acknowledgement testing at any time.

For a definitive discussion of ICD-10 testing and its importance, read our recent article about ICD-10 testing published in the ICD-10 Monitor. If your organization needs knowledgeable ICD-10 help, including ensuring the validity of your testing methodologies, we will help.  We also can guide you through the organizational implementation process, and help mitigate potential risks to your revenue cycle. Contact us!