Tag Archives: center for medicare & medicaid services

A Better Way to Measure Claim Risk

The medical portion of workers’ compensation claims is now almost 60% of claim costs. That fact alone should easily convince payers to focus on the rich medical information in their data. Yet, very powerful information residing in claims data is virtually ignored — diagnostic codes in the form of ICD-9s. The problem is few in the industry really understand ICD-9s or how they could supercharge medical management.

ICD-9s, which are not unique to workers’ compensation, are the World Health Organization’s International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM). They are a standardized method of describing injuries, illnesses and related issues worldwide. ICDs are the codes that classify mortality data worldwide. The ICD-CM is used to code and classify morbidity data from inpatient and outpatient records and doctor’s offices. The purpose of the ICD is to promote international comparability in the collection, classification, processing and presentation of mortality statistics. Revisions of the ICD are implemented periodically so that the classification also reflects advances in medical science.

Those who bill for medical services in the U.S. are required to use one of two standard forms from CMS (Centers for Medicare and Medicaid Services), the HCFA-1500 (Health Insurance Claim Form) for outpatient services and UB-04 (Unified Billing) for hospitals and other facilities. Both standardized forms require the medical provider to list ICD-9s appropriate to the medical procedures for which they are billing. The data derived from these forms should be analyzed and incorporated into medical management processes.

Bill review organizations and payers capture data from the standardized billing forms in their systems. Nevertheless, while the ICD information is documented in systems, its use ends there. ICD-9s are difficult to interpret in the form seen on bills.ICD-9s are displayed in the form of codes, not descriptions of injuries and illnesses, and they number in the thousands. Individuals cannot remember the codes, nor do they have the time to look up codes for interpretation. Instead, they simply ignore them.

Yet knowledge resides in ICD-9 codes that can be translated to powerful medical management tools. When the ICD-9s in a claim are monitored electronically and concurrently, they reveal and inform.

ICD-9s reveal migrating claims, which are those where the injured worker is moving away from recovery, rather than toward it. Such claims always accrue ICD-9s. However, few notice what is happening. Standard processes and systems in workers’ compensation only record the ICD-9s. They do not monitor, interpret or even count them.

Migrating claims are those becoming more complex and costly, often an insidious process that is missed by claims adjusters and medical case managers until considerable damage is done. What happens in migrating claims is the injured worker is not recovering and is referred to multiple specialists. Each specialist adds new ICD-9s to the claim, thereby increasing claim risk.

Using a computerized system designed to monitor ICD-9s is a powerful knowledge solution. Alerts can be sent to appropriate persons when the number and severity of ICD-9s in a claim increases beyond a certain point. Migrating claims cannot be missed, and intervention is implemented early, thereby significantly improving effectiveness.

A way to optimize the power of ICD-9s is to score them individually for medical severity. Each claim then contains a total ICD-9 score in the system, which translates to the claim risk score. A system designed to monitor ICD-9 scores in claims keeps a running total, the claim risk score. As ICD-9s are added, the claim risk score increases. As a claim migrates and accumulates ICD-9s, an alert is transmitted to an appropriate person. Migrating claims cannot go unnoticed.

Claim ICD-9 scores are predictors of risk and cost. Claim ICD-9 scores can be monitored from the outset and throughout the course of the claim. The claim ICD-9 score reveals the seriousness and complexity of a claim. Medical doctors managing difficult claims can be differentiated from those handling less arduous claims, thereby creating fairness in measuring provider performance.

The ICD-9 contains thousands of codes, and the ICD-10 revision will triple the number of codes, making its information value exponentially greater. ICD-10 is to be activated in October 2014. However, it now may be postponed to 2015.

Regardless of the government’s decision about when the ICD-10 is required, wise medical managers are using the ICD factor as an important and revealing evidence of claim progress — or regression.