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ICD-10 Delay Creates Workers’ Comp Mess

Right now, we would be launching the long-anticipated shift from ICD-9 to ICD-10 — except that the Centers for Medicare and Medicaid Services (CMS) was ordered to make yet another change to the deadline. Instead of taking effect Oct. 1, 2014, the newest deadline for ICD-10 is Oct. 1, 2015. The inevitable is put off for another year.

Delaying implementation of ICD-10 is a relief for some but grinding for others. Without a doubt, continued delays significantly affect costs and benefits for the healthcare system.

According to Michele Hibbert-Iacobacci, vice president of information management and support at Mitchell International, “On March 31, 2014, the ICD-10-CM/PCS (International Classification of Diseases — 10th Revision, Clinical Modification and Procedural Coding System) implementation was delayed in the United States [because] the Senate approved a bill (H.R. 4302). This update to the obsolete ICD-9-CM/PCS was a requirement in the Health Insurance Portability and Accountability Act (HIPAA) for all covered entities. Workers’ compensation has been excluded as an industry that is not covered under HIPAA; however, the providers submitting the medical bills to workers’ compensation payers are covered entities. By proxy, the workers’ compensation industry needed to prepare to accept ICD-10-CM/PCS by the implementation date of Oct. 1, 2014, and the majority of payers and vendors were ready to process bills by that date.”

The move from ICD-9 to ICD-10 reflects substantial advances in medicine that have occurred during the past three decades. ICD-9 includes 17,000 diagnostic codes, whereas ICD-10 has 155,000 codes, reflecting much more detail and differentiation in diagnoses. The result of the expanded and updated coding will enhance definition of diseases and injuries and make payments more accurate.

Yet continued delays have placed time and cost burdens on billers, suppliers and payers throughout the healthcare and insurance industries. Organizations have spent millions of dollars on training personnel for the upgrade; now, they have spend more on refresher courses and on training for new people who are replacing trained personnel who have left.

The delays also create a challenge because ICD-10 codes will be used sporadically before and after the deadline, requiring handling both sets of codes. There will be those who begin using the new coding early and those who never believed the day for the switch would come. The latter group could lag a long time.

Accommodation will be made for old coding and dual coding. Bills will be submitted using either and both. Therefore, decisions must be made regarding payment. Will the paying organization assume the task of converting the codes? Should reimbursement be denied those not in compliance on codes? Systems will need to accommodate both to navigate the transition.

The drop-dead date for ICD-10 will come, whether it occurs in October 2015 or later. When the day comes, reimbursement will depend on accurate and timely coding.

There are those who are thankful for the delay because they were not ready. They now have time to meet the new deadline. Those who were ready for the launch can now perfect the processes they created. The test for them is to sustain readiness for another year.

That is costly. It is also tiring.

Analytics at the Next Level: Transformation Is in Sight

Although insurance companies are embracing analytics in many forms to a much higher degree than other businesses, adoption by the insurance industry is still only in its adolescent stage. Deployment is broad but inconsistent. The use of analytics may be about to mature considerably, though, based on a recent series of mergers and acquisitions.

Currently, while a majority of large carriers use predictive modeling in one of more lines of business, and mostly in personal lines auto, a smaller percentage use it in their commercial auto and property units. Insurers recognize predictive analytics as a critical tool for improving top-line growth and profitability while managing risk and improving operational efficiency. Insurers believe predictive analytics can create competitive advantage and increase market share.

Fueling even greater excitement – and soon to be driving transformational innovation – is the recent surge of M&A activity by both new and nontraditional players, which have combined risk management and sophisticated analytics expertise with robust and diverse industry database services. The list of recent deals includes:

  • CoreLogic’s 2014 purchase of catastrophe modeling firm Eqecat, following its 2013 acquisition of property data provider Marshall & Swift/Boeckh; a significant minority interest in Symbility, provider of cloud-based and smartphone/tablet-enabled property claims technology for the property and casualty insurance industry; and the credit and flood services units of DataQuick.
  • Statutory and public data provider SNL Insurance’s 2014 purchase of business intelligence and analytics firm iPartners, which serves P&C and life companies.
  • Verisk Analytics’ 2014 acquisition of EagleView Technology, a digital aerial property imaging and measurement solution.
  • LexisNexis Risk Solutions’ 2013 acquisition of Mapflow, a geographic risk assessment technology company with solutions that complement the data, advanced analytics, supercomputing platform and linking capabilities offered by LexisNexis.

Other 2013/2014 transactions that have broad implications for the insurance analytics and information technology ecosystem include:

  • Guidewire Software, a provider of core management system software and related products for property and casualty insurers, acquired Millbrook, a provider of data management and business intelligence and analytic solutions for P&C insurers.
  • IHS, a global leader in critical information and analytics, acquired automotive information database provider R.L. Polk, which owns the vehicle history report provider Carfax. 
  • FICO, a leading provider of analytics and decision management technology, acquired Infoglide Software, a provider of entity resolution and social network analysis solutions used primarily to improve fraud detection, security and compliance.
  • CCC Information Services, a database, software, analytics and solutions provider to the auto insurance claims and collision repair markets, acquired Auto Injury Solutions, a provider of auto injury medical review solutions. This transaction follows CCC’s acquisition of Injury Sciences, which provides insurance carriers with scientifically based analytic tools to help identify fraudulent and exaggerated injury claims associated with automobile accidents.
  • Mitchell International, a provider of technology, connectivity and information solutions to the P&C claims and collision repair industries, plans to acquire Fairpay Solutions, which provides workers’ compensation, liability and auto-cost-containment and payment-integrity services. Fairpay will expand Mitchell’s solution suite of bill review and out-of-network negotiation services and complements its acquisition of National Health Quest in 2012.

Based on these acquisitions and the other trends driving the use of analytics, it will be increasingly possible to:

  • Integrate cloud services, M2M, data mining and analytics to create the ultimate insurance enterprise platform.
  • Identify profitable customers, measure satisfaction and loyalty and drive cross/up-sell programs.
  • Capitalize on emerging technologies to improve pool optimization, create dynamic pricing models and reduce loss and claims payout.
  • Encourage “management by analytics” to overcome departmental or product-specific views of customers, update legacy systems and reduce operating spending over the enterprise.
  • Explore external data sources to better understand customer risk, pricing, attrition and opportunities for exploring emerging markets.                       

As the industry is beginning to understand, the breadth of proven analytics applications and the seemingly unlimited potential to identify even more, coupled with related M&A market activity that will drive transformational innovation, indicates that the growing interest in analytics will be well-rewarded. Those that are paying the most attention will become market leaders.

Stephen will be Chairing Analytics for Insurance USA, Chicago, March 19-20, 2014.