Imagine that a federal agency called the Centers for Medicare & Medicaid Services, responsible for insuring about one-third of the nation, tried to build a national health insurance exchange and the rollout was disastrous.

Well, we don’t have to imagine; it happened. Through wildly poor management that included severely underestimating the complexity of the task, CMS embarrassed itself, and it confused and inconvenienced millions of people.

I fear the same scenario will play out with the ICD-10 rollout, because CMS does not appear to have learned a thing from the insurance exchange debacle.

Medicare processes several million claims a day. Medicare had three – yes, count them, three –ICD-10 end-to-end testing weeks, during which a grand total of 67,000 claims were tested. If you split that number in thirds, it appears that CMS tested an average of 22,300 claims each week and then crowed about how well it did.

Meanwhile, industry stakeholders were telling Health Data Management and other publications that they weren’t getting back fully adjudicated claims with complete remittance advice that could be automatically posted to patient accounts. Not all tests were—in the minds of stakeholders—incomplete, but there were considerably more issues than CMS acknowledged.

So, Medicare tested about 22,300 ICD-10 claims over a five-day period three times, and from that, it believes that it is ready to process millions of claims right off the bat next month. During the health insurance exchange debacle, CMS did not value the idea of scale—of having the capabilities to process huge amounts of information immediately when a system goes live in production mode.

Consequently, CMS did not know the insurance exchange would not handle the scale because it was not adequately tested at scale before go-live. Now, CMS is again not valuing the immensity of the scale of ICD-10 and is not acknowledging its contractors are not fully ready.

Under strong pressure from physicians, CMS agreed in early July to several payment and audit policy concessions during the first year of ICD-10 for physicians and other practitioners under Medicare Part B. For instance, Medicare will not deny claims solely based on the specificity of ICD-10 codes as long as the given codes are in the appropriate diagnostic family of codes. Further, Medicare Part B claims will not be audited in the first year if there are errors in the specificity of diagnosis codes as long as they are in the appropriate family of codes, and Medicare Administrative Contractors as well as Recovery Audit Contractors will be required to follow the policy.

That’s good policy—late, but good. However, CMS then took two months to issue “additional caveats” about the guidance on the policy that physicians should be aware of.

Further, the policy covers only Medicare fee-for-service claims under Part B. It does not cover other Medicare programs. It does not cover Medicaid. CMS says states at their discretion could adopt a similar policy. However, CMS has no knowledge of any state Medicaid agency at this time pursuing a relaxed payment and audit policy. That means providers should count on having to code ICD-10 very precisely--from Day One--if they want to get paid by Medicaid. How can a mess not be coming?

Speaking of Medicaid, does anyone know the ICD-10 readiness of each state and territorial agency? CMS oversees Medicaid in partnership with the states. But a CMS “State Medicaid ICD-10 Readiness” website gives virtually no information on how ready the states are. There’s a map of the nation and you can click on any state to learn more about ICD-10 preparation and testing, but that information is to assist providers in getting ready.

Clicking on seven of the most populated states—California, Florida, Illinois, Michigan, New York, Pennsylvania and Texas—revealed no information regarding states’ own Medicaid readiness for the transition. And now we know why. Modern Healthcare reports that CMS is giving at least four states--California, Louisiana, Maryland and Montana--permission to continue using ICD-9 as a "temporary" workaround because they can't calculate payments under ICD-10.  Surely, there will be more. It appears the ICD-10 ride could be a whole lot bumpier than everyone already is expecting. Buckle up.

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