WellPoint Inc. is asking federal regulators to try to make the ICD-10 shift a little easier.
Anthony Mader, a vice president at WellPoint, Indianapolis (NYSE:WLP), discusses concerns about the shift near the top of a comment letter he submitted in connection with medical loss ratio (MLR) regulations developed by the U.S. Department of Health and Human Services (HHS).
The MLR provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA) require carriers to spend at least 85% of large group revenue and 80% of individual and small group revenue on health care or quality improvement efforts or else send rebates to the enrollees.
Carriers have been trying to persuade HHS to classify as many costs as possible as heath care or quality improvement costs, rather than as administrative costs.
Meanwhile, federal health care laws and regulations developed before PPACA are requiring U.S. health care providers and carriers to shift to the ICD-10-CM diagnostic coding system from the ICD-9 system by Oct. 1, 2013.
The shift will require mammoth changes in medical office procedures, medical billing systems, plan administration systems and insurance company systems.
The American Medical Association, Chicago, has called for the government to stop the ICD-10 conversion effort altogether.
America's Health Insurance Plans (AHIP), Washington, has estimated shifting to ICD-10 from ICD-9 will cost its health plan members about $12 per plan enrollee, or a total of about $3 billion industrywide.
HHS had been planning to classify the ICD-10 conversion costs as administrative costs. In a final rule released in December 2011, officials decided to let carriers treat some conversion costs as quality improvement costs for the 2012 and 2013 reporting years. The amount of ICD-10 conversion costs that can be treated that way is capped at 0.3% of premium.
"We appreciate the recognition of ICD-10 conversion expenses as a quality improvement activity," Mader writes in the comment letter.
Mader says WellPoint would like to see HHS officials let insurers include ICD-10 compliance expenses in MLR calculations starting with the 2011 calculations.
WellPoint also is asking HHS officials to remove the cap on the amount of ICD-10 conversion expense that can be treated as a quality improvement expense.
HHS has been pushing for the ICD-10 conversion in an effort primarily to improve the quality of care, so treating conversion costs as quality improvement costs is the right decision, Mader says.
But carriers are already working on the conversion and ought to be able to get credit for efforts to implement that massive undertaking immediately, Mader says.
"Carriers who began ICD-10 implementation planning in 2011 likely spent between 20-30% of their overall ICD-10 compliance budget," Mader says."For example, WellPoint estimates that it incurred approximately 28% of its ICD-10 compliance budget in 2011."
WellPoint believes the 0.3% of premium cap on the conversion credit is unreasonable, Mader adds.
HHS officials said they came up with the cap using cost projections insurers made before they started work on the conversion.
HHS should consider scenarios in which carriers are spending substantially more than they had expected, Mader says.
CORRECTION: An earlier description of WellPoint's views on the ICD-10 shift described the company's thoughts on timing incorrectly. WellPoint opposes a delay.