How to Measure Claim Risk With ICD-9's

by Karen Wolfe

Most agree 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-9’s. The problem is few in the industry really understand ICD-9’s or in what ways they could inform and super-charge medical management.

ICD defined

ICD-9 codes are not unique to Workers’ Compensation. ICD-9’s 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.

ICD's 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 and of WHO (World Health Organization) sponsorship is to promote international comparability in the collection, classification, processing, and presentation of mortality statistics. New revisions of the ICD are implemented periodically so that the classification also reflects advances in medical science.

ICD-9’s in standard billing forms

Those who bill for medical services in the U.S. are required to use one of two CMS (Center for Medicare and Medicaid) standard forms, 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 list ICD-9’s appropriate to the medical procedures for which they are billing. The verdant data derived from these forms should be analyzed and incorporated into medical management processes.

Unwieldy and ignored

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-9’s are difficult to interpret in the form seen on bills.

ICD-9’s on bills 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.

Secret power of ICD-9's

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

ICD-9’s reveal migrating claims

Migrating claims are those where the injured worker is moving away from recovery, rather than toward it. Such claims always accrue ICD-9’s. However, few notice what is happening before them. Standard processes and systems in Workers’ Compensation only record the ICD-9’s. 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-9’s to the claim, thereby increasing claim risk.

As a claims migrates, the number of ICD-9’s associated with it mounts.

Knowledge solution

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

ICD-9 scores as predictors of risk

A way to optimize the power of ICD-9’s 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 of ICD-9 scores for the claims, the claim risk score. As ICD-9’s are added during the course of the claim, the claim ICD-9 score increases. As a claim migrates and accumulates ICD-9’s, 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.

ICD-9’s scores level the playing field

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.

Moving on—ICD-10

The ICD-9 contains thousands of codes. Moreover, the ICD-10 revision will triple the number of codes, making its information value exponential. ICD-10 is slated to be activated in October of 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.

Karen Wolfe is President and CEO of MedMetrics®, LLC, an online Workers’ Compensation analytics company. MedMetrics provides “apps” online that link analytics to operations, thereby making them actionable. MedMetrics also monitors concurrent integrated data, including ICD-9 scores to detect potentially high risk or high cost events occurring in claims. karenwolfe@medmetrics.org