Preparing and Implementing a Comprehensive ICD-10 Testing Strategy

• Cognizant 20-20 Insights

Preparing and Implementing a
Comprehensive ICD-10 Testing Strategy
Executive Summary Healthcare payers must also coordinate ICD-10
testing with the ongoing QA of other enterprise
The move from ICD-9 to ICD-10 promises long-
applications. Finally, there is the challenge of
term benefits in efficiency and accuracy, but it
creating accurate test data for an ICD-10 appli-
also poses a staggeringly complex remediation
cation environment that does not yet exist. This
challenge. This new version of the International
requires not only tools but also an analytical
Classification of Diseases involves a four-fold leap
approach and method that depends on human
in the diagnostic codes and a 22-fold leap in the
input and decision-making.
procedure codes used in every part of the clinical
and business value chain. While this will eventu- This white paper describes a testing strategy that,
ally help improve care and drive efficiencies, the if healthcare organizations begin now, can help
complexity and breadth of this shift requires orga- ensure compliance without endangering critical
nizations to begin remediation and testing now, business operations.
in close cooperation with business stakeholders,
to ensure compliance by the proposed Oct. 1, 2013 ICD-10 Remediation
deadline. ICD-10 will replace ICD-9 with a fundamental shift
of how treatment and conditions are described. Its
Effective ICD-10 testing must focus not just on
objective is to provide more precise descriptions
technical requirements but also on business
of diagnoses and treatments and thus enable
objectives, such as clinical equivalency, benefit
more accurate payments, better tracking of
neutrality, financial integrity and operational
treatment results and more efficient claim coding
stability. The test plan should take a risk-based
and productivity. To achieve this improved granu-
approach to prioritizing testing of the most
larity, the number of diagnosis codes will increase
critical functions and scenarios. It should take
from about 14,000 to 68,000, with procedure
into account internal constraints — such as com-
codes increasing from about 4,000 to 87,000.
petition for funding — as well as external con-
straints, such as delays in the availability of ICD- Because of the expansion in the code base and
10-compliant products from vendors. Because the near-simultaneous adoption of the Version
each organization has its own mix of applications 5010 transaction standard, this migration will
with unique dependencies and process flows, have a significant impact on people, processes,
ICD-10 testing requires each healthcare payer to partners and technology, both within and across
properly schedule its unique sequence of unit and healthcare enterprises (see Figure 1). Redefining
end-to-end testing.

cognizant 20-20 insights | february 2012

rules and policies concerning business processes central to each organization’s path through the
will impact business trend analysis reporting, process:
claims payment and processing decisions, along
with analytical systems used for claims adjudi-
• Clinical equivalency: This is achieved when
the use of either the ICD-9 or equivalent
cation, reimbursement, benefits administration,
ICD-10 codes define the same characteristics
referral and authorization processes and quality
of patient care, and the suggested outcomes
measurement.
meet medical necessity.
Business impacts include changes in validation • Benefit neutrality: This means that the use of
logic, retention of original code and changes to ICD-9 or the equivalent ICD-10 codes result in
technology. Because of these challenges, experts the same member coverage, with no increase
predict the transition to ICD-10 will have a greater in member premiums or out-of-pocket expense.
impact on payers than the implementation of
• Financial integrity: This is achieved when
HIPAA 5010 and the Y2K remediation effort, the use of either set of codes results in the
combined. payment of appropriate benefits by the insurer
and the appropriate financial contribution by
Because ICD-10 codes are not an exact one-to-one
the recipient.
match with ICD-9, approximations and mismatches
will affect operations. The U.S. Department of • Operational stability: This is achieved when
Health and Human Services predicts that claim critical accuracy measures such as rates of
errors will rise to between 6% and 10% of all auto-adjudication and claims payment accuracy
claims, up from an annual 3% under ICD-9.1 are maintained at optimum levels under either
the old or new codes.
Operational stability will be further challenged
for the many payers with legacy systems that will Path to Remediation
need to implement additional manual processes The first step toward remediation is to assess
to comply. Many payers will also need to make the impacts that ICD-10 will have on people,
changes to their IT infrastructure either for processes, partners and application portfolios.
compliance purposes or to position themselves to This analysis should extend to the impact cat-
take advantage of the more detailed information egorized by ICD-based rules and the associated
available under ICD-10. processes, codes, volume and functions such as
payments and benefits applications.
There are four overarching business objectives
of ICD-10 remediation and testing, which must be

ICD-10 Testing: What’s Different

• The test strategy for ICD-10 needs to be different from the standard test approach for a large program.
• ICD-10 is much more than a technology implementation/roll-out and is dependent on other criteria,
both internal (i.e., business context) and external (i.e., business partners).
ICD-10 codes replacing ICD-9 codes are not an Need to develop a plan to test each partner and the
exact one-to-one operation, leading to end-to-end connection to the business partner.
approximations that will impact operations.

Difficulty in creating both diversity
Business Business The larger number of codes in
of data (to represent all the Context Partners ICD-10 could lead to increased
possible ICD-10 codes) and volume of claims/transactions
sufficient volume of ICD-10 data than previously encountered.
for stress testing. Impact to
Test Data Operations

If the enterprise chooses the ICD-10 will impact multiple business
“dual processing” approach, Remediation Business processes and test scenarios would
then the testing will need to Approach Process be more extensive to cover the
ensure congruence between end-to-end business transactions.
Epic
the two systems.
Event

Go-live date that is non-negotiable, making a
phased approach impossible.

Figure 1

cognizant 20-20 insights 2

Remediation itself begins with choosing a reme- understand how ICD codes are used by various
diation option, with the standard choices being processes and applications within the organiza-
direct utilization, dual utilization and crosswalk. tion and with business partners. This business
The “direct” option involves remediating or perspective is especially critical given the wide
replacing systems to make them completely variety of scenarios involved, and the need to
ICD-10 compliant. Dual utilization allows the assure clinical equivalency, benefit neutrality,
processing of both ICD-9 and ICD-10. Direct or financial integrity and opera-
dual utilization of ICD-10 is the desired end state tional stability.
of all payers regardless of their initial choice,
Direct or dual
since it will require the minimal amount of manual The next step is to develop utilization of ICD-10 is
the business requirements,
intervention, be supported post-2015 and allow the desired end state
the payer to realize the benefits of the enhanced technical requirements and
ICD-10 data. use cases for the macro of all payers regardless
processes affected by the of their initial choice,
The “crosswalk” option involves creating maps to transition. Understanding
since it will require
convert data from ICD-9 to ICD-10, or vice versa, and prioritizing these use
and is used for legacy systems that are either too cases also requires close the minimal amount of
difficult or too expensive to remediate and are cooperation among the manual intervention, be
targeted for sun-setting in the near future. One business, IT and testing
supported post-2015
drawback is that the use of crosswalks is only functions. The fact that ICD
acceptable until 2015, when all systems must be codes affect all clinical and and allow the payer to
fully ICD-10 compliant (see Figure 2). Another is business processes, as well realize the benefits
that crosswalks will fail to resolve issues around as the number of potential
of the enhanced
the “downstream” reporting of medical informa- use cases, means that an
tion, such as to medical management systems, unsuccessful transition ICD-10 data.
or to resolve questions around the use of ICD-10 may have serious financial
codes in pricing and contracting. and operational implications. Comprehensive
ICD-10 testing, strategy, planning and execution
Whichever approach an organization takes, are critical to meeting these requirements and
it is essential to involve business partners to mitigating potential threats to the core of the
ensure those doing the remediation and testing business.

Timelines for ICD-10 Implementation and Testing
Phases*

Testing & Complete ICD-10-Based
Assessment Remediation Steady State
Implementation Processing
Time 2010 2011 2012 2013 2014 2015 2016
5010
Assessment and Compliance ICD-10 Compliance
development of
strategic roadmap

Overall Testing Strategy
CMS stops supporting GEMs

Development of
business requirements
Strategy

Processing based on
Test Plan direct utilization/crosswalks
(actual timeline may vary
Scenario Design depending on the business
& application complexity of
the impacted entity)
SIT, Regression, Complete ICD-10-based
Dual & E2E Testing processing
Process and system
design and remediation External ICD-10-based pricing &
Partner Testing contract finalization

UAT

Operational
Readiness Accumulate ICD-10 history data to define rules on fraud
Testing & abuse, audit, analytics, medical management, etc.

From an industry perspective, healthcare entities should spend Q4 2012 and Q1 2013 on external partners
testing, while internal testing should be completed by end of 2012.

* Timeline is based on current CMS compliance deadline of Oct. 2013.

Figure 2


How Testing Meets the Challenge systems, are integrated, interoperable and ready
to accept and process the new codes and formats.
Testing plays an especially important role in
It should validate medical policies, ICD-10-reme-
ICD-10 remediation because of the breadth and
diated business processes, payment policies,
depth of how the codes are used in both clinical
claims adjudication rules and edits, technology
and business processes, as well as the need to
platforms, databases and applications to ensure
ensure the transition does not harm clinical
successful integration and interfacing among
decisions, financial or operational processes.
clearinghouses, providers, payers and other
However, because of the healthcare entities.
Because very few unique requirements of ICD-10
System performance testing and tuning will
organizations will remediation, standard system
ensure that both applications and their associated
testing lifecycle models will not
be able to test all suffice. Because very few orga-
databases can accommodate volume changes
in areas such as claims adjudication, billing and
scenarios, they nizations will be able to test
customer/provider services. Financial integrity
will need to turn to all scenarios, they will need to
testing will ensure that the payer or provider
turn to risk-based testing to
risk-based testing prioritize which scenarios are
is not underpaid or overpaid due to the use of
ICD-10 codes. Benefit neutrality testing ensures
to prioritize which most critical. Another unique
that the ICD-10 implementation will not result in
scenarios are challenge is creating test data,
either over- or under-usage of benefits within any
as the central component of
most critical. that data (the diagnoses codes)
particular LOB/product combination, including
within medical policies.
is being changed as part of the
transition and cannot be simply converted from Testing Requirements
ICD-9 based claims.
The design of the test environment, test data, test
The first step is creating a clear test strategy strategy, test scenarios and test execution should
and detailed test plan. This plan must go beyond be built around the aim of returning to “business
testing technical and functional application as usual” after the implementation of the ICD-10
requirements, to include outcome-based testing codes.
of business scenarios and macro processes such
The creation of the test environment begins
as customer service, customer enrollment and
with identifying the hardware and software
provider management. This will ensure that the
requirements for all relevant applications, as
defined goals are met at the business, financial,
well as which existing test environments can be
benefit, clinical and operational levels. Perfor-
reused for ICD-10 testing, such as those used for
mance testing is also very important, as the larger
enterprise system and Version 5010 compliance.
number of codes and information in ICD-10 could
lead to a longer processing cycle time. It is also critical to understand how the current
test environment will be impacted by ICD-10
The next step is the development of business
enterprise testing. This is especially challenging in
scenarios that represent the ICD-related
the case of ICD-10 because, in a regular test cycle,
processes that generate the highest volume of
an organization maintains multiple test envi-
transactions and processes and thus could have
ronments to run various scenarios. Since under
the greatest financial impact on the payer organi-
ICD-10 the scenarios involve all core systems, it is
zation. This domain-intensive, prioritized testing
much more difficult to create dedicated test envi-
requires involvement from domain experts who
ronments.
have deep knowledge about how ICD-10 will
impact their particular business, and ensures the Because of the hard deadline, a phased approach
most critical scenarios and processes are tested to testing and implementation is not possible. All
first. forms of testing, from unit to end-to-end testing,
must be completed for the most critical processes
Next, the scenarios are executed through end-
by the “go-live” date. This, again, increases the
to-end testing that validates the full execution of
importance of prioritizing which scenarios and
a business process with a business partner. This
processes to test first, and the need to involve
testing should ensure that all of the payer’s IT
business partners in identifying and aligning them.
systems, as well as the external trading partner’s


Business Objectives for ICD-10 Testing

Achieved when ICD-9 and Achieved when ICD-9 and
resultant ICD-10 codes define equivalent ICD-10 codes
the same characteristics, and result in claim payouts and
suggested outcomes meet encounter revenue that
medical necessity. Clinical Financial meets acceptable tolerance
Equivalence Neutrality targets.

Testing Outcome - One global map
primarily based on clinical equivalence.

Achieved when auto- Operational Benefit Achieved when ICD-9 and
adjudication rates, denial Stability Neutrality equivalent ICD-10 codes
rates, call rates, claims result in same member
payment accuracy, etc. coverage with no increase
are maintained. in member premiums or
out-of-pocket expense.

Figure 3

Creating test data is another unusual challenge Scenario development is critical to risk-based
because it requires a wide variety and sufficient testing, to ensure a clear understanding of how
volume of ICD-10-based data to perform testing ICD-9 codes are being used, critical dependen-
on a wide variety of processes. The generation cies and which application modules use which
and management of a high volume of contextual codes. With this information,
test data may require direct coding of clinical testers can align those codes
data, in addition to using converted historical to scenarios and build the test While automated
claims transactions. While automated tools can data, based on the require- tools can help, an
help, an analytical approach that includes human ments of those scenarios.
input and decision-making is required when it is Testing is then performed analytical approach
impossible to perform a simple mapping of ICD-9 based on the prioritization of that includes human
codes to ICD-10. Such mapping may be unfeasible the scenarios. input and decision-
because of the added granularity and detail in
the newer codes, which may mean either one-to- Organizations should also making is required
many or no matches and may cloud the intent of consider the use of accel- when it is impossible
erators, which are tools and/
the associated rule.
or processes from outside
to perform a simple
Test data must be created for use in a dedicated partners that can help them mapping of ICD-9
test environment, such as for performance meet the strict time and func- codes to ICD-10.
testing, as well as for testing to ensure that tionality requirements of ICD-10
high-level business objectives are met (see compliance. These may include:
Figure 3).
• Reusable test assets such as ICD-10 test
Testing Approach scenarios and test cases that reduce the
effort and time required for ICD-10 testing.
Given the breadth and depth of the impact of
Reusable scenarios are especially useful for
ICD-10, very few organizations will have time and
high-level functions that can be reused for
budget to test all scenarios. For this reason, a
areas such as claims adjudication, claims
risk-based approach is recommended to define
adjustment and benefit verification.
test data and test data requirements, as well
as the use of test data management tools and • Existing feasibility studies that can provide
processes. Such risk-based prioritization should an understanding of ICD-10 test tools and
be conducted in close cooperation with internal their proper use, as well as test infrastructure
business stakeholders and external partners. needs.
It should also consider the potential business
• Benchmark data on areas such as claims
impact of failures, the number of business units payments to ensure optimum coverage during
affected, and which codes and functions are neutrality testing.
involved in the most critical processes.


• Automated tools to compare values for testing immediately, based on tight collaboration
various parameters, such as claims payment between business and IT.
during neutrality testing. Tools that assist in
the generation of test data will also come in While ICD-10 testing is more complex than tradi-
handy. tional testing, it is critical for ensuring that payers
can make the most effective use of the detailed
Begin Now new information provided by ICD-10. Taking
Moving from ICD-9 to ICD-10 will have a signifi- a risk-based approach that prioritizes testing
cant effect on virtually every business process, based on extensive and continuing input from the
policy and IT system used in healthcare. Based business helps ensure success in this challenging
on industry estimates and our client experience, yet rewarding move forward in medical payment
it is vital for all healthcare payers to define a and results tracking.
comprehensive strategy of remediation and

Footnotes
1
Anne Zieger, “Switch to ICD-10 Should Prove Very Costly,” Fierce Health Finance, Aug. 27, 2008,
http://www.fiercehealthit.com/story/switch-icd-10-should-be-very-costly/2008-08-2008-08-27.

About the Authors
Vincent Dabbondanza is a Senior Manger within Cognizant Business Consulting’s Healthcare Practice.
He has many years of management consulting experience within healthcare, focusing primarily on
the payer and provider segments around strategy, operations, regulatory compliance and care
delivery optimization. Vincent‘s domain expertise is within claims management and processing,
medical management, regulatory compliance, customer service, network management and program
management. Prior to joining Cognizant, Vincent was a Managing Director at PSA Consulting, an
Engagement Manager with Tier Technologies, a Senior Associate with CSC Healthcare and a Senior
Consultant at West Hudson. He is a certified Six Sigma Black Belt and holds a B. A. from the University
of Maryland, an MBA from Frostburg State University and a Certificate in Corporate Governance from
Tulane University Law School. Vincent can be reached at Vincent.Dabbondanza@cognizant.com.

Sultan Syed is a Regional Director within Cognizant’s Healthcare Quality Assurance and Testing Practice.
He has over 19 years of experience within various industries, with a strong focus on the healthcare payer
and provider spaces. Sultan earned his B.S. degree at Kean University and his M.S. at DePaul University.
He has been actively involved in building ICD-10 testing solutions for Cognizant clients throughout North
America. Sultan is a member of the Workgroup for Electronic Data Interchange (WEDI) and the American
Society for Quality (ASQ). He can be reached at Sultan.Syed@cognizant.com.

About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-
sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in
Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry
and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50
delivery centers worldwide and approximately 137,700 employees as of December 31, 2011, Cognizant is a member of
the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing
and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.

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Preparing and Implementing a Comprehensive ICD-10 Testing Strategy

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Preparing and Implementing a Comprehensive ICD-10 Testing Strategy