Testimony by Ed Schooley for the January 28, 2004 NCVHS Subcommittee on Standards and Security Hearing

January 28, 2004

TESTIMONY OF
ED SCHOOLEY, D.D.S.
DENTAL DIRECTOR, DELTA DENTAL PLANS OF IOWA
ON BEHALF OF THE
DELTA DENTAL PLANS ASSOCIATION
BEFORE THE
SUBCOMMITTEE ON STANDARDS AND SECURITY
OF THE
NATIONAL COMMITTEE ON VITAL HEALTH STATISTICS

Introduction

I am pleased to be here today on behalf of the Delta Dental Plans Association (“DDPA”) to discuss the status of dental coding standards issues and to follow-up on our past communications regarding the need for improvements to the mechanism for the dental code set revision and maintenance process.

DDPA is wholly committed to efforts that will better the dental provider community’s use of electronic claims to at least equal medical claims in order to advance the goals of administrative simplification.  Dental claims in electronic form are at about 35 percent compared to medical transactions for physicians that are about 65 percent of all claims.

We believe that changes, however, are needed to achieve that goal and I will discuss these in my testimony.

Update on Continued Improvements to the Process

First I would like to follow-up on our past testimony and correspondence to update the Committee on the status of the dental code set revision and maintenance process.

As you may recall, the dental payer groups testified before your Subcommittee on February 6, 2002, and requested the Subcommittee’s guidance on the development of an “open” code set revision and maintenance process.  Subsequent to that hearing, the dental payer groups reached agreement on keys areas of “reform” to the ADA’s existing procedures.

Directly as a result of the Subcommittee’s attention to this matter, the ADA and payer groups met and developed changes to the dental Code Revision Committee’s (“CRC”) protocol and a revised timeline for review and action on requests to revise the dental code.  As you know, the CRC is the established mechanism for provider-payer review and revision of the CDT procedure code set.

 These changes were adopted by unanimous vote of the CRC on August 16, 2002.  The changes would not have occurred but for the interest of the Subcommittee.  While we see progress being made towards achieving our goal of an “open” code revision and maintenance process, as I will discuss, we believe that there are further opportunities for improvements.

Dental Coding Issues and Challenges

Nature of Changes.  As we stated in our testimony of February 6, 2002 in connection with the CDT procedure code set–changes must be carefully designed to achieve administrative simplification, and that, when possible changes should be minimal, and objectively science-based.  However, at the February meeting of the CRC we will be evaluating over 186 submissions for new codes or code revisions.  CDT-4 currently includes approximately 500 codes.  Of the 186 code submissions, less than 10 represent new science or technology.  Judging from past experience, we expect 50 percent of these change requests to be adopted.  Often these changes represent code splitting and unbundling of procedures.  We believe billing code changes should not be designed to enhance provider payment opportunities without increased services to patients.

Timing of Changes.  CDT code maintenance occurs on a two year cycle.  Frequent,  pervasive changes in the code set are disruptive and time consuming to implement.  Updates should be limited to make the process more manageable.

In the case of Delta plans, for most products, these changes must be filed and approved by state departments of insurance.  New benefit booklets must be produced and disseminated.  Web sites must be updated to reflect changes.  Fee schedules for each benefit plan must be updated with code set changes.  Reprogramming costs are high for both payers and dental practice management systems.  It is also costly to train and retrain staff frequently, as it delays accurate billing and payment while both providers and payers endure the inevitable learning curve.

All of these expenses add to the cost of benefit plan administration and serves only to increase the cost of dental care, making dental care less affordable and available in the United States.

Need for Diagnostic Code Sets Used for Dental Claims

Dental payers look to the medical claims world for models of improvement.  Professional claims, as you know, utilize two procedure code sets—the CPT and HCPCS codes.  This dual system serves as a “checks and balances” system for providers and payers.  The AMA maintains the CPT code while a collaboration of public and private payers maintain the HCPCS code.  Dental claims only utilize one CDT dental procedure code set, which, as I noted previously, is maintained in a collaborative effort by the CRC.  For the dental world our “checks and balances” exist at the CRC level.

The medical systems use an interaction of procedure and diagnostic codes for billing transaction purposes.  As you know, the ICD-9 is maintained by the government, in an “open” process.  The ADA has proposed the use of the “Systematized Nomenclature of Dentistry” (“SNODENT’) for diagnostic information, if required, on dental claims.  I will discuss our opinion about its suitability in a moment, but I’d like to point out now that the SNODENT code set is maintained solely by the ADA.  Thus, there is no system of “checks and balances” or impartial party for maintenance of important diagnostic codes as in the medical world.

Rationale for Diagnostic Codes or Modifiers in Dental Claims

As you know, there has been a great deal of discussion among the designated standard maintenance organizations (“DSMOs”) about the adoption of procedure code “modifiers” or diagnostic codes, to provide a “reason” for the specific treatment.  The vast majority of these modifiers, upon analysis, are actually diagnoses. Because such a code set is lacking on dental claims today, it is often not evident why, or under what circumstances, a procedure is being rendered.  Therefore, text notes or attachments are critical for the processing of benefit payments.  The dental payer groups find that diagnostic information is critical, in order to adjudicate many claims automatically, and to manage our programs.

Diagnostic codes are important components for achieving the objectives of administrative simplification for several reasons.

Efficiency.  First, diagnostic codes will facilitate operations, improve submission accuracy, lower administrative costs, and improve claim turnaround times.   Non-clean claims take 2.2 times longer to adjudicate.  One study by a Delta Plan demonstrated a 28-day adjudication for non-clean claims compared to 13 days for clean claims.  The cost differential between electronic claims and traditional paper claims is upwards of 11-cents in some Delta Plans.  As many as three percent of 77 million claims—some 2.3 million, have missing information that may lend them to be “codified”.

Fraud Detection.  Second, diagnostic codes will facilitate utilization management activities and monitoring for fraud and abuse.  Knowing the specific clinical conditions for treatment allows for more effective disease management programs.  Diagnostic codes will also facilitate the process of ensuring that items and services are medically necessary and appropriate.

Benefit Design.  Third, diagnostic codes will assist in development of plan designs.  Insurers will have information to structure more qualitative and cost effective dental benefit plans for employer groups and individuals.

Outcomes Research. Fourth, diagnostic codes will facilitate more effective outcomes research.  Plans will be able to identify those treatments that are efficacious and those that are not for a given clinical condition, thus ultimately improving the public’s oral health.

 Claims Attachments.  Finally, diagnostic codes will reduce or eliminate the need for dental claim attachments that discourage dentists from submitting claims electronically.  As many as six percent of 77 million claims—some 4.6 million, undergo “professional review”; and as many as three percent—some 2.3 million, require additional information.  On average up to six percent of 77 million claims—some 4.6 million, may be impacted by codifying some of the unique, missing information.

Assuming that Delta Plans represent some 25 percent of the dental benefit market, we are talking about 308 million claims for the entire market.  Thus, over 18 million claims could be more efficiently adjudicated with appropriate diagnostic coding improvements.

Dental Providers Recognize the Importance of Diagnostic Codes

The ADA has acknowledged the importance of diagnostic codes to both providers and payers.  In past testimony before the NCVHS Computer-Based Patient Record Work Group, the ADA testified, for example, that SNODENT could provide the means for diagnostic coding, reliable diagnostic treatment outcomes data, and for third-party payers to eliminate the need for narrative descriptions and other attachments.  See ADA Testimony (May 17, 1999).  SNODENT is analogous to SNOMED in its granularity. In fact, SNODENT was included in the National Library of Medicine (NLM) licensing of SNOMED for use in the electronic health record.

Reprise to the Dental Code Revision Committee Maintenance Process So, we come back now to the issue of “process” and how it impacts important dental coding issues that are critical to the success of administrative simplification.

Diagnostic Code Proposal.  The ADA has expressed strong support for using the 6,000 SNODENT codes as the proper diagnostic code set for dental procedures.  However, the ADA has also indicated that, the development and maintenance of the diagnostic codes would be solely and entirely the purview of the ADA without substantive payer representation or participation.   If these codes are to be used for claiming purposes, we find this unacceptable.

Impact on Simplification.  The 6,000 SNODENT diagnostic codes, however, raise concerns about achieving the goal of administrative simplification.  The 6,000 SNODENT codes, however, may not be appropriate for this purpose.  SNODENT appears more suited for use by the research community and dental informatics rather than by payers.  SNODENT’s size is not appropriate for administrative use in billing transactions.

Dental Procedure Code Needs an Efficient Set of Diagnostic Codes

Our urgent message to the Committee today is that administrative simplification can be advanced for dental claims with an efficient diagnostic code set.  Dental claims must have access to the same kinds of code sets that assist in the automated processing of medical claims.  However, important debate among dental payers and providers must first occur before SNODENT, or any other diagnostic code or set of “modifiers”, is adopted as part of the national dental code set standards.

ICD-10 Recommendation.  The ICD-9 and ICD-10 codes are much more efficient than SNODENT and either would be preferable to SNODENT for purposes of dental benefit claims transactions. Although Delta Plans have not yet completed our assessment, many  ICD-9 diagnostic codes are outdated and DDPA believes that ICD-10 is a needed improvement for medical claims.   Currently, dental payers have no diagnostic codes in use in claims transactions, and so, in our preliminary assessment, view the cost differential between implementing ICD-9 or ICD-10 to be the same. Delta Plans are developing a package of ICD change requests.

Because HIPAA includes a statutory definition of a “code set” that includes “diagnostic codes”, DDPA strongly believes that the “diagnostic code” is part of the national standard “code set”.   Any proposal to adopt diagnostic codes, such as SNODENT, must be accomplished in the “open” process established under HIPAA for national standard setting.

Conclusion

The adoption of diagnostic codes would be an important step forward in simplifying electronic transactions for dental procedures.  DDPA supports ICD-10 for dental claim transactions.  Just as the CDT dental code system is now a “national” standard in the dental industry and maintained through a balanced process, the adoption of any dental diagnostic code as part of this “national” standard must be accomplished through the “open” process required under HIPAA, and DDPA respectfully requests the Subcommittee’s support on this important matter.