Change is difficult, even if it is ultimately a positive change. ICD-10 is one of the biggest changes to hit healthcare in decades and the deadline is getting closer and closer. The upcoming transition from the ICD-9 coding standard to ICD-10 will lead to more accurate tracking of individual and population health trends, and will allow much greater specificity in medical coding. But there's no question that the transition will be challenging.
Most practices can expect a drop in productivity during the changeover. It is predicted that with ICD-10 productivity is expected to decline by 30% to 60%. How long that productivity dip will last depends on many factors, like the size of your practice, how much training and practice your coders have with ICD-10 before it's implemented, your denial management strategy and how well you've planned to cope with possible cash flow disruptions.
ICD-10 is not simply a coding or IT challenge; it is a significant threat to a practice or organization’s revenue and cash flow. ICD-10 coding could cause a drop in first-pass claim rates while denial rates could jump an estimated 100 to 200 percent in the early stages of the transition. CMS predicts that claims error rates will be more than two times higher with ICD-10, reaching a high of 6 to 10 percent in comparison with the average 3-percent error rate with ICD-9. Even if your facility has an excellent coding staff and a great billing department, the chances are pretty good that your coding productivity and your revenue stream are going to “take a hit.”
Expect medical billing cycles to slow while ICD-10 is being phased in and plan accordingly. Otherwise a loss of revenue to an already inefficient revenue cycle could be disastrous. Here are some considerations to bear in mind as the October 1st deadline for the ICD-10 conversion approaches.
Financial Costs of the ICD-10 Conversion
A 2008 study on the financial costs of ICD-10 conversion estimated implementation costs of over $83,000 for a three-physician practice, or closer to $3 million for a practice employing 100 physicians. Around half of the cost of the ICD-10 transition has to do with increased documentation costs and additional time needed to code patient diagnoses. About one-quarter of the cost of ICD-10 conversion will be attributable to disruptions in cash flow.
Practices will have to spend money on training as well. Learning ICD-10 is like learning a new language, and mastery takes time, training, and practice. Small practices can expect to spend $2,000 on training and education for those who will be using ICD-10 system in their everyday tasks. Larger practices can count on proportionally higher expenditures on training.
Why Documenting and Coding Will Take More Time - At Least at First
The changes associated with ICD-10 have to do with code composition, organization, structure, and detail level. The new codes have three to seven alpha-numeric digits, and clinical documentation determines the appropriate ICD-10 code. New terminology must be used for documenting patient care information, and the terminology must support diagnosis reporting and medical necessity. If you use unspecified codes in medical billing, you can expect a spike in claim rejections. With all these changes, it's clear that accurate documentation and coding of each patient encounter will consume more time, at least until your staff is skilled and comfortable using ICD-10.
Canada's Dip in Productivity Following ICD-10 Transition
Canada's ICD-10 transition wasn't exactly like the one in the United States, but we can learn from it nonetheless. In Canada, productivity dropped before, during, and after the ICD-10 transition, and it took an average of about six months for most providers to regain their normal productivity levels. Decreases in productivity were attributable to training time, slower claims processing, questions from coders, and medical billing inquiries from payers.
It's important to bear in mind that Canada uses its own version of ICD-10 called ICD-10-CA and does not use ICD-10-PCS (Procedure Coding System), which the US does. Moreover, Canada doesn't use coding for reimbursement. Therefore, it's wise to take Canada's temporary 50% productivity drop as a baseline, since ICD-10 in the US is more complex.
Possible Cash Flow Issues After ICD-10 Implementation
Even facilities that have done their utmost to prepare for the transition should be prepared for a slowdown in medical billing. Days spent in Accounts Receivable could easily go from 50 days to 60 days during ICD-10 implementation. Facilities on a "pay as you go" policy have to prepare for delayed cash flow so they can pay their own bills on time. Preparation may involve making cash reserves available, or arranging for a line of credit to be tapped should it become necessary. Lack of preparation and management will likely lead to burning through cash reserves quickly if there are significant medical billing delays.
Training and practice time for medical billing staff are two of the most important ways to prepare for a productivity loss due to the ICD-10 transition. Still, it's important for practices to acknowledge that cash flow issues are likely to occur due to slower medical coding and an increase in denials. Preparing for ICD-10 by readying cash reserves or credit can help minimize the impact ICD-10 has on your revenue cycle management.