Craig KappelAs the countdown continues towards what is expected to be a final and immovable deadline of Oct. 1, 2014, for the conversion to ICD-10 for medical diagnosis and inpatient procedure coding, providers across the country are facing the cold reality that delay is no longer an option.

Although many providers have at least begun the process of converting their information systems to ICD-10—by my anecdotal estimate, at least five out of every 10 have substantial efforts underway—they still face many challenges with shifting from the 24,000 codes under ICD-9 to the 155,000 separate codes under ICD-10, not the least of which are the financial implications.

It is true that the conversion from ICD-9 to ICD-10 is intended to be budget neutral for providers, but there is significant risk of lost revenue due to poor quality of documentation and the related coding. Steps taken today could help organizations avoid the costly risk of underperforming financially once ICD-10 is fully implemented.

Proper physician training in meaningful quality documentation should be viewed as a cornerstone for any effective ICD-10 conversion program. There will be a much higher bar for the supporting documentation needed in the medical record to be reimbursed under ICD-10. As has always been the case, poor documentation leads to inadequate payment for services rendered.

Another key area of focus for providers is their denials management process. When fully implemented, ICD-10 is likely to cause an increase in denials due to miscodings as well as changes in the medical necessity and authorization guidelines from the payers. To respond, providers will need to examine their current workflows and determine if they have adequate systems in place for overturning denials and or reducing the value of these denials. Simply put, many payment denials occur because a process isn’t working well. Providers should be allocating the proper time and resources now to identify potential weaknesses in these core processes.

For providers that have already made meaningful progress in their conversion efforts, they should plan to be complete with their coder ICD-10 training by the end of the summer. This target completion date will then afford coders the opportunity to practice what they have learned about ICD-10 coding to work out mistakes and errors well in time for the Oct. 1, 2014, compliance date. By the fall of this year and early spring of 2014, providers should be focused on working with their software vendors to complete their updates to core and secondary computer programs to accept ICD-10 codes. The remaining time should be left to test the updated systems and reengineer business processes, as appropriate, to support the new coding structure.

For those organizations who that not yet begun the process of getting ready for ICD-10, there is still time to respond effectively, but not much. For the average 300-bed hospital, total conversion costs are estimated to be between $3 million and $5 million. Although these costs may be daunting, they pale in comparison to the financial perils of noncompliance.

Craig is a partner at Ernst & Young LLP.

The views expressed herein are those of the author and do not necessarily reflect the views of Ernst & Young LLP.

Publication Date: Tuesday, February 12, 2013