Ben ColtonOct. 1, 2014, marks the compliance date for ICD-10.  Given that professional fee reimbursement tends to be driven by CPT codes rather than diagnoses, many in the industry tend to underestimate the effect that ICD-10 will have on physician practices.  However, accurate diagnosis coding is still a fundamental component of the physician billing process, and the transition to ICD-10 can significantly impact short- and long-term cash flow and overhead costs if not addressed appropriately.  

Jason MeauxA study by the American Medical Association estimated that practices should plan to spend upward of $80,000 per physician on implementing ICD-10 to cover the cost of training, business process analysis, IT system upgrades, increased documentation, and cash flow disruption. Moreover, beyond the standard considerations like whether the practice’s IT systems, vendors, clearinghouse, and payers will be able to support ICD-10, it is critical for administrators to acknowledge the less obvious effects, such as the impact that increased documentation standards will likely have on physician productivity, particularly at the outset, and the subsequent impact on revenue and physician compensation plans driven by volume metrics.

Accordingly, the key considerations for establishing an ICD-10 implementation plan include the following:

  • Evaluating IT systems, interfaces, and vendors that currently use ICD-9 codes and developing a transition plan
  • Strategizing on ways to improve data capture and how to use that data
  • Assessing training needs and developing programs to support both the initial and any ongoing training
  • Managing expectations regarding productivity loss
  • Appropriately budgeting for implementation resources, as well as the short- and long-term impacts on cash driven by reduced productivity and increased A/R
  • Potentially revising work flows/processes

Despite being given a three-year reprieve on implementation, many organizations have not made progress on their ICD-10 transition plans, and this situation is especially true in small physician practices.  To that end, preparing for the change to ICD-10 now is essential for creating a smooth transition.   

Benjamin C. Colton is a senior manager, ECG Management Consultants, Inc., Seattle.

Jason D. Meaux is a manager, ECG Management Consultants, Inc., Seattle.

Reprinted with permission from Health Administration Press, Chicago, IL, 2013, The New Hospital-Physician Enterprise: Meeting the Challenges of Value-Based Care.

Publication Date: Wednesday, October 02, 2013