Philip L. Ronning

At a Glance

 As the Oct. 1, 2013, ICD-10 compliance date approaches, hospitals should be taking five key action steps:  

  • Establish a project management team.  
  • Create an implementation plan.  
  • Produce and project a timeline.  
  • Prepare a gap analysis for each department or system.  
  • Calculate and prepare for impact on the revenue cycle.

The growing numbers of laws and regulations that have been promulgated in recent years appear to require healthcare finance executives to have the skill and stamina of mountaineers. The mandate to convert from ICD-9 to ICD-10 by Oct. 1, 2013, might be viewed by some as an unnecessary administrative and billing requirement benefiting only the government and therefore not a top priority for hospital executives. In reality, this conversion should be seen not simply as an obligation but rather as an opportunity-an important and welcomed undertaking generating both commitment and enthusiasm.

Why Change?

The conversion to ICD-10 is driven largely by the inadequacies of the code set to accommodate nearly 40 years of scientific progress and technological innovation. Because the numeric structural logic limits of ICD-9 prevent a simple expansion, a new alphanumeric framework was needed. ICD-10 allows for concisely coding the many disease distinctions that have been classified and the new procedures and techniques that have developed since 1975.

The ICD-9 code set has 13,000 diagnosis codes compared with more than 68,000 such codes in ICD-10-CM and more than 87,000 procedure codes in ICD-10-PCS. Although most of these codes will not be routinely used by most providers, codes are now available for accurately coding such things as West Nile Virus and laparoscopic procedures, neither of which are accommodated properly in ICD-9 nomenclature and conventions.

Benefits of ICD-10

The adoption of ICD-10 brings important society-level benefits, including epidemiological enhancements in the tracking and trending of diseases, particularly in biosurveillance or the ability to identify nationally and internationally indications of potential epidemics of communicable diseases, whether occurring naturally or the result of bioterrorism. The use of international conventions allows comparisons of data to track incidence and spread of disease and the effectiveness of treatments. These epidemiological initiatives are of increasing importance to the local, regional, national, and global communities. Although the costs of conversion will vary widely, the hard costs of the migration process are generally estimated to have a payback period of two years. Yet many indirect benefits, both business and clinical, exist that can offset this effort.

The migration from ICD-9 to ICD-10 will bring the following advantages to the provider community as well.

Support accurate coding and reduce coding errors. An ongoing improvement effort is reducing coding errors and increasing accuracy. ICD-10 holds the prospect for significant improvement.

Capture advancements in new technology. The principal shortcoming of ICD-9 has been its increasing inability to provide codes for new technology. ICD-10 accommodates both implemented new technologies and provides for easy additions in the future for new developments.

Translate precisely admissions into proper diagnosis-related groups (DRGs). The specificity of ICD-10 promises improved accuracy in grouping diagnoses and procedures into the proper Medicare severity-adjusted DRG (MS-DRG).

Offer payment design and contracting innovation. With improved specificity in coding will come innovations in how payment and claims processing systems are designed and managed. This benefit should remove much of the administrative negotiating in claims management and contract negotiation.

Improve resource utilization management. Reducing utilization will be an ongoing focus in the future. Better information on the conditions surrounding the relationship between diagnosis and procedure(s) will provide the basis for more effective utilization management initiatives.

Facilitate implementation and functionality of the lectronic health record (EHR). Expanded codes make digitizing medical records easier. Converting to ICD-10 before EHR development is generally considered to be easier and less costly than doing so after EHR implementation because many EHR systems will likely not support ICD-9. Therefore, healthcare organizations would not benefit from waiting to stage ICD-10 between EHR implementation and the ICD-10 compliance deadline.

Enhance quality and population health reporting, management, and improvement. Anticipation is building around improved quality reporting and management. Among the benefits promised is an increased ability to measure and monitor the effects of hospital care on population health measured longitudinally. Improved information about the population derived from ICD-10 databases will allow a much greater degree of actuarial accuracy in predicting morbidity in a population.

Employ effective accountable care positioning, including value-based purchasing, bundling, and global pricing. The sophistication inherent in ICD-10 will improve providers' ability to demonstrate and offer value in the accountable care environment, particularly given its expected applications in population health measurement and management.

Reduce ambiguities in all aspects of patient-provider interactions. The larger the dictionary, the more accurate the description. ICD-10 will offer a much larger dictionary of codes to allow a reduction in the code-based descriptions of both diagnoses and procedures. More available codes will make it easier to find the correct code.

Protect against fraud and abuse. Because the Centers for Medicare & Medicaid Services (CMS) has identified ICD-10 as a tool for detecting fraud and abuse, hospitals and health systems can use the tool to prevent and protect against fraud as the specificity of the codes eliminates much of the need for judgment, thereby reducing errors and the opportunity for miscoding and fraudulent upcoding.

What Healthcare Finance Executives Need to Know

Finance executives in hospitals should have a clear understanding of what the transition to ICD-10 means for them.

Hospitals' implementation efforts should be under way. Because ICD-10 is much more complex and far-reaching than ICD-9, healthcare organizations should have begun their implementation activities by now. Despite widespread calls for an implementation delay until 2016, CMS has made it clear that another extension will not be granted, and the Health Insurance Portability and Accountability Act (HIPAA) has mandated that claims include current valid codes at the time of discharge for all services provided on or after Oct. 1, 2013, using ICD-10-CM. It is likely that entities not covered by HIPAA will also migrate to ICD-10 because providers will no longer file claims with ICD-9. The code set will continue to evolve but will be frozen for a period of time approaching the implementation date.

Hospitals should look to gain value now; opportunity declines over time. Within the obligation to migrate to ICD-10 can be found opportunities. These opportunities-such as coding improvements, quality
measurement, and fraud and abuse prevention-can make participation in the process more appealing. The ICD-10 migration project is not a task to be delegated to the IT department, nor is it the principal domain of the CFO. This project requires high-level leadership from across the organization.

This is not a system upgrade; it is an organizational change initiative. Although the conversion to ICD-10 can be seen as a simple coding upgrade, it is far more. The migration process will affect virtually every aspect of the organization. Because such change is normally resisted, the project undertaken is best based upon the principles of large-scale change and will require the support of senior management throughout the process.

Hospitals' success lies in large part in the hands of others. Converting to ICD-10 will require many vendors, associated providers, payers, and trading partners to convert their systems for or with hospitals. Many hospitals will be unable to proceed without successful performance of conversion efforts of others first. These other parties will have to convert systems for many other organizations on the same timeline, which can result in backlogs and bottlenecks.

Crosswalking is a key capability. Crosswalking, or the mapping of ICD-9 to ICD-10 and ICD-10 to ICD-9 code translations, is an essential skill for both implementation planning and remediation efforts after Oct. 1, 2013, when both coding systems will be required to support the reconciliation efforts of old claims. General Equivalence Mappings (GEMs) were created by 3M Healthcare Information to serve the short-term and limited purpose of migrating systems (see . A GEM is a bi-directional translation dictionary to help understand or analyze the conversion process and to convert databases, such as payment systems, coverage edits, quality measures, and risk-adjustment logic. "Applied maps" can be developed for specific purposes, such as analyzing how the conversion to ICD-10 will affect certain key MS-DRG payments. The 3M Healthcare Information analysis found the impact would vary but would be slight, with overall hospital payments increasing 0.05 percent using the ICD-10 version of MS-DRGs.

Five Key Action Steps

Many providers have begun the migration to ICD-10 in earnest, but others have not. With only 14 months until the compliance date, hospital CFOs and other finance executives should be taking the following steps now to prepare for the ICD-10 conversion.

Establish a project management team. The ICD-10 migration project is a long-term, complex, multiphase process. A cross-functional team or migration task force should be established by and under the direction of both senior financial and IT management. The task force should include representatives of finance, revenue cycle, IT, coding, medical staff office, major physician groups, and compliance.

Create an implementation plan. A detailed implementation plan prepared by the task force is needed to guide the progress, including subordinate schedules, resource requirements, and budgets by function or system with team member responsibility specifically designated. An agreed-upon initial assessment form should be developed for the creation of this plan. Senior management should review the appropriateness of budget allocations and resource requirements.

Produce and project a timeline. A master project timeline in the form of a Gantt Chart overseen by the task force integrating the plans from each department or function is then developed with critical paths identified, particularly for key vendors upon whom timely conversion depends. In other countries where the conversion has already taken place, the staff learning curve has been six months. Training should not commence in earnest before early 2013 to ensure staff will not forget what they have learned by the time they have to use ICD-10, thereby requiring retraining. Physician training for nonclinical activities can be problematic. This is particularly true for nonemployed physicians over whom the hospital has less authority. Generally, physician leaders and physician champions are helpful in encouraging timely participation.

Prepare a gap analysis for each department or system. Because successful implementation depends on many individual components, departments should be reporting regularly on their progress and the progress of their trading partners. The task force will prepare and manage an analysis of the gaps between current state and full ICD-10 readiness, and monitor the plan to fill the gaps. Problem areas can be identified, and the resources of the group or outside expertise can be called upon the fill those gaps.

Calculate and prepare for impact on the revenue cycle. Although there are multiple reasons for and benefits from this conversion, the financial impact can be significant. The task force should assess the potential impact the conversion may have on revenue by payer or contract. Consider potential risks from:

  • Claim rejection and denial
  • Authorization delays
  • Improper claims payment
  • Coding backlog
  • Key MS-DRG shifts
  • Case mix index changes

Although the migration to ICD-10 is an obligation at one level, it should be seen as a crucial step in advancing the architecture and language unifying the efforts of providers, payers, suppliers, and manufacturers to improve population health.

Philip L. Ronning is principal, Ronning Healthcare Solutions, Portland, Ore., and a member of HFMA's Oregon Chapter (


Getting Your Revenue Cycle Ready for ICD-10  

In preparation for ICD-10, a high-performing revenue cycle is critical. The changes to process that ICD-10 requires will be difficult to enact if current revenue cycle processes are not efficient and effective. HFMA's MAP initiative can be useful in achieving the high-performing revenue cycle that is a solid foundation for ICD-10 implementation.

MAP Keys (key performance indicators) related to revenue integrity can help monitor the effectiveness of coding and associated activities. The web-based MAP App can help track performance related to key indicators, compare performance with relevant peer groups, and access successful practices from high-performing organizations, many of which have received the annual MAP Award for revenue cycle excellence.

Finally, the MAP Event in Miami, Oct. 26-28, will feature lessons from numerous MAP Award-winning hospitals that can help with getting your revenue cycle ready for ICD-10. Get information about the MAP initiative at

Publication Date: Monday, August 01, 2011

Login Required

If you are an existing member, please log in below. Username and password are required.



Forgot User Name?
Forgot Password?

If you are not an HFMA member and would like to access portions of our content for 30 days, please fill out the following.

First Name:

Last Name:


   Become an HFMA member instead