5 Considerations for Healthcare Providers as ICD-10 Deadline Approaches
Read
On October 1, 2015, all healthcare professionals covered under the Health Insurance Portability Accountability Act (HIPAA) will be required to transition to the ICD-10 coding language. With five times more available codes than its predecessor, ICD-9, the new coding system will introduce new challenges and complexity for healthcare providers.
The updated medical classification list, provided by the World Health Organization (WHO), is termed ICD-10 for short because it is the 10th revision of the International Classification of Diseases (ICD) – a clinical cataloging system for the U.S. healthcare industry. These codes are used to track patients’ health records, including diagnoses, symptoms and procedures. In contrast to the outdated ICD-9 that provided a 3 to 5 character code list and 13,000 available codes, the new list is a 3 to 7 character code expanding to more than 68,000 available codes.
Due to the change in code complexity and increased specificity, the transition to ICD-10 may require significant training, software and system upgrades, and careful planning. Its implementation could be a financial burden for many in the healthcare industry and could lead to a sharp decrease in productivity and collections in the early stages.
The following are five areas of impact that healthcare organizations should consider.
1. Training
Healthcare providers are faced with transitioning their employees to the new ICD-10 coding system and potentially hiring new staff to assist with an increased workload. While the WHO provides online resources, such as training guides, support and study materials, adapting to the new system might take some time. In addition, insufficient training and the learning curve of bringing employees up to speed could lead to processing errors.
2. Financial planning challenges
The learning curve inherent in any new system means time and attention could be diverted away from traditional billing and collection duties. Healthcare providers who face difficulties with the conversion could see a delay in the time it takes to submit claims to their patients’ insurance providers. This could result in a longer revenue cycle and potential cash-flow crunches.
3. Recovery Audit Contractors (RAC)
Medicare and Medicaid represent the largest payer for health services in the United States. To help uncover fraudulent and abusive claims from health care providers, the U.S. Department of Health and Human Services hires Recovery Audit Contractors (RACs). These auditors have legal authority, and much like an IRS agent, they can contact healthcare providers to request lengthy lists of documentation. Many suspect that billing errors under ICD-10 could lead to inadvertent red flags in the government’s system and result in increasing RAC activity, thereby adding another layer of time and cost to adopting the new system.
4. Medical record coders
Qualified medical coders are an integral part of the healthcare industry; however, they are already in short supply. These coders go through rigorous training and screening in order to provide accurate and efficient services. With the implementation of ICD-10, there is concern that this already small labor pool will shrink even further. Businesses unable to hire adequate staff may need to rely on more expensive contract coders.
5. Security risks
Businesses depending on outsourced professionals during the ICD-10 transition may want to consider implementing a vendor management program if they don’t already have one in place. Third-party vendors could introduce information security risks if they have access to covered entities’ or business associates’ sensitive data. This is especially of concern for healthcare companies, who are subject to HIPAA and related regulations. Recovering from a data breach may be costly.
Rolling out the changes
The WHO has been testing the new system for some time. From March 2014 to June 2015, healthcare providers have submitted a total of 162,800 records of which 88% passed with acceptance. Similar pass rates are expected during initial implementation, which could lead to delayed processing and collections for the records that do not pass.
Similarly, the Centers for Medicare & Medicaid Services (CMS) completed its own ICD-10 testing of 67,000 claims over a three-week period. Although CMS did not release exact figures, they did acknowledge some errors that could lead to delays in processing claims once ICD-10 goes live.
Businesses would be well-served to consider their cash flow needs in light of the forthcoming transition and plan wisely for what lies ahead. An accounting professional can help healthcare organizations with tax planning for delayed revenue or increased expenses, analyzing cash flow crunches, and management’s evaluation of potential revenue fluctuations.
Contact me or another member of Kaufman Rossin’s entrepreneurial services team to learn more about how the ICD-10 change may affect you and your practice.
