Health Information Management

What will the ICD-10 transition really cost?

HIM-HIPAA Insider, December 8, 2014

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In its November issue, the Journal of AHIMA published an article citing significantly lower costs for physician practices to transition to ICD-10 than the numbers supplied by Nachimson Advisors in a 2014 updated report (Nachimson published the first report at the request of the AMA in 2008).

We’re not talking about a small difference in cost estimates. Nachimson estimated small physician practices will spend $56,639-$226,105 on ICD-10 implementation. Analysts from 3M put the figure at $1,960-$5,900, according to the AHIMA article. Somebody’s numbers are way off.
Nachimson rebutted the AHIMA numbers, saying the study used to come up with the lower estimate is flawed and fails to account for some critical steps in ICD-10 planning and transition.
So who’s right? Probably neither. The real numbers will likely fall somewhere in between and could vary widely by practice. For example, a practice that already has a robust (or at least well-implemented) electronic medical record (EMR) will likely spend less time and money updating the system for ICD-10. The vendor should provide the software changes as part of the regular software updates.
However, if a practice (or any other healthcare provider) does not have a good EMR in place that providers and coders are comfortable using, that organization will probably spend more time and money training on the software.
How much training is enough? Is it sufficient to just look at specialty specific codes? Probably not. The AHIMA article seemed to lowball the time needed for training coders. Physicians only need a few hours total to get up to speed on the concepts new to ICD-10.
What we can’t afford is another ICD-10 delay. The AMA is continuing its quest to kill ICD-10 outright, while the Texas Medical Association and the Medical Society of the State of New York, among others, are lobbying for at least another two-year delay.
What would a two-year delay cost? Based on previous CMS estimates, between $2 billion and $13 billion. Who has that kind of money (other than Warren Buffett and Bill Gates)?
The medical associations claim the transition will cost $1.64 billion over 15 years, with 43% due to IT systems upgrades. They claim that physicians will bear the largest portion of the costs: $356 million for training and $571 million for expected productivity losses.
Those numbers sound scary until you stop and think about them. For physician practices, that works out to $934.8 million over 15 years, which equates to $62.3 million a year. Now, spread that out among the roughly 230,000 physician practices in the United States and that works out to $271 a year per practice (if my math is correct).
Now look at the $2 billion for a two-year delay. If we use the medical association’s claim that physicians will foot 57% of the costs, physician practices are looking at $570,000 in additional costs each year. That’s $2,478 per practice each year. That’s almost 10 times the cost if we implement ICD-10 in 2015 (if my math and logic hold). Plus we would still have those training costs and productivity declines to deal with.
Training is absolutely essential. If you don’t know how to code in ICD-10, you’re not getting paid, period, end of argument. However, physicians themselves will not be putting in endless hours of training. They will be spending more time documenting information so coders can report the most specific, applicable codes. But I would argue that they need to improve documentation now. Clinical documentation improvement wouldn’t be such a growing field if physicians documented all of the information they need to document now.
We know productivity will decline, we just don’t know by how much. Almost all of the information about productivity declines centers on ICD-10-CM. No one else uses ICD-10-PCS. I think we’re going to see a big drop in productivity in the short-term just because no one is familiar with using PCS in the real world.
How do we counter the AMA and physician practices (and everyone else dragging their feet)? Play up the benefits. Yes, ICD-10-CM includes 68,000 codes. But those codes provide physicians with a lot more information about the patient’s health. Say a patient broke his leg. In ICD-9-CM, we can tell if the fracture was open or closed and which part of the bone was broken. In ICD-10-CM, we’ll also know which leg and whether the patient is receiving active treatment, routine follow-up care, or suffering from a late effect.
Researchers will be able to abstract more meaningful data and see what kinds of diseases or injuries are becoming more or less prevalent in the population. Right now, we can’t use coded data to track the number of patients in the U.S. with Ebola.
ICD-10-PCS is absolutely more complicated than ICD-9-CM Volume 3. And that’s a good thing. Right now, in ICD-9-CM Volume 3, we have one code for a closure of the skin and subcutaneous tissue of other sites (86.59). That doesn’t really tell you much.
In ICD-10-PCS, we’ll be able to specify where that closure was:
  • Scalp
  • Face
  • Anterior neck
  • Posterior neck
  • Chest
  • Back
  • Abdomen
  • Buttock
  • Perineum
  • Pelvic region
  • Right upper arm
  • Left upper arm
  • Right lower arm
  • Left lower arm
  • Right hand
  • Left hand
  • Right upper leg
  • Left upper leg
  • Right lower leg
  • Left lower leg
  • Right foot
  • Left foot
More details? Absolutely. More work for the physicians? I hope not. They should already be documenting where they are performing a closure (especially if they want to get paid for their professional services). And, oh by the way, physicians will still be billing CPT® codes for procedures. Why do they even care that PCS is more complicated?
The physician organizations argue that the U.S. is the only country to tie coding to reimbursement. We’re also the last major industrialized country to keep limping along on the 30-year-old ICD-9 system. Yes, some physician practices will likely fold after ICD-10 implementation because either they aren’t ready or their payers aren’t ready.
If physician practices don’t prepare, they have only themselves to blame. Their readiness is completely under their control. ICD-10 isn’t a surprise. We were supposed to be using it in 2012. You’ve already had two extra years to get ready and you’re entering the third bonus year. What are you waiting for?
If it’s the payer’s fault, shame on them. You can (and should) find out know where your payers stand on ICD-10 readiness. And for the love of the Flying Spaghetti Monster, TEST your systems! Repeatedly. With every payer you can. (CMS is offering multiple testing weeks, so sign up.) Getting the codes right does you no good if you can’t submit a claim or your payer can’t process it correctly.
If the physician groups want to lobby Congress, then so should the organizations that want ICD-10. Organizations and practices have already spent billions preparing for ICD-10. Let’s not waste more time and money.
This article originally appeared on HCPro’s ICD-10 Trainer blog.

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