ICD-10 Conversion: Do Or Die

That's not to suggest that larger healthcare groups aren't feeling the pain. "Most large provider and payer organizations have an ICD-10 project budget of $50 million to $100 million, which is interesting because the ICD-10 final rule estimated the cost as 0.03% of revenue," said John Halamka, CIO at Beth Israel Deaconess Medical Center in Boston. "For BIDMC, that would be about $450,000. Our project budget estimates are about 10 times that," he said in a recent blog posting.

"Most small to medium healthcare organizations are desperate. They are consumed with meaningful use, 5010, e-prescribing, healthcare reform, and compliance," he said. "They have no bandwidth or resources to execute a massive ICD-10 project over the next two years," Halamka wrote.

Adding insult to injury, during the crossover to ICD-10 organizations need to support dual coding of both ICD-9 and ICD-10, which can also require more attention and resources. For instance, while a provider may be ready to send ICD-10 compliant claims, some payers may not be ready to process them.

As for costs for doctor practices and other clinical providers transitioning to ICD-10, that varies depending upon the size of a healthcare organization, said Mahan. The costs include implementation, training staff, operations, and coding.

A 2008 study conducted for the Medical Group Management Association indicated that it would cost a typical 10-doctor practice about $285,000 to convert to ICD-10. The software cost associated with the transition would be only $15,000, according to the study. The big costs would come from increases in claims queries, reductions in cash flow, and, most of all, increased documentation time.

Meanwhile, it's important for healthcare organizations to remember that the key milestone that organizations must accomplish prior to ICD-10 is the IT infrastructure upgrade needed to support the extended codes--specifically the need to upgrade electronic data transaction standards to comply with HIPAA 5010. The 5010 standards provide the capability for the larger ICD-10 code sets to be electronically sent. "5010 is the first critical juncture," Mahan said.

Is The Timetable Reasonable?

Healthcare organizations have gotten a bit more time for achieving the 5010 transition. The 5010 mandate's deadline was recently extended from Jan. 1, 2012 to late March 2012. Once that March deadline comes and goes, CMS will require that all electronic claims use the Version 5010 standards. Version 4010 claims will no longer be accepted for payment.

In the meantime, some groups, including the American Medical Association, have been pushing the federal government to delay the ICD-10 deadline. But while procrastination might help some organizations, delaying ICD-10 now could cause more hassles for others.

"Large healthcare organizations have already been working hard on ICD-10, so they have sunk costs and a fixed run rate for their project management office," said Halamka. "At this point, any extension of the deadline would cost them more."

In any case, even procrastinators should take heart. "It's never too late to start," Mahan said. Nonetheless, "if you don't make the ICD-10 compliance deadline come October 2013, it won't be good."

Marianne Kolbasuk McGee is a senior writer for InformationWeek.

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