Updated on: February 17, 2016

Detecting Early Warning Signs on Your ICD-10 Project

By Paresh K. Shah
Original story posted on: August 23, 2013

Transitioning from ICD-9 to ICD-10 will involve many hurdles for healthcare organizations, with issues including:

 

 

  • Interruption of the hospital revenue stream
  • Lack of clarity across ICD-10 project portfolios
  • Cost overruns
  • Schedule slippage
  • Inadequate resources
  • Cash flow
  • Increased operating costs

The current time period, combined with the Centers for Medicare & Medicaid Services (CMS) decision not to change the compliance date, is forcing many organizations to focus more intently and/or spend money on their ICD-10 projects of late.

However, before devoting additional expenditures to this, now is the time to take the pulse of your ICD-10 project to determine where you stand – and, more importantly, when the project will be completed  and what the projected costs are. For company leadership and the CFO, it is a challenge worth tackling, because successfully implementing ICD-10 prior to the compliance date can enhance your entire organization’s fiscal stability and economic outcomes.

Taking the Pulse: Project Management Techniques

Many organizations take the pulse of their ICD-10 projects by analyzing the plan deliverables and due dates, then scrutinizing the costs and expenses for each deliverable. However, the deliverable-based approach does not fully reveal the true state of the ICD-10 program in terms of progress and projections  for the schedule, scope and budget. It also does not indicate the full costs and effort required to implement remaining deliverables, nor does it capture the scheduling and cost implications.

To analyze an ICD-10 program (or any program, for that matter) and get a more accurate picture of the current state of affairs, and to detect any early warning signs, earned value management (EVM) is applicable to ICD-10. The ICD-10 program is a complex mix of multiple projects (planning, assessment, testing, communication, etc.), and each and every subproject needs to analyzed in terms of scope, schedule and budget in terms of progress to date and the cost projection.

So, what is EVM? In simple terms, it is defined as “what we are getting for what we are spending?” In practice, it is a way of measuring the work done on a program against the value associated with the deliverables associated with that program by combining the key factors of:E

  • Scope
  • Schedule
  • Cost

These should have been defined during the program design phase (in this case, the ICD-10 scope and impact analysis phase).

Also, consider the additional factors of:

  • Projected value: the budgeted cost of work scheduled
  • Earned value: the budgeted cost of work performed

Applying EVM on an exsting ICD-10 Program

To illustrate how this could be done for an existing ICD-10 program, consider the following example:

Background: An acute-care hospital with 200-plus beds and an ICD-10 budget of $3 million.

Quarter

Actual Cost USD $

Budget to Date USD $

 

January-March 2013

$ 200,000

$ 200,000

April-June 2013

$ 650,000

$ 850,000

Standard project management deliverables would show the planned expenditure ($850,000) in direct relation to the actual expenditure ($850,000). Although this does show how much of the budget was spent on the project to date, it does not indicate the true program progress, nor does it demonstrate how much physical work has been accomplished. So the result is that there is no measure of how effective the spending has been or what is remaining to be done on the project to realize the expected value.

Utilizing the standard project plan from CMS, issued at the end of the second quarter, and applying a criteria from EVM (earned value, or the measure of work performed at the budgeted amounts) shows the following:

Tasks

Plan at end of second quarter

Actual Status at end of second quarter

Budget

Planning

Completed

90 percent done

$ 550,000

Communications

15 percent done

10 percent done

$ 150,000

Testing

10 percent done

Not started

$1.7 million + $600,000 (training)

Determining earned value gives an EVM of $510,000, meaning we spent $850,000 to achieve work related to about $500,000. This constitutes an early warning that the project is having problems in terms of cost and schedule.

This could be due to the following factors:

  • Project under budget
  • Poor technical performance from the project team
  • Scope creep

 

Why do you need to follow Earned Value on ICD-10?

 

Employing EVM is not difficult as it pertains to the ICD-10 program; it’s challenging, yes, but it is not rocket science. If we follow a few base EVM criteria (there are 32 criteria in all), we can achieve our goal: implementing ICD-10 successfully by detecting early warning signs and making corrections and adjustments accordingly.

 


 

The few basic elements required for our ICD-10 project (call it EVM light, or simple EVM) are:

  • Who: Who will be performing the work? Will this be done in-house or outsourced?
  • What: What is the full scope of the project? What defines 10 percent completion? 25 percent completion?
  • When: The implementation date is Oct. 1, 2014..How will you plan and schedule the work that needs to be done by then?
  • How: How much is the budget, in real terms?
  • Why: Why do you feel it is important to monitor the performance of the plan?

Having gone over the above few elements will help us determine the following:

  • What tasks have been completed?
  • How long has it taken to complete the work?
  • How much have we spent to complete the tasks reported as finished?
  • At this pace, when will the project be completed?
  • What will be the total cost at completion?

After identifying any early warning signal, “immediately” would be the time to act – because if you react in mid-2014, you will have limited options.

The Next Step

All early warnings need to be determined at the subproject level and then rolled up to offer a full view of the entire ICD-10 program. The ICD-10 project manager and staff need to focus on the findings and fixing problems. They can see where the problems are, plus track risks and dependencies. This will help in providing constant feedback to your organization.

There are tools available for complete ICD-10 compliance management. These tools can assist you with a range of initiatives, from program management to assessment management to remediation. But the earned value can be customized at each level to offer a comprehensive look at the overall ICD-10 program.

In Conclusion

Identifying an early warning on an ICD-10 project will indicate that the project will require additional budgeting and/or the project scope will need to be redefined and/or resources will need to be adjusted.

It is a common project management technique that whereas we spend 10 percent of the time developing the plan, we spend the remaining 90 percent of the time doing the actual work. But to be successful and to reap the rewards of compliance, we need to spend up to 40 percent of the time developing the plan and the remaining 60 percent doing the work. By allocating more time and resources in developing the plan, it will ensure that the plan is complete and thoughtful – and the result will be less time required to implement ICD-10.

Earned value in conjunction with effective program management can help deliver better performance in meeting ICD-10 compliance.

About the Author

Paresh K. Shah is a president of MindLeaf Technologies, Inc., a healthcare compliance company based in Bedford, Mass.

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Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.