logo Print this page
Updated on: March 14, 2016

Fast-Tracking ICD-10 Pt 4

Original story posted on: June 7, 2013

EDITOR’S NOTE: This is the fourth in a series of articles on fast-tracking ICD-10 implementation.

Over the years there have been many studies seeking to identify the cost to move to ICD-10. However, putting together a “real” ICD-10 budget can be a challenge. We have been working with our hospitals to accomplish this, and there is a great deal to consider.


Business requirements are a vital component of successful ICD-10-CM/PCS implementation, but faced with budget and resource constraints and the pressure to achieve compliance, organizations may be tempted to skip an implementation step(s) to cut costs. Yet not defining business data and system requirements at the start of implementation can result in significant costs.

Developing an ICD-10 budget is an important step after completing the impact assessment. The largest expenditures are information systems, education and training. One crucial item that should be included in the budget is the potential for reduction in cash flow post-implementation. Another issue to consider when developing the budget is the cost to rebuild templates or workflows in the electronic health record. Keep the ICD-10 budget separate from the regular budget, and make sure once the former has been developed that it is reviewed at each steering committee meeting and updated at least quarterly, as costs and budgetary items may need adjustment.

Many organizations, including hospitals, operate on a June 30 fiscal year end, meaning budgets must be completed and approved by this date. So while expediency is imperative, make sure you consider all the items in the impact assessment analysis that must be addressed.

What we know at this point is that each organization, whether large or small, will incur a major expense due to the implementation of ICD-10-CM/PCS. Having time to implement ICD-10-CM/PCS allows organizations to accurately budget their resources.

To keep it simple, I will break down a sample budget by implementation items. Keep in mind that each organization is different, and costs can be higher or lower depending on the scope of your implementation project.

The impact assessment for a moderately sized organization will cost around $75,000, and expenses could rise as high as $300,000 for a large organization for fieldwork and a report – which can take many weeks to complete.

The GAP analysis and risk assessment typically can be performed simultaneously; they take approximately 40-60 hours to complete and can run from $16,000 up to $50,000 for a large hospital system.

One of the key areas of concern in any ICD-10 budget is information systems. We all use various forms of software, including electronic health records, encoders, applications that provide images, as well as other applications that may or may not interface with the electronic health interface.

From analyzing the impact assessment, an organization should obtain information concerning costs for expanding or adding additional hardware and application software upgrades due to the implementation of the ICD-10 codes, and the fact that the healthcare industry at large will be running dual systems (ICD-9 and ICD-10) concurrently for an unknown period of time. Also consider the cost to rebuild workflows and/or templates within each system. The cost to expand systems and hardware needs to be a key item in any ICD-10 budget and could encompass a significant financial commitment.

The documentation assessment also is an important component to implementation, and it includes a review of hospital inpatient and outpatient records, as well as any employed physicians. Typically we review 75 hospital records and 10 records per employed physician. This will give us an assessment indicating where the documentation is today with ICD-9 and what documentation is lacking that will be needed for ICD-10. This will assist in building documentation training for the physicians.

A documentation assessment for 75 records of inpatient hospital services should cost approximately $45,000 for a medium-sized facility and up to $180,000 for a very large hospital system. Once you complete the documentation assessment you can develop your budget for training.

Now let’s move on to the training budget. We generally split it into four segments:

  • Awareness training
  • Documentation training
  • Fundamental training
  • In-depth CM and/or PCS training.



Everyone within an organization needs awareness training. What we have done is develop the awareness training and package it as a Webinar that organizations can put on their intranet for everyone to view. Some hospitals we work with also forward a copy of the training to each department and set up departmental meeting to review it. This should take no more than two hours. The cost for development and delivery of this form of training should be budgeted at around $5,000, which should include tests to ensure compliance.

Documentation training is designed for practitioners (physicians, NPPs, therapists, etc.) and sorted by specialty in order to outline what documentation needs to look like in ICD-10. By scrutinizing the top 25-30 diagnosis codes by specialty, this training can be developed very easily. The cost per practitioner should be budgeted around $100, and such training should last at least two to four hours.

Fundamental training should last a full day and be designed to offer basic, fundamental knowledge of ICD-10 to those who work with the codes but do not perform the in-depth, day-to-day coding. Practitioners would benefit from this training, as well as key staff members in the organization that work with codes, review reports, enter codes from orders, etc. The cost per person will run around $300 for a six-hour session.

In-depth training should be reserved for inpatient coders, outpatient, and physician coders. They will need the most intense training. The inpatient coders and even some of the outpatient hospital coders will benefit from ICD-10-CM and PCS training. This training should last at least three days, but four days is much better. We have conducted several ICD-10 training sessions for hospital coders, and the one comment they all make is that “we need more time.” We have presented our training in a four-day format, devoting two days for ICD-10-CM and two days to ICD-10-PCS. I think we are going to expand PCS training to three days, however, as the coders are asking for more information. You should budget about $700 for the two-day training sessions (CM or PCS) and approximately $1,200 for the coders who need both CM and PCS. There are numerous training options out there, including Webinars, online sessions, seminars, classroom sessions, etc., but I strongly feel that coders need the workshop or seminar format, with an instructor present to answer questions. When looking for training, seek an offering that includes code books and training manuals. The in-depth and fundamental training sessions require hands-on coding, so a code book is essential even though we don’t always use them during day-to-day operations, considering the encoders and code look-up tools currently on the market.

Don’t forget the cost to develop an action plan if you are outsourcing. It takes many hours to evaluate the impact assessment, GAP analysis and risk assessment, then come up with a reasonable action plan. Costs to develop the action plan can range from $25,000 to $50,000.

The training plan is another key element that takes time to develop. Outlining the scope of training and what type of training is beneficial is critical to ICD-10 success. Education and training is typically the first item cut from any budget, but a word of caution: for ICD-10, education and training is a critical step. A training plan can cost between $10,000 and $20,000 to develop, depending on your organization’s size and the number of staffers who need training.

Review the sample budget I have outlined below. If you decide to perform some of these tasks internally, these costs should be considered project costs and will encompass using valuable staff time as well.

A sample budget for a 200-bed hospital in an urban area:

Implementation Step

Estimated Cost

Committee Development, Assistance and Oversight  (consultant)


Impact Analysis (consulting firm)


Gap and Risk Assessment (consulting firm)


Documentation Assessment (consulting firm)




Implementation Step

Estimated Cost

Action Plan Development (consulting firm)


Budget Development (consulting firm)


Training Plan Development (consulting firm)


Awareness Training


Documentation Training

200 practitioners at $100 per practitioner = $20,000

Fundamental ICD-10 Training

34 staffers at $299 per person = $10,166

In-depth ICD-10-CM Training

24 staffers at $699 for a two-day training session, per person = $16,776

In-depth ICD-10 CM/PCS Training

30 staffers at $1,200 for a two-day training session, per person = $36,000

Action Plan Development (consulting firm)


Hardware Costs


Application Upgrades


Customization Costs and/or Workflow (Template) Rebuilding


Overtime and Staffing (Outsourced) Costs


Post-Implementation Costs


Total Estimated Budget


Keep in mind that this is just a sample budget. Your costs might be higher or lower depending on variables such as using consultants, customization, hardware and application upgrades, and the number of employed physicians and staff members who will need training. I have put together numerous budgets for hospitals large and small, as well as physician practices, to assist with planning for ICD-10. I recommend the following steps when developing the budget:

  1. Establish strategies, tasks and goals for the transition to ICD-10.
  2. Perform an in-depth impact assessment prior to development of the budget.
  3. Identify available funding for ICD-10 implementation.
  4. Select appropriate vendors by evaluating costs associated with ICD-10-related changes to your organization’s business processes and system upgrades.
  5. Compare costs with current vendors and investigate other potential vendors and costs.
  6. Coordinate with internal and external resources (including vendors and other parties) required to support implementation.
  7. Document an inventory of tasks necessary to meet the ICD-10 implementation deadline.
  8. Determine if software upgrades are included in your current contract or whether there will be additional costs. If they are not included, inquire as to what the additional costs will be.
  9. Don’t forget training on new systems if a decision is made to change or upgrade existing systems.
  10. Plan and approve a budget for expenses related to the transition, such as training and system upgrades.
  11. Obtain cost estimates for project teams, vendors, and others.
  12. Obtain costs for education and training across the organization, and include these costs in the budget.
  13. Formulate a final baseline budget.
  14. Obtain final approval from the ICD-10 steering committee.
  15. Continue to review the budget at every steering committee meeting and adjust the budget if additional costs are incurred.


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.
Deborah Grider, CPC, CPC-H, CPC-I, CPC-P, CPMA, CEMC, CCS-P, CDIP, Certified Clinical Documentation Improvement Practitioner

Deborah Grider has 35 years of industry experience and is a recognized national speaker, consultant, and American Medical Association author who has been working with ICD-10 since 1990 and is the author of Preparing for ICD-10, Making the Transition Manageable, Principles of ICD-10, the ICD-10 Workbook, Medical Record Auditor, and Coding with Modifiers for the AMA. She is a senior healthcare consultant with Karen Zupko & Associates. Deborah is also the 2017 American Health Information Management Association (AHIMA) Literacy Legacy Award recipient. She is a member of the ICD10monitor editorial board and a popular panelist on Talk Ten Tuesdays.

Latest from Deborah Grider, CPC, CPC-H, CPC-I, CPC-P, CPMA, CEMC, CCS-P, CDIP, Certified Clinical Documentation Improvement Practitioner

Copyright © 2021 | ICD10monitor.com, a division of Panacea Healthcare Solutions, Inc.
287 East 6th Street | Suite 400 | St. Paul, MN | 55101 • TOLL FREE: 800.252.1578