Updated on: September 23, 2013

Is the Industry Tightening the ICD-10 Noose on Itself?

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Original story posted on: May 25, 2012

When the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would delay the ICD-10 compliance date by one year, until Oct. 1, 2014, did the industry collectively let out a sigh of relief, or did it let out a sigh of distress?

CMS considers a one-year delay a “reasonable compromise” between the incremental costs a delay imposes on hospitals already on track to achieve compliance in 2013 and the additional time that many small hospitals and provider groups need to become compliant.

According to a recent survey conducted by CMS, up to one-quarter of healthcare providers believed they would not be ready for the Oct. 1, 2013 compliance date. While the survey found no significant differences among practice settings regarding the likelihood of achieving compliance before the deadline, based on recent industry feedback it is believed that larger health plans and providers generally are more prepared than smaller entities.

Cost of the delay

In terms of costs, CMS concluded that commercial health plans, medium-sized and large hospitals, and large physician practices are far along in their ICD-10 implementation planning, having devoted funds, resources and staff to the effort. CMS also estimated that a one-year delay of the ICD-10 compliance date would add 10 to 30 percent to the total cost these entities already have spent or budgeted for the transition. However, CMS believes savings would come from the avoidance of costs that would be incurred as a consequence of significant numbers of providers being unprepared for the transition to ICD-10. In the Regulatory Impact Analysis (RIA) of the proposed rule, CMS estimated a cost avoidance of approximately $3.6 billion to nearly $8 billion in this regard. However, the one-year delay is projected to add an additional cost to commercial entities of approximately $1 billion to $6.4 billion.

Back to the Future

Will the one-year delay have the desired result of risk mitigation and cost avoidance? I think that factoring in certain assumptions, and considering the industry experience with the conversion to 5010, more questions have arisen than were answered by the proposed delay. For example:

  • Will commercial health plans, medium and large hospitals, and large physician practices still have devoted funds, resources and staff committed to this effort?
  • Will these entities have the aforementioned estimated 10 to 30 percent additional funds to allocate?
  • Will the smaller entities, which the industry acknowledges have a bigger challenge than larger organizations, be able to have the necessary resources, staff and funds committed to this effort, even with a one-year delay?
  • Will these entities have fewer industry challenges and demands with a one-year delay, considering that we also are moving toward other initiatives such as ACOs, value-based purchasing, MU, population health management, etc.?
  • Will a one-year delay truly mitigate the consequences of being unprepared for the ICD-10 conversion in 2013?
  • Will entities continue moving forward with ICD-10 conversion preparation according to the collective voice of the industry experts, or will competing and conflicting priorities result in lost momentum?

The most important question is this: will the industry be in a better position with a one-year extension, or will it have a negative impact? Only time will tell, and we know we most likely have another year to determine this.

About the Author

John Pitsikoulis, RHIA, is a Strategic Advisory Services Client Executive and ICD-10 Practice leader at CTG Health Solutions (CTGHS). John is responsible for the strategic advisory services such as ICD-10, EMR clinical documentation integration program, and Computer Assisted Documentation Services. John has over 25 years of Health Information Management (HIM), coding, and compliance consulting experience working with clients on ICD-10 services, RAC, coding, and clinical documentation improvement engagements.

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Article citation

1 "Version 5010 and ICD-10 Readiness Assessment: Conducted among health Care providers, payers and Vendors for CMS, December 2011

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.

John Pitsikoulis, RHIA, is the ICD-10 practice leader and an AHIMA ICD-10-Approved Trainer for Nuance Communications. John has more than 28 years of revenue cycle, health information management, coding, and compliance consulting experience. John has developed and led several corporate and client strategic engagements for managing the conversion to ICD-10, including ICD-10 assessments, implementation planning, integrated testing, education plan management and revenue preservation strategies.