January 22, 2013

The Invisible Hand and ICD-10

By

Those of you who, like me, majored in the “dismal science” (also known as economics) will remember Adam Smith as the first modern economist. His classic work was The Wealth of Nations, in which he immortalized the concept of the invisible hand to describe the self-regulating behavior of the market:

“As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value… led by an invisible hand to promote an end which was no part of his intention… By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.”

In other words, Smith writes that by pursuing what is best for the individual (and, by extension, a payer or provider), the market (the invisible hand) creates a greater benefit for society. Another way to think of this is the concept of enlightened self-interest, and that’s where our industry’s behavior relative to ICD-10 comes into play.

In one of my prior articles, I used the phrase from the movie Jerry Maguire “Help me help you” to show how to gain better cooperation in assessing ICD-10 readiness. That is an example of enlightened self-interest. For example, forward-thinking payers want to make sure their providers are going to be ready for ICD-10. It is in their interest to do so because they know that this will make the transaction testing run better (and save money) as well as reducing resubmissions, call center volume, and so forth, post the conversion date (also saving money).

There is another school of thought. To use another movie analogy, consider the movie The Fugitive. When the Harrison Ford character says, “I didn’t kill my wife,” the marshal, played by Tommy Lee Jones, replies, “I don’t care.” Substitute “I’m not ready for ICD-10” and many organizations will reply “I don’t care.” Their logic is that it is the provider’s responsibility to be ready and they must deal with the consequences of a rejected claim, etc.

The problem is that if all large organizations take that approach, the post-cutover environment will be very costly for them. I can image lots of claims rejections resulting in significant rework for both provider and payer, with the likelihood of a massive increase in calls from the providers. There is a cost to that, and many large health plans have concluded that an ounce of prevention is better than that pound of cure.

Notice that I did not single out payers. I used the term “large organizations” because there is a similar self-interest at work for providers. Payers will not be able to do testing with their entire provider network. It is prudent for them to focus on their largest submitters and the specialties with the most complex and costly codes. Many payer outreach efforts focus on assessing the readiness of their providers and gathering the data necessary to prioritize testing resources. In turn, it is in the self-interest of a hospital to do similar outreach to its affiliated physicians. Forward-thinking hospitals realize they need their docs to get the right information into the chart, and that it is nobody’s interest to have claims miscoded or reworked. It is not in the hospital’s interest to have its affiliated physicians’ productivity plummet because they are not ready for ICD-10 and are in a cash-flow crisis because of rejected claims. That’s enlightened self-interest and the invisible hand at work.

About the Author

Hugh Kelly is the
 vice president of marketing and sales for Avior Computing. 

Mr. Kelly has more than 20 years in the software and technology business at organizations ranging from start-ups to publicly traded companies. Mr. Kelly has been involved in all aspects of marketing and sales, with considerable focus on channel development.  During his executive tenure, his organizations have raised over $200M in external capital.  He is a venture partner at Ascent Ventures.

Contact the Author

To comment on this article please go to

Read 20 times Updated on September 23, 2013