May 27, 2014

ICD-10: Implementation Delays and their Effect on Healthcare Cost

Late February at HIMSS 2014, CMS administrator Marilyn Tavenner was adamant that there would be no more delays with the implementation of International Classification of Diseases-10th (ICD-10). This statement reassured hospital administrators to sign ICD-10 agreements and aim the ships full steam ahead. However as we all now know, on April 1st, the implementation of ICD-10 which was scheduled for October 1st 2014, has been delayed for at least another year when President Obama signed the Protecting Access to Medicare Act of 2014. This is not the first time the implementation of ICD-10 has been delayed (the fourth deadline to be exact!!). Each year ICD-10 is delayed, a significant amount of money is lost by the healthcare industry. ICD-10 is essentially the infrastructure needed to create new payment schemes. In fact, it was predicted that over a course of 10 years, implementation of ICD-10 would result in the healthcare industry gaining $700 million to $7.7 billion in cost savings [1].

The ICD-9 code has been in use for more than 30 years and is now considered outdated for today’s treatment, reporting, and billing. As there are more than 140,000 very specific ICD-10 codes, this delay may have spared doctors a headache but others in the healthcare community are “frustrated”. What financial implications will the delay have for the healthcare sector in general? As coding affects billing, the delay of ICD-10 will affect every aspect of a health care organization.

Case-mix index (CMI) of a hospital tells us how sick the hospitalized patients are and what types of surgeries are being performed. To determine a patient’s CMI, it is important to document all co-morbidities and interventions as detailed as possible. Why is this crucial? Because CMI determines the amount of money the hospital receives to treat patients. The higher the CMI value, the more money the hospital receives for patient care. A drop of 0.1 in a hospital’s CMI value could mean a loss of at least $4500 per patient! How is this relevant to ICD-10? Well, with 71,924 codes for procedure and 69,823 codes for diagnosis, ICD-10 is far more detailed than ICD-9 (which only has 3, 824 codes for procedure and 14,025 codes for diagnosis). Thus, patients are likely to be under-coded with ICD-9, resulting in significant loss of hospital revenue.

Providers had to overcome a great many hurdles associated with ICD-10 implementation. For example they had to deal with costs incurred from overhauling their IT departments and training regimens for coders and code users. Many hospitals in fact had spent time and money capturing patient information in both code sets and double-checking the accuracy of ICD-10 through audits. Now they are faced with additional costs to either maintain transition from ICD-9 to ICD-10 or to stop the transition process and restart the process closer to the new implementation date. These costs are not likely to be reimbursed as they are deemed as operating costs. Moreover, physicians need to be prepared for the transition as well. Changing the way physicians document is not going to be an overnight process. This takes time, which translates into time being spent not seeing patients and loss of revenue potentials.

The delay is not only affecting healthcare providers but also healthcare educators and students of coding and health information management programs. At some institutes, both ICD-9 and ICD-10 are being taught to students and the plan is to continue this till ICD-10 has been implemented. However, dual coding education is cumbersome and unfair to students who already have the challenge of mastering one set of codes. According to American Health Information Management Association (AHIMA), there are at least 25,000 students who have learned to code exclusively in ICD-10 and this delay has greatly affected their job prospects.

To top things off, there is a possibility that ICD-10 might never be implemented, and that the government might choose instead to adopt ICD-11. The proposed date of release for ICD-11 is in 2017. If this were to happen, providers who have already invested heavily into the implementation of ICD-10 would be required to go through another possibly long-drawn-out implementation process.

[1] “The Costs and Benefits of Moving to the ICD-10 Code Sets,” RAND Corporation. March 2004, p.38, http://www.rand.org/content/dam/rand/pubs/technical_reports/2004/RAND_TR132.pdf

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