ICD-10 and the Financial Impact
Industry experts suggest the ICD-10 conversion will be more time-consuming, costly, and complicated than the preparation for Y2K. Some studies indicate the cost of transitioning to ICD-10 for a hospital can be between $1 million and $5 million, and for a large healthcare system, it could amount to over $5 million.
During the transition, you may see added expenses in IT, document design and print, training and education, and claim processing, to name a few.
Personnel and Software Costs
It is imperative that software vendors, such as claim clearinghouses, eligibility verification, and medical necessity validation programs are ready for ICD-10. This will require your organization, software vendors, and third party payers to work together to prepare for ICD-10, and may result in additional personnel and software costs.
Training and Education Budget
Since this is such a significant change, many individuals will need ICD-10-specific education. Staff must train on all new procedure and software applications, too. As part of your organization-wide implementation planning and budgeting, identify the required training for each role along with the associated costs.
Staff Overtime Expense
As with any major initiative, individuals will be “wearing many hats” to help prepare for ICD-10, and this may result in an increase in overtime expenses. For example, overtime hours may be required to ensure staff can complete the required training. In addition, staff may need to work overtime to fill in for employees that are working on specific implementation projects, attending training sessions, and/or participating in ICD-10 meetings. Overtime expenses will most likely be higher than the current level prior to October 1, 2013.
Claims Processing and Denials Management
Ensuring current claims are submitted and paid in a timely matter is especially important as we near October 1, 2013. Many industry experts are recommending organizations reduce their accounts receivable levels prior to ICD-10. This is because post-implementation claim processing time and denials—such as medical necessity denials—may initially increase due to provider or payer issues. Regretfully, this may have a negative effect on cash flow and the cash reserves your practice or organization has to pay its bills.
What are ways you can help minimize any potential negative financial outcomes and begin to proactively help during your organization’s transition to ICD-10?