How Physicians Can Financially Prepare for the ICD-10 Switchover Come October
With implementation of ICD-10 in October, many practices are looking at how to navigate the first few months financially. Many experts expect the first few months to have a serious impact on receivables. But there are ways to mitigate the impact of the changeover, if not eliminate it altogether.
Practices need to consider partnering up with a consultant or vendor versed in ICD-10. During the switchover, many practices will wind up using two sets of codes depending on when the patient was first seen. “It’s definitely going to be difficult,” said Marvin McLanahan, executive director of revenue cycle for Hackensack UMC Mountainside in New Jersey. “Are you ready to accommodate two versions of codes?”
Maury Regional Medical Center in Columbia, Tennessee, has a dual billing system in which they have set two different dates for ICD-10 and ICD-9, said Kirby Hedrick, patient accounts director. But McLanahan is still concerned, saying that those who will do the best during the changeover will be partnered with experts. “If you don’t have a partner now, you’re pretty much in trouble,” he said.
Be prepared to pay for extra training time
The American Academy of Orthopedic Surgeons released a study conducted by Nachimon Advisors LLC that suggests HHS underestimated the costs of switching over to ICD-10. The study estimates that a typical three-physician practice may actually spend between $56,639 and $226,105 to comply with the new mandates, while a 100-physican practice may be looking at a bill as high as $2.7 million.
With estimates of training time to be 16 hours for coding staff, 12 hours for providers and 8 hours for administrative staff, beginning the process early is vital to ensure less coding errors as the switchover begins. “ICD-10 demands significantly more specificity in diagnosing and coding, something the healthcare landscape isn't accustomed to or skilled in effecting at this time," M. Alexandra Johnson, FACHE, and a consultant at Coleman Consulting Group told Information Week. Extra time and money spent on training personnel will ensure fewer errors after implementation, meaning faster reimbursements.
Sit down with your practice’s financial institution
With the new codes being implemented, most experts are anticipating a longer wait for reimbursements. Combine that with any errors that coders may make, and a practice’s receivables can become backlogged very quickly; this means that providers need to have a plan in place to deal with the temporary financial shortfall.
"Consulting with the bank on providing such things as lines of credit and even loans for infrastructure costs is very important. Because of the code changes, it is estimated that three to six months of working capital reserves will be needed to deal with the initial problems of the switch-over," said Lisa M. Enright, senior vice president and manager of the HealthCare Practice Banking Division for RBS Citizens Financial Banking.
Enright also advises practices to be prepared when meeting with their banker. Financial institutions will need tax returns for the last three years of the practice and its principals, year-to-date interim financials, a current Accounts Receivable Aging Report and updated personal financial statements in order to complete a credit review. She also suggests that dealing with a bank or a specific representative who understands healthcare financing requirements will make the process much easier, as well as having someone that can design an industry-specific financial plan.
The first few months of ICD-10 will be stressful for doctors and support personnel alike. But with careful planning and consultation with financial experts, a practice’s receivables should soon be back on track.
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