With The New ICD-10 Deadline Looming, Is Your Cash-Flow About To Be Disrupted?
The deadline for ICD-10 implementation has been pushed, again, to October 2015. With a collective sigh of relief, healthcare providers and other involved parties have found some reprieve from the taxing and expensive transition to the new naming and reporting nomenclature characteristic of the successor to the ICD-9 standard.
However, this sigh of relief may be short-lived as many physicians and other healthcare professionals may not have fully appreciated the full impact of the transition, especially on their cash-flow. If you are a healthcare provider or professional, it’s imperative that you understand the cost implications, both explicit and implicit, that may eventually affect your practice. In this article we’ll outline the major cost centers of the transition plus the possible negative impact the new reporting standards may have on your practice, especially with regards to your cash flow.
Systems and Software
With every major change in the healthcare sector, there follows closely a need to transition systems to the new order. This may mean upgrading systems or enacting a complete overhaul of existing systems. The shift to ICD-10 is no different. As you prepare to transition by the October deadline, one of the primary costs you will have to budget for is the transitory cost of upgrading or replacing your legacy systems.
While for many healthcare centers that use outsourced EHR software this means waiting and hoping your vendor will make the necessary upgrades, for large practices with in-house systems this is a different story. Budget must be allocated to upgrade these systems and also determine the future of legacy systems and data, their storage and maintenance. The obvious impact of not having systems that are ready for the transition is that you will not be able to shift to the new reporting protocols and this will have a knock-on effect on your receivables.
According to research findings from a Navicure third ICD-10 readiness survey, three quarter of respondents polled anticipated a slump in staff productivity of up to 40% while a tenth expected productivity losses of over 41%. This is a major concern broached by practices transitioning as they believe that besides revenue losses from other factors associated with the transition, the fact that most of their staff will be caught up in training and orientation activities will see their productivity decline and this could impact their cash flows.
This has been echoed by industry observers including Robert Tennant, a senior policy advisor at Medical Group Management Association, an Englewood, Colo.-based consultancy who says that everyone involved in billing systems will need training, from the physicians, to the coders, to those processing the transactions. This will be a major challenge to practices transitioning large staffs, as the training costs and slump in productivity could see costs skyrocket both in revenue inflows and budgetary allocations.
Revenue Integrity and Payer Readiness
Systems and software and staff productivity will have more of an impact on practices prior to the deadline, but what could deal the real blow to cash flows is payer readiness and maintaining revenue integrity. Payer readiness refers to the congruency between payer reporting systems (whether they are optimized for ICD-10-compliant transactions) and practice systems. According to the Navicure poll, 41% of those polled cited payer readiness as an issue, with the fact that extensive testing with payers is yet to be accomplished by most practices.
Revenue integrity refers to effectively achieving and maintaining operational compliance, efficiency, and legitimate reimbursement through consistent claims reporting throughout the ICD-10 transition process. The challenge being to keep claims reporting standards consistent in the face of diverse and sometimes hitherto unknown factors that militate against efforts to maintain revenue integrity.
These two factors alone are anticipated to have the greatest and most sustained impact on practice cash flows compared to the others.
To mitigate these factors, practices will need to develop or adopt implementation roadmaps that will see them take the necessary steps in readiness for the October deadline. One issue that won’t go away, however, is how to absorb all the costs involved, as there is no industry money allocated to fund this transition.
If your practice is small, you may be able to have a relatively smooth transition but for practices with excess of 100 members, the transition costs could run into millions, not to mention the cash-flow disruption that could occur post-transition when it becomes mandatory to report using ICD-10 standards.
The best way forward is to start now and possibly work with a transition expert or partner vendor to help you work through the transition process. Let them assist you with the technical aspects and help you know what to focus on to get your staff and practice ready for the ICD-10 transition deadline.