The Cost of ICD-10 Implementation

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  • In AAPC News
  • September 8, 2009
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By Angela “Annie” Boynton RHIT, CPC, CCS, CPC-H, CCS-P, CPC-P, CPC-I

At this point, many are aware of the impending upgrades to ICD-10 and 5010/D.0/3.0.  Much has been touted about the costs.  It seems that the majority of health care leaders ask “How can we afford to implement ICD-10?” It’s a valid question especially when nationwide estimates are as high as $8 billion dollars to implement ICD-10.  Over the past few years many studies have been done that focus on the cost of implementation.  RAND Corporation, the Nolan Corporation and Price Waterhouse Coopers have all studied the fiscal impact of ICD-10 implementation.

The Medical Group Management Association even conducted a survey that resulted in estimates of roughly $84,000 for the average small physician practice to upgrade to ICD-10; large practices could be facing an implementation price tag in the neighborhood of $3 million dollars.  For health plans, depending on size, estimates range between half a million and nearly $14 million dollars to implement ICD-10 with most monies aimed at training, systems upgrades and contract negotiations.

It is vitally important to remember that diagnostic coding is the language with which health care is communicated to payers, to statistical reporting agencies and for internal tracking and monitoring purposes in health plans and providers alike.  ICD-10 offers a level of sophistication and the ability to track, audit and reimburse with accuracy that has never been seen before.  In order to oversee a successful implementation it is vital that all manner of providers and payers begin assessing their usage of ICD-9 in order to mirror where ICD-10 will have the greatest impact.

Budgeting for additional time, training, equipment and resources required to implement ICD-10 should begin early.  Imagine the budgetary impact on those who decide to wait to budget for ICD-10 implementation until 2012!  In order to avoid financial disaster, budgetary preparation should begin as early as 2010.  Working additional padding into budgets will help to alleviate some of the fiscal strain that ICD-10 implementation is likely to create in 2013.

Budgeting for implementation is only one aspect of fiscal concern.  Attention should also be given to the aftermath of ICD-10 implementation, in particular contract negotiations; the increased specificity that ICD-10 is going to bring will almost certainly require some level of contract renegotiation.  It is important to remember that one-to-one code mapping is not going to be possible with every ICD-10 code.  There is a 6-to-1 code increase in ICD-10 compared to ICD-9.  It is a good idea for providers and payers to review contracts early so as to be better prepared for the impending transition.

No one is willing to dispute that the cost of implementation is going to be high.   It is going to be time sensitive and resource intensive.  But when faced with the alternatives the question health care leadership should be asking is “How can we afford not to implement ICD-10?”

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