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Major Hurdles to Overcome in Implementing ICD-10 for Healthcare Payers

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  • December 14, 2009
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By Julia Croly

Moving to ICD-10-CM/PCS will require a tremendous effort and incur incredible cost for healthcare organizations. The major hurdles to overcome in implementation of ICD-10-CM/PCS for healthcare payers include cost, timing and complexity.

  • Timing: On Jan. 16, 2009, the federal government modified the HIPAA transaction and code set requirements mandating that covered entities replace the ICD-9-CM code set with ICD-10-PCS and ICD-10-CM beginning October 1, 2013. HHS decided to move the date back to October 1, 2013 from 2011 due to the complexity and time commitment required to successfully implement the ICD-10 code sets across all segments of the healthcare industry. Based upon ICD-10 implementations in other countries (the United States is the only industrialized country not using ICD-10), a typical healthcare organization required three to four years for implementation. Retrospectively, those healthcare organizations invariably wished they had started sooner and had more time.
  • Cost: In some early work done, HHS estimated that changing the payer systems to ICD-10 may be the largest cost category. HHS estimated a cost of approximately $164.64 million with a range of $110 million minimum to $274 million maximum to change payers’ IT systems. Payers need to ascertain their individual cost implications and budget accordingly. Contingency planning is a must which means accounting for the unexpected.
  • Complexity: The transition to ICD-10 means more than the addition of a few diagnostic and procedural codes. The number of codes expands from roughly 17,000 to 155,000, according to the U.S. Department of Health and Human Services. ICD-10 adds sixth and seventh characters and a new structure that allows for further expansion than was possible with ICD-9-CM.  This complexity allows for more detailed diagnosis and procedures which will impact all aspects of a healthcare payer’s core processes and technology. The transition to ICD-10 will impact almost every business area of a payer who works with coded diagnostic and procedural data. Those payer business areas potentially affected include Actuarial and Underwriting, Claims Operations, Customer Service, Internal Audit and Fraud Detection, Health Care Services, Sales and Marketing, Analytics and Business Intelligence and Provider Network Management.

Face ICD-10 head on because there is no workaround: There are interim strategies and tactics being discussed and developed to accomplish what should be considered short-term workarounds. These should be viewed as interim backup plans at best. For the long-term, payers and providers will only achieve the total benefit of ICD-10 through full implementation.

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