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Contributing Writer · Jan 17, 2014

ICD-10 transition: How much will It cost?

This article was co-authored by Cara Buckhaulter, Billing Services Operation Manager and ICD-10 Expert at NueMD, and Kevin McCarthy, Industry News Editor at NueMD. Cara and Kevin are frequent contributors on NueMD’s website and share a passion for helping small practices remain financially stable through the transition to ICD-10.

With the transition to ICD-10 less than nine months away, planning remains a major concern for many providers. Aside from a reduction in efficiency and a potential increase in claim rejections, providers can also expect to see a major impact on their bottom line.

Due to the number of variables involved in calculating what the ICD-10 transition will cost your practice, it’s hard to give an exact number. That said, the goal of this article is to help you gain an understanding of the costs associated with the transition, and suggest a few ways to minimize the negative effects ICD-10 can have on your revenue cycle. Here are four things to consider:

Prepare for Reduced Cash Flow

As your practice transitions to ICD-10, coding time, coding backlog, and claim turnaround time are all likely to increase, ultimately disrupting your revenue cycle.

In a white paper published by the American Association of Professional Coders (AAPC), Michelle Bamford, regional coordinator of clinical information services with the Vancouver Island Health Authority, provided some insight into the negative effects ICD-10 can have on a practice. According to Bamford, shortly after ICD-10 implementation, the average coding time per record increased from 12-15 minutes to 33 minutes, while turnaround time saw a 100% increase from 69 days to 139 days. These numbers might not translate directly to your practice, but they should give you some idea of what you might be up against after the October 1 transition.

Here are a few best practices to help you prepare for potential cash flow delays:

  • Make sure software vendors and payers will be ready to seamlessly process claims that use ICD-10 codes. If you haven’t already been in contact with them to confirm testing plans, initiate those conversations now.
  • Consider saving some cash to build up a “rainy day fund.” Starting a line of credit is another option.
  • Know your metrics. Where does your practice stand now? What are your average coding and turnaround times? We suggest working out some test cases and creating projections. If turnaround time increases by 50%, how much of a cash flow disruption will you experience? If coding time doubles, will your current staff be able to keep up with your expected number of claims? As you analyze your projections, you’ll gain insight into your training, staffing, and “rainy day fund” needs.

Training for ICD-10

A portion of your budget will be spent on securing training resources for your staff. Several training options are available for coders and providers, ranging from the World Health Organization’s (WHO) free online training tool to more intense code set training boot camps for those looking to complete training quickly, or prefer to learn in a classroom setting. Training materials and courses can range in price from $50 to several hundred dollars per person. Here are a few training options to explore:

Keep in mind that the success of your ICD-10 training initiative will have a direct impact on your practice’s cash flow. If your staff has become comfortable with the new procedures, you can help bring documentation, coding, and turnaround time closer to your pre-ICD-10 norms.

As you create your training plan and budget, consider the time and flexibility of each training method and choose the option that works best for you and your staff. And keep in mind that time spent training is time your staff can’t spend performing their regular duties – so plan accordingly.

Staffing Your Practice

Making a smooth transition to ICD-10 will require a significant amount of your staff’s time.

  • Leading up to October 2014, your staff (particularly providers and coders) will need to devote several hours to training. As you finalize your training plan, account for the exact number of hours your staff won’t be doing their normal day-to-day tasks.
  • Communicating with software vendors and payers is another time-consuming, yet essential component of a successful transition. Confirm that both have testing plans in place, and make sure that your practice’s testing timeline aligns with theirs.
  • Adding new/temporary staff can help your practice work with payers to resolve claim rejections and deal with increased documentation and coding times.

Updating Your Software

Because software costs vary from vendor to vendor, costs associated with updating will depend on whether your system is cloud-based, or hosted on your own server. For practices using a cloud-based system, it’s unlikely you’ll incur additional costs to get your system ready for ICD-10. Client-server based systems often require additional costs to make upgrades, and to pay for IT professionals to install, test, and maintain systems.

Whether or not you incur any software-related costs while making the transition, be sure to confirm that your vendors will be ready. Actively communicate with vendors to see how their implementation timeline aligns with the plan for your practice.

The Brass Tacks ($$$)

As much as we’d love to, we can’t give a simple dollar amount that applies to all small practices – the number of factors involved in calculating this cost makes a “blanket” number unrealistic. But we can say this…

Let’s consider a small practice (two providers, one office manager, and one coder/biller) that really “does it right” — they use cloud-based software to save on overhead and maintenance fees, follow recommendations from CMS, properly train staff, communicate with vendors, and complete successful end-to-end tests with ample time before October 1. This practice might be able to survive the transition for as little as $10K-25K.

Now take a practice that ignores recommended implementation timelines, neglects the need for adequate training, and fails to hold their vendors and payers accountable. This practice will encounter some very serious revenue cycle problems. We recommend you run some projections for worst-case scenarios specific to your practice, but we have to warn you – the numbers can get pretty scary.

So it’s up to you to be more like the first practice – take these recommendations to heart and do everything you can to remain financially strong through the transition – your patients and your bottom line will appreciate it!

Visit our ICD-10 Center or watch our recorded ICD-10 Webinar.

Practice Fusion’s Director of Clinical Program Management will provide an overview of the changes to expect with ICD-10, as well as how to transition to ICD-10 in your daily workflows.