ICD-10 was expensive to implement

Some physicians may end up paying nearly three times more for ICD-10 implementation than had been predicted just five years ago, according to a new report from the American Medical Association.

The updated AMA cost study, conducted by Nachimson Advisors, finds dramatic increases when compared to a similar 2008 report, also by Nachimson. That financial hit is now compounded by other federal mandates that weren't yet in existence back then.

With the Oct. 1, 2014 deadline to transition to ICD-10 code sets just months away, and physician practices grappling with a slew of new regulatory requirements related to meaningful use and payment reform, AMA – whose official position calls for ICD-10 repeal – sent a letter to Health and Human Services Secretary Kathleen Sebelius asking her to rethink the ICD-10 mandate.

"By itself, the implementation of ICD-10 is a massive undertaking," wrote James L. Madara, MD, executive vice president and CEO of AMA. "Yet, physicians are being asked to assume this burdensome requirement at the same time that they are being required to adopt new technology, re-engineer workflow, and reform the way they deliver care; all of which are interfering with their ability to care for patients and make investments to improve quality."

Compelling physicians to adopt ICD-10 will be a big burden for practices – compounded by their inability to devote time and resources to other federal mandates that come with significant penalties.

Madara made the case that, "physicians are facing serious financial obstacles from multiple sources," including:

• Incurring costs to comply with meaningful use that exceed available incentives;
• Purchasing EHR software certified for 2014 or software upgrades that allow for use of ICD-10;
• Implementing upgrades to practice management systems for ICD-10
• Incurring penalties from cuts to Medicare Part B reimbursement, "including a 2 percent cut if Medicare ePrescribing is not met (cut taken in 2014), a 1 percent cut if meaningful use is not met (cut taken in 2015), and a 1.5 percent cut under the Physician Quality Reporting System (PQRS) (cut taken in 2015)"; and
• Mitigating a 2 percent cut stemming from sequestration.

In 2008 the predicted cost to implement ICD-10 ranged from $83,290 for a small practice, $285,195 for a medium practice and $2,728,780 for a large practice, according to the first Nachimson Advisors report.

Based on new information, the 2014 study found the following cost ranges for each practice size based on variable factors such as specialty, vendor and software.

[See also: Practices badly lagging on ICD-10]

• Small practice: $56,639-$226,105

• Medium practice: $213,364-$824,735

• Large practice: $2,017,151-$8,018,364

Two-thirds of physician practices are projected to fall into the upper range of current cost estimates, which are much higher than the 2008 estimates, according to AMA. These practices are expected to incur major costs associated with software upgrades to accommodate the transition to ICD-10.

In addition to software upgrades, the total costs include the expense of training, practice assessments, testing, payment disruptions and productivity loss for physicians.

The 2014 estimates include much higher figures due in part to significant post-implementation costs, including the need for testing and the potential risk of payment disruption.

AMA data also shows that vendor readiness for the new code set is significantly lagging. Few practices have therefore been able to conduct appropriate testing or implement workflow changes to ensure the new codes are working as intended.

"The markedly higher implementation costs for ICD-10 place a crushing burden on physicians, straining vital resources needed to invest in new health care delivery models and well-developed technology that promotes care coordination with real value to patients," said AMA President Ardis Dee Hoven, MD, in a press statement.

"Continuing to compel physicians to adopt this new coding structure threatens to disrupt innovations by diverting resources away from areas that are expected to help lower costs and improve the quality of care," she said.

Read the new Nachimson Advisors Study here.

Read AMA's letter to HHS here.

I just read an interesting item out of the HFMA conference in Las Vegas this week. A couple panelists shared their ICD-10 implementation costs.

The North Shore Long Island Jewish Health System, New York, a 14-hospital system, expects to pay about $50 million for IT, training and other upgrades.

Sutter Health, California, a 24 hospital system, estimates it will cost more than $100 million. That includes $60 for IT and $25 million for a computer assisted coding (CAC) program.

Does that mean only about $15 million for training? I'm hearing that training is going to be a much bigger part of the budget. And training includes more than sending medical coders to ICD-10 boot camp.

Nonetheless, a commenter who identifies himself as "Steve S." points out this classification confusion:

"It doesn't seem reasonable to allocate any of the costs for CAC to 'ICD-10' as that CAC functionality is not dictated by ICD-10 but rather an investment that will pay off regardless of ICD-10 or not. Also, how much of the $60 million in "technology upgrades" is really dictated by ICD-10? Or is it just a good time to upgrade out of date technology?

"It's sorta like me going for an oil change and telling my wife it's gonna cost $3000 because I wanna get some cool new wheels for the truck."

To stick with Steve's analogy, I think it's like telling the wife we need to pay about $30,000 for a new pickup truck because we need it to bring home the new couch she wants.

You get the picture. I'm not sure the people at Sutter Health do though.

One last thing. Any guesses as to who is "Steve S."?

Speaking of insightful comments

This week I expressed some confusion when I read that Kaiser Permanente CEO George Halvorson was at the same HFMA conference and expressed frustration with ICD-10 coding. But "sjsteindel" explained it in the comments:

"It is easy to understand why KP does not like ICD-10. All their internal systems use their internal version of SNOMED and it maps to ICD-9-CM. All the great work they do is based on the internal SNOMED codes and the increased clinical precision of ICD-10-CM offers them nothing, except a lot of work in doing new maps for payment."

So for Kaiser, ICD-10 doesn't do them any good because they're already working with a high level of specificity.

And "sjsteindel" had this take on ICD-11:

"I really don't see why ICD-11 is rearing an ugly head at this time, out side of introducing a stall. Anyone interested should sign up and look at the present Alpha code. It is essentially just ICD-10, not 10-CM, with some expanded explanatory text. There are no links to SNOMED nor does it appear to be anyplace to put them. Also, look at the WHO site regarding ICD-11. All mention of SNOMED was dropped. Hence, we have no real idea what 11 will be or when. Also, it appears the WHO is working on just the mortality side of 11, which is their domain and interest, and not the morbidity side which is purpose of 10-CM. Hence, at this time, ICD-11 when if appears may not work as a replacement for 9-CM."

A "stall?" You mean someone might argue for ICD-11 instead of ICD-10 as a tactic to delay implementation? Can't imagine it.

 Tweet of the Week

"Did you know ICD-10-CM requires highly detailed documentation. Build an action plan for your practice: http://goo.gl/zpw2w  ‪#ICD10" (@AmerMedicalAssn)

That link will take you to an  opportunity to buy a $160 book on ICD-10-CM. And there are more books you can buy from the AMA on the subject. I guess vigorous opposition doesn't mean they can't make money off of ICD-10 implementation. (Thank you @ShimCode for pointing that out.)

4 Lessons Learned from HIPAA 5010 That’ll Benefit Your ICD-10 Project

Sunday is the first day that the Centers for Medicare and Medicaid Services will start enforcing  HIPAA 5010 compliance. Remember that was supposed to be enforced six months ago. Sisko explains how four aspects of the messy transition portend complications for ICD-10 implementation. (ICD-10 Impact to Health Care Payers & Providers)

ICD-10 Training: Staff will need to translate edits

Expect the HIPAA 5010 reimbursement delays to be a predictor of what's going to happen after the ICD-10 compliance deadline. (ICD10 Watch)

ICD-10 codes already change how we die

A roundup of studies that use ICD-10 mortality codes to drive public policy. (ICD10 Watch)

Petition To Use The ICD and not The DSM.

When ICD-10 implementation finally drives Halvorson crazy (his prediction), his therapist may assign an ICD-10 code to his condition. That's because the The National Alliance of Professional Psychology Providers (NAPPP) has launched a petition for psychologists to endorse using ICD-10-CM for Diagnosis of Mental Disorders (DSM). They want to be able to collaborate with the physical side of medicine better. (NAPPP)

Five steps to avoid ICD-10 stress

Ken Bradley has five strategies to help make the ICD-10 transition a bit easier:

1. Examine existing documentation and coding.
2. Understand the unique scope of a practice’s ICD-10 efforts.
3. Get a sense of coding staff’s attitudes toward ICD-10.
4. Understand vendor partners’ plans.
5. Garner buy-in from the entire practice.

(Health Management Technology)

Carl Natale blogs regularly at ICD10Watch.com.