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Delta Connect Blog

AMA: Cost of ICD-10 will be prohibitive for most providers

Posted by Crystal Parks on Feb 13, 2014 12:45:24 PM

The American Medical Association (AMA) hasn’t yet given up on being vocal about the burden of the ICD-10 transition slated for October 1, 2014, and has released a new report warning providers that the implementation process will drain significantly more money than most organizations have planned for.  From the impact assessment to vendor upgrades to productivity loss remediation, the financial hit to a typical small practice may range from $56,639 to $226,105 over the next two years.  Compared to an initial report released in 2008, the 2014 projected costs are significantly higher.
“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 release. “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.
The new report factors in post-implementation costs for the first year after ICD-10 goes into effect, accounting for the anticipated productivity losses and claims payment disruptions of between 2 and 6 percent of revenues.  Medium and large practices stand to lose significantly more, with a medium provider expected to spend somewhere between $213,364 and $824,735, and a large provider losing anywhere between $2 million and $8 million.
Most organizations simply haven’t budgeted for this scale of impact, the report says, and the combination of financial unpreparedness and the double wallop of the ACA and Stage 2 of Meaningful Use will overload already frazzled physicians.
Claims processing and cash flow interruption represent considerable challenges to physician practices, though the exact magnitude for each physician will be unknown until on and after October 1, 2014,” the report says.  “One orthopedic surgical practice administrator well into ICD-10 preparedness said, ‘There aren’t enough margins in Medicare that allow us to absorb a 10% productivity or reimbursement loss. That would put us out of business.’”
The calculations take into account the fact that providers will be simultaneously upgrading to ONC certified 2014 EHR technology, a factor the 2008 report couldn’t foresee.  Most EHR vendors have not made ICD-10 an integrated part of their 2014 technology yet, posing an additional quandary for providers.
“In reality, the EHR vendors’ release of Version 2014 CEHRT software is not aligned with ICD‐10 compliant PMS software,” the study says. “Many integrated EHR vendors (EHR and PMS supported by the same company) plan to release ICD‐10 compliant systems in the first quarter of 2014 and Version 2014 CEHRT software in early summer 2014, essentially leaving many practices without time to participate in ICD‐10 testing and adjust to new technology. The timing also means that physicians are likely to be using a hybrid system, accessing both ICD‐9 content for Meaningful Use, but also using ICD‐10 compliant billing systems, resulting in potential for patient billing errors and problems with Meaningful Use reporting and attestation data.”
While the report takes the same dire tone as many of the AMA’s other protests against the switch to the new code set, the financial information can be an important planning tool for practices that might not be very far along in their implementation process.  The post-implementation costs will be dependent on how well a provider prepares in the coming months, and how much they participate in clinical documentation improvement, comprehensive technical testing, and coder education.


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