Switch to ICD-10 should prove very costly

Providers are far from done in their struggles to implement the new National Provider Identifier number, which has proved to be every bit as troublesome as the industry predicted. But apparently, HHS was determined to raise the angst level further. With its recent announcement that it was pushing for an October 2011 deadline for the industry to switch from ICD-9-CM to ICD-10 codes, health organizations are bracing themselves for millions in additional IT and operational expenses.

ICD-9-CM codes, which are used for electronic claims processing, remittance, advice, eligibility inquiries, referral authorizations and more, have been in place for 30 years, but most other developed nations around the world use ICD-10 codes. The new code set will allow clinical IT systems to record far more specific and rich diagnostic information than ICD-9 codes, as it contains more than 155,000 codes, while ICD-9 contains only 17,000.

As the switch occurs, brace yourself for reimbursement nightmares. HHS admits that the switch--like the NPI cutover--could initially cause significant cash flow problems for providers because of the increased risk of payment hold-ups due to coding and systems problems. HHS is predicting that claims-error rates will rise between 6 and 10 percent, up from a normal 3 percent rate typically seen for annual updates of ICD-9. (If NPI experience is any indication, that's probably a pretty conservative error estimate--so expect significantly worse cash holdups than HHS is predicting.)

Meanwhile, as readers know, such a switch will prove to be immensely complex, not to mention quite costly, on the IT front. While estimates vary from one consulting firm to another, HHS estimates the cost of the switch at $1.64 billion industry-wide, including $356 million in training costs, lost productivity costs of $572 million and system change costs of $713 million.

To learn more about the HHS proposal:
- read this Modern Healthcare piece (reg. req.)

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