Assessing The ICD-10 Aftermath

After being delayed three times in the past five years, ICD-10 is finally upon us. The industry is no longer fixated on the ICD-10 deadline but instead is shifting its focus to the impact the transition will have on healthcare in the U.S. Many, particularly physicians practices and small hospitals, are bracing for the worst. The biggest fear is that an avalanche of claims denials in the wake of ICD-10 will cause substantial disruptions in cash flow and revenue for these providers.

There’s good reason for smaller providers to have these concerns. First, smaller providers are often poorly equipped to absorb revenue disruptions. Second, this group has been notoriously ill-prepared for the ICD-10 transition. Recent studies validate this lack of preparation. For example, a WEDI (Workgroup for Electronic Data Interchange) ICD-10 readiness survey from July showed that only one in five physicians had started external testing with health plans or clearinghouses. As a result, fewer than half of respondents believed they would be ready to make the transition to ICD-10 by the Oct. 1 deadline.

The financial repercussions of unpreparedness may be transformative for the healthcare industry. According to a recent survey conducted by the Texas Medical Association, claims disruptions stemming from ICD-10 may drive many older physicians to retire early and younger physicians to terminate or renegotiate their plan contracts. It seems like ICD-10 could be the last straw for a group of providers already overwhelmed by regulatory and administrative burdens.

CMS is making an effort to ease the ICD-10 transition for physicians. In early July, the agency announced a partnership with the American Medical Association to make the ICD-10 claims submission process more flexible. While CMS still asserts that any claim submitted on or after Oct. 1, 2015 will be rejected if it does not contain a valid ICD-10 code, the agency also states that no claim will be denied or subject to audit based solely on specificity. In other words, Medicare will pay any claim containing an ICD-10 code from the right diagnostic family even if it isn’t perfect.

The ICD-10 outlook is a lot brighter for larger hospitals and health systems. Most of these providers have been testing their ICD-10 readiness for months and appear to be well-positioned for the transition. For example, hospitals that participated in the three rounds of end-to-end ICD-10 testing with CMS had approximately 99 percent of their claims accepted.

However, skeptics aren’t convinced that these test results are representative of what we can expect from the full transition. In essence, many believe CMS has failed to adjust for the scale of the transition and that test results were skewed because there were similar claims submitted from test-ready facilities.

It’s hard to know for certain what will happen when a large number of entities that haven’t been involved in testing start submitting ICD-10 claims. The fact is, it will be a number of weeks (even months) before the industry can begin to gauge the true impact the ICD-10 transition will have on our industry. Hopefully, the ramifications of the transition aren’t far reaching and the benefits realized from more specific documentation outweigh any hardships.