The new cost of ICD-10 Implementation: $225,000 for small practices and up to $8 million for large practices!

Making the switch from the ICD-9 to the ICD-10 diagnosis code set could cost as much as $225,000 for some small practices and up to $8 million in some large practices, according to a study from the American Medical Association.

Physician offices and hospitals must use the ICD-10 code sets beginning Oct. 1, but the preparation for the switch is taking years and involves hours of staff training, the purchase of new hardware and software, and testing with vendors and payers.

A follow-up report prepared for the AMA by Nachimson Advisors found that in certain cases, implementation costs are nearly three times higher than what the firm predicted in 2008.

In their original report, Nachimson Advisors estimated that it would cost more than $83,000 for a typical small practice (3 physicians, 2 administrative staff) to implement ICD-10, rising to $285,000 for a typical medium-size practice (10 physicians, 1 full-time coder, 6 administrative staff), and about $2.7 million for a typical large practice (100 physicians, 10 full-time coders, 64 administrative staff).

Now those costs are estimated to range from $56,000 to $226,000 for small practices and $213,000 to $824,000 for medium-size practices. And for large practices, implementing ICD-10 could cost anywhere from $2 million to $8 million.

About two-thirds of physician practices are expected to have costs in the upper range of those estimates, according to the AMA.

One reason for the increased cost is new requirements related to the adoption of electronic health records (EHRs). Nachimson Advisors also projects a larger potential for payment disruptions, estimating that 2%-6% of claims could be denied after the Oct. 1 implementation date.

"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," Dr. Ardis Dee Hoven, AMA president, said in a 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."

The AMA is calling on Health & Human Services secretary Kathleen Sebelius to reconsider ICD-10 implementation. But if the agency sticks to its plan, the AMA has requested several changes to mitigate some of the costs.

For example, the AMA recommends that Medicare provide a 2-year implementation period during which the agency would not be allowed to deny payments based on the specificity of the ICD-10 code provided. And the agency would provide feedback on coding to physicians during this time.

The AMA also is asking Medicare to simplify its claims requirements by adopting a policy that when the most specific ICD-10 code is used, no additional information or attachments will be required before paying the claim.

How Can We Properly Prepare for ICD-10?

Begin by assessing your individual situation and creating a plan of action.

• take your top 50 icd-9 codes and map them
• then look at the different documentation requirements
• create simple templates to start changing documentation habits NOW!
• consider dual coding ( I highly suggest this!)

What Else Should I Be Doing

• talk to your vendors
• begin creating new superbills
• review other practice documents that will need to be updated prior to Oct. 1, 2014
• BUY an ICD-10 book and become familiar with it!

These are simple steps that will reduce your "loss of productivity" and protect your cash flow. 

For more ideas, tips and tricks please visit: www.ermconsultinginc.com