On October 1, 2014 of this year CMS is requiring all providers and health systems to submit their bills using a new coding system ICD 10.
Federal health officials recently announced “end-to-end” testing of Medicare claims using the ICD-10 diagnostic and procedure codes. This is an attempt to deliver much sought-after assurances that its contractors will be prepared for the October 1st, 2014 implementation date. The testing will allow the participating providers and suppliers to submit test claims to the CMS with ICD-10 codes and receive a remittance advice explaining how the claims were processed, according to the CMS.
“The small sample group of providers who participate in end-to-end testing will be selected to represent a broad cross-section of provider types, claims types, and submitter types,” the CMS announcement read.
According to MedPage Today, CMS will conduct front-end testing between March 3 and 7. In that round of tests, the agency will be looking at how well the system works from the provider’s side — that is, how easily and accurately providers can submit claims — using the new codes. End-to-end testing is expected to be more comprehensive and include testing of the “back end” — how things work on the CMS side of the process.
American Medical Association’s Concerns
“The AMA believes end-to-end testing is essential for ensuring the healthcare industry will not suffer massive disruptions in claims and payment processing and ultimately risk physicians’ ability to care for their patients,” American Medical Association President Ardis Dee Hoven said in a statement applauding the announcement from CMS.
However, the AMA continues to press CMS over reconsidering the ICD-10 mandate. Ardis Dee Hoven’s statement notes:”While the AMA is pleased by the federal government’s decision today to conduct end-to-end ICD-10 testing, the AMA continues to urge CMS to reconsider the ICD-10 mandate during a time when physicians are struggling to keep up with many other costly, federal mandates. According to a recent AMA commissioned cost study, the mandated implementation of the ICD-10 code set alone will be dramatically more expensive for most physician practices than previously estimated.” The study showed that the costs have significantly increased since 2008 for example in 2008 the cost for upgrading a typical small practice was around $83,000 in 2013 that number jumped to between $55,000 and $250,000 a significant difference.
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Complexity and Cost
As we have previously written on Policy and Medicine, some medical industry groups fear the costs and potential added complications could be extremely burdensome. The conversion from ICD-9 to ICD-10 is not a simple program upgrade. The number of codes jumps almost 10x, from 16,000 codes in ICD-9 to 155,000 codes in ICD-10, and the codes are drastically more complex in ICD-10. This represents a significant change for medical professionals. Accurate coding is key to timely and accurate reimbursement for services rendered, and more codes create concern about more mistakes.
According to Capital New York, the U.S. Department of Health and Human Services estimates the updates will cost the industry $1.64 billion. The estimate includes $357 million for staff training, $572 million in lost productivity and $713 million for system changes.
Most Are Unprepared
The chances of improper planning increase as the Oct. 1, 2014 deadline draws closer — especially as so many practices have yet to act on ICD-10. In a survey by Navicure last month, 74% of respondents have not begun their transition plan. Yet, only 9% of those polled are “not confident” they will be prepared. In January, 38% of the more than 570 physician practices polled by Medical Group Management Association had not yet started their ICD-10 implementation and only 9% had made “significant progress.” None had finished.
Impact On Smaller Practices
The impact of ICD-10 on smaller practices will be especially burdensome. Small practices face all the difficulties of health IT implementation without the benefit of big budgets and numerous staff to diffuse the burdens. ICD-10 will be no different, and may hit small providers particularly hard, especially as many lag behind in planning and education.
According to research conducted by Nachmison Advisors, a typical small practice will spend between $56,639 and $226,105 on ICD-10, not the previously estimated $83,290. A typical midsized healthcare provider will spend between $213,364 and $824,735, instead of $285,195, and a large practice will expend between $2 million and $8 million instead of the previously predicted $2.3 million, the report said. Costs include physician productivity losses, payment disruptions, training, testing, and practice assessments, as well as the implementation itself.
Analysis
It is amazing that in the middle of implementing quality improvement measures CMS is taking on requiring a new coding system. According to updates coming from the HIMMS 2014 conference this week, software vendors are not as prepared as they had previously stated. Also, implementation will have to be adopted by all 50 state Medicaid offices and there is no data to indicate that all of those states will be ready in time to meet the deadline. Several large group practices are saving away 3 months of billings in case they don’t get reimbursed on a timely basis due to the system confusion coming from ICD 10 implementation from both the payer and provider.