Switch to ICD-10 codes could be costly

A Costly Burden?

The cost for a 10-physician practice to move to ICD-10 by 2011 could be more than $285,000, according to a study released Oct. 9 by Health IT researcher Nachimson Advisors. These expenses include:

• Total training expenditures estimates: $4,745
• New claim form (superbill) software: $9,990
• Business process analysis: $12,000
• Practice management and billing system software upgrades: $15,000
• Increases in claim inquiries and reduction in cash flow: $65,000
• Increased documentation costs: $178,500

For a small, three-physician practice, the total cost to implement ICD-10 is estimated to be $83,290, according to the study. For a large, 100-physician practice the estimated costs to implement ICD-10 is more than $2.7 million.

Click HERE to read the Nachimson Advisors study, which was funded by a number of medical associations, including  the American Medical Association, the American Academy of Professional Coders, the American Clinical Laboratory Association and the American College of Physicians.

“If HHS’s proposed 2011 timeframe for implementing ICD-10 goes forward as planned, physician practices will have to cope with a crushing burden of added costs, duplicative systems, and confusion over health insurers’ coverage decisions,” William F. Jessee, MD, FACMPE, Medical Group Management Association president and CEO, said in a statement. “HHS’s proposed timeframe is unworkable for patients, physician practices and clinical laboratories and needs to be changed.”

ICD-10 Benefits

Over the long haul, switching over to ICD-10 will have benefits in six categories, according to HHS: More accurate payments for new procedures, fewer rejected claims, fewer improper claims, better understanding of new procedures, improved disease management, better understanding of health conditions and healthcare outcomes, and harmonization of disease monitoring and reporting worldwide.

In terms of actual money, benefits of the conversion would start in 2013 with about $87.7 million in annual savings, according to HHS. The annual cost savings would increase to $467 million by 2023. The “break even” point on the estimate wouldn’t be seen until 2018; the cumulative benefit of the conversion was estimated to be around $3.95 billion by 2023.

Government Cost Estimates

HHS has estimated that the conversion from ICD-9 to ICD-10 will cost around $1.64 billion, with costs ranging between $849 million to $3.05 billion. According to a HHS work group estimate, the costs will fall into training ($356 million), productivity losses ($572 million) and system changes ($713 million).