Providers and payers are still lacking a comprehensive understanding of the revenue and business impacts of the ICD-10 transition, according to a recent survey conducted by audit and tax firm KPMG, and few organizations have a firm plan to address the potential cash flow problems that may stem from the October 1, 2014 code switch. Despite a widespread belief that claims will be rejected at a significant rate due to inaccurate coding, few organizations have closely examined how stunted revenue flows will truly affect their balance sheets.
“As October 1 inches closer, healthcare organizations have their work cut out to properly absorb the impact that the new coding will have on their businesses,” said Wayne Cafran, an advisory principal in KPMG’s Healthcare & Life Sciences practice. “A full 50 percent stated that they had yet to estimate the new coding systems impact on their cash flow. With estimates by those who did measure the impact tallying anywhere from $1 million to more than $15 million, healthcare organizations are in for a rude awakening when they finally realize what the new standards will have on their bottom lines.”
The poll was conducted late last year, ending in December, and provides one of the most recent snapshots of industry readiness as the compliance date creeps closer. Three-quarters of KPMG respondents said they have completed their impact assessments, and 72% have set aside a budget for the rest of the transition process. Forty-two percent say they have started the testing process internally and worked with vendors and payers to establish timelines for external testing procedures.
However, only one-third are currently conducting end-to-end testing, and 74% have not yet started to plan, or have no intention of planning, external testing with health plans and business partners. “This proves somewhat problematic when you consider the importance of ensuring that the process will function smoothly on day one,” Cafran says. “The recent roll out of the Affordable Care Act from a technical aspect should give health plans and providers all the motivation they need in determining just how important it is to put the new system through its paces.”
“In terms of specific processes, nearly half of those surveyed believed that denial/variance management would be most affected in the transition outside of coding and documentation,” added Randy Notes, a principal in KPMG’s Healthcare and Life Sciences practice. “Successfully managing denials and variance entails a thorough analysis of not just the new codes, but reviewing trends of the previous ICD-9 codes and mapping high volume medical necessity. Organizations also must familiarize themselves with claims rejections and denial representatives under the new process and designing a brand new billing process. It is easy to see why this was a leading pain point among our field.”