ICD-10 Transition on Budget for Majority of Providers

March 31, 2014
Laura Joszt

While the vast majority of organizations are on or below budget for ICD-10 transition, survey respondents revealed many providers aren't thinking enough about the impact the transition will have on reimbursement and cash flow.

Congress may have voted to delay ICD-10 as part of the recent short-term sustainable growth rate (SGR) fix, but early results from a survey find the vast majority of organizations are at or below budget for ICD-10 readiness.

The survey from The Advisory Board Company revealed that nearly 95% of organizations reported expenses at or below budget. The difference between budget and actual expenditures ranged from 5% to 15%.

According to survey results, 77% of provider organizations have comprehensive budgets with specific line-item allocations. However, The Advisory Board Company expects budgets will change as organizations continue to run tests.

“And while organizations agree on maintaining a strict budget, there's no consensus regarding how to transition across systems,” according to The Advisory Board Company.

Nearly all respondents (95%) say they will code charts using both ICD-9 and ICD-10 codes in preparation, but the actual percentage of dual-coded charts varies greatly among organizations.

The good news is that providers say they are having frequent conversations with commercial payers and specific testing time frames and logistics have been agreed upon. The survey results found that 73% of organizations will begin testing 3 to 6 months before launch. Just 22% are already running tests in collaboration with insurance companies.

So busy preparing for the actual launch and transition, many organizations may not have considered the ensuing impact. Slightly more than half (56%) of respondents have not renegotiated payer agreements to minimize reimbursement risks associated with ICD-10 transition.

More than 40% of respondents have not yet modeled what the impact of transition will be on accounts receivable. According to The Advisory Board Company, it could take months to restore accounts receivable to pre-ICD-10 levels. In the meantime, spikes in Discharged Not Final Billed can disrupt cash flow, the company added.