New ICD-10 Cost Estimates Higher for Most Practices

New estimates for ICD-10 implementation find that costs to physician practices could be nearly three times what was predicted in 2008 with two-thirds of practices projected to fall into the upper range.

The majority of physician practices will be absorbing the costs of upgrading practice management system software for ICD-10 and a new survey initiated by the American Medical Association found that implementation may be more expensive than previously estimated.

The study, conducted by Nachimson Advisors, found that estimated ICD-10 implementation costs can be nearly three times what was predicted originally in 2008. While the initial estimate placed implementation costs for a small practice ranged from $83,290 for a small practice, the new 2014 study found it could cost a small practice up to $226,105 depending on specialty, vendor and software.

"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," AMA President Ardis Dee Hoven, MD, said in a statement.

Two-thirds of practices are projected to fall into the upper range of current cost estimates:

Small practice

2008: $83,290

2014: $56-639 - $226,735

Medium practice

2008: $285,195

2014: $213,364 - $824,735

Large practice

2008: $2,728,780

2014: $2,017,151 - $8,018,364

The new estimated costs are so high because software upgrades aren’t the only costs physicians will have to pay. There is also the expense of training, practice assessments, testing, payment disruptions and productivity loss for the practices.

According to the AMA, software vendors are also lagging in readiness, which means few practices are able to conduct appropriate testing. The Centers for Medicare and Medicaid Services estimates that claims denial rates could increase 100% to 200% in the early stages of ICD-10.

"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," Hoven added.