With 10 Months to Go, How is ICD-10 Testing Going?

Providers and health plans fully admit they are unprepared for ICD-10 implementation: with less than 10 months left, many haven't fully determined how the transition will affect their businesses.

While many physicians are worrying about how further implementation of Affordable Care Act will affect the health care industry in 2014, another big concern that they fully admit to being unprepared for is ICD-10.

A new KPMG survey revealed that with less than 10 months until ICD-10 implementation, health plans and providers haven’t fully determined how it all will affect their businesses. While three-quarters have completed an ICD-10 impact assessment and 72% allocated money to the efforts to prepare, they were actually behind in preparing for key aspects of implementation.

“As October 1 inches closer, health care organizations have their work cut out to properly absorb the impact that the new coding will have on their businesses,” Wayne Cafran, an advisory principal in KPMG’s Healthcare & Life Sciences practice, said in a statement. “A full 50% 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, health care organizations are in for a rude awakening when they finally realize what the new standards will have on their bottom lines.”

The transition to ICD-10 will have moderate to severe impacts on an organizations bottom line, according to 73% of respondents. Nearly 45% expect that denial/variance management would be affected the most, according to Randy Notes, a principal in KPMG’s Healthcare & Life Sciences practice. He adds that organizations will need to familiarize themselves with claims rejections and denial representatives under the new process.

The survey found that less than half (42%) of respondents recently underwent system testing that includes testing processes and systems using ICD-10 codes, creating a comprehensive test plan and working with health plans and billing clearinghouses. A third is currently conducting more comprehensive end-to-end testing. Meanwhile, 28% plans to conduct end-to-end compliance testing while 3% admitted that they are not planning this testing at all.

“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,” Cafran said.