5 potential ICD-10 related financial issues
As healthcare organizations prepare for the ICD-10 conversion, everyone knows there will be challenges. And while much of the focus has been on the difficulties of hands-on implementation, financial managers are not likely to make it through unscathed.
"The ICD-10 implementation is basically going to happen overnight," said Doug Fenstermaker, managing director and vice president of healthcare for Warbird Consulting Partners, a professional services firm with a focus on healthcare financial management. "CFOs need to get their entire health organization trained and prepared now to avoid potential problems later."
Fenstermaker explains that there are five potential – not absolute – financial issues that may be more burdensome for those healthcare providers who wait until the last minute to make provisions for the transition.
1. Training
While much of the expectation to efficiently convert from ICD-9 to ICD-10 falls on the shoulders of medical coders, everyone within a health organization is very much responsible for being up-to-speed as well. After the implementation, if doctors or nurses only write partial information and medical coders don't find it specific enough, they'll bounce it back to the doctors or nurses to fix it (which only they can). Any back-and-forth like that begins to delay accounts receivable.
2. Cash flow crunch
Even for the most prepared hospitals, there will undoubtedly be a learning curve resulting in a delay of getting bills out the door fast enough. Accounts receivable departments currently take roughly 45 to 55 days to process everything. With the transition to ICD-10, that could potentially spike to another 10 to 20 days if a staff is underprepared and can't adapt quickly enough. Most hospitals themselves have a "pay as they go" policy. So if their cash flow is delayed, or even eliminated, they won't be able to pay their own bills in a timely fashion. Yes, most have cash reserves they can draw from, but those could easily be burned through with lack of preparation and proper management.
3. Recovery Audit Contractors (RAC)
Because the government takes part of the revenue from a hospital for Medicare/Medicaid they have a vested interest in the successful implementation of ICD-10. Errors in coding mean the government doesn't get their due share. And when that happens – and it will for some – they classify that as fraud and abuse, at which point they send in Recovery Audit Contractors. The incentive for the contractors is that they get a contingency fee for every error they find. If they can do a sample survey and find out how an error applies generally, they can then multiply it by the accounts a hospital has and charge that much. RACs have legal authority, too, which means hospitals have to drop everything to respond to their demands for data. Of course, healthcare providers who disagree with RACs have the option to appeal their findings, which can be an even more lengthy and expensive endeavor.
4. Medical record coders
There's already a shortage of qualified medical record coders in this country, especially in rural areas. Those folks go through an incredible amount of education and screening so that they can be the accurate and efficient. With ICD-10, they're being asked to know five times as many codes. When ICD-10 goes into effect, hospitals will be desperate to be as accurate with their coding as possible (again, to avoid having to pay unnecessary fees to the government as mentioned above). And, if they can't employ the coders they need before ICD-10 goes into effect, they'll really have only two options: 1) outsourcing the work overseas, or, 2) hiring contract coders.
5. Security risks
Outsourcing medical records to third parties is risky. You're not in charge of those people; they're contractors. They can make major mistakes you don't catch that can directly affect your revenue. "If I was still a CFO," said Fenstermaker, "I wouldn't outsource anything. Those moving parts integral to the heart of revenue cycles are something that I would want to be in total control of." Financial issues aren't the only concern, either; any time you incorporate an external party to assist with classified information, like medical records, you run the risk of there being some kind of security breach, which is also costly to fix.
