Hospitals, doctors and insurers are bracing for a radical and possibly very expensive change to the way they bill.
Beginning in October 2014, the federal government will require everyone convert to the latest version of the International Classification of Diseases, known as ICD-10. The change is intended to create more detailed public health records, providing a more effective means of tracking health patterns and outbreaks of sickness.
But some medical industry groups fear the costs and added complications, particularly if the new software doesn’t perform right, could be burdensome and possibly ruinous.
“There are enormous reasons to be concerned,” said Steven Stack, immediate past chair of the board of trustees for the American Medical Association. “The complexity we have seen is obscene. One of the big worries physicians have is it is an exponential leap from what the current system is with no identifiable value worth doing that kind of change. There is little to no benefit for physicians and enormous downsides.”
ICD-10 expands the number of diagnoses and procedure codes for which a hospital or physician can bill from 16,000 to as many as 155,000, depending on the type of medical practice.
That level of detail can be useful for public health management and for insurers.
But it will certainly make additional paperwork demands of physicians.
For example, there are now codes that differentiate which type of tropical bird injured a patient. There is also a specific code for treating a patient who has walked into a lamppost.
And that code has three subsets: one for the initial visit, one for the the follow up and one for subsequent visits.
“People are very dismissive of how much time that takes, but it’s a lot,” Stack said. “And the potential for payment disruption is enormous.”
Updating and testing this new software is an incredibly complex operation that the U.S. Department of Health and Human Services estimates will cost the industry $1.64 billion. The estimate includes $357 million for staff training, $572 million in lost productivity and $713 million for system changes.
The federal government, and proponents of the new system, argue the greater precision found in the new codes will lead to as much as $4 billion worth of savings over the next decade.
“CMS is committed to implementing ICD-10 on October 1,” a spokeswoman for the Centers for Medicare and Medicaid said in an email. “We are also committed to continuing to process provider claims in a timely and effective manner once the ICD-10 code sets go into effect. We are working very closely with all industry stakeholders to provide industry support in transitioning to ICD-10.”
ICD-9, by broad agreement, is inadequate. For example, it does not always account for recent advancements in medical technology, meaning that vastly different procedures have to be coded and billed as if they were the same.
But hospitals, many with thin profit margins, are struggling to find ways to front the cost of the new system and explain the changes. And private-practicing doctors don’t expect to ever recoup their investment.
The scariest possibility of all is that the rollout will be a flop.
“There are a million points of (potential) failure,” said Mary Hyland, CPO & VP regulatory affairs at the SSI Group, which provides healthcare software that helps manage finances. “It’s a tremendous undertaking.”
It’s more than just downloading some software. The new programs have to be able to communicate with all the hospitals other software, with insurers and with third-party intermediaries such as SSI Group. And there is no central authority coordinating end-to-end testing and implementation. It’s every doctor and hospital for themselves.
“You can see how this complexity just mushrooms,” Hyland said.
