Measuring the Financial Impact of ICD-10 Conversion, Part 2

In Part 1 of this two-part article (which you can read here), Terri McCubbin, director of acute care consulting services for 3M Health Information Systems, outlined a two-phase process for determining the financial impact of converting from ICD-9 to ICD-10. The first step, conducting a gap analysis to determine how ICD-10, if implemented today, would affect the current claims process, was  described in Part 1. The second phase — identifying the financial risks and opportunities resulting from that analysis — is the subject of this article.

Before launching its ICD-10 conversion project, New York University’s Langone Medical Center management wanted some answers.

According to McCubbin, management at the 1,000-bed hospital and healthcare provider wanted to know the risks and opportunities that awaited the organization as it approached the Oct. 1, 2014 deadline when ICD-9 would be replaced by ICD-10. At the outset of the ICD-10 project, NYU Langone management asked:

• How will the conversion affect reimbursement? How would DRG payments change from its larger payers?
• ICD-10 contains more than 8 times as many individual codes as ICD-9, which will increase the bureaucratic workload of the organization. What are the real costs of the anticipated loss of productivity?
• How much training will be required and for whom? What is the cost of that training, both direct and indirect, such as the cost to backfill personnel who will be taking training?

After the gap analysis, NYU Langone was able to project a budget for ICD-10 conversion. Here’s a summary of what they discovered:

Impact on reimbursement

According to McCubbin, some healthcare providers will see an increase in reimbursements as a result of the ICD-10 conversion, some will see a decline, and still others, no change.

When the analysis was extended by specialty, there was a more dramatic variance in reimbursements. Reimbursements for surgery, the analysis found, would grow by more than $200,000; orthopedics, the specialty of NYU Langone, would lose more than $100,000 under ICD-10.

Productivity loss

For those healthcare organizations without a Clinical Documentation Improvement (CDI) program, the loss in productivity by coders is estimated to be 30 percent to 50 percent in the first year if ICD-10. Fortunately NYU Langone has a CDI program, and according to McCubbin will lose a maximum of 30 percent productivity, which will drop to around 10 percent in the second and subsequent years.

Training

Training, at least for those who currently code under ICD-9, is a known quantity. Inpatient coders will require between 65-80 hours of training; outpatient and professional coders 40 hours. Don’t forget to include CBI staff among those who need to be trained, McCubbin says. The cost of training ranges between $500 to $5,000, depending upon method; computer-based training is far less expensive than in-person training, for example.

The big unknown in training is what is required for clinical staff, especially physicians. Thanks to the gap analysis, NYU Langone can pinpoint how much training will be required by specialty.

McCubbin warns that training for physicians cannot be cookie cutter. “Number one, they will never learn to code,” says McCubbin. “Our approach is to educate the physicians on the new documentation requirements ITALIC to their speciality. Cardiology doesn’t want to know what urology requirements. You need to focus that education just on cardiology.”

The good news, says McCubbin, is that she believes that physicians can learn what they need in less than an hour.