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Costs of implementing ICD-10

The cost of implementing ICD-10 in small and medium physician offices could be quite excessive. In 2014, the American Medical Association released a report outlining the cost of ICD-10 implementation. For small practices, the report estimated costs could exceed $200,000, while for medium practices the costs could exceed $800,000.

  Typical Small Practice Typical Medium Practice Typical Large Practice
Training $2,700 – $3,000 $4,800 – $7,900 $75,100
Assessment $4,300 – $7,000 $6,535 – $9,600 $19,320
Vendor/Software Upgrades $0 – $60,000 $0 – $200,000 $0 – $2,000,000
Process Remediation $3,312 – $6,701 $6,211 – $12,990 $14,874 – #31,821
Testing $15,248 – $28,805 $47,906 – $93,098 $428,740 – $880,660
Productivity Loss $8,500 – $20,250 $72,649 – $166,649 $725,487 – $1,666,487
Payment Disruption $22,579 – $100,349 $75,263 – $334,498 $752,630 – $3,344,976
Total Costs $56,639 – $226,105 $213,364 – $824,735 $2,017,151 – $8,018,364

Source: American Medical Association

Implementation Timeline & Phases

Develop an implementation strategy that includes an assessment of the impact on your organization, a detailed timeline, and budget. Check with your billing service, clearinghouse, or practice management software vendor about their compliance plans. Providers who handle billing and software development internally should plan for medical records/coding, clinical, IT, and finance staff to coordinate on ICD-10 transition efforts.

Planning

  • Establish project management structure
  • Establish governance
  • Plan to communicate with external partners
  • Establish risk management

Communication and Awareness

  • Create a communication plan
  • Assess training needs and develop a training plan
  • Meet with staff to discuss effect of ICD-10

Assessment

  • Assess business and policy impacts
  • Assess technological impacts
  • Evaluate vendors

Operational Implementation

  • Identify system migration strategiesImplement business and technical modifications
  • Prepare and deliver training

Testing

  • Complete Level I internal testingComplete Level II external testing

Transition

  • Prepare and establish the production and go-live environmentsDeliver ongoing support

The ICD-10 Implementation Guide for Small and Medium Provider Practices groups the milestones and tasks into the following six phases:

Planning

  • Establish a project management structure
  • Ensure top leadership understands the breadth and significance of the ICD-10 change.
  • Assign overall responsibility and decision-making authority for managing the transition. This can be one person or a committee depending on the size of your organization.
  • Plan a comprehensive and realistic budget. This should include costs such as software upgrades and training needs.
  • Adhere to a well-defined timeline that makes sense for your organization
  • Establish a governance plan to communicate with external partners
  • Ensure involvement and commitment of all internal and external stakeholders. Contact vendors, physicians, affiliated hospitals, clearinghouses, and others to determine their plans for ICD-10 transition.
  • Identify any additional tasks based on your organization’s specific business processes, systems, and policies
  • Identify critical dependencies and predecessors
  • Identify resources and task owners
  • Estimate start dates and end dates
  • Identify entry and exit criteria between phases
  • Continue to update the plan throughout ICD-10 implementation and afterwards
  • Establish a risk management process
  • Identify risks by departments or key internal/external functions
  • Identify the chance a risk will occur, its degree of potential impact, and relevant ways to avoid risk like offering training, identifying alternate vendors, and building up cash reserves or increased lines of credit
  • Assign responsibility for risk reduction action, including when to involve management through channels appropriate for your practice structure

Communication and Awareness

  • Create a communication plan
  • Ensure that all your internal and external stakeholders understands their responsibilities for ICD-10 implementation. The communication plan should identify:
  • Stakeholders
  • Audiences
  • Messages
  • Issues
  • Roles and responsibilities
  • Timelines
  • Communication methods
  • Evaluation techniques
  • Assess training needs and develop a training plan that identifies
  • Affected staff members, including physicians, nurse practitioners, physician assistants, medical technicians, administrative staff/coders, and vendors
  • Staff competence and skill gaps, and how to tailor trainings to individuals or business user groups
  • Optimal timing to receive training/certification
  • Best approach training methods for your practice, including webinars, certification courses, and community courses
  • Meet with staff to discuss effect of ICD-10 and identify responsibilities

Assessment

  • Assess business and policy impacts
  • Referrals
  • Authorization/ pre-certification
  • Patient practice intake
  • Patient clinic encounter—including entry, clinical and exit
  • Patient hospital encounter and hospital admission scheduling
  • Physician orders
  • Medical record
  • Analytics
  • Contracting
  • Research participation
  • Public health reporting
  • Risk Management
  • Financial Operations
  • Value
  • Compliance Management
  • Clearinghouse Relationship Management
  • Payer Relationship Management
  • Assess technological impacts
  • Clinical Documentation
  • Physician Reimbursements
  • Evaluate vendors
  • Create an inventory of existing vendors, tools, and possible vendor candidates.
  • Establish a tracking system to ensure that you address and monitor key questions, concerns, and that the vendor meets project timelines.
  • Identify “Plan B” options in case your vendor does not progress fast enough, including operational work-arounds and vendor replacement alternatives.
  • Review contracts to clarify existing vendor contractual requirements, and factor key requirements into contracts with new vendors.
  • Analyze interfaces or dependencies between systems to avoid failures from cross-system dependencies.
  • Define acceptance criteria to measure vendor performance.
  • Ensure that vendor capabilities meet your organization’s expectations.
  • Code Set Maintenance
  • Ability to Search for Codes
  • Code Cross-Walking
  • Definition of Code Set Aggregation or Grouping
  • Develop Clinical Test Scenario Assessments

Operational Implementation

  • Identify system migration strategies
  • Patient registration
  • Clinical documentation/health records
  • Referrals and authorization
  • Coding
  • Order entry
  • Billing
  • Reporting and analysis
  • Other diagnosis-related functions, depending on the nature of the practice
  • Implement business and technical modifications
  • Determine if/how your practice will work with vendors for implementation
  • Coordinate with vendor the update of the internal policies affected by ICD-10
  • Coordinate with vendor the update of internal processes affected by ICD-10, including clinical, financial, actuarial, and reporting functions
  • Finalize system/technical requirements
  • Identify test data requirements
  • (there is a further outline of requirements in the Scenario Based Vendor Assessement section)
  • Update approved code design to remediate system changes and updates
  • Coordinate update of code with vendor to remediate system changes/updates
  • Coordinate and conduct testing with partners based on updated system logic
  • Prepare and deliver training

Testing

  • Unit testing/basic component testing
  • System testing
  • Regression testing
  • Nonfunctional testing – performance
  • Nonfunctional testing – privacy/ security
  • Complete Level I internal testing **The ICD-10 Final Rule requires Level I compliance testing.
  • Database architecture
  • User interfaces
  • Algorithms based on diagnosis or institutional procedure codes
  • Code aggregations (grouping) models
  • Key metrics related to diagnosis or institutional procedure codes
  • All reporting logic based on diagnosis or institutional procedure codes
  • Complete Level II external testing **The ICD-10 Final Rule requires Level II compliance testing.
  • Payers
  • Hospitals
  • Health Information Exchanges
  • Outsourced Billing or Coding
  • Government Entities
  • Implications
  • Test Plan
  • Identify acceptance criteria based on business and system functional requirements that were defined during the analysis/design phase
  • Determine the business sponsor responsible for approving the scope of test plans
  • Test Case
  • Define test cases to ensure that the system updates meet your business requirements and that the system components function efficiently.
  • Test case design should include both anticipated and unexpected outcomes.
  • Test cases should also include high-risk scenarios.
  • Include Test Data to:
  • Validate (data validation)
  • Trigger errors
  • Test high risk scenarios
  • Test volume
  • Test all types of domains and categories
  • Simulate a standard environmental model over time
  • Test comparisons, ranking, trending variation, and other key analytic models
  • Error-testing Plan
  • Multiple testing layers to support various iterations of re-testing in parallel tracks
  • Effective detection and repair of blocking errors that limit testing activities
  • An error-tracking system with standard alerts to report to stakeholders
  • Prioritization model for error remediation designed to focus on business-critical requirements
  • Set of acceptance criteria
  • Model for reporting known issues
  • Developing a schedule for fixing known issues in the future

Transition

  • Prepare and establish the production and go-live environments
  • Confirm with system vendors
  • Test the baseline
  • Identify financial targets (taking into consideration revenue losses due to anticipated bill rejections)
  • Prepare for productivity declines
  • Continue to assess quality
  • Deliver ongoing support
  • Identify problems or errors, and take steps to address them
  • Monitor coding accuracy and productivity and implement strategies to address identified problems
  • Monitor payers for possible interaction issues
  • Monitor the ICD-10 transition’s impact on reimbursement, claims denials and rejections, coding productivity and accuracy
  • Monitor systems function and correct errors or other identified problems as quickly as possible; implement contingency plan if needed
  • Resolve post-implementation problems as expeditiously as possible
  • After the ICD-10 implementation, your practice should review processes to confirm their effectiveness and sustainability. These include:
  • Clinical documentation changes
  • Coding practices and processes
  • Revenue cycle processes and changes
  • Other organization adaptations made during the transition

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