ICD-10 Implementation May Be More Costly Than Thought

An updated report prepared for the American Medical Association (AMA) released Feb. 12 showed an increase in physician implementation costs for the upcoming transition to the International Classification of Diseases, 10th Revision (ICD-10) code set from the original 2008 report, in some cases by as much as five times. The report, which was prepared by Nachimson Advisors LLC, said “costs to implement ICD-10 may be much higher than what was estimated in 2008, especially for physicians who must pay for upgrades to their electronic health records (EHR) and practice management systems (PMS).” For example, the original report estimated small physician practices would incur ICD-10 implementation costs of $83,000, while the updated report said costs could range from $57,000 to $226,000. For medium physician practices, estimated implementation costs changed from a fixed $285,000 in 2008 to between $213,000 and $824,000 in the updated report; for large physician practices, estimated costs changed from a fixed $2.7 million in 2008 to a range of between $2 million and $8 million in the updated report. ICD-10 is a code set updating health care diagnoses and procedures from the currently used 13,000 codes in ICD-9 to 68,000 codes. All Health Insurance Portability and Accountability Act entities must transition to ICD-10 by Oct. 1, 2014. The updated report said physician practices that have no costs associated with ICD-10 software upgrades will see implementation costs somewhere in the lower end of the report’s estimates. However, the report said only one-third of practices are likely to have no software upgrade costs, and the majority will see cost increases. “Specialty practices, because of their higher revenues and per hour rates, show the greatest costs, especially for productivity losses and payment disruption,” the report said. ICD-10 Delay Sought In addition to releasing the updated cost report, AMA Feb. 12 sent a letter to Health and Human Services Secretary Kathleen Sebelius calling for a repeal of the ICD-10 code set. The letter said that transitioning to the ICD-10 code set would lead to heavy financial burdens for physicians as well as prevent them from making progress on other federal programs, including achieving meaningful use of electronic health records and meeting electronic prescribing standards. Beyond repealing ICD-10, the AMA letter said that the Centers for Medicare and Medicaid Services (CMS) should conduct end-to-end ICD-10 testing for all physicians. If full testing isn’t possible for all physicians, AMA said CMS should conduct end-to-end testing with a sample of 100 physician practices of all sizes. Takeaway: Health care providers should be prepared to invest heavily in software upgrades as they prepare to transition to ICD-10 come Oct. 1, 2014.