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Home / News & IndustryManaged Care Insight and Analysis
Updated: Jan. 13, 2009
ICD-10 Mandate Hardship For Healthcare Providers Says Study

A proposed rule from the Department of Health and Human Services (HHS) requiring all physician practices and other providers to adopt a new coding set – the ICD-10 code set – by 2011 would dramatically increase costs for physician practices and clinical laboratories, according to a new cost study initiated by a broad group of provider organizations and conducted by Nachimson Advisors.

According to the study, the total estimated cost for a 10-physician practice to move to ICD-10 would be more than $285,000. These expenses include:

    a. Total training expenditures estimates – $4,745

    b. New claim form (superbill) software – $9,990

    c. Business process analysis – $12,000

    d. Practice management and billing system software upgrades – $15,000

    e. Increases in claim inquiries and reduction in cash flow – $65,000

    f. Increased documentation costs – $178,500

The study also said for a small, three-physician practice, the total cost to implement ICD-10 is estimated to be $83,290; for a large, 100-physician practice the estimated costs to implement ICD-10 is more than $2.7 million.

"We are just now beginning to learn the increased costs on physician practices associated with moving to the ICD-10 code set – and they are staggering," said Dr. William F. Jessee, Medical Group Management Association president and CEO. "If HHS’s proposed 2011 timeframe for implementing ICD-10 goes forward as planned, physician practices will have to cope with a crushing burden of added costs, duplicative systems and confusion over health insurers’ coverage decisions. HHS’s proposed timeframe is unworkable for patients, physician practices and clinical laboratories and needs to be changed." MGMA was one of the organizations that commissioned the study.

HHS proposed a new rule that would require all physician practices.

Dr. Joseph M. Heyman, board chair, American Medical Association (AMA), stated "The AMA is deeply concerned that HHS is rushing head-first into the transition to a complex coding system without fully recognizing the impact on the healthcare system. Physicians, insurers, medical labs and others are raising the alarm that the costs, documentation and training required by ICD-10 will be significantly greater than HHS now recognizes. We are committed to improving the healthcare system, but we cannot let history repeat itself as CMS attempts to quickly implement yet another major HIPAA change without allowing time for physician education, software vendor updates, coder training and testing with payers – steps that are needed for a smooth transition and cannot be rushed."

Clinical laboratories will also be impacted.

In the study, Nachimson Advisors identified a large national laboratory as estimating its up-front cost of implementing ICD-10-CM to be approximately $40 million, including IT and education costs.

"This study illuminates the fact that adopting ICD-10 will be far more costly for physician practices and clinical labs and much more complicated than HHS acknowledges in the proposed rule," said Alan Mertz, president of the American Clinical Laboratory Association. "We are hopeful that HHS will review this study closely and revise their compliance strategy to correspond with a more appropriate timeline."

Addresses: Nachimson Advisors, 11 Valley Glen Ct., Reistertown, MD 21136; (410) 935-7084, Medical Group Management Association, 104 Inverness Terrace East, Engelwood, CO 80112; (303) 799-1111,

  This article was taken from:
The Executive Report on Physician Organizations

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