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A survey conducted by CliftonLarsonAllen found that a majority of providers are behind in their implementation of the new ICD-10. Health Care Managing Consultant Karla VonEschen explains why providers should start implementation now to avoid problems in the future.

Survey: 70 Percent of Providers Unprepared for ICD-10 Implementation

  • 1/12/2012

Survey: 70 Percent of Providers Unprepared for ICD-10 Implementation

The health care industry was given almost five years to start implementing the International Statistical Classification of Diseases and Related health Problems, 10th Revision (ICD-10) Clinical Modification/Procedure Coding System (CM/PCS), which must be ready by October 1, 2013. In addition, the industry must also implement the Health Insurance Portability and Accountability Act of 1996 (HIPAA) version 5010 standard by March 31, 2012, to prepare for the ICD-10 transition.

In July 2011, LarsonAllen (now CliftonLarsonAllen) asked administrators, health systems, revenue cycle teams, hospitals, physician practices, home health care, hospice agencies, senior care facilities, and CFOs to participate in a survey to benchmark readiness for ICD-10.

The survey results showed many providers have not started the process or created an implementation plan.

“The implementation of ICD-10 is overwhelming for everyone in the health care community; but the more you do now, even the small steps, will pay off when October 1, 2013, is finally here,” says Karla VonEschen, a health care managing consultant with CliftonLarsonAllen.

Organizational preparedness

Participants were asked 14 questions ranging from where they were in the transition process, to how much education and funding they have for the transition. Out of 100 responses, 39 percent said they had not started to prepare for the ICD-10 transition, and 31 percent indicated they were behind schedule, but had started planning. Only 1 percent were ahead of schedule, and 29 percent were on schedule.

It is vital that organizations make this a priority, since the government has not indicated there will be any deadline extensions, says VonEschen. “I spent many years working in the payer world, and from an operational perspective, I believe ICD-10 will impact more than just claims processing payments,” she says. “This will also impact how benefits are administered, financial reporting, quality reporting, care management, contracting, customer service, provider service, and more.”

VonEschen acknowledges that implementation is a big undertaking regardless of an organization’s size, but says the process is manageable if it is broken down into the following phases:

  • Planning: Perform an analysis of your organization to determine risk, begin educating staff, and start working on a plan of approach. 
  • Preparation: Determine who the key stakeholders are, create a project plan, and start assigning tasks and responsibilities to various staff, including clinical coders, information technology (IT), operations, and care management.
  • Implementation: Make necessary operational changes to bill and accept payments in both ICD-9 and ICD-10 code formats, and create a plan to test functionality in early 2013. Make sure to leave enough time to work out any bugs.

Knowing where to start

The most common reason respondents gave for stalling on the transition was a lack in knowledge of how to get started. This was followed closely by resource prioritization, and insufficient key stakeholder engagement.

According to VonEschen, there are many organizations with resources to help start the transition to ICD-10, including:

Budgets, training, and resources

Another key barrier is budgeting, with 64 percent stating they do not have ICD-10 preparations in their budget. VonEschen believes the cost of not being ready will outweigh the cost of transitioning on time. “Consider the financial impact of rejected claims, claims processing at an incorrect benefit level for the member, incorrect contract payment to the provider, increased call volume to the payer, and resubmitting and reprocessing claims for payment,” she says.

In addition, 79 percent stated they did not have an internal training plan in place. “Training staff on ICD-10 will be an important part of a successful transition,” VonEschen says. In particular, she noted that coders will need a solid knowledge of anatomy to understand how to code ICD-10. The current ICD-10-CM code book has approximately 68,000 diagnosis codes, while ICD-10-PCS has approximately 72,000. The current ICD-9 diagnosis codes used today total about 17,000.

Two-thirds of participants stated they planned on utilizing external resources to assist with ICD-10 planning and implementation. Almost 70 percent said they would find educational services beneficial, followed by group coding training (55 percent), “train the trainer” coding sessions (43 percent), and diagnosis coding and documentation review (32 percent).

5010 compliance

Providers must also soon be compliant with HIPAA version 5010, the new standard that regulates the electronic transmission of specific health care transactions. It is necessary to implement the standard to prepare for the ICD-10 transition. The compliance deadline was January 1, 2012, but there is a 90 day grace period before any action will be taken for noncompliance. VonEschen says providers should take the following steps to make the transition successful:

  1. Assess the documentation gaps. Since appropriate ICD-10 coding will rely heavily on detailed documentation, it will be important to determine where improvement is needed. Without appropriate detail, it will be very difficult for coders to accurately select the correct ICD-10 code.
  2. Know your medical terminology and the current ICD-9 system for coding. Many providers are unaware of how much of their practice relies on appropriate diagnosis coding, from a clinical and financial standpoint. A solid understanding of both will make for an easier transition to ICD-10.
  3. Prepare for a possible financial impact. Claims payment can be driven by many factors, but with payment being driven by ICD-9 codes, providers should expect an impact with the change to ICD-10. Health plans may try to avoid ICD-10 from having any impact on reimbursement, but differences in payment may be inevitable, says VonEschen. This may be based on the precise coding in ICD-10, and the differences in some code sets which may be difficult to organize.

How we can help

Many providers are at different stages in the ICD-10 implementation process, but there are resources for each step. CliftonLarsonAllen can help with ICD-10 transition assessment and development plans, coding education, reviews of gaps in physician documentation, assessing financial risk, contract review and negotiation, and payer readiness assessments.


Rob Schile, Health Care Partner or 612-376-4592

Karla VonEschen, Health Care Consultant or 612-376-4603