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Are the AMA’s ICD-10 implementation estimates correct?

October 21, 2015

ICD_10_cost_estimationPhysicians who have read the American Medical Association’s estimates of projected ICD-10 implementation expenses for most practices have plenty of reasons to be concerned. According to the AMA, between the initial 2008 estimates and the updates in 2014, cost estimates increased threefold from a low of around $56,000 for single-provider practices to nearly $226,000. A medium practice of six to 10 providers could pay between $213,300 and $824,700, with costs for larger practices running into the millions: between $2 and $8 million, according to the latest estimates.
Other groups, such as the American Health Information Management Association (AHIMA), put the figures considerably lower $4,372 for single-provider practices and around $11,028 for those with six providers, calculated at $1,838 per provider. AHIMA reminds providers that the old ICD-9 codes weren’t developed with reimbursement in mind, one reason behind many reimbursement headaches.

The ICD-10 system which replaces them offers more payer-friendly options and therefore higher reimbursements down the road. Until both providers and payers are both competent with the new coding, however, many practices will have to come up with eye-opening sums of money to finance the technology and staff training necessary to fully comply.

Additional costs of ICD-10 compliance readiness:

In addition to the obvious expenses of software and training, there are several hidden costs that the AMA and others may not be adequately factoring into the estimates but which can quickly turn into significant expenses. Some of these include:

Payer reimbursement issues:

  • Regardless of how well-prepared a practice may be, with a trained staff and top-notch billing service, there is no control over payers. The result could be major backlogs of unprocessed claims, leaving practices stuck with dwindling revenues.
  • Providers can probably count at least a few payer processing mistakes during the transition period that could result in erroneous denials and other payment delays, further draining revenues.

Read More: 6 Ways Cross-walking Eases ICD-10 Transition Headaches 

Staff time and productivity issues:

  • Expect a slowdown in coder productivity as they spend more time becoming accustomed to using the new system; expect at least some errors as well, resulting in denials and delays.
  • Additional expenses occur when practices must bring temporary coders on board during the learning period, or pay overtime to the existing coding staff to enable them to keep up with the workflow.

To offset any unplanned costs due to processing and other delays, it is recommended that practices keep three to six months’ of reserves for working capital expenses. Many smaller practices already on tight budgets may have postponed obtaining new software and training for their staff so setting aside enough reserves for three to six months of expenses may not be possible for new or single-provider practices. What can a smaller office with minimal staff do to avoid losing reimbursement revenues while ensuring full coding compliance?

The AMA doesn’t have to have the last word in ICD-10 coding implementation costs – there are options available to keep transition expenses under control while meeting the new guidelines:

  • Most practices have already established a line of credit with their bank; if other financing options aren’t available this could be used to cover the initial costs of software upgrades and training. Depending on the amount needed, this may be preferable to dipping into capital reserves.
  • Another way to buy more implementation time and remain compliant is to entrust the practice’s coding and billing to an experienced medical services partner while your technologies and staff gets up to speed. M-Scribe Technologies, LLC is a full-service company offering billing, coding and other claims assistance to practices of all sizes since 1999. Call us at 888-727-234 or visit us online for a creating your practice’s needs and how to be ICD-10 compliant without losing time, revenues or sleep.

We can also help you creating your ICD-10 crosswalk based on your specific neeeds.


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