Many hospitals and health systems are crying foul over the ICD-10 delay, other will benefit from the decision
With the ICD-10 switch pushed back until at least Oct 1, 2015, Becker’s Hospital Review notes a financial blow has been dealt to “hospitals and health systems that have devoted significant resources to ensure readiness” for the now-delayed Oct. 1, 2014 deadline.
Becker’s quotes John Halamka, MD, CIO of Beth Israel Deaconess Medical Center in Boston, as writing on his blog, “Although I know that many small practices were not ready for ICD-10, the majority of hospitals and payers were ready for 2014. A delay in 2013 may have been helpful, but a delay in 2014 is just going to cost hospitals more as timelines and consulting engagements are extended.”
But what, exactly, will the delay cost hospitals? According to Pamela Arora, SVP and CIO of Children’s Medical Center Dallas, the delay will cost her facility over $1 million. “At Children’s, with 45 downstream systems beyond the electronic medical record changes required, the two years’ delay will cost over $1 million. As a not-for-profit organization that provides $55 million in charity care and has a 65 percent Medicaid base annually, this directly affects the capacity of care we can provide in the community,” she says.
According to Modern Healthcare, Catholic Health Initiatives purposely chose to set aside implementing a new electronic health record system and chose instead to spend millions of dollars upgrading their software to accommodate ICD-10. Now, the possibility exists that the effort – and the money spent – may have been wasted.
“We made decisions 18 months or two years ago that we are going to do certain things and postpone certain things based on having to implement ICD-10,” said Michael O’Rourke, SVP and CIO at Catholic Health Initiatives. “Had we known this would be delayed, things would have been different.”
Still, not all health systems view the delay negatively as many knew a disruption in revenue streams caused by the scramble to meet this year’s deadline would have negatively impacted credit ratings. There had been fear of declining ratings for small organizations and nonprofits as ICD-10 tied up valuable resources with Fitch Ratings writing in March, “Revenue cycle disruptions due to ICD-10 implementation could place added rating pressure on hospitals with weak liquidity positions and/or depressed profitability … or smaller hospitals with limited access to resources that would enable them to fully prepare for ICD-10 and absorb the associated revenue cycle disruptions.”
Now, Fitch Ratings writes, “The one-year extension of the deadline for hospitals and payors to transition to the International Classification of Diseases (ICD-10) is viewed as a positive credit development for not-for-profit hospitals. While the majority of hospital providers Fitch rates are prepared for the Oct. 1 transition, the potential disruption to the revenue cycle could have a negative credit impact on the sector (particularly on lower rated credits).”
Health systems worried about damage to their credit rating aren’t alone in benefiting from the delay, as Healthcare Finance News writes. Citing KLAS research, Healthcare Finance News asks, “So, who is relieved?” before answering its own question with:
- “Some Ill-Prepared Core Vendors: Not all providers are confident that their core vendors are ready for the transition. One CMIO recently told KLAS, ‘Our core vendor will be breathing a deep sigh of relief because they are not ready.’
- CMS and Payers: Many providers report that payers are still not ready for testing. This includes Medicare, which reportedly won’t begin ICD-10 end-to-end testing pilots until the end of July. Regarding CMS, one provider said, ‘I don’t think CMS is ready, and they are cleverly disguising it by using providers as the reason for the delay.’
- MGMA, AMA, and Physician Practices: The AMA is against moving to ICD-10 entirely. They estimate the cost of switching to ICD-10 will be between $225,000 and $8 million for physician practices and that it will force many practices out of business. The MGMA said that without CMS leading the testing, ‘there will be significant increases in cash flow disruptions to practices that will affect the ability to treat patients.’
- Providers needing more testing, implementations, training or optimization: Several providers KLAS spoke with welcomed the extra time. They said the following:
- ‘After hearing the announcement, we have breathed a sigh of relief. We will adjust our timeline for training and implementation and revise our plan moving forward.’
- ‘This allows us to do a thorough mitigation. We will use the extra time redesigning EMR smart tools to make it easier for documenters to provide the needed specificity.’ – Anonymous Director of HIM
- ‘We will finish the end-to-end testing and then stop work until next year, when we will have to bring in another resource to do regression testing and then cutover. We will finish the computer-aided coding implementation along with the crosswalk tool implementation and the dual-coding implementation.’”
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