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Managing ICD-10-and Healthcare Reform-Related Volatility

July 20, 2011
by Pradep Nair, Sr. Vice President HCL Healthcare Practice
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Dramatic change is coming to the U.S. healthcare industry, and it will permanently alter the way payers and providers work together, while upsetting basic formulas for profitability and success. In October 2013, the entire industry will convert to the 10th Revision of the World Health Organization's International Classification of Disease. ICD-10 is an unfunded mandate that will add massive complexity to healthcare claims and reimbursement systems. Just three months later-in January 2014-significant portions of Healthcare Reform will take effect, compounding the complexity.

While these changes will create substantial volatility, payers that develop and employ proactive strategies and investments will position themselves to seize considerable new market share.

ICD-10 will increase diagnostic codes from 14,000 to 67,000, and hospital procedure codes from 13,000 to 85,000. While this added data granularity will lead to better analytics and enhance medical outcomes, it will be extremely burdensome for payers. Healthcare reform, which is designed to, among other things, provide better coverage for those with preexisting conditions, improve prescription drug coverage in Medicare, and extend the life of the Medicare trust fund by at least 12 years, will cause even more headaches.

While ICD-10 is a done deal, elements of Healthcare Reform, because of legal challenges, are less certain to occur. Some legal experts, for example, doubt that the government can force anyone to buy health insurance, or to deny them the ability to opt out of a plan offered at work. However, even if parts of the act are thrown out, healthcare payers, providers and other stakeholders should nonetheless prepare themselves for significant changes in the marketplace. More likely, successful challenges will set the stage for a more iterative approach to healthcare reform, but not its full repeal.

PREPARE, NOW

Payers that have not already begun preparing for ICD-10 and Healthcare Reform can minimize business disruption by starting immediately. The steps that may take place with Healthcare Reform-universal coverage, prohibition of pre-existing condition exclusions, premium support (or tax credits) for low-and middle-income residents, and health benefits exchanges, to name some-clearly will create a sea change in how payers manage their business. It is critical that once these become law, payers are able to thrive.

Companies that fail to prepare for the imminent changes will find themselves in serious trouble. In addition to government sanctions-fines and penalties, in most cases-they will likely be leapfrogged quickly by competitors that have taken the necessary steps to comply. As a result, they will lose market share and perhaps eventually fail outright.

Fortunately, there are several strategies payers can adopt to manage the volatility the new environment will create. They can:

  • Sharpen their focus on their core competencies to become nimble

  • Grow their presence in emerging markets

  • Consider merging or acquiring complementary capabilities

Whichever strategies payers pursue, they will require canny investments in people, process and technology-investments that enable interoperability, scalability, flexibility, and cost-effectiveness. While these programs will require resources, they will pay off handsomely as the environment these new laws bring about takes shape.

HCL CAN HELP

With massive changes looming, forward-looking payers and other industry stakeholders are gearing up with innovative strategies and solutions to manage the dual challenges of ICD-10 and Healthcare Reform. To this end, HCL Healthcare has brought together an elite team of physicians, technology experts, and industry specialists to build a complete and affordable suite of solutions for healthcare payers, providers, pharmaceutical companies and employers.

Already, this team has deployed solutions such as an innovative process that channels high-risk members into disease prevention programs and a streamlined quote-to card enrollment system with built-in means-testing-all of which will be required under Healthcare Reform. HCL's robust ICD-10 tools, meanwhile, are helping payers get ahead of a complex new coding regime that will influence the next generation of claims systems and provider contracts.

Moreover, our teams help payers and providers align their business and IT objectives to ensure that the entire organization moves toward compliance as efficiently as possible. We also use care to involve people from all levels of the company in decision-making and the implementation of change, especially where claims processing is concerned. Furthermore, we use industry-leading tools and techniques to help payers get ahead of the conversion process and ensure a smooth transition to the new coding and compliance environment.

Combined with our proven technology and BPO skills, HCL empowers healthcare payers to control costs, comply with a host of regulations, laws and acts, and thrive in a world that before long, will be fundamentally changed by Healthcare Reform and unfunded mandates. The company's industry experts have a comprehensive understanding of how the industry operates, the impact the mandates will impose, and the best ways payers can meet the challenges they face.

Healthcare Informatics 2011 August;28(8):33-35

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