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The Different ICD-10 Delay Scenarios

March 28, 2012
by Gabriel Perna
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Why the difference between a one and two-year delay is huge
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The recent announcement by the Centers for Medicare and Medicaid Services (CMS) that the compliance date for physicians and hospitals to transition to the ICD-10 (International Classification of Diseases) coding system will be delayed, has left many in the healthcare industry in a state of limbo. Until CMS announces a new compliance date, or announces the original Oct. 1, 2013 date will be kept in place with a delayed enforcement scenario, healthcare providers, payers, and varying state and federal government entities are left with nothing but speculation.

Despite this state of limbo, many industry analysts are urging organizations, on both the provider and payer side, to carry on and keep up with impact assessments and various other ICD-10 preparatory work. Some insiders, like Dave Biel, principal at New York City-based Deloitte, say leaders at organizations should map out one and two-year scenarios as they wait to hear from CMS about the delay.

Healthcare Informatics Assistant Editor Gabriel Perna got the chance to speak with Biel about various issues related to the ICD-10 compliance delay, including why the difference between a one-year and two-year delay is enormous. Below are excerpts from that interview.

Dave Biel

Ultimately, what have you heard from providers and payers, on how they’ve taken the news of this ICD-10 compliance delay?

Reactions varied. I found it interesting that the variance was not on the type of healthcare entity, meaning provider versus payer, but on how much momentum an organization has achieved for their remediation programs. For those that are mature and “ramped up,” this year teed up to be a very big year of activity.  They had their funding, their plans, their resources (and there are a number of organizations in that state of readiness across all sectors), and were poised to deliver an unprecedented level of work in 2012. These organizations reacted negatively, especially immediately following the announcement. Their feeling was this would take the momentum out of their sails, after it took such a major investment in time, effort and dollars to get where they were. As you know, at these large organizations, getting these enterprise transformation efforts - which ICD-10 turns out to be – aligned and moving requires a huge investment. Most program leads were concerned that their CFO would have a knee-jerk response and kill the whole program for 2012 – that is pull their funding.  Obviously, this would create the need to execute a full ramp up again in 2013.

Since their initial reaction, those who were negative have looked at their programs more holistically and have concluded that some more time would be good, but that an extreme delay could damage momentum – meaning more than a year.

On the other side, the organizations that weren’t paying attention to ICD-10 – despite their need to be doing so – are breathing a sigh of relief.  

Does the compliance delay have more of an effect on providers or payers?

Neither is more affected than the other; they are all equally impacted. ICD-10 is pervasive to all healthcare processes that have to do with medical documentation and payment processing, period. The entire healthcare provider revenue cycle, billing office, all the way up to the clinical documentation processes have impacts. Similarly, payers have huge impacts in their claims and payment processing areas, clinical processes and data analytical areas. It’s the same for state health organizations; they are essentially payers for Medicaid. And again, the same holds true for the federal government – Medicare – they have the same payer issues on a massive scale. The federal government also has to deal with provider concerns. For instance, the Veteran’s Administration is the largest provider network in the US.

The bottom line is that ICD-10 represents an unprecedented level of transformation. It makes the HIPAA 5010 transformation small in comparison. We see from recent results that 5010 has not been an easy transformation for the healthcare industry; regardless, it is relatively straightforward when compared to ICD-10.

What’s the difference between a one and two-year delay? Start with the one-year delay.

If you haven’t started, and there are a number of organizations in this category, you should immediately. This is why we are in this delay position in the first place. The delay shouldn’t be looked at as a reason to continue to ignore the mandate for another year or two. It should be looked at as an opportunity to make use of the time available to properly address ICD-10. This applies for all organizations of any type:  payer, provider, state health, federal government.  Nobody should be idle.

For organizations that have mature remediation programs in place, there is a significant difference between a one- and a two-year delay. The one-year delay gives you the opportunity to identify and focus on areas where you may have some weakness. Even for organizations that are moving along nicely, there often is a weak point that could be improved. In many payers, for instance, I see the need to focus on testing and business readiness approaches, which really are not yet well formed or realistic.

The one-year delay represents the opportunity to shore up the areas of your program that were potentially weak. Using testing again as an example, it is an opportunity to create a truly robust approach to test the company under ICD-10, leverage trading partners in a pilot environment and focus on the risky areas that require time and attention.  Putting that plan in place is job number one, and then smoothing the activities and work that proceed it, such as business and technology remediation over a longer time, is possible  Smoothing allows you to spread some of the cost over a longer time.

How do things change beyond a year?

A two-year scenario is different, because it is simply a more complex scenario. Most organizations will undergo numerous changes that will change their operating and systems landscape – in some cases significantly. With numerous government mandates in play and other internal improvement initiatives in flight, it is safe to assume that many organizations need to examine what their future state looks like in 2015 before they consider how to refresh their ICD-10 programs.  

As an example, several payers are consolidating their core administrative systems right now, which is a huge multi-year effort. Some of those are scheduled to complete in the two-year timeframe. They also have other large transformation efforts that will change their infrastructure and process. So a two-year delay begs the question, “does the plan I had in place for 10/1/2013 remain the same plan if the date moves to 10/1/2015?” “Is my approach to remediation different based on the other changes I am planning to implement by 2015?” “Should I slow or stop some threads that may no longer be necessary?”  And, “should I start new threads that now will be required?” As you can see, there are more variables to consider in a two-year scenario.

Another aspect that is critical in a two-year scenario, and also needs to be considered for a one-year scenario as well, is the movement of time-sensitive activities that should coincide with the compliance date.  A key example is training – which is a crucial component, especially for providers. If you train too early, people will forget what they learned. If you train too late, they will not be ready for the transition. With a two-year delay there’s a significant amount of re-planning required for these types of activities.

Going forward, as we wait for the CMS to announce the delay, what’s your advice to CIOs, CMIOs and other technology leaders at hospitals on how to deal with ICD-10 – with so much uncertainty?

There is a set of scenario planning that we believe all organizations should do. Now the caveat is, that to do a scenario plan you need a plan to start with. If you have that, I recommend a one- and two-year scenario plan, at least. Doing a deep dive review of the delay impacts to your program is very important. The one-year scenario plan focuses on identifying threads of work to shore up, and threads to smooth. The two-year scenario plan is similar but on a greater scale, and focuses also on the numerous changes and variables that may impact your organization’s approach. All scenarios need to address movement of key milestones and time-sensitive activities, of course, as well as doing a cost and funding analysis for your sponsors who will be awaiting to hear how much the new plan will cost, and if any dollars for 2012 can be allocated to other programs.

Last and most important (and this is critical):  if you haven’t done your impact assessment, DO NOT WAIT. The delay doesn’t suggest you should continue to ignore the mandate – do your assessment and evaluate the amount of work you need to do to become compliant. Then, when the government reveals the new deadline, it will possible to create a cogent plan to achieve compliance within that time frame.

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