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Survey: Healthcare Organizations Largely Unprepared for ICD-10 Implementation

January 8, 2014
by Rajiv Leventhal
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With ICD-10 implementation less than 10 months away, health plans and providers haven't fully determined how the new coding standards will affect their businesses, according to a recent poll conducted by KPMG, the N.Y.-based audit, tax and advisory firm.

The KPMG poll, conducted from October to December of 2013, found that while the majority of payer and provider respondents acknowledged that they had completed an ICD-10 impact assessment (76 percent) and had allocated budget toward readiness efforts (72 percent), they were significantly deficient in preparing for key aspects of implementation. Comprehensive system testing, determination of impact on cash flow, and revenue cycles were where the majority of respondents revealed that their respective organizations had not properly addressed the impact of ICD-10 implementation.

"As October 1st inches closer, healthcare organizations have their work cut out to properly absorb the impact that the new coding will have on their businesses," Wayne Cafran, an advisory principal in KPMG's healthcare and life sciences practice, said in a statement. "A full 50 percent stated that they had yet to estimate the new coding systems impact on their cash flow. With estimates by those who did measure the impact tallying anywhere from $1 million to more than $15 million, healthcare organizations are in for a rude awakening when they finally realize what the new standards will have on their bottom lines."

Nonetheless, healthcare providers and health plans will spend the early part of 2014 ensuring that their coding systems are properly functioning by October 1st. Forty-two percent of respondents indicated that they have recently undergone system testing, which, according to the Centers of Medicaid and Medicare Services (CMS), includes working with practice management system and outside vendors to develop and test processes and systems using ICD-10 codes, creating a comprehensive test scheduling plan, and working with health plans and billing clearinghouses.

In terms of more comprehensive testing, one-third of respondents indicated that they are currently conducting end-to-end testing. More than one-quarter (28 percent) stated that they plan on conducting end-to-end ICD-10 compliance testing, while three percent stated that they would not.

"Nearly three-quarters (74 percent) of respondents said that they have yet to or are not planning on conducting testing that involves external entities, such as health plans, providers and trading entities," said Cafran. "This proves somewhat problematic when you consider the importance of ensuring that the process will function smoothly on day one. The recent roll out of the Affordable Care Act from a technical aspect should give health plans and providers all the motivation they need in determining just how important it is to put the new system through its paces."

A survey published in December by the Workgroup for Electronic Data Interchange (WEDI) revealed that despite the impending deadline, the healthcare industry isn’t ready. According to that survey, 80 percent of providers will not complete their business changes and begin testing before 2014. Additionally, more than 20 percent of vendors said they were half-way or less than half-way complete with product development in support of ICD-10, and 40 percent said they would not have products available to customers until 2014. One-third of payers were planning to test externally by the end of 2013, down from one-half in the February 2013 survey.

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