Did the Delay of ICD-10 Prevent a Financial Disaster in the Healthcare Market?

Recently healthcare providers were required to transition from the current healthcare coding system of ICD-9 to ICD-10. The acronym ICD stands for International Classification of Disease. Healthcare providers use these codes to classify disease conditions or procedures to support their reimbursement claims. U.S. healthcare providers have been using the ICD-9 coding system since 1979. Numerous countries have advanced from ICD-9 to ICD-10 supporting a greater level of detail classifying a patient’s disease condition and procedures performed. The U.S. has held off moving from ICD-9 to ICD-10 for a number of years due to the complexity and impact throughout every aspect of the healthcare business. The latest deadline for healthcare providers to comply with the ICD-10 coding system was October 1, 2014. A law recently passed gave healthcare providers a reprieve of adopting this new coding system for at least one year.

This reprieve of requiring healthcare providers’ adoption is a positive move, and the delay prevents adverse impact to a number of healthcare providers and the economy. The larger healthcare delivery systems have the resources supporting the conversion to ICD-10, and most of them have been preparing for a period-of-time. The medium to smaller healthcare systems are financially constrained, and not as well prepared. Since healthcare providers operate on a small profit margin and tight cash flow, any impact to slowing down their reimbursement will adversely affect their business. This would put a number of healthcare systems into a position of financial distress, potential bankruptcy or up for acquisition by a by a larger healthcare system. To illustrate this point, I heard of a large healthcare delivery system looking to establish a one billion dollar line of credit to keep them afloat until they can stabilize their cash flow situation after the ICD-10 conversion. Most medium to small hospitals would not be able to acquire a sufficient line of credit to keep them financially viable until their reimbursement and cash flow challenges are worked through due to the conversion. It is foreseeable that the implementation of the ICD-10 coding system this October would have accelerated the consolidation of healthcare providers to a fewer number serving a larger community of patients.

The other challenge is the human element of using a new coding system. The complexity is exponentially more difficult with ICD-10 compared to ICD-9. The ICD-10 diagnosis coding categories grew to 2,033 from 855 in ICD-9. The margin of error is high creating more rejected claims due to errors, and a higher frequency of audits by payers generating fines and payment recovery.

Any negative impact to the financial health of our healthcare delivery systems, adversely affects our economy. Healthcare providers are large employers in most of their communities. They would be required to reduce personnel to remain financially viable. Additionally, the volume of charity care would be reduced and the purchase of supplies is curtailed affecting some of our nation’s largest suppliers and distributors.

The U.S. healthcare delivery system should transform to the ICD-10 coding system. Due to the profound impact to our healthcare delivery system and economy, the implementation should be deployed in a thoughtful and staged approach.

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