ICD-10 Will Cost Docs Less Than First Thought, Study Says

February 11, 2015

For physicians in small practices, the cost of switching to the controversial ICD-10 diagnostic codes on October 1 for clinical documentation and billing purposes is drastically less than previously estimated, according to a new study in the Journal of the American Health Information Management Association (JAHIMA).

The conversion cost came to an average $3430 per physician, taking into account ICD-10 manuals, training, software upgrades and testing, and other related expenses.

This finding comes from a survey of practice administrators who belong to the Professional Association of Health Care Office Management (PAHCOM). The 276 practices they worked in had six or fewer providers, including nurse practitioners and physician assistants in addition to physicians. The survey asked the administrators to add up all the ICD-10 costs that their practices had incurred as well as upcoming expenditures.

The Health Insurance Portability and Accountability Act requires the healthcare industry to switch from the current ICD-9 diagnostic codes to the more comprehensive ICD-10 set. The October 1 deadline, set by the Centers for Medicare & Medicaid Services , has been postponed twice from its original date of October 1, 2013.

Opponents of ICD-10, such as the American Medical Association (AMA), contend that the new codes will impose a prohibitively heavy economic burden on clinicians. They point to a 2008 study that put the cost of switching from ICD-9 to ICD-10 for a three-physician practice at $83,290, or almost $28,000 per physician. That was roughly the same per-physician cost for larger groups. Roughly half the expense of ICD implementation consisted of physicians spending more time documenting patient encounters to support the new codes — a drop in productivity.

The company that conducted that study, Nachimson Advisors, updated the numbers in early 2014 to reflect new expenses that materialized since 2008. One was the need for a new or upgraded electronic health record (EHR) system that incorporated the new diagnostic codes and complied with the federal incentive program for meaningful use of an EHR. As a result, Nachimson Advisors calculated that a three-physician practice could spend anywhere from $56,639 to $226,105, or as much as $75,000 per clinician.

Neither the study by Nachimson Advisors nor the one just published in JAHIMA can be viewed as independent. The AMA, a partisan in the IDC-10 wars, commissioned the Nachimson Advisors study. For its part, the American Health Information Management Association is a staunch ICD-10 supporter. Its senior director for coding policy and compliance, Susan Bowman, is a coauthor of the JAHIMA study.

Battling Studies

The study of the PAHCOM practices is not the only one to undercut the figures from the AMA. The American Academy of Professional Coders recently surveyed practices with fewer than 10 providers and found that ICD-10-conversion costs averaged $750 per provider. Another study published in JAHIMA last fall estimated that a three-physician practice would have to spend $1960 to $5900, or as much as $1966 per provider.

Why have cost estimates dropped so dramatically? The JAHIMA study from last fall excluded costs related to EHR capability and meaningful use that Nachimson Advisors included. The authors explained that these were not directly related to ICD-10 conversion. Other reasons for falling costs, they said, were the greater mastery of ICD-10 by the coding industry, and the availability of free or inexpensive manuals and training that didn't exist earlier. In addition, the 2014 JAHIMA study questioned the accuracy of documentation estimates in the Nachimson Advisors analysis, saying that they were based primarily on the hospital world as opposed to physician practices.

In the latest study published in JAHIMA, lead author and PAHCOM director Karen Blanchette and coauthors also noted the falling price of implementation. "Many software system vendors are providing ICD-10 system updates at no additional cost," they wrote. Increasing adoption of EHR technology has made the switch to ICD-10 easier, not harder, they added.

"Based on this survey and the two other recent studies, the financial barriers to ICD-10 are significantly less than originally projected," the authors write.

A spokesperson for the AMA told Medscape Medical News that the association was still studying the recent JAHIMA study, and therefore was not in a position to comment.

Stanley Nachimson, the principal of Nachimson Advisors, defended the accuracy of his estimates in an interview with Medscape Medical News. His study, Nachimson said, included many costs that apparently did not figure into the analysis published in JAHIMA last month. These costs included an assessment of how the new codes would impact practice work habits, internal testing, the value of the hours that physicians and their staffs would spend on ICD-10 conversion, and an increase in denied claims resulting from coding mistakes at the onset.

Nachimson offers a similar critique of last year's JAHIMA study on ICD-10 costs, which he said misstated how he arrived at estimates of higher documentation costs and lower productivity. A full-length rebuttal to that study is available on the AMA website.

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