Managed Care - December 2008 - (Page 14)

Upgrades don’t come cheap eplacing the ICD-9 codes with ICD-10 could cost the health care system anywhere between $3.2 billion to $8.3 billion, according to a white paper prepared by the Hay Group for America’s Health Insurance Plans. The wide range is because the authors based their conclusions on the three most complete recent studies of the issue, which are cited below the “preliminary estimate” table on this page. However, they note, “These estimates vary dramatically.” For instance, one of the studies accounts for production lost while training coders in the new system, while the other two do not. However, those two account for the cost of renegotiating provider contracts, while the one does not. They all agree, however, that “because of the number of systems and people involved, the cost of this transition will be substantial.” R Estimated cost to payers to implement ICD-10 ($1,000s) Per entity Low Health plans and health insurers National $10,000 Multiregional $5,000 Large $3,000 Midsize $500 Small $150 Third party administrators $25 Total for private payers High $25,000 $10,000 $6,000 $1,500 $500 $50 Entities 6 6 45 75 160 1,500 $30 $37 $24 $37.5 Total cost Low $60 $60 $135 $112.5 $80 $75 $270 $150 High $324,000 $747,500 The burden of the switchover falls most heavily on hospitals, analysts agree. As with all health care players, they must concern themselves with the increase from about 13,000 ICD-10 CM (clinical modifications) codes to 68,000. However, hospitals must also implement an additional 87,000 ICD-10 PCS (procedural coding system) codes that are designed for inpatient services. That’s up from approximately 3,000 procedural codes in ICD-9. Preliminary estimate of contract renegotiation costs Number of hospitals Contracts per hospital Low High Hours Low High Total cost ($1,000s) Low High Hospital contracts 4,895 10 20 10 20 $34,265 $137,060 Source: White paper prepared by the Hay Group for America’s Health Insurance Plan, Oct. 12, 2006. Based on studies by Rand Corp. (2004), Robert E. Nolan Co. (2003), and PriceWaterhouseCoopers (2003). Players in the health care system are nearly unanimous in wanting the Centers for Medicare and Medicaid Services to push back the current deadline of Oct. 1, 2011 for implementing ICD-10. Whether that happens or not, the industry is going to have to focus on coders over the next few years. Making them proficient with ICD-10 will take hours and money. A study by the Robert E. Nolan consulting company estimates that 117,000 coders working for health plans would require between 4 and 80 hours of training at a cost of between $54 million and $80 million. A Rand study reached a similar conclusion. Category Number of staff members 142,170 754,636 1,455,015 44,207 117,020 Hours 24–40 4–12 4–40 4–40 4–80 Training costs in millions $94–$141 $332–$499 $456–$684 $30–$45 $54–$80 Full-time coders Physicians/practitioners Part-time coders and other clinicians Other hospital Payer plans Source: Robert E. Nolan Co., October 2003. 14 MANAGED CARE / DECEMBER 2008

Table of Contents Feed for the Digital Edition of Managed Care - December 2008

Managed Care - December 2008 Editor's Memo Contents Legislation & Regulation News and Commentary Medication Management Compensation Monitor ICD-10 Offers Huge Opportunity, Challenge Part D at a Crossroads Plans Can Weather the Financial Crisis DM vs. Medical Home? Tackle Prediabetes Reasonable Approach to Morning Sickness Formulary Files Tomorrow's Medicine Outlook

Managed Care - December 2008

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