At the Margins

Survey: 95% of organizations are at or below budget on ICD-10 transition

David Lumbert

Early results from our ICD-10 Readiness Survey show that nearly 95% of organizations reported expenses at or below budget, with the variance between budget and actual expenditures ranging from 5 to 15%. But we also learned that there are still many tests—and challenges—to face before Oct. 1.

For starters, providers lack consensus on the percentage of charts to dual code, the prevalence of renegotiated commercial contracts, and whether to model the financial impact of delayed reimbursement stemming from the transition.

Survey says...

77% of respondents have comprehensive budgets with specific line-item allocations, but with six months still to go in the process and many tests yet to run, budgets are likely to change with last-minute enhancements.

And while organizations agree on maintaining a strict budget, there's no consensus regarding how to transition across systems.

95% of respondents will code charts using both ICD-9 and ICD-10 codes to prepare for the new system, but providers disagree on the percentage of charts to be dual coded–and one-third say they simply don’t know.

Providers reported frequent conversations with commercial payers and three quarters have agreed to specific testing time frames and logistics for the transition. Most organizations (73%) will begin testing 3-6 months before launch, with 22% already running tests in collaboration with insurance companies.

But more split are the decisions to adjust contracts in preparation for the transition, often proactively negotiating terms that minimize reimbursement risks associated with the ICD-10 transition–56% of respondents have not renegotiated payer agreements.

More than 40% of providers haven't broached AR days

Most surprising, over 40% of respondents have not yet modeled the expected impact of the transition on accounts receivable (AR) days. According to previous research, it will take months, not weeks, to restore AR to pre-ICD-10 levels, while spikes in Discharged Not Final Billed (DNFB) can significantly disrupt cash flow.

This impact is compounded by the fact that 30% of organizations are not building up cash reserves to prepare for financial disruption.

Who's in charge?

Despite all of this uncertainty among organizations, respondents remain fairly aligned when it comes to leadership responsibilities. 

In 56% of organizations, the CFO is ultimately responsible for the success and challenges of the transition to ICD-10.

Distantly following the CFO in primary responsibility-holders are the VP Finance (16%) and CIO (15%), highlighting the importance of meeting both compliance and financial goals.

Next week, we’ll review how organizations are preparing staff and working groups for the transition, as well as reallocating IT resources before Oct. 1.

Get Involved

It's not too late to participate in our ICD-10 Readiness Survey.