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Hospital Margins in Jeopardy as 5010, ICD-10 Deadlines Loom

Karen Minich-Pourshadi, for HealthLeaders Media, November 11, 2011
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This article appears in the October 2011 issue of HealthLeaders magazine.

In the next two years healthcare providers will be faced with two transitions that could blow margins to smithereens if they aren’t completed on time. This is why for quite a while now Bruce Landes, MD, president and CEO of Southwest Physician Associates, a 1,500-member IPA in Dallas has been trying to get the word out about the ramifications of HIPAA 5010 and ICD-10.

Although Landes has diligently written newsletters, contacted the media and his colleagues, and held a seminar on these subjects, he’s also had numerous conversations with peers who indicate they aren’t prepared for what these two transitions will do to the bottom line. And there’s a whole lot of money at stake for both the unprepared and the prepared, he points out.  

“I think we’re going to have a whole lot of panicked calls in January when the providers suddenly find out their claims process doesn’t work,” he says.

If 5010 and ICD-10 are not properly implemented, there is the potential for financial upheaval, including:

  • Significant increases in accounts receivable
  • Rapid decreases in cash flow
  • High call volumes due to rejected claims
  • Risk of increased audits and sanctions

HIPAA 5010 is the latest version of healthcare transaction standards, focusing on the electronic exchange of administrative and financial information between healthcare providers and health plans for patient care services, including eligibility inquiries, service (treatment) authorization and referrals, claims status requests, and claims and remittance advice (claims payment). It must be fully implemented by January 1, 2012, to avoid delays in claims reimbursements.

The 5010 transactions are a key component of ICD-10, which is the largest overhaul of healthcare codes in the past 30 years. That transition to ICD-10 must be completed by October 1, 2013, and includes more than 155,000 codes, a significant expansion from the current 17,000 codes in ICD-9. 

Landes’ worry that providers will not be prepared for these transitions is echoed by healthcare leaders nationwide, and many are reporting they aren’t ready. In the July HealthLeaders Media Intelligence Report, ICD-10 Puts Revenue at Risk, the majority of healthcare leaders acknowledge that none of their systems is ICD-10 ready. Half of the respondents said they have yet to complete even one readiness assessment, and 41% cited more pressing priorities for not having done so.

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