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ICD-10 implementation: Critical steps insurers must take

With a public insurance option hanging over their heads and a sputtering employer-based market, health insurers are rightfully concerned about the future. But there is another issue slated for 2013 that could prove to be as difficult for health insurers.

On October 1, 2013, the U.S. Department of Health and Human Services will mandate that healthcare companies comply with ICD-10 diagnosis and inpatient hospital procedure codes.

Health insurers are understandably edgy considering the breadth of this change, which will potentially touch nearly all operational systems and procedures, according to Deloitte Consulting, LLP, in New York City, which recently joined forces with America’s Health Insurance Plans to serve as its ICD-10 and 5010 training partner.

ICD-10 implementation requires a “massive wave of system reviews, new medical coding or extensive updates to existing software, and changes to many system interfaces,” said Deloitte in its report ICD-10: Turning Regulatory Compliance into Strategic Advantage. “Because of the complex structure of ICD-10 codes, implementing and testing the changes in EMRs, billing systems, reporting packages, and decision and analytical systems will require more effort than simply testing data—it will involve installing new code sets, training coders, remapping interfaces, and recreating reports/extracts used by all constituents who access diagnosis codes.”

Exactly how large is the ICD-10 changeover? It should easily surpass the 1999–2000 Y2K system upgrades. David Biel, principal of the ICD-10 service offering at Deloitte in Chicago, says this is because health plans will have to deal with business processes and staffing. In other words, ICD-10 is more than technological improvements.

“These codes are embedded in all of their financial transaction systems as well as their clinical systems,” Biel says. “In order to order a drug in a hospital, you need to have a diagnosis. All of those things are going to change. This means huge people changes and huge training issues that they will have to deal with.”

But with the ICD-10 changeover also comes an opportunity. Deloitte said ICD-10 could be a “potential platform for future strategic innovation.” Although most health insurers will simply comply with the ICD-10 standards, Deloitte estimated that 10%–15% of health insurers will become innovators and these innovators will “approach ICD-10 compliance as a strategic initiative and, as a result, could increase patient satisfaction and quality of care, while moving their business and clinical model into new markets.”

However, to become an innovator, health insurers will need significant capital and personnel investments, which many insurers might not be able to achieve. It is important not to think of the ICD-10 change as merely a bottom line concern, says Biel. “We’re out in the market talking to a lot of insurers about ICD-10, and they’re a number of them asking, ‘What can I get out of this?’ rather than just thinking of costs,” he says.

One potential benefit for health plans is having more accurate and a wider breadth of health data, which could help insurers learn more about member health issues and allow insurers to break down the data for more targeted interventions. This could especially help disease management and care management programs find at-risk members and link them to programs to improve their health outcomes.

Whether a health plan wants to merely comply or become an innovator, the company must prepare now. The North Carolina Healthcare Information and Communications Alliance, Inc., and The Workgroup for Electronic Data Interchange recently released a timeline for ICD-10 preparation. The groups estimate that it could take four years for providers to implement ICD-10.

Biel concurs with the assessment. “Even though we’re four years away technically, the magnitude of the change is large enough that if you don’t start looking at the impact now, then you won’t have created a budget for 2010 to start the process,” he says.

So what can health insurers do now? Biel suggests the following four steps:

  • Review your technology to understand the affected areas and how they are embedded in your systems
  • Conduct an operational assessment to see the business processes touched by this change
  • Conduct a people assessment to see who will need training in ICD-10
  • Conduct a strategic assessment and determine how your company wants to handle ICD-10 (i.e., comply, collaborate, or innovate) and review what would go into each option

But don’t wait to start this process. If your company has not already started ICD-10 implementation, you are already behind your competitors. You have to get to work now.

“I believe all health plans before the 2010 budgeting cycle should have an idea of what the impact is, what their road map is to compliance, and how much they need to budget over the next three years—especially the next year,” says Biel.