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Mapping Out Revenue-Cycle Solutions

Karen Minich-Pourshadi, for HealthLeaders Media, May 22, 2012

Process mapping led SNCH down a similar path, says Bogen. The potential financial impact of this transition meant not only documenting the potential productivity losses on the hospital side, but also understanding the problems that could result from the payers not being ready.

"We have to know what this means in terms of the potential for productivity losses. How much longer will it take to get through the same caseload and get claims out the door? We looked at whether we'd need to add staff, how we could retrain existing staff, the potential for staff to retire due to ICD-10, and all the costs associated with these," says Bogen.

SNCH assessed that the organization would need to increase staffing in the coding and validation areas by at least 25% in the first year of ICD-10 activation due to the longer time it is expected to take reviewing the charts (even in an EMR environment). However it's the payers, Bogen notes, that are a bit of a wildcard in the financial assessment of the ICD-10 transition. He believes that on the payer side the transition will add at least five to seven days to the average days in A/R, which at $1 million a day in 2012 means a hit to cash flow of at least $5 million to $7 million.

"This may be an optimistic estimate based on the payer community performance on the recent switchover under 5010," Bogen says. "Anytime managed care can demonstrate that something is out of their control you are going to have delays. They may not pay claims, or [may] pay them incorrectly and then have to adjust a payment at a future point; so the financial cost isn't easy to estimate."

Health First may have an idea on how to change that, however. Rogers says process mapping his organization, which took more than six months to complete, revealed a possible gap and opportunity with his payers in terms of readiness.

"We found it's important to have the dialogue with the payers because they will require much more information, too. By knowing what they need now, we are able to get our team better prepared. You have to get this information and start the reeducation of the clinical folks, the coders, and documenters," says Rogers.

Although the government bills the ICD-10 transition as a "revenue neutral" undertaking, the addition of so many new codes can offer hospitals a revenue-making opportunity. Hospitals and health systems that have been coding incorrectly on ICD-9 can potentially reclaim missed revenue.

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