Hospitals Likely to Outsource ICD-10 at Launch

Nearly half of hospitals surveyed say they expect to outsource coding work and one hospital in five is already using outside resources for this purpose, a market research firm reports.

Nearly half of the 650 hospitals in a recent survey said they will outsource ICD-10 services when the new diagnostic and coding system goes online in October 2015, market research firm Black Book Rankings says.

The Black Book survey found that 19% of hospitals are outsourcing coding already, but that the number is anticipated to grow to 47% of hospitals by the providers polled.  

"Transitioning to ICD-10 is a complicated process and hospitals are leaning on the expertise and successes of outsourcing vendors," Doug Brown, managing partner of Black Book, said in prepared remarks.

"We still operate in an ICD-9 world, complicated by EHR implementations, value-based reimbursement models, compliance issues and optimizing reimbursement; a perfect storm from which outsourcers have the expertise to shield their clients."

ICD-10 Delay Alters Provider, Vendor Prep

The survey found that hospitals strongly rely on outsourcing for a broad array of coding and clinical documentation services. For example 25% of hospitals now outsource clinical documentation audit, review and programming, and that percentage is expected to increase to 71% by the third quarter of 2015, as hospitals adjust to the new codes.

In addition, transcription services are now outsourced by 63% of hospitals and are also expected to grow to more than 70% of providers as the ICD-10 deadline approaches.

Melanie Endicott, senior director of coding and CDI products development at American Health Information Management Association, says the survey raises questions. "I would like to know a little bit more of the story. I am wondering if these hospitals are thinking that they'll do some outsourcing but still keep some in-house staff," she says.

Endicott says it's acknowledged among providers that productivity is expected to decline in October 2015 as coding staff adjust to the new system. "So the likelihood that a facility would need to outsource some coding work is very high, I would say even more than half. But it may not be forever. They may need six months of additional help until their own coders get up to speed, or whatever the situation might be. And they might hire some outsourced coders to pick up the back log. There is going to be a variety of things going on."

Endicott says the one-year delay in the ICD-10 Implementation, a surprise addition to the physician sustainable growth rate bill, has already costs providers who were ready and counting on the anticipated October 2014 implementation.

"Most facilities had budgeted through 2014 to train staff and that was going to stop as soon as they were in ICD-10," she says. "Now they have to add another year to the training to make sure they don't lose what they have lost. That additional training takes away from productivity and it does increase costs."

"A lot of facilities were planning on rolling out dual coding six months prior to implementation. That would have been around April of this year. Some facilities did still go with that dual coding beginning this year, maybe less aggressively than they were planning to do. But they are rolling it out a little bit so they can get their coders trained, have them practice in the real world environment, and identify any issues that they can work out. Having this extra year helps them take their time and might provide for smoother implementation next year."

What's Your ICD-10 HR Strategy?

Still, Endicott says she is concerned that some laggard providers won't use the extra time to prepare.

"I always worry that with the delay they just delay their planning as well and they still won't be ready next year," she says. "It's like anything. Most people put it off until they have to do it. The only excuse we might hear is that it's been delayed so many times we thought it would be delayed again. And when it really does happen they might be caught off guard."