If Obamacare Doesn’t Kill Small Medical Practices, Bureaucratic ICD-10 Coding Requirements Might

News headlines have focused on
the
bureaucratic mandates,
financial looniness, and
unlikely assumptions that seem designed to drive medical
providers away from the Affordable Care Act or out of business
entirely. But this year, a non-Obamacare bureaucratic car bomb is
set to explode in the medical world in the form of
ICD-10—a new coding system for patient diagnoses and inpatient
procedures. Mandated by the Centers for Medicare & Medicaid
Servives, the coding system standardizes communications among
providers and insurers. Well, it standardizes them more,
since ICD-9 has been in place for 30 years. Uncertainty over
hitches in replacing the old coding system with a brand new one has
industry experts advising practices to keep several months
worth of cash on hand to cover lags in reimbursement. Practices
lacking that much liquidity under the mattress may be truly
screwed.

Theoretically, the new coding system covers inpatient care
involving Medicare, Medicaid, and “everyone covered by the Health
Insurance Portability Accountability Act.” The government says up
and down that the new codes aren’t really necessary for private
practices providing outpatient care. A handy FAQ insists:

Will ICD-10 replace Current Procedural Terminology (CPT)
procedure coding?

No. The switch to ICD-10 does not affect CPT coding for
outpatient procedures. Like ICD-9 procedure codes, ICD-10-PCS codes
are for hospital inpatient procedures only.

But as EHRIntelligence
points out, “While it’s true that CPT/HCPCS codes will continue
to be the gold standard for outpatient
procedures, providers will be required to include ICD-10
diagnostic codes with their claims in order to receive
reimbursements from payers.”

So, if doctors want to be compensated by anybody other than
cash-only patients, they need to adopt the new codes, too.

The problem is that glitches are anticipated in switchover to
the new coding system, since nobody is allowed to use it before
October 1, 2014, and everybody is required to use it after
that day. That’s right, another government-mandated healthcare
industry hard launch, exactly one year after Healthcare.gov
debuted.

Actually, ICD-10 and Healthcare.goc were originally scheduled to
launch on the same day in 2013.

The Healthcare Billing & Management Association
warns that “it is possible that not all payors will be ready
for ICD-10 on October 1, 2014,” so “it will be important that you
are able to submit in both ICD-9 and ICD-10 formats.” The group
further recommends that practices “establish a line of credit to
tide the office over during the first months following the
implementation of ICD-10” to acommodate reimbursement delays.

The CMS itself notes in its
Implementation Guide for Small and Medium
Practices:

The transition to ICD-10 will result in changes to physician
reimbursements. … [C]hallenges with billing productivity combined
with potential payer claim processing challenges may result in
signicant impact to cash flow. This may require the need for
reserve funds or lines of credit to offset cash flow
challenges.

According to
HealthcareITNews:

Healthcare providers may face disruptions in their payments even
if they are on target to operate using ICD-10 codes on Oct. 1,
2014. 

Since providers will, and indeed need, to be able to
pay rent and staff salaries if the transition does not flow as
smoothly as testing has indicated, experts advise having up to
several months’ cash reserves or access to cash through a loan or
line of credit to avoid potential headaches.

“Just figure that with the transition to ICD-10 there will be
delays in reimbursement,” said April Arzate, vice president of
client services at MediGain, a Dallas-based revenue cycle and
healthcare analytics company.

Arzate recommends keeping enough cash on hand to cover medical
supplies, payroll, rent, and the rest of a medical practice’s
overhead for three to six months.

In a
separate document on risk-mitigation strategies for
implementing IDC-10, the CMS specifies a “minimum of six months of
cash reserves to mitigate revenue impacts over the ICD-10
transformation period.”

Lines of credit might step in where available cash is
short, but banks issue lines of credit to good risks—not medical
practices already struggling in an uncertain regulatory
environment.

If you’re a doctor, now is a good time to look at your cash
flow, or your retirement options. If you’re a patient, you might
just consider buying your favorite doc a good-bye drink.