Healthcare News & Insights

How ready is your hospital for ICD-10’s financial impact?

Your coders and billers might be prepared for ICD-10, but what about your revenue cycle? 

482468341It’s an important question for hospital execs to ask, since the ICD-10 implementation date is fast approaching.

Some hospitals have been skeptical about preparing for ICD-10 after the start date was pushed back yet again last year. But not taking the time to prepare thoroughly will have serious consequences on hospitals’ finances, according to Craig Greenberg in a Healthcare Finance News article.

ICD-10’s financial impact

Hospitals have to look beyond just having their staff and technology prepared for the change, warns Greenberg, the national practice director for advisory services at Beacon Partners, a healthcare management consulting agency. They must also be prepared financially.

It’s estimated that ICD-10 will have a significant impact on hospitals’ revenue.

Based on your organization’s preparedness, you may see your revenue dip 30% to 40%, Greenberg warns. To make matters worse, staff productivity could also falter after the deadline, as workers adjust to using ICD-10 on a daily basis.

That’s why it’s crucial for hospital leaders to make their own ICD-10 preparations sooner rather than later. For some, this will mean ensuring clarity in payor contracts or determining lines of credit to support finances.

Identifying key performance indicators

Hospitals that want to avoid taking a huge financial hit from ICD-10 should also focus on improving processes and identifying key performance indicators (KPIs) in their revenue cycle, suggests Joshua Berman, the ICD-10 director for RelayHealth Financial, a healthcare finance consulting company, in a post on ICD-10 Watch.

Monitoring and improving KPIs that drive your business now will help prevent them from getting worse once ICD-10 takes effect. Berman suggests keeping a close on:

  • Denial rates. It’s reasonable to expect that denial rates will go up due to coding errors with ICD-10. But Berman recommends hospital note which claim categories have the highest volume and value, and investigate the cause of the denials.
  • Rejection rates. Focus on improving clinical documentation and coding now to find any errors that need addressing.
  • Payment speed. Berman warns that payors will likely start taking longer to pay claims because they’ll spend more time considering why a claim should be reimbursed. That means it may be beneficial to create a revenue cushion so other aspects of your operations aren’t affected by any reimbursement delays.
  • Billing efficiency. From the time a patient is discharged to the time the invoice goes out, a lot happens and it all takes time. So hospitals need to look at their billing efficiency now, since ICD-10 will slow things down, to see if there is anything they can do to speed up the process before the implementation deadline.

Improving processes now can help you avoid a revenue slowdown after the ICD-10 deadline.

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