D'Arcy Gue

ICD-10: Many Hospitals At Risk of Non-Readiness on October 1

August 12, 2015

ICD-10 4 Minute Read

Though WEDI’s new ICD-10 Survey report tries to send a positive message about the healthcare industry’s readiness for ICD-10, the results leave much room for concern. A close look at the survey data indicates that numerous hospitals may be at great risk of not being ready to submit claims accurately in ICD-10 by October 1, the compliance deadline. Many industry professionals are worried about inadequate preparedness of a large portion of hospitals, particularly smaller facilities. Left with only weeks to prepare, it appears that their operations are at risk for major disruptions.

According to WEDI, “It appears that much of the industry is approaching readiness, but there is still work to do, especially for physician practices.”

In fact, the data suggests there is much work to do, and not just in physician practices.

Here’s a quick analysis derived from the WEDI Survey, conducted between June and July, focusing on hospital non-readiness as opposed to readiness. First, let’s remember that there are 5686 hospitals in the U.S.  453 providers participated in this survey, about half of the participation on the February survey. Of these providers, only two-fifths, or about 175, were hospitals / health systems — the rest were physician practices.

Looking at key factors in readiness / non-readiness, it is clear that many hospitals may not be ready for the cutover to ICD-10 on October 1:

  1. ICD-10 Assessments
    According the survey results, over three fifths of hospitals (including health systems) have completed ICD-10 assessments. If the sampling was adequate, this means that 40% or 2274 hospitals have not completed ICD-10 assessments.
  2. Business Changes
    Nearly three-fifths of hospitals responded that they would not complete necessary business changes until the third quarter. October 1 is just one month into the third quarter, and 6 weeks away from now. Can it really be that over 3400 hospitals still won’t have completed necessary business changes by September?
  3. External Testing
    Since almost three-fourths of the  hospitals sample had started or completed external testing by late June, it follows that over one fourth — about 1500 hospitals — have not done so.
  4. Testing Partners
    Two-thirds of the hospitals sample expected to test with multiple payers, so one-third — 1856 hospitals —  apparently do not. Three-fifths of hospitals  had tested with Medicare, implying that 2274 have not, even though all but one-tenth (569) said they plan to do so.
  5. Readiness for Cutover
    Seven-eighths of hospitals responded that they were ready or would be ready by the compliance date. This is unlikely, if they haven’t completed the steps above. In addition, even if seven-eighths are ready by October 1, what about the one-eighth (about 700 hospitals) that are unaccounted for? Incidentally, one-tenth of the hospitals (which would represent 569) responded “unknown” to this question.

If any hospital cannot submit ICD-10 compliant claims as of October 1, its claims will not be paid — unlike physician practices, who will not be penalized for at least one year if they submit ICD-10 claims that are inaccurate.

Historically, survey analyses of the healthcare industry’s  progress on ICD-10 preparedness have shown consistently that smaller hospitals lagged behind large hospitals and hospital systems. Current evidence suggests that this remains the case, including much anecdotal information from ICD-10 practitioners and other healthcare professionals.. These hospitals often are in smaller communities and rural areas. What will happen to them and their communities? What impact would their inability to transact with ICD-10 have on the industry?

Let us hope that the sample of 175 hospitals taken in the WEDI Survey is just too small, and that many more hospitals have met the implementation targets above. And, let us note that no margins for error were provided with the survey data, making it difficult to draw definite conclusions. On the other hand, if the sample is too small, doesn’t that mean that all of the survey’s hospital results are questionable — and that the truth of hospital ICD-10 readiness across the country remains an unknown?

In its July 30 letter to the Department of Health and Human Services WEDI has warned: “We assert that if the industry, and in particular physician practices, do not make a dedicated and aggressive effort.., there is likely to be disruption to industry claims processing on Oct 1, 2015.” Many colleagues and I, working and talking with still unprepared hospitals (and vendors) everyday, couldn’t agree more.

Who, with enough clout, can step forward  in the weeks remaining, conduct a much larger survey, and provide enough data about industry ICD-10 readiness to help prevent or mitigate major claims disruptions across the nation?  Might CMS step forward here?

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