The implementation of ICD-10 will result in an initial decrease in cash flow for even the best prepared healthcare organization.  CMS projects that it may take up to two years after the October 1, 2014 implementation date to get payment cycles back in line. Officials have recommended that healthcare organizations budget for up to a 40 percent increase in outstanding payments.

What must be top of mind is that the severity and duration of ICD-10’s negative impact will be dependent on the quality of the implementation. You might not avoid all of the financial risks ICD-10 imposes, but if you’re prepared, you can minimize their impact.

Because ICD-10 coded data will be the baseline for almost all financial reimbursement for the healthcare provider, you absolutely need a clear picture of how your clinical activities translate into ICD-10 codes.  Without that picture, you don’t have the information you need to make income projections and you can’t accurately make key financial decisions, such as:

• Contracting, and proposed ICD-10 reimbursements
• ACO propositions and their proposed risks and rewards
• Participation in voluntary quality-of-care programs

To understand the impacts of ICD-10 on your revenue and make reasonable decisions, you need to be able to answer four questions:

• Is my current documentation sufficient to derive revenue neutral coding?
• Is my coding sufficient to produce revenue neutral DRGs?
• Does the DRG assignment of my visits change under ICD-10?
• Do my proposed payer reimbursement rates for ICD-10 affect my bottom line?

We’ll cover methods to answering the questions above in our “ICD-10 and Your Bottom Line” series.  Subscribe today to receive each post in the series.