Guest post: Will ICD-10 Result in Cost Savings for Medical Expenses?

The following is a guest post from a US writer, Susan Gorgalini. I think the subject matter is, er, just a tad recherché for regular readers here, but if you are interested in how the shift to ICD-10 may be affecting medical costs (in the US), this may be of interest.

jane xx

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ICD-10, a new standard for the way diagnoses are coded, has created an uproar in healthcare. Institutions are worried they will be unable to pay the hefty implementation fees to update their servers, additionally medical secretaries will be earning a medical billing and coding salary after additional schooling, and many protest it will lengthen an already time-consuming process. As a result, many are wondering whether the new standard is worth as much time, effort, and exhaustion.

The current implementation of ICD-10 is far more expensive than anticipated, as evidenced by the HHS’s second delay in the deadline for mandatory compliance, which has now been pushed back to October 1, 2014. The initial deadline for full-scale implementation of ICD-10 systems was October 1, 2011, which reflects an enormous gap between planning and implementation. The need to send thousands of workers to school in order to prepare them for the new system, in addition to the enormous costs of computers, programming and troubleshooting lead many to believe these changes will push the medical industry even farther into the red.

The president of the American Medical Association (AMA), Dr. Peter W. Carmel, prepared a formal press release in which he stated, on behalf of the AMA, that the delay was a step in the right direction, but that the mandate itself was onerous and a “costly time-consuming regulatory burden.” That said, the AMA as a whole vociferously advocates for administrative simplification, and supports the unique health plan identifier portion of the regulation. In fact, the AMA states in their white paper on the issue that inefficient health care processing results in between $21 and $210 billion per year in lost expenses for the industry, which translates to 10-14% of the revenue generated by a physician’s practice in a year.

Regardless of the upfront costs, most calculations project ICD-10 as saving the healthcare industry money in the long run. According to the magazine Policy and Medicine, HHS Secretary Kathleen Sebelius estimates that once the implementation is complete, it will save the industry $4.6 billion dollars over a ten year period. Some estimates claim even more potential.

Even if the ICD-10 does ultimately save the industry money, will savings be passed along to healthcare consumers, or will it take other forms? In the end, the general consensus on this issue is that the implementation of ICD-10 will be good for patients and will most likely save patients hassle, but it may not directly save them money. This is related to the inefficiencies that the new ICD-10 is designed to eliminate. According to the American Medical Association, the major problem with foregoing a nationwide standard is that many third-party administrators are currently not required to have any particular patient designation. Meaning that while many organizations currently use ICD-9, many do not. The system is not yet standardized, which throws up significant boundaries between organizations. As a result, patients can often be erroneously billed, erroneously denied coverage, or be forced to deal with improperly processed bills. The result is a series of administrative headaches that cost time (in terms of employee and consumer hours) to correct. ICD-10 will eliminate many of these issues, because all organizations will speak the same technical language, leading to fewer mistakes and more effective treatment.

By requiring all U.S. health care providers to comply with the international standard, the U.S. government hopes to eliminate this inefficiency, and therefore make the patient experience more pleasant. It will also mean that doctors will have more time to devote to patient care, and they will spend less time on paperwork. And that’s an outcome that everyone can agree is a positive.

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