Register  
Saturday, June 24, 2017
 
Ready Consultant
  
  View Overview
                 About Us

All Articles Listing
rss
Expect States to Take Control of Health Reform
By:SWilliams - - 07/09/2010

46 states face budget shortfalls. Can they afford health reform? Read More..


Health Reform, Is Your Company's Plan Grandfathered? Be careful.
By:ReadyConsultant - - 07/07/2010

Employers who offer health coverage have many new requirements to understand related to the recently passed Affordable Care Act. Most of the major changes do not become effective until January 1, 2014 particularly given the "grandfathered" status. However, maintaining this status may be more diffic... Read More..


What's Next for ONC's Agenda with EHR's, Certification and more?
By:DWillcutts - - 01/21/2010

Information Week's recent interview with ONC's Dr. David Blumenthal provided some interesting insights into what is next and who is out there to help providers realize these goals. Where are the meaningful use guidelines? What about the certification process and who will be certifying? And is there... Read More..


NHIN Re-thought? ONC's Dr. David Blumenthal is re-envisioning
By:DWillcutts - - 01/21/2010

The six year effort by the government to create a National Health Information Network through efforts such as RHIOs is getting a fresh look. Is there practicality coming out of Washington? Or is this another twist in the road to a far off dream? At first glance, having a focus on smaller providers'... Read More..


Page:   of 16 
  

Reform Legislation Aside, ICD-10 Could Be Health Care's Biggest Challenge

SWilliams - - 01/20/2010

Grassroots upheaval risks impacting the flow of dollars between buyers and sellers of health care services.


Grassroots upheaval risks impacting the flow of dollars between buyers and sellers of health care services.
 
Regardless of how reform legislation plays out, the health care industry still has stormy seas to navigate in the months ahead. Business intelligence technology and regulatory compliance will feature among these navigational challenges, perhaps none more prominent than ICD-10 implementation.

On January 14th, Milliman, an actuarial consultancy, blasted a warning shot across the industry's bow. In a white paper surveying ICD-10 readiness, it reported that 70 percent of respondents, mostly health plans, indicates little or no prepared action. It also demonstrated that many payers expect to hand off responsibility to IT vendors. [1]

The International Classification of Diseases, or "ICD", is a diagnostic and procedural coding system originally developed by the World Health Organization ("WHO"), and fully utilized in the United States. The ICD system connects not just the entire $2.5 trillion US health industry, but the global health care system itself.

ICD's ninth edition debuted in the late 70s. The U.S. later revised this version to meet its demands for greater specificity. This "clinical modification", or "CM", roughly doubled the number of categories. ICD-9-CM is now employed in all inpatient, outpatient and physician office settings.

In 1992, the WHO introduced the tenth edition, and, in 2015, it's planning to introduce the eleventh edition, which will adopt Web 2.0 collaboration principles.[2]

At its most basic, ICD establishes the means for dollars to flow between buyers and sellers of health care services. It allows payers and providers to communicate on reimbursement and administrative transactions, in addition to care delivery procedures, such as documentation of a patient's visit, research activities, public health reporting, and quality reporting.

Y2K redux
A year ago, the Department of Health and Human Services ("HHS") mandated ICD-10 adoption by October 1, 2013, a three year postponement to its original 2010 target. The rest of the world, meanwhile, has already switched from the previous version.

The differences between ICD-9 and ICD-10 are stark. Whereas ICD-9 provides about 13,000 diagnosis and 3,000 procedure codes, ICD-10 will provide 68,000 and 87,000 codes, respectively. In the case of angioplasty, ICD-9 provides just one code.  ICD-10 details 1,170 coded descriptions, with granularity that pinpoints the location of the blockage and the device used for each patient.
The format and syntax of the two systems vary substantially, as well.

Many industry insiders, in fact, compare its implementation to the time, effort and dollars spent on Y2K.[3]

For providers, the typical three-physician practice can expect to pay $84,000 in system upgrades, according to the Medical Group Management Association. At the same time, HHS is also mandating that these practices meaningfully use certified electronic health records ("EHRs"), and comply with new HIPAA regulations.[4]

HHS, by comparison, is targeting $44,000 per physician in incentive payments for EHR adoption. No such incentives exist for ICD implementation.
 
ICD-10 implementation risks system-wide disruption.

Many practices, as a result, confront not only severe financial challenges, especially in a pressured reimbursement environment, but also significant workflow disruptions, with potential impact on patient care.

Three-physician practices constitute about one of every two practices, and 80 percent of all outpatient visits. Any grassroots upheaval will impact the system as a whole.
 
HHS is also mandating that all entities covered under HIPAA (essentially everyone in health care) adopt a new version of transaction codes by 2012, called HIPAA 5010 (current version: 4010). These codes—used in claims processing and remittance—are a prerequisite for ICD-10 implementation, and will likewise require considerable upgrade efforts.

Vendor dependence
Milliman argues that, while IT vendors might drive "minimal compliance", most organizations won't want to delegate "business decisions that, when inadequately addressed, will expose themselves to severe operational and financial risks". It points out that covered entities, not their vendors, are owners of the business, and ICD-10 transition will affect a broad scope of operations, not just vendor systems and services.

Among seven categories HHS has indentified as benefits, the agency has calculated a net present value accruing from ICD-10 implementation of more than $3 billion for the top five.
  1. more accurate payments for new procedures
  2. fewer rejected claims
  3. fewer improper claims
  4. better understanding of new procedures
  5. improved disease management
  6. better understanding of health conditions and health care outcomes
  7. harmonization of disease monitoring and reporting worldwide
This calculation, as Milliman emphasizes, does not include strategic benefits that payers would gain in better information about care delivery and utilization. 
 
It also does not include the negative impact of unintended consequences stemming from workflow disruption.

Health information consultancies win
Recently, the market intelligence firm IDC issued its top ten health care payer predictions for 2010; its number one prediction: the renewal of information management business models.[5]

The report's authors highlight "cost containment, a changing competitive market, business efficiency, outcomes improvement, transparency, and partnership efforts among ecosystem participants" as dominant background themes.

Other predictions making up the top ten include:
  • Business intelligence technology will be the number one investment category.
  • Actionable advice initiatives will lead health care payer business intelligence priorities and investment.
  • Legislative and regulatory compliance initiatives will be among the top three technology investment categories in 2010.
  • Health care payers will seek and prioritize strategic technology partnerships.
  • Segmentation will become the new strategic asset.
  • Reform and the value-based health plan model will drive sales and customer acquisition automation ("quote to card") solutions.
  • Payment reform will drive new investment in provider network, contract, payment, and analytic solutions.
  • Communications and document management technology investment will appear among the top ten technology investment growth categories.
  • Medical home best practices will emerge.
Along with health reform, IDC highlights ICD-10 implementation as a core issue impacting the payer marketplace. 
 
As its 2010 predictions clearly establish, information technology continues to emerge as health care's prevailing value driver. No wonder industry watchers expect double digit growth over the next few years. Creative vendor financing and lower cost technologies such as open source software will support rising demand among IT purchasers.[6]

Expect health information consultancies to benefit strongly, as payers and providers increasingly seek external advice. The business impact of ICD-10 implementation will be significant, likely not dissimilar to enterprise resource planning ("ERP") system implementation, which has driven consulting profits for two decades—first accelerating in preparation for Y2K.

Just as share prices of health IT vendors performed strongly throughout 2009, shares in health information consultancies could gain in 2010. Since January last year, Allscripts-Misys Healthcare Solutions (MDRX) is up over 130 percent. Cerner Corporation (CERN) is nearly 150 percent higher.

Among the large health information consultancies, Accenture (ACN), IBM (IBM) and even Dell (DELL) and Hewlett-Packard (HPQ) could all see increasing demand for their services.

Small consultancies, though, could be among the biggest winners. Over 5,000 hospitals and 650,000 physicians make up the fragmented provider marketplace. ICD-10's complexity will no doubt generate highly specific needs across this universe.

Perhaps the most basic requirement for ICD-10 implementation will be a mechanism that allows buyers and sellers of this type of consulting service to locate each other in an efficient way.

[1] Milliman White Paper: "ICD -10: Perceptions and Readiness". Read here. [PDF]
[2] "WHO adopts Wikipedia approach to key update", accessed 1/19/10.  Read here.
[3] "NorthBay Healthcare selects PHNS to conduct readiness assessment for ICD-10", accessed 1/19/10. Read here.
[4] "ICD-10 deadline causing worry, even 3 years away", accessed 1/19/10. Read here.
[5] "Experts predict top 10 payer trends for 2010", accessed 1/19/10. Read here.
[6] "Innovation Inspired by Economics: 2010 Health IT Forecast", accessed 1/19/10.  Read here.
 
 
© Lyceum Associates, Inc.  All rights reserved.

print


Relatd Articles

Controlled Information Exchange
By:SWilliams - - 12/13/2009

Government action banning the collection of prescription drug data raises fundamental questions about the use of digital information. Read More..

Open Letter to the American CEO: Five Need-to-Know Facts About Health Care
By:SWilliams - - 10/29/2009

Health care may be complex, but knowing its basic workings puts the corporate leader at an immediate advantage. Read More..

Risk Takers Take to Health Care
By:SWilliams - - 11/29/2009

Market dynamics favor accelerating deal activity and investment, and expectations are rising—but so must returns. Read More..

The Missing Stakeholder in Health Reform
By:SWilliams - - 09/08/2009

Can you name the stakeholder left out in the cold? He's big—really big—but doesn't quite have the developed voice that others do. Read More..


rating
  Comments

No comments.

Your Name
Title
Comment
CAPTCHA image
Enter the code

This Content Requires Adobe Flash Player | Download Now


Terms Of Use  |  Privacy Statement
Home  |  Getting Started  |  Using ReadyConsultant  |  User Guides  |  Ready Blog
Copyright 2011 by Ready Consultant, LLC