An updated study released today by the American Medical Association finds that implementation of the ICD-10 code set will be significantly more costly for most physician practices than estimated. In some cases, practices will spend nearly three times what had been previously predicted.
The study, conducted by Nachimson Advisors, updates a 2008 report on ICD-10 implementation costs, also produced by Nachimson.
In 2008 the predicted cost to implement ICD-10 ranged from $83,290 for a small practice, $285,195 for a medium practice and $2,728,780 for a large practice.
The 2014 report found the following cost ranges for each practice size based on variable factors such as specialty, vendor and software:
Small practice — $56,639 - $226,105 Medium practice — $213,364 - $824,735 Large practice — $2,017,151 - $8,018,364
Two-thirds of physician practices are expected to fall into the upper range of current cost estimates, according to the research. These practices will presumably incur major costs associated with software upgrades in particular as a means to accommodate the transition to ICD-10, AMA reported.
Along with software upgrades, the total costs include the expense of training, practice assessments, testing, payment disruptions and productivity loss for physicians.
"[ICD-10 implementation] is a massive administrative and financial undertaking for physicians who are already overwhelmed by overlapping regulatory requirements and uncertainty in a rapidly changing health care landscape," AMA stated in a news release accompanying the new report.
In response to the findings, the AMA sent a letter to Health and Human Services Secretary Kathleen Sebelius asking her to reconsider the ICD-10 mandate.
"Continuing to compel physicians to adopt this new coding structure threatens to disrupt innovations by diverting resources away from areas that are expected to help lower costs and improve the quality of care," said AMA President Ardis Dee Hoven, MD, in a prepared statement.
It is believed that the 2014 estimates include much higher figures due partially to significant post-implementation costs, including the need for testing and the potential risk of payment disruption. The Centers for Medicare & Medicaid Services has estimated that claims denial rates could increase 100 to 200 percent in the early stages of coding with ICD-10.
Costs are not the only challenge facing physicians in implementing ICD-10, AMA reported. “Data shows that software vendor readiness for the new code set is significantly lagging. Few practices have therefore been able to conduct appropriate testing or implement workflow changes to ensure the new codes are working as intended,” according to the organization.
The following chart breaks out total costs by practice size.