How to Prepare For ICD-10 The Right Way

Water tap dripping dollar bills, Water waste conceptIf you’ve done any reading about ICD-10, you know that this transition will be a monumental task. Fundamentally speaking, ICD-10 is a paradigm shift. It is designed to completely transform medical documentation. And since documentation is a lot of what doctors do, inevitably these changes will impact our day-to-day practice.

In a recent AMA publication, the authors concluded that the two biggest challenges with implementing ICD-10 will be having the necessary system upgrades completed and staff training.

Preparing and planning ahead on how to manage these two main areas of concerns will greatly decide how smoothly the practice will transition to coding in an ICD-10 world.

However, addressing system upgrades and staff training are mainly operation and implementation issues. There is one important piece of the preparations that is not getting enough mention. And that is, the potential cash flow issues that can occur during this transition.

In other words, will your practice have enough cash reserve to sustain 2, 3 or 6 months without any income?

I can’t speak for other specialties, but in pediatrics, when we’ve gone through CPT updates and revisions, health insurance company can take weeks, sometimes months before they update their systems despite being informed of the new codes months in advance. With ICD-10 we are talking about a complete overhaul of our entire CPT system.

Can we be assured that health insurance company will have all these codes ready in their system on day one? If we can be, then I guess there is nothing to worry about. But if history is any indication, medical practices can expect going months without collecting from insurance companies.

In our practice, we generally keep cash reserve for, you know, rainy days. But in my forecast, I’ve never projected to run the office with zero income. I’ve always put in my forecast that some revenue would trickle in, thus lessening the burden of the so call rainy day.

Lines of credit can certainly help. But if your office’s line of credit is anything like mine, I doubt it could sustain the practice’s operation for 6-months.

Recently, I spoke to Dr. Susan Kressly about this very topic. This is what she had to say about this potential issue:

I am proposing doing your planning far in advance so if you can stash a little cash month by month so the pain isn’t so awful when it hits. There are LOTs of pediatric practices that live hand to mouth. If their claims get held up for a month, they can’t meet payroll. I’m constantly amazed by that.

She also cautious us to be good boy scouts and girl scout and start preparing sooner rather than later.

There is no way you can effectively plan for this 3 months before it happens. You don’t want to take out a last minute line of credit and pay interest if you don’t have to. Many of us are seeing a LOT of patients right now. I am proposing you consider lean times in this current time of seemingly plenty.
In her office, Dr. Kressly has already started taking measures. Here is what her practice is doing starting this year.

In her office, Dr. Kressly has already started taking measures. Here is what her practice is doing starting this year.

We already had a conversation in our office about our “disaster” plan (for the potential cash flow disaster of 2014). We talked about how much it would really cost us to run the office for 1, 2 and 3 months if everything got ground to a hault. We made a plan on when to start saving, what makes sense for our corporate structure.

As part of their planning process, Dr. Kressly and her partners decided to make big purchases in 2013 instead of waiting until 2014.

We decided to upgrade our infrastructure this year 2013 (new server, computers, some other upgrades/capital expenses that we new we had to do in the next few years.) Get those done this year, so when 2014 hits we can start enacting our conservative cash flow/banking plan. If it never happens, then WOO HOO! My bonus will be awesome! And if it does, the bills all still get paid and eventually we will get paid for the work done, just making sure that the business is still standing.

After speaking with Dr. Kressly a few things became clear:

  1. There is a greater sense of urgency to start putting this money away (a few months is not enough to gather all the money one will need).
  2. I need to be realistic about how much our practice will need (that is, a little bit of cash on hand probably is not going to cut it).
  3. I need to consider and prepare for zero cash to come in during that transition; which I’ve never considered really.

What are your thoughts? You think we are being like Chicken Little or does this argument resonate with your the way it did with me. You know, this for all we know, this may be our Y2K. But being judicious with cash has never steered anybody in the wrong direction.

3 thoughts on “How to Prepare For ICD-10 The Right Way”

  1. There is still enough time for practices to foftify their reserves painlessly. The time to begin though is now. Stash away some ACA parity $$ Always better to earn a little interest than pay it

  2. Wow. Let’s hope it’s another Y2K. Maybe practices will finally focus on collecting patient balances if payers turn off the spigot.

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