ICD-10 is the 10th revision of the International Statistical Classification of Diseases and Related Health Problems, containing over 14,400 medical codes. The transition from ICD-9 to ICD-10 in the US, which was mandated for October 2015, will significantly impact healthcare revenue cycle management due to the increased specificity of codes, resulting in changes to documentation practices, reimbursement amounts, and potential increases in claim denials during the transition period. Healthcare organizations need to proactively address contract negotiations and dispute resolution procedures to mitigate financial risks from the ICD-10 transition.

1. ICD – 10 & Its impact on Healthcare RCM
By : Ricky Rakesh Jha PMP®| jharicky @Twitter
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Introduction to ICD – 10
ICD-10 is the 10th revision of the International Statistical Classification of Diseases and Related Health
Problems (ICD), a medical classification list by the World Health Organization (WHO). It contains codes for
diseases, signs and symptoms, abnormal findings, complaints, social circumstances, and external causes
of injury or diseases.
With more than 14,400 different codes and this set permits the tracking of many new diagnoses. The
codes can be expanded to over 16,000 codes by using optional sub-classifications. The detail reported by
ICD can be further increased, with a simplified multi-axial approach, by using codes meant to be reported
in a separate data field.
Difference between ICD -9 & ICD 10
Structural differences between the two code sets also exist. ICD-9-CM diagnosis codes have three to five
digits that are mostly numeric (supplemental chapters have an alpha first digit). The ICD-10-CM diagnosis
codes have three to seven digits with an alpha first digit, numeric second digit, and alpha or numeric third
through seventh digits.
The ICD-9-CM procedure codes have three or four numeric digits. Procedure codes under ICD-10 have
seven digits, which can be either alpha or numeric. Although the ICD-10 code set is larger and more
complex, it has the benefit of providing significantly more information, such as laterality or procedural
approach.
ICD 10 in USA
The first mandate for this can be traced from 1999 when coding of death certificates and mortality data
was mandated. Though initially scheduled for Oct, 2013 it has now been shifted to be applicable from Oct
2015 onwards. As a general thumb rule all HIPPA regulated entities will have to move to ICD 10.

2. ICD – 10 & Its impact on Healthcare RCM
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Opportunity
The shift to ICD-10 will require software modifications in both the insurance coverage and billing sections
of practice management systems. Billing service and clearinghouse vendors will also have to comply with
the new system. The time required to implement these changes could be significant, and may result in a
lengthy transition period. Here is an opportunity!!!
Healthcare – RCM Services
Many companies look at the process of obtaining revenue as a series of discrete steps -- often aligned
with business functions or departments -- rather than wholesome affair that requires a global view.
Hospitals lead the way in looking at the big picture, known as the revenue cycle, as a continuous whole.
Refer to Figure 1
Within a hospital, RCM cycle begins with contracting. A medical center's payer-relations team negotiates
reimbursement levels for patients with different health plans. These patients are then scheduled for
various inpatient and outpatient services. They are registered -- providing significant personal data
including financial information -- and as they receive care, case managers work with insurance companies
to ensure that the care is appropriate and will be paid based upon the contract and on industry-standard
practice guidelines. When the patient is discharged, the medical record is coded and the insurance
company is billed. The patient may or may not have personal liability for some of the final bill.

3. ICD – 10 & Its impact on Healthcare RCM
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When the entire account is paid, the balance settles at $0, unless the insurance company or a government
auditor determines that there was some error, creating a "post-payment denial."
The hospital departments most often included in traditional revenue-cycle operations teams include payer
relations, scheduling, registration, case management, coding, and billing and denials management.
Impact of ICD 10 on Health Care (HC) RCM
Analyzing the impact of ICD-10 on a practice’s business processes will also be costly. As health plans
modify their contracts to include the more specific codes, they may also alter their payment schedules,
resulting in changes to a practice’s cash flow.
North move in documentation costs
According to the study**, the move to the ICD-10-CM will increase documentation activities about 15
percent to 20 percent. This translates into a permanent increase of 3 percent to 4 percent of physician
time spent on documentation for ICD-10-CM.
ICD-10's impact on reimbursement
ICD-10 implementation was delayed by the Centers for Medicare and Medicaid Services until October
2015. Many current managed care agreements likely include binding language that will impact
reimbursement changes resulting from ICD-10 implementation, particularly for inpatient services.
Some managed care agreements may address ICD-10 conversion by requiring providers and the plan to
comply with ICD-10 in claims submission and payment processes as of the implementation date.
Agreements for reimbursement of inpatient services based on case rates tied to specific DRGs (diagnosis-
related group) will require plans to implement new rates in conjunction with ICD-10 implementation.
While it’s impossible to predict how such rates will need to change, agreements typically have multiyear
terms with limited rights to terminate early.
Revenue Neutrality from ICD 9 to 10
Hard to determine what “revenue neutral” means when comparing what was paid for a service based on
ICD-9 codes and a DRG grouper to the new DRG grouper based on ICD-10 codes. In fact, comparisons are
impossible unless medical records are coded for both ICD-9 and ICD-10.
The agreement may permit the plan to decide what “revenue neutral” means and only give providers a
right to dispute the interpretation. Providers may have a limited window to dispute, and may not have
adequate data to assess the issue. Therefore, long-term agreements without an audit right or third-party
review of “revenue neutrality” are problematic. This challenge is magnified if the agreement permits a
plan to otherwise make rate changes, limiting a provider’s claim that ICD-10 conversion results in a
material breach.
The ICD-10 conversion also will have a ripple effect on a managed care plan’s coverage and payment
policies and reporting systems that are based on diagnostic codes, requiring updates for ICD-10 codes.
Changes to such policies and reports may impact reimbursement as well.
Because significant payment disputes are possible, providers should proactively address the ICD-10 issues
in their current contract negotiations. Provisions addressing grouper changes, specifically addressing ICD-

4. ICD – 10 & Its impact on Healthcare RCM
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10, those referencing “revenue neutral” requirements and provisions dealing with policy and manual
compliance should be carefully evaluated in current contract reviews.
Claim Denials or Delays
Given the challenges presented of both the coding on the hospital and physician offices’ side, and the
remediation of processing rules on the payers’ side, physicians, hospitals, and other providers may see a
significant increase in denials. These denials may result from changes in remediation of medical policies,
or may occur after transition due to refinements in processing rules based on the increased granularity of
these codes. In addition, if payers rely on ‚crosswalks‛ to convert submitted ICD-10 codes backward to
ICD-9 codes, there may be unintended consequences in processing those claims. Payment or approval of
services may be denied due to misinterpretation of the intent of policies or rules simply as an artifact of
errors of translation of ICD-9 codes to ICD-10
Figure 2

5. ICD – 10 & Its impact on Healthcare RCM
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Creating a ICD 10 XYZ- Denial Management Business Model
The most critical to revenue cycle profitability is to have a highly efficient accounts receivable and claims
denial management processes in place. It is these revenue cycle processes that determine the
difference between financial stability and merely struggling to make ends meet. Whether the clients
outsource all of their revenue cycle management functions to us, or just the critical AR and Denial
Management tasks, we should have a system that brings them valuable net returns on the resources
devoted to this most important aspect.
Figure 3

6. ICD – 10 & Its impact on Healthcare RCM
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An efficient Dm company should be able to take care of AR and Denial Management functions resulting
into greater profitability to clients and in return XYZ- minimizing lost reimbursements by maximizing our
effectiveness at collecting unpaid claims. It's the right value equation to get the highest possible return on
investment - it's a service that more than pays for itself.
Figure 4

7. ICD – 10 & Its impact on Healthcare RCM
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Reference to this report:
Nachimson Advisors (Na)* estimated the cost‐impact of an ICD‐10 mandate on three different provider practices:
• A “typical” small practice comprised of three physicians and two administrative staff.
• A “typical” medium practice comprised of 10 providers, one full‐time coder, and six administrative staff.
• A “typical” large practice comprised of 100 providers, with 64 coding staff comprised of 10‐full time coders and 54
medical records staff.
Total Cost Impact of ICD‐10 Mandate on Individual Provider Practices
• For a typical small practice, Na estimates the total cost impact of the ICD‐10 mandate as $83,290 per small practice.
• For a typical medium practice, Na estimates the total cost impact of the ICD‐ 10 mandate as $285,195 per medium
practice.
• For a typical large practice, Na estimates the total cost impact of the ICD‐10 mandate as $2.7 million per large practice.
Changes to Super‐bills
Most physician practices use “super‐bills” – documents provided to health plans and other payers that specify medical
services provided. With five times as many codes as the previous ICD coding iteration, an ICD‐10 mandate would require
significant changes to existing super‐bills and/or spur some practices to move to an electronic medical record (and
absorb corresponding software costs).
Estimated change‐to‐super‐bills costs associated with an ICD‐10 mandate would range from $2,985 for a small practice
to $99,500 for a large practice.

8. ICD – 10 & Its impact on Healthcare RCM
By : Ricky Rakesh Jha PMP®| jharicky @Twitter
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Reverences in this paper:
*http://www.nachimsonadvisors.com/Documents/ICD‐10%20Impacts%20on%20Providers.pdf
**https://www.christianacare.org/workfiles/medicaldentalstaff/icd10/ICD‐10‐Physician‐Impacts‐3‐7‐11.pdf
About the compiler
Ricky Rakesh Jha PMP - Email : rickyjha@ymail.com
XYZGlobal | M&A – Project Manger
www.eventon.in
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