Read more about the important steps for practice coding in order to maintain compliance during ICD-10 transition in this guide from McKesson.

1. Practice Coding: Forecast Report
Market Drivers and Demand Forecast
Synopsis
A long-standing shortage of qualified medical coders continues to persist nationwide. The greatest
impact to date appears to be in larger organizations or health systems that struggle to maintain
coding staff. However, medical practices are not immune to the limited coding resources and future
changes in diagnostic and procedural code sets. Specific steps should be taken now to offset the
potential negative impact on care delivery and financial performance.
Current Market Snapshot
Sixty percent of respondents in a survey of the American Health Information Management
Association reported that hospitals and other facilities are completely staffed for all approved
positions. About a quarter (23%) or respondents have coding positions that have been open for
more than 3 months. The balance reported positions that have been open 3 months or less.1
Current Staffing of Coding Positions
A lack of qualified candidates appears to remain the root cause. The vast majority of respondents
(46%) said their departments are short on coders due to a lack of qualified candidates in the
market. Many respondents commented that candidates lack on-the-job experience. A minimal
number of respondents said their staffing shortages are the result of hiring freezes or layoffs.
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2. Practice Coding Trending Report
Forecast Report
Medical Practices
Coding responsibilities within a practice can be performed primarily by the physician, a designated
coder or other staff and depends on the physician’s preference, staff training, as well as, how the
practice has set up its workflow. McKesson Practice Consulting, a national physician advisory
group, found that three quarters of respondents surveyed at the Health Care Compliance
Association’s annual Compliance Institute handled coding in house for professional services and
72% of the people who performed coding for professional services are coders2.
Who Performs Coding in Practices for Professional Services
Who Performs Coding in Practices for Professional Services?
Physicians/
Providers
28%
Coders
72%
The number of coders employed or contracted by a medical practice varies based on practice
specialty and size with a median range from 3 to 10 coders, and 55% of those surveyed indicated
they would use a mix of internal and external resources to provide coding and documentation
training in the future.
Practices that employ coders face a potential lack of skilled talent combined with the need to
remain up-to-date on coding changes and meet regulatory compliance requirements. Continued
attention from commercial carriers and the Federal government have also led to a growing number
of audit programs targeting both hospitals and physicians which adds further pressure to ensure
coding accuracy.
Electronic Medical Records
The coding support built within many current electronic medical records (EMR) is designed to assist
physicians in selecting the appropriate Evaluation and Management (E&M) code based on the level
of services delivered. Doctors who use an EMR with built-in coding support are usually prompted
after the progress note has been completed. Options are then displayed based on the level of
service and physicians can choose the E&M level prompted or another.
Some practices that use an EMR have reported seeing a decrease in E&M under coding. While
this tool may provide physicians with a level of coding support, the need to verify medical necessity,
as well as, the need to correctly capture diagnostic and other related codes for care services is
anticipated to become more complex in the future.
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3. Practice Coding Forecast Report
Transition to ICD-10-CM/PCS
The Department of Health and Human Services (HHS) announced in August 2008 that it is
transitioning the health care industry to the International Classification of Diseases, Tenth Revision,
Clinical Modification (ICD-10-CM) and the International Classification of Diseases, Tenth Revision,
Procedural Classification System (ICD-10-PCS) for coding and billing. The implementation
deadline is October 1, 2013.
ICD-9 Clinical Modification (ICD-9-CM) is nearly 30 years old and many of its diagnosis categories
are full, preventing further expansion. In fact, it’s estimated that the ICD-9-CM procedure code set
will run out of codes in the near future. In addition, ICD-9-CM is not flexible enough to quickly
incorporate emerging diagnoses and procedures, nor is it accurate enough to identify diagnoses
and procedures precisely. In contrast, ICD-10-CM and PCS provide detailed information on
procedures allows ample space for capturing new technology and devices and has a logical
structure with clear, consistent definitions.
All covered entities (health plans, health care clearinghouses, and certain health care providers)
that bill Medicare for services must being using the ICD-10 code as currently scheduled.
ICD-9-CM Diagnosis Codes ICD-10-CM Diagnosis Codes
13,000 diagnosis codes 68,000 diagnosis codes
Uses 3 to 5 digit codes Uses 3 to 7 digit codes
Chapters 1-17 uses all numeric characters,  Digit 1 is alpha (A-Z, not case sensitive)
supplemental chapters use an alpha first digit  Digit 2 and 3 are numeric
(E or V)  Digits 4-7 are alpha
ICD-9-CM Procedure Codes ICD-10-PCS Codes
11,000 procedure codes 87,000 procedure codes
Uses 3 to 4 digit codes Uses 7 digit codes
All four digits are numeric Any of the digits can be alpha or numeric.
Letters O and I are not used to avoid confusion
with number 0 and 1.
Potential Effect on Coding Services
With the transition to ICD-10 codes, the demand for qualified coding services is anticipated to
increase. Simultaneously the supply of medical coders is expected to remain the same or
decrease. The combination of both factors could have a dramatic effect on physicians and
healthcare organizations.
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4. Practice Coding Forecast Report
Potential solutions will require a mix of technology to help automate as much as possible in
combination with qualified coding professionals who are trained and prepared to handle the
changes ahead.
The Department of Health and Human Services estimates total training costs for full-time hospital
coders at $2,750 per coder ($2,200 for lost work time, plus $550 for training expenses), and $500
for part-time codes ($440 for lost work time, plus $110 for training expenses).
The lack of experienced candidates in the market coupled with changes in coding is requiring
organizations to be flexible, creative, and take corrective measures that will help practices thrive in
the future.
Important Steps to Take
 Provide regular coding and documentation monitoring, audits and training for staff and
physicians.
 Encourage good habits now and track progress through improved documentation, compliant
coding, fewer denied claims and increased reimbursement.
 Be sure to have an active compliance plan in place and update to address regulatory
requirements.
 Make your staff aware of the upcoming coding changes and provide training. The Centers for
Medicare & Medicaid Services ICD-10 Web site offers an ICD-10-PCS to ICD-9-CM information
that can be downloaded from: www.cms.hhs.gov/ICD10/02_ICD-10-PCS.asp
 Physicians and healthcare executives should evaluate outside consulting resources and
services to augment current practice or department staffing needs and help control overhead
costs.
 Consider hiring and training from within, reaching out to surrounding states for coding
candidates and work with community colleges to boost the local pool of candidates.
 When evaluating an electronic medical record or new practice management system, ask how
they handle coding support and what their plans are to address future coding changes.
1
American Health Information Management Association (AHIMA) Survey June 29 – July 12 (95 responses), 2009
2
McKesson Practice Consulting Survey Findings, Health Care Compliance Association Conference, April 21 - 24 (56
responses), 2010
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McKesson Corporation.

5. Practice Coding Forecast Report
McKesson Practice Consulting Solutions
Physician focused consulting experts with over 25 years of experience dedicated to
making a measurable impact on the fiscal success of medical practices through
strategic growth and practice performance
Currently engaged with more than 100 clients nationwide, our consultants offer a broad
range of core services including coding and compliance, managed care contracting,
revenue and practice management, financial analysis and strategic growth.
We will provide you with realistic recommendations and hands-on solutions to address
tough challenges, find untapped opportunities and ensure measurable success.
Call for a No Obligation Consult
800-789-6409
Or Visit Our Website
www.mckesson.com/practiceconsulting
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Alpharetta, GA 30005
www.mckesson.com
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