Fitch: ICD-10 delay could help hospital finances

ICD-10, the oft-criticized initiative to greatly expand the number of billing codes that providers use, has been delayed for yet another year, a move that will likely benefit not-for-profit hospitals.

The most recent delay of ICD-10's implementation will probably have a positive impact on the bottom lines of many not-for-profit providers, according to a new report by Fitch Ratings.

ICD-10--which would boost the current number of billing codes from about 15,000 to more than 68,000--was supposed to go into effect this fall, but the transition was put off until 2015, as part of the legislation President Barack Obama signed into law last week that provides another one-year patch on Medicare's sustainable growth rate payment formula for doctors.

"While the majority of hospital providers Fitch rates are prepared for the Oct. 1 transition, the potential disruption to the revenue cycle could have a negative credit impact on the sector (particularly on lower rated credits)," Fitch said in a brief statement on the ICD-10 delay it issued last Friday.

Moreover, "the readiness of both governmental and commercial payers to adequately process claims and payments in a timely manner has been questioned," Fitch said. "In our view, lower-rated credits would be more susceptible to this risk as have less financial resources to absorb a potential delay in reimbursement."

ICD-10 costs can range from more than $50,000 for the smallest medical practice to as much as $8 million for the largest practices. For some hospitals, switching to the dual-code systems required to make a smooth transition from ICD-9 to ICD-10 could cost as much as $20 million.

To learn more:
- read the Fitch report