Guest Commentary: The pros and cons of transitioning to ICD-10 via a tactical approach

Don't kid yourself. The ICD-10 mandate is going to impact every facet of payer operations. Anybody who thinks this is only going to impact their revenue cycle and focuses just on that is "living in a fool's paradise," Rajiv Sabharwal, chief solutions architect for healthcare and life sciences at Infosys told  FierceHealthPayer.

"This transition has the potential to bring down businesses," he says.

The switch from ICD-9 to ICD-10 will affect not just claims adjudication, but how benefits are set up, how health plans define premiums, plan, pricing and benefit. All those areas require you to look into clinical aspects of member populations. And the only way to do that is to analyze use by codes.

Health insurers are still struggling with what to do as the ICD-10 compliance deadline looms ahead in October 2013. Migrating from a legacy system to a cutting-edge ICD-10-based system is expensive and requires significant capital investment. What's more, payers could incur a high level of risk if they fail to upgrade their back-end system and just assume using a crosswalk to convert between ICD-9 and ICD-10 will cover them.

Whether such an approach is appropriate will depend on the state of your legacy system, Sabharwal says. A tactical approach, where no conversion to downstream applications takes place and only a crosswalk linking ICD-9 to ICD-10 is used, is a good way to proceed if your legacy systems are scheduled to be retired in the next few years, he says. The mandate says that payers are responsible for receiving and sending out ICD-10 data. But they don't have to process based on ICD-10. According to a tactical approach, payers would keep processing using the existing system and ICD-9 codes. Come Oct. 1, 2013, when the payer receives codes in ICD-10, it will just map back to the relevant ICD-9 code.

"It can work, but it won't work for a long time," Sabharwal says.

There are downsides to the tactical approach. Since CMS will pay for Medicare patients based on ICD-10 codes, payers could lose out on money due them if they have down-converted all the ICD-10 codes to ICD-9, because their legacy system is not capable of seeing the differences between certain procedures. For example, ICD-10 differentiates between angioplasty types and stent types, but ICD-9 doesn't.

About one and a half years ago, payers were split 60/40 in favor of the tactical approach, in which they would down-convert to ICD-9 codes for processing over a strategic approach that would involve upgrading the legacy system.

Now, perhaps 15 percent still favor the go-slow tactical approach.

The big challenge is that ICD-10 is a business transformation issue, not a technology transformation issue, says Sabharwal. "The tail should not be wagging the dog," he says. "You do not want to look at ICD-10 transformation in terms of technology conversion. You have a lot of process decisions."

A handful of large, progressive payers started doing an impact assessment at the end of 2009 or beginning of 2010. They already understand what will be affected, what new skill sets are needed, how they want to define their pricing structure, how they will launch new products and how they will manage new contracts with provider networks. They are near done with planning.

Others are still working on initial impact assessments. By year end, they should be ready for the remediation phase. Perhaps 30 percent of payers fall into this category.

The rest are still struggling. They may have recently started the assessment phase or are coming out with RFPs to hire the support to do the assessment. "Those are the ones who are getting a little behind," Sabharwal notes.

The big downside to the tactical approach is that it has the potential to make or break an insurer. "[Payers] can't keep on going with the tactical approach," Sabharwal says. If they did, he says, they could start losing money so bad they might not be able to survive. - Sandra

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