ICD-10 Budgeting: Account for direct and indirect ICD-10 transition costs

Carl Natale
by Carl Natale

Budgeting for the ICD-10 transition will be trickier than you think. You need to set aside funds for more than software and equipment upgrades.

There will be two types of ICD-10 transition costs to include in your budget: direct and indirect costs.

Direct costs

Direct costs are kind of easy to spot. Each area requires resources - time and money - to accommodate. These are items such as:

  • Software and hardware
    • In house and vendor modifications
    • Upgrades
    • New software, systems and equipment
  • Education
    • Coder training
    • Clinician education
    • Awareness raising
  • Testing related costs
  • Staff time needed for:
    • Implementation planning
    • Training
    • Testing
    • Vendor management
  • Temp staffing to assist with extra work resulting from:
    • Decreased coding productivity
    • Billing backlogs
    • Claims denial and rejection management
    • IT work on upgrades and systems
    • Lost time during training
  • Consulting services
  • Forms and reports
    • Redesign
    • Printing costs
  • Data conversion
  • Dual coding
    • Added time
    • Maintaining data collection
    • Analyzing data

Indirect costs

Indirect costs are the factors that can reduce cash flow and revenues:

  • Drop in productivity
  • Increased accounts receivable cycles

Ken Bradley, vice president at Navicure, writes that medical practices can offset the revenue implications of ICD-10 implementation through several steps:

  • Planning
  • Thorough education and training
  • Testing

Bradley also points out that these steps may not inoculate your medical practice against revenue cycle disruptions. He suggests securing a line of credit in advance.