Why your ICD-10 budget needs a checkup

Carl Natale
by Carl Natale

Last week we found out that the ICD-10 transition may not be as expensive for medical practices as previously estimated. How does that happen?

First, consider the previous estimates are based upon the 2013 Nachisom Advisors study of ICD-10 transition costs. This gave a range for small medical practices from $56,639 to $226,105. If that's not enough to scare a physician into vigorous opposition, I don't know what else is.

To calm those fears, Thomas C. Kravis, M.D., Susan Belley, M. Ed., RHIA,  Donna M. Smith, RHIA, and Richard F. Averill, M.S., counter that study with their own ICD-10 transition cost estimates in the Journal of AHIMA — which says the Nachimson study uses inpatient hospital activities to base costs.

The JOA study puts the ICD-10 price tag in a range from $1,960 to $5,900 for small medical practices.

Who are we to believe?

Neither. This is something that medical practice managers need to figure out for themselves.

[See also: What needs to be in your ICD-10 budget]

Let's consider the framework created for the JOA study.


This is going to call for a set of ICD-10 code books and as many as 32 hours of formal training for each person and three hours for a physician. The JOA study caps the cost at $5,900. But I don't think that accounts for the time lost while staff members are in training.

AHIMA earlier estimated training time  at:

  • Organization wide education (especially non-coding staff)
    • Practical training (four hours)
      • Introduction to ICD-10-CM/PCS code sets
      • How implementation tools work
      • HIM directors, IT staff and other staff
  • Coding training
    • Awareness (three to six hours)
      • Reinforce foundation training
        • Anatomy
        • Physiology
        • Pharmacology
        • Medical terminology
    • ICD-10-CM training (28 hours)
      • Introduction to coding system
      • Comprehensive diagnosis coding instructions
    • ICD-10-PCS training (23-28 hours)
      • Introduction to coding system
      • Comprehensive procedure coding instructions
  • Coding training for specialty settings
    • Awareness (three to six hours)
      • Reinforce foundation training
    • ICD-10-CM training (28 hours)
      • Introduction to coding system
      • Comprehensive coding instruction

But there is more than planning for the costs of training sessions and materials. The budget also needs to account for staff or temp workers who cover while your people are in training sessions. This may include outsourcing medical coding while staff coders are in training.

Single-physician practices may be able to work around the training schedule with minimal impact to the budget or productivity.

System conversions

The JOA estimates depend on a small physician practice not having to pay anything to upgrade any systems:

"Many vendors are including the ICD-10 software update as part of their routine annual software update at no addition cost resulting in physician offices having no incremental ICD-10 related costs associated with their billing, practice management and EMR software."

Someone needs to start calling vendors. This is a huge part of the perceived costs of ICD-10 transitions. But maybe it's not.

[See also: How to talk to your healthcare vendors about the ICD-10 transition]

Superbill conversion

Apparently this is a concern. The JOA study doesn't see the need to invest anything more than the time needed to usually update the superbill.

[See also: Is that a superbill in your lab coat or are you glad to use ICD-10?]

End-to-end testing

I'm not sure why this is a zero-cost activity. Medical practices shouldn't have to pay for testing. But the time to prepare ICD-10 claims that result in zero reimbursements is a cost. And there will be time needed to review results and make changes. Which means time will not be spent on something else.

[See also: Are you ready for ICD-10 testing?]

Which leads to the next cost center.


It doesn't look like the JOA study accounts for the cost of time needed for converting processes. Which may not be a problem if the conversion is spread out over a year or so. Which makes procrastination more costly.

The JOA study focuses on the productivity losses from taking extra time to document individual encounters for ICD-10 specificity. That and the extra time medical coders will need to assign ICD-10 codes could be mitigated by automation.

This is where economies of scale come into play. A single physician probably doesn't take time to calculate minutes lost. (That would take time away from treating patients I'm sure.) So time lost in the ICD-10 transition could be "absorbed" without costing anything.

But as the healthcare provider size increases, lost time has a cost. The larger the medical practice or hospital, it is more likely there is someone calculating such costs.

So maybe these costs are too little to be worth concern in the very small medical practices. Even if the documentation effort has an effect, the JOA study argues that the increased documentation could increase reimbursement revenue previously left unclaimed.

And that's a valid argument today. Except the U.S. healthcare system is concerned with controlling costs. That means paying less for healthcare. Finding previously unclaimed revenue is going to become harder to do.

How much will this cost?

In February when the Nachimson study was updated, I thought it was a good idea to have higher ICD-10 cost estimates. "Because how many complicated IT project are done under budget?"

But maybe a small medical practice doesn't have a complicated ICD-10 transition.

 Instead of taking the numbers from Nachimson or JOA and inserting them into a budget, use the studies as a guide to gathering cost estimates. Yes, it's going to take time and effort. Which is a cost. But it's not going to get any cheaper.