The October 1 deadline for the implementation of ICD-10 is rapidly approaching, and that may be very bad news for many providers.

A recent survey by the Workgroup for Electronic Data Interchange (WEDI) found that only about 20% of physician practices have started or completed external ICD-10 testing and less than 50% indicated they were ready or would be ready for the October 1 deadline.

This lack of progress is cause for concern because there are many risks associated with the transition to ICD-10. Here are five of the top ICD-10 risks.

1. Increase in denials. ICD-10 has more than 69,000 diagnostic codes and 87,000 procedure codes, compared with 14,000 diagnostic and 4,000 procedure codes under ICD-9. The opportunity for error — regardless of training — is substantial. There is an increase in the likelihood of denials relating to issues including coding errors, insufficient documentation and increased payer scrutiny of claims. As denial rates increase, so will accounts receivable days.

2. Decrease in staff productivity. According to a study in the journal Perspectives in Health Information Management, “The prevailing estimate of productivity loss [due to ICD-10] is typically somewhere between 30 and 50 percent. However, preliminary results of this time study overall were much higher, with ICD-10-CM/PCS coding taking 69 percent longer overall and, at best, 54.4 percent longer when performed by the participants with the most training in ICD-10-CM/PCS.”

HIT Consultant notes, “Canada saw a 67% drop in coder productivity after ICD-10 was implemented during its government-funded rollout of the program.”

The unfortunate reality is that it is going to take more time for business office staff to complete and submit claims following the transition to ICD-10, and some — if not many — of those claims will likely be denied. So even if it’s “business as usual” at your organization in terms of treating patients, that will not be the case in the business office, where staff members will be scrambling to keep up with volume as they try to apply their knowledge of ICD-10, and, in some cases, learn the coding system on the fly.

3. Disruption of cash flow. As coder and biller productivity declines and denials increase, organizations will likely experience a substantial interruption of their revenue stream. If an organization lacks substantial cash reserves or does not take out a loan, a long-term cash flow disruption could quickly impact an organization’s ability to pay bills, including rent, utilities and salaries.

As Healthcare Finance notes, “Even for the most prepared hospitals, there will undoubtedly be a learning curve resulting in a delay of getting bills out the door fast enough. Accounts receivable departments currently take roughly 45 to 55 days to process everything. With the transition to ICD-10, that could potentially spike to another 10 to 20 days if a staff is underprepared and can’t adapt quickly enough.”

4. Health plans unprepared. Even if you believe your organization is as prepared as it could possibly be for the transition to ICD-10, there’s nothing you can do about the preparation of your payers.

The WEDI survey revealed that two-fifths of health plans were already prepared and nearly three-fifths of other respondents indicated they would be ready by the compliance date. While that sounds somewhat promising, looking at this another way reveals that 60% of payers are not presently prepared and 40% will not be ready by the compliance date.

If your payers fall into this 40% (there’s a good chance it will be higher), you can expect much slower payments. You should also plan for staff to spend more time on follow up and denials review. Payers that are not prepared are more likely to make mistakes during claims reviews.

5. Lack of coders and billers. Some organizations may look to add skilled coders and billers to its staff in hopes of combating the risk of declining productivity. Unfortunately, as CareerStep reports, “Right now the medical coding and billing industry is short of trained medical coders by 30%. With the implementation of [ICD-10], the shortage is expected to be over 50% by the end of the year.”

As if finding skilled coders and billers wasn’t difficult enough, the cost of hiring qualified individuals is going up. As a report on AAPC’s 2014 Salary Survey notes, “The more experience [AAPC] members have, the more money they make. And according to survey respondents, members with the most experience are worth more now than ever.” Also, “The average salary for all employed members in 2014 was $50,775, which is an 8.4 percent increase and a major jump from 2013.”

Is Outsourcing Right for You?

These five risks — and the many others associated with the transition to ICD-10 — have the potential to cripple an organization, which is why many practices and surgery centers are considering whether to outsource their coding and billing.

PGM Billing is one of the country’s leading billing and management companies, providing practice and ASC billing services to organizations nationwide. PGM is the creator of the ICD-10 Codes Lookup Tool and ICD-10 Code Conversion Tool, and provides many other ICD-10 educational and training resources. Contact PGM today to find out how they can help your organization leading up to and following the transition to ICD-10.