Four Critical Steps Insurers Must Take Now

Les Masterson, for HealthLeaders Media, August 5, 2009

With a public insurance option hanging over their heads and a sputtering employer-based market, health insurers are rightfully concerned about their future. But there is another issue slated for 2013 that could prove as difficult for health insurers.

On October 1, 2013, the Department of Health and Human Services will mandate that healthcare companies comply with ICD-10 diagnosis and inpatient hospital procedure codes.

Health insurers are understandably edgy just thinking about the breadth of this change. This transformation will potentially touch nearly all operational systems and procedures, according to Deloitte Consulting LLP, which recently joined forces with America's Health Insurance Plans to serve as its ICD-10 and 5010 training partner.

Deloitte said ICD-10 implementation requires a "massive wave of system reviews, new medical coding or extensive updates to existing software, and changes to many system interfaces.

"Because of the complex structure of ICD-10 codes, implementing and testing the changes in EMRs, billing systems, reporting packages, decision and analytical systems will require more effort than simply testing data–it will involve installing new code sets, training coders, re-mapping interfaces and recreating reports/extracts used by all constituents who access diagnosis codes," said Deloitte in its ICD-10: Turning Regulatory Compliance into Strategic Advantage.

Just how large is the ICD-10 change over? It should easily surpass the Y2K system upgrades of 1999-2000. David Biel, principal of the ICD-10 service offering for Deloitte in Chicago, says this is because health plans will have to deal with business processes and staffing. In other words, ICD-10 is more than technological improvements. "These codes are embedded in all of their financial transaction systems as well as their clinical systems. In order to order a drug in a hospital, you need to have a diagnosis. All of those things are going to change. This means huge people changes and huge training issues that they will have to deal with," he adds.

But with the ICD-10 changeover also comes an opportunity. Deloitte said ICD-10 could be a "potential platform for future strategic innovation." Though most health insurers will simply comply with the ICD-10 standards, Deloitte estimated that 10 to 15% of health insurers will become "innovators." Deloitte predicts that these innovators will "approach ICD-10 compliance as a strategic initiative and, as a result, could increase patient satisfaction and quality of care, while moving their business and clinical model into new markets."

To become an innovator, however, health insurers will need significant capital and personnel investments, which many insurers might not be able to achieve. What's important is to think of the ICD-10 change not as merely a bottom line concern, says Biel. "We're out in the market talking to a lot of insurers about ICD-10, and they're a number of them asking, 'what can I get out of this' rather than just thinking of costs," he says.

One potential benefit for health plans is having more accurate and a wider breadth of health data. This could help insurers learn more about member health issues and could allow insurers to break down the data into smaller groups for more targeted interventions. This could especially help disease management and care management programs find at-risk members and link them to programs that could improve their health outcomes.

Whether a health plan wants to merely comply or become an innovator, the company needs to prepare now. The North Carolina Healthcare Information and Communications Alliance, Inc., and The Workgroup for Electronic Data Interchange recently released a timeline for ICD-10 preparation. The groups estimate that it could take four years for providers to implement ICD-10.

Biel concurs with the assessment. "Even though we're four years away technically, the magnitude of the change is large enough that if you don't start looking at the impact now, then you won't have created a budget for 2010 to start the process," he says.

So, what can health insurers do now? Biel offers these four steps:

1. Review your technology to understand the impacted areas and how they are embedded in your systems.
   

• Conduct an operational assessment to see the business processes that are touched by this change.


• Conduct a people assessment to see the people who will need training in ICD-10.


• Conduct a strategic assessment and figure out how your company wants to handle ICD-10 (i.e. comply, collaborate, or innovate) and review what would go into each option.

But don't wait to start this process. If your company has not already started the process to implement ICD-10, you are already behind your competitors. Get to work now.
"I believe all health plans before the 2010 budgeting cycle should have an idea of what the impact is, what their road map is to compliance, and how much they need to budget over the next three years—especially the next year," says Biel.