Healthcare Practice Strategies - Winter 2014 - Dodging the ICD-10 Cash Crunch
February 07, 2014
No doubt, the switch to the new ICD-10 code set will cause some waves. In fact, the American Medical Association has placed the ICD-10 conversion on its list of top-five challenges for physicians in 2014.
The new code set includes five times as many codes, and the different coding arrangements will certainly require more precise and thorough documentation.
Even more critical, though, is the potential impact on practice cash flow. Even physicians who are totally prepared to implement the new code set on Oct. 1, 2014, may experience delays in claims collections due to learning curves at both the practice and payor level. Indeed, the likelihood of submission delays and rejections is high, as hundreds of billing systems, clearinghouses, and commercial and government computer systems are impacted.
It has certainly happened before. In early 2012, glitches in the transition from the Medicare claims format HIPAA 4010 to 5010 caused cash-flow headaches for private-practice providers. In many cases, it took three to four weeks for practices to discover the problem — significantly delaying payments. Practices counting on these payments to meet overhead fell short during the first quarter of 2012.
Your best bet is to prepare now for cash flow delays.
Cash up. Establish a financial reserve that will cover overhead costs, particularly in the fourth quarter of 2014. Reserve at least enough to weather three to six months of payment delays.
Establish a line of credit. If an outright cash reserve is unfeasible, experts recommend that practices establish a credit line that can cover at least three to six months of operating expenses. The trick is to work with lenders now — before cash flow issues arise.
Healthcare Practice Strategies - Winter 2014