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New Study Shows ICD-10 Implementation Costs to Be Significantly Higher

New cost estimates for implementing the federally mandated ICD-10 code set by Oct. 1, 2014, are, in some cases, nearly three times more than previously estimated, according to a new study released by the American Medical Association (AMA).

ICD10Costs associated with ICD-10 implementation include training, vendor and software upgrades, testing and payment disruption. Compared to a similar study completed in 2008, these costs could be as much as $8 million for a typical large physician practice. For a small practice, implementation costs could be more than $225,000. The move is expected to be “much more disruptive for physicians” than previous mandates.

“The markedly higher implementation costs for ICD-10 place a crushing burden on physicians, straining vital resources needed to invest in new health care delivery models and well-developed technology that promotes care coordination with real value to patients,” AMA President Ardis Dee Hoven, MD, said in a news release.

“Continuing to compel physicians to adopt this new coding structure threatens to disrupt innovations by diverting resources away from areas that are expected to help lower costs and improve the quality of care,” Dr. Hoven said.

Current cost estimates are higher now “due to the need for testing, and the potential for increased payment disruption,” the study reports. “A major element in cost is clearly the vendor/software upgrade category.”

The study notes specialty practices will see the highest ICD-10 implementation costs, especially in productivity losses and payment disruptions, because of their higher revenues and per hour rates.

The study estimates both pre- and post-ICD-10 implementation costs for average small, medium and large physician practices. While conservative cost estimates fall slightly below 2008 estimates, the range of expenses is much higher than the AMA’s 2008 analysis, and many practices are expected to fall into the higher ranges.

Although organized neurosurgery is still advocating that Medicare scrap this new coding system, we recognize that it is imperative that neurosurgeons are nevertheless prepared for the change — particularly since significant disruption to claims processing is almost certain and the agency will not provide any transition period.  To access educational resources for practical insight into the preparation process, click here.

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One Comment

  • Dan Toren says:

    That’s true: the impact of the ICD-10 transition on your bottom line may be significant and not in a positive way…
    Anticipating the angst of October 1st, we’ve developed and recently released an app that may help alleviate the anxiety related to the ICD-10 implementation. Especially for the small practices that don’t have the support or budgets of a hospital HIM department.

    You can check it out at and we’ll appreciate your feedback

    Even with this great app we couldn’t find an ICD-10 code for “Major depression due to ICD-10 implementation”. I guess that’s saved for ICD-11.

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