ICD-10 Success Step 2: Financial Planning

Kareo ICD-10 Resource CenterThe ICD-10 deadline is now only five months away. There is no time to lose in your preparations. As we continue our recap on the steps to ICD-10 success, we're looking at the importance of financial planning to ensure your business can weather anything ICD-10 brings your way.

ICD-10 will impact your revenue—both now and after the transition. To make a successful transition requires thoughtful financial planning.

There are four basic steps to your ICD-10 financial planning: Tweet this Kareo story
  1. Planning for added expenses related to training and preparing for the transition. Because ICD-10 requires training, updates to forms, changes to workflow, and the purchase of new resources, it needs a budget. It doesn’t have to be fancy, but take some time to create a spreadsheet and list out all the potential expenses. The sooner you do this, the more time you have to spread out the costs.
  2. Identifying what you will need for cash reserves to protect your practice in the event of a reduction in revenue and productivity. Industry experts have suggested that denials could increase by as much as 200% after October 1. As a result, many believe that practices should have reserves to cover as much as 50% reduction in revenue for up to three months. You'll need to set aside cash reserves or apply for a line of credit. You can't predict how quickly or accurately claims will be paid. With money set aside you can be sure you can pay the bills no matter what happens.
  3. Looking at ways to contain costs and reduce expenses in case you do see a revenue shortfall. One way to set aside some savings or cover extra costs for ICD-10 is to reduce costs in other areas. It is always good to review expenses and look for opportunities to reduce them. You might be inclined to look at ways to reduce staffing costs--your biggest expense-- but now is not the time for that. You'll need all the staff and resources you can get. However, now is not the time to for bonuses or raises. Wait until after the transition. January 2016 is probably a better time to evaluate raises.
  4. Monitor claims closely after October 1. After the transition, one of the most important tasks will be monitoring your claims, watching for denials, and addressing them quickly. If your medical billing software has denial tracking or no response claim tracking, be sure to use it. Put in place a process now to monitor claims so it becomes a habit before October 1. Ideally, denials should be followed up on within a set window of time like 48 hours.
Recent studies have suggested the cost for small practices to transition to ICD-10 will be around $2000 - $6000. While this isn't a huge amount, for a small business it isn't a drop in the bucket either. Planning adequately will really help make this cost easier to manage. More importantly, ensuring that you have adequate savings will help your practice survive the transition. Get started now to ensure your financial security through October 1 and beyond.

For more tools and resources to help survive ICD-10 visits the Kareo ICD-10 Resource Center.

About the Author

Lea writes educational articles to help medical practices improve their businesses. In addition to Kareo, Lea has written for Medical Manager Health Systems, WebMD...

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