Are You Ready for the Decline in Cash Flow When ICD-10 Hits?

Are You Ready for the Decline in Cash Flow When ICD-10 Hits?

Did you know that serious decreases in cash flow are predicted when ICD-10 hits? In 2011 before the ICD-10 deadline was moved the first time, the predictions were staggering. According to the HIMSS G7 Advisory Report:

“Denial rates will increase by 100 percent to 200 percent post-implementation, with a corresponding increase in accounts receivable days by 20 percent to 40 percent. Healthcare organizations will most likely be hindered with declining payments for up to two years after the implementation date.”[1]

The last thing your organization should do is spend your valuable time and resources getting compliant with ICD-10 and then struggle from serious cash flow deficits. But that’s exactly what many organizations stand to do if they have not planned for the sure disruption from ICD-10 later this year. Is your organization ready for the decline in cash flow expected when ICD-10 hits?

Healthcare systems which are working hard to make the initial financial investment to get compliant with the ICD-federal mandate deserve to enter this transition with all the cards laid out clearly.

How Your Organization Can Mitigate Serious Cash Flow Issues?

Healthcare providers today are challenged with the mandate to do more with less during normal operating cycles, but in 2015 with major deadlines approaching for EHR attestation (which has just been moved to March 20, 2015) and ICD-10, business as usual is taking on quite a different meaning.  Nonetheless, it is possible to plan for and prevent serious cash flow issues.

3 Tips for Best Practice Risk Management Strategy

  1. Planning:
    1. Review all risks associated with making the transition to ICD-10, including what will happen if you do not meet the October 2015 deadline. You’ll want to look at the projected revenue adjustments that your organization will be hit with if you do not implement ICD-10 in time.  Most importantly, as you plan for the transition, you’ll need to be aware of when and how long cash flow will be disrupted.  Identify each financial risk.
    2. Even if you have completed all your test-runs and payments are processing, UPS highly recommends that while you may have a good cash flow, your organization should secure a line of credit for no less than 3 months of operating expenses. Once your cash flow starts to decline, it’s much more difficult to secure credit.  A line of credit is what UPS recommends, you will only use it if you need it and if you are fortunate not to need it; you will not be required to pay interest or bank charges.  The line of credit will be your safety net!
  2. Forecasting: Once you’ve identified the risks you’re facing, you should forecast possible changes to cash flow and move to advanced planning to protect the specific revenue losses which you expect to occur before, during and after the ICD-10 transition.
  3. Test for Revenue-Neutrality: The changes from ICD-9 to ICD-10 mean that providers need to ensure they are appropriately able to document and code appropriately. Testing should ensure that a patient coded in ICD-10 would correlate with the identical Diagnosis Related Grouping (DRG) for ICD-9 so that revenue-neutrality is maintained.[2]

Avoiding a disruption to your cash flow might not be possible, but with proper planning and testing ahead of the ICD-10 conversion, your organization can mitigate serious risks that will come with the change and thereby protect your bottom line.

Seven Additional Practice-Specific Tips to Prepare for ICD-10 Cash Flow Disruptions

(adapted from a list published by Government Health IT)


  1. Plan for and discuss budgeting avenues for additional cash reserves if material delays in payment occur
    2. Conduct financial modeling to understand financial implications moving from ICD-9 to ICD-10 and determine the revenue impact by provider or system facility, service line and geography
    3. Engage with your high-volume payers to assess their readiness state to process your claims coded in ICD-10
    4. Conduct clinical documentation improvement reviews using ICD-10 code set
    5. Develop a strategy for coding, billing and claim backlogs to improve cash flow
    6. Determine strategy for denials management pre- and post-ICD-10 conversion
    7. Assess readiness state of external vendors who support coding, billing, follow up and denials[3]

If you’re on track to meet ICD-10 deadlines, you can also make sure you’re on track to protect your bottom line from the damaging effects of a serious cash flow problem. Talk to the experts with United Physician Services to learn how to optimize operations, increase revenue, and plan for dips like the one expected later this year.

Call To Action at bottom

[1] ICD-10 Transformation: Five Critical Risk-Mitigation Strategies, 2011

[2]  Ibid, 2011

[3] ICD-10 Revenue Neutrality: 9 Ways to Protect Your Cash Flow, Government Health IT