Business Transformation Catalyzed by ICD-10 and HIPAA 5010
As US Healthcare industry races to comply with HIPAA 5010 and ICD10 regulations by Jan’2012 and Oct’2013, these two changes remain as the biggest challenges the US healthcare industry has faced in decades. Processes and IT systems will need to be remediated and people retrained to ensure business continuity and avoid penalties. These two changes are being termed as the “Y2K of the healthcare industry” and are expected to cost the industry close to USD 20 billion for remediation.
Given the magnitude of the impact based on high level assessments, it is really important to breakdown the problem statement and detail it out. The mandate as a whole can be broken into two separate problems in a very simplistic way – viz., HIPAA 5010 transformation and ICD 10 Migration. But in my opinion, tackling of these two separately would be prohibitive in terms of implementation (though you might be ok, in terms of impact assessment).
An alternative and more practical approach would be to run the whole program as a Transformation Exercise (both ICD10 and HIPAA5010) put together, but careful enough not to overload this program with other miscellaneous enhancements. The problem can be attacked by looking at it from different viewpoints (Ref: Fig 1)
Compliance Remediation Viewpoint: One can look at the whole ICD 10 and HIPAA 5010 simply as compliance need and treat it accordingly. While this is not a bad idea, one would not reap the actual benefits of new regulations immediately.
A healthcare firm looking at the challenge from a compliance perspective would analyze the business processes and application portfolios try and make them compliant with the regulations.
Compliance Remediation viewpoint would result in fairly simple identification of application set that needs to be remediated to be externally compliant, i.e. be compliant with regulations with the government agencies (CMS) and partners.
Business Transformation Viewpoint: Business transformation viewpoint would involve a thorough analysis of the new standards, their customization and impact assessment on the business, if the changes were applied in their true sense. This would typically reveal a much larger impact (compared to Compliance Impact Viewpoint) and would require much more diligent planning and execution.
This would involve (I have listed some findings of the viewpoint):
1. How to accommodate and utilize of new HIPAA 5010 messages and on the business processes.
2. How to accommodate and utilize of new segments and fields of 5010 on applications and business processes.
3. Impact of deprecated and changed segments and fields of 5010 on applications and business processes.
4. How the well ordered and much more granular ICD (version 10) codes can be utilized in bringing about the claim processing efficiency and decrease healthcare costs.
5. How the ICD 10 codes can be used to increase accuracy in identifying the diseases from the claims and medical management perspective to better the healthcare provided.
6. How the historical data (ICD 9) can be used to generate required information for rating and pricing.
Execution Viewpoint: This viewpoint puts a concrete roadmap to the transformation program, be it Compliance Remediation or the Business Transformation. Both of these would have many commonalities, but the magnitudes of these two efforts could be largely varying in size and timeline.
Few items that would be considered in the execution viewpoint are:
1. How a given impact analysis can be broken down into a phased implementation approach.
2. What are the critical areas and priority application that need to be remediated based on the business benefit and ease of implementation.
3. What are the business process / workflow changes that need consideration / training.
4. How the additional activities are (potentially during the transition) are handled – these could be the manual edits in the workflow.
5. Last but not the least, what is the most efficient way (in terms of cost and time-line) to bring about the transformation.
As shown in the figure 1, there are different paths that can be taken to execute the program.
1. Compliance Only Remediation (marked as 1) caters to changing minimal set of applications and interfaces, to be compliant. This would typically mean skin deep impact on the whole application portfolio, typically at the interfaces.
2. Business Transformation Remediation (marked as 2, followed by 3) identifies business transformation needs of the organization (along with compliance needs) and executes the program.
I will try and blog more on the different viewpoints with respect to domain areas of a given organization in the future blogs.
