Implementing ICD-10: How It Can Help to Reduce Cost and Improve Quality
The implementation of ICD-10 will be daunting to say the least. Estimates regarding what this will take to implement are anywhere from 12,029M – 30,480M; with the bulk of the cost needed for system upgrades, conversion and crosswalks. A simple question to this massive undertaking is what the return will be to the health care industry and likewise for everyone who participates in the health care system.
It is the general consensus across the industry that ICD-10 will allow for:
1. Better disease management and case management programs
2. Pay-for-Performance and Reimbursement Methodology
3. Underwriting
However, the question then becomes how to implement programs which will support improvements in these and other areas.
First, let’s take a look at the where health care dollars go:
Clearly hospital cost account for at least 1/3 of all health care dollars spent by Private Insurance (in fact according to the Kaiser Foundation, hospital cost are reported at 36.5% and Physician costs are reported as 28.8% in terms of overall cost for the same reporting year of 2004).
Next, looking at the “as-is” inpatient environment, Kaiser Foundation and the AHA Trendwatch Chart Book 2008 provide the following details:
From an inpatient hospital perspective on overall healthcare dollars, while it seems that admissions are in a static state, and days are actually decreasing, the costs associated with inpatient days are increasing.
Assuming that this trend is happening similarly across the board for most large private payers and that the reason why days are decreasing is due to strong utilization and case management, the question becomes how to reduce cost given with more than just standard utilization/case management techniques?
This is where using ICD-10 and drilling down to more specific reasons as to why there was an admission in the first place will be valuable. An example of this could be tracking drug related instances due to an adverse event and the associated cost. In 1995 there was a study conducted by Johnson and Bootman estimating the cost of drug-related instances in the ambulatory setting in the United States at more than $76.6 billion. In 2001, Ernst and Grizzle published in the Journal of American Pharmacists Association that in updating Johnson and Bootman’s model, they found that by 2000 the cost of drug related morbidity and mortality exceeded $177.4 billion. The majority of these costs were accounted for by hospital admissions at $121.5 billion. By using ICD10 to identify those cases specific adverse drug events while hospitalized, there is potential to help drive down the cost associated with hospital admission due to adverse drug events, thereby improving the quality of care and at the same time reducing costs.
Other examples of where drill downs on cost reduction could be better evaluated are:
1. Emergency Room Visits;
2. Morbidity and mortality;
3. Further investigation of studies provided by WHO and other international organizations based on ICD10.
These are just a few examples of how ICD-10 can be used to help evaluate cost expenditures, while at the same time evaluating quality of care initatives.
