Technology Consulting

Implementing ICD-10 to
achieve high performance
An approach for creating
strategic value
Accenture believes
ICD-10 offers payers
and providers a
rare opportunity
to gain significant
competitive
advantage.
The positive impact of ICD-10
The move to ICD-10 will bring the
medical, clinical and financial sides
of the health care industry into full
alignment in terms of procedures and
diagnoses, capturing the advances
of the past 20 years in a common
shared code set. This is great news
for the consumer, as it will help to
create health care services that are
both more efficient and effective in
meeting consumer health care needs.
However, the RAND Corporation
has estimated that the total costs
to the industry for system changes,
retraining and lost productivity will
be between $475 million and $1,550
1
million over 10 years . (Figure 1)
The good news is that this same
research shows that the cost benefits
will outweigh the cost liabilities.
RAND estimates costs savings of
$700 million to $7,700 million to
be gained over 10 years through:
1 RAND Corporation. “The Costs and
Benefits of Moving to the ICD-10
Code Sets.” March 2004
2
The health care industry in the United States lags
behind the rest of the world in the adoption of ICD-10.
The mandated move by the US government to this
robust and flexible code set promises to capture the
data needed to make ongoing improvements in patient
care, quality reviews, medical research, reimbursement
and electronic health records.
But the benefits don’t stop there. Accenture High
Performance Business research has shown that many
successful organizations use occasions like this to
create a competitive advantage, and Accenture sees
the migration to ICD-10 as an opportunity to generate
the strategic business value that will be the hallmark
of high performance in the transformed health care
environment to come.
• More accurate payments for new, • Easier identification of patients in
more expensive procedures. need of disease management and
more effective disease management.
• Fewer miscoded, rejected
and improper claims. Clearly, how effectively and
completely payers and providers
• More detailed discharge data put ICD-10 to use will determine to
for a better understanding of what extent cost benefits outweigh
the value of new procedures. cost liabilities—and how quickly.
RAND Corporation estimates of the cost liabilities and
cost benefits of ICD-10 adoption
$m
$7,700
8,000 Cost liabilities
Cost benefits
6,000
4,000
$1,500
2,000 $700
$475
0
Minimum Maximum
Timeline for the move to ICD-10
On January 16, 2009, the U.S.
Department of Health and Human
Services published its final rule for
the adoption of the ICD-10 code
sets, created by the World Health
Organization. The following two
ICD-10 code sets will replace the
outdated ICD-9 code sets, per the
Health Insurance Portability and
Accountability Act of 1996 (HIPAA):
• International Classification of
Diseases, 10th Revision, Clinical
Modification (ICD-10-CM) for
coding patient diagnoses
• International Classification of
Diseases, 10th Revision, Procedural
Classification System (ICD-10-PCS)
for coding inpatient procedures
Also on January 16, 2009, the
department published its final rule for
the adoption of American National
Standards Institute (ANSI) Transaction
Version 5010 (v5010), to replace
Version 4010. The new v5010 is a
set of updated standards for specific
electronic health care transactions and
is essential for the adoption of ICD-10.
The two rules set the following dates
for mandatory compliance with the
new coding and transaction standards:
January 1, 2012
Achieve compliance with v5010
October 1, 2013
Achieve compliance with ICD-10
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So, why is ICD-10 such a big deal? Take one measure:
the likely costs. Healthcare industry estimates of the
effort required for implementation of ICD-10 range
from 50% more than the costs of the Health Insurance
Portability and Accountability Act of 1996 (HIPAA),
to four times the amount.

The need for a sense of urgency

While the compliance date for ICD-10
is not until October 1, 2013, Accenture
believes that now is the time to begin
planning and budgeting for the work
ahead. Wise providers and payers
are doing so already by conducting
detailed analyses of the impact on
their businesses. All providers and
payers should be doing so or they are
likely to face a costly race against
time to meet the legislated compliance
dates and risk losing out to their
better-prepared competitors. The
pressure is on to determine how to
adopt the new standards as efficiently
and cost effectively as possible.
This is a very tight time frame given the
extent of the technical and functional
changes that ICD-10 and v5010 will
require. A look at the key difference
between the two code sets shows that
just one of the technical challenges will
be as significant as the Y2K challenge,
with the need to expand the field
length to accommodate the longer
code lengths. (Figure 2) The level of
modernization of an organization’s
health information system will drive
costs and time requirements. The sooner
these are understood, the better able the
organization will be to develop a cost-
effective strategy for the transition.
Table 1. Differences between
ICD-9 and ICD-10 that will have a
significant impact on IT systems
ICD-9 ICD-10
Diagnosis
codes 13,000 68,000
Procedure
codes 11,000 72,000
Code 3 to 5 3 to 7
length digits digits
Code Numeric Alpha-
form primarily numeric
Many key decisions also have to
be made around the functional
implementation of ICD-10 and the
development of the business rules
needed for putting it to work—which
makes it all the more vital that health
care organizations start early to consider
its practical implications. Business
processes associated with the capture,
manipulation, transfer, submission, use
and reporting of diagnoses and inpatient
procedures will have to be revised
to see that ICD-10 code assignments
accurately reflect the patient care and
that accurate reimbursements can be
made with little or no intervention.
On top of that, Accenture sees that
individual organizations have the
opportunity to develop distinctive
capabilities by leveraging the richer,
more detailed and more granular data
that will be available with ICD-10. For
payers, this can mean distinguishing
products, benefit plans and patient
services. For providers, ICD-10 can be
used to improve performance along
all points of the revenue cycle.

4
5
Legislative mandates are often the catalyst
for considerable change—witness HIPAA.
The implementation of ICD-10 will be even bigger.
Put simply, it will require an industry-wide overhaul,
creating a compelling case for incorporating the
transformation of processes and technology into
the ICD-10 implementation efforts as a way
to improve the financial returns.

Accenture’s approach for achieving

high performance through ICD-10
Through work helping several major
health care industry clients prepare
for ICD-10, Accenture has developed
deep insight into the strategic and
operational impact of ICD-10 and
the opportunities that lie ahead.
Health care organizations moving to
ICD-10 have a clear opportunity to
realize a real return on their investment
with its implementation and to drive
the business toward achieving high
performance. To achieve these benefits,
the optimization and implementation
process must begin now. In Accenture's
view, to be fully prepared for ICD-10
and positioned to realize competitive
advantage from it, organizations need
to embark on a clearly defined process.
1. Co-assess ICD-10 and
v5010 migrations.
With the migration to v5010 a
prerequisite for implementing ICD-10,
Accenture sees that organizations will
benefit from synergies by assessing and
planning as part of their assessment
and planning for v5010. Integrated
planning will also help to facilitate a
successful implementation of ICD-10.
2. Gauge the impact on operations.
ICD-10 will have a pervasive impact
on every operational process across
a health care business. It is vital for
organizations to assess and analyze
the nature and scope of this impact
down to the most granular level of
their operations. Only then can they set
project and budget priorities and design
and implement effective processes.
3. Realize advantages embedded
in the new code set.
The five-fold increase in the number
of codes will add a significant degree
of complexity, but also provide for
codes that carry far richer, deeper and
more detailed medical information—
much of which can now only be
accessed through paper records or
phone calls. Taking advantage of
the opportunities this information
offers will require early planning.
4. Leverage migration as
an opportunity to redesign
business processes.
The migration to v5010 and then
to ICD-10 involves a significant
transformational effort affecting
nearly every system, process and
person in the organization. This
creates a rare opportunity for
reengineering and improving processes
across the organization and down
to the most granular level.
Accenture's assets can jump-start and
accelerate companies' ICD-10 solutions.
The firm's offerings encompass an
array of tools and services, including
an organizational process model
showing the impacts of ICD-10,
interview guides and tools for ICD-10

6
assessments, ICD-9 and v5010 toolkits
to accelerate implementations and the
Accenture Software Remediation Tool
for automating ICD-10 conversions.

The message is clear. The move to

ICD-10 will be a defining moment
for the health care industry, and
the future of companies across the
industry will be determined by how
successfully they tackle the imminent
challenges. Companies that seize
the opportunity put themselves in
position to be the industry's high-
performance businesses of the future.

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For more
About learn how your
Accenture
organization can achieve
Accenture is a global management
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ICD-10, contact:
Combining unparalleled experience,
comprehensive capabilities across all
Mary Card
industries and business functions,
mary.l.card@accenture.com
and extensive research on the world’s
most successful companies, Accenture
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collaborates with clients to help them
laura.corn@accenture.com
become high-performance businesses
and governments. With more than
186,000 people serving clients in over
120 countries, the company generated
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the fiscal year ended Aug. 31, 2008.
Its home page is www.accenture.com.
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About Accenture
Accenture is a global management
consulting, technology services
and outsourcing company.
Combining unparalleled experience,
comprehensive capabilities across all
industries and business functions,
and extensive research on the world’s
most successful companies, Accenture
collaborates with clients to help them
become high-performance businesses
and governments. With approximately
177,000 people serving clients in more
than 120 countries, the company
generated net revenues of US$23.39
billion for the fiscal year ended Aug.
31, 2008. Its home page is www.
accenture.com
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performance IT in an economic downturn
please contact Michael Nieves at:
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