Emergency cash a must for move to ICD-10
July 30, 2013 in Medical Technology
Healthcare providers may face disruptions in their payments even if they are on target to operate using ICD-10 codes on Oct. 1, 2014.
Since providers will, and indeed need, to be able to pay rent and staff salaries if the transition does not flow as smoothly as testing has indicated, experts advise having up to several months’ cash reserves or access to cash through a loan or line of credit to avoid potential headaches.
“Just figure that with the transition to ICD-10 there will be delays in reimbursement,” said April Arzate, vice president of client services at MediGain, a Dallas-based revenue cycle and healthcare analytics company.
[For more ICD-10 facts and advice, see ICD-10 Compliance and Beyond: Completing the Journey].
Although there will be a great deal of testing and preparation done by the vendors of practice management and electronic health record (EHR) systems by clearinghouses and payers, “we really won’t know the true effect until they turn it on,” Arzate added.
Mitigate revenue disruption
The recommendation that Arzate pointed to is to reserve at least enough money to cover medical supplies, payroll, rent, everything required to keep the practice operational for three to six months — just in case any payers experience disruptions in cash flow that delay payments.
That’s especially difficult for small practices. “You may not have to have it on hand,” Arzate explained, “but you need to have the resources available.”
It’s better to talk with the bank now before the funds are needed, added Clint Hughes, MediGain vice president of marketing.
“The bank will be more open now than if you come to them desperate because you’re two months behind,” he said.
Arzate suggested that they establish a line of credit, or if they already have one in place, “ask for an increase or different payment terms,” she said. “They just need to start that process ahead of time.”
[See also: 8 zaniest ICD-10 codes.]
Also, check with payers to determine if they have a contingency plan in the event of a disruption and what they intend to do for providers so they’re not left with a significant cash flow crisis.