System Impacts for Payers

The single greatest cost and risk to payers in achieving compliance with the Electronic Transactions and Code Sets Rule will be the remediation and/or replacement of information systems. The modification of field length and structure is a minor part of the problem. The work required to change business rules and processes that are code-dependent is estimated to be the major cost and time component.

System Evaluations

A key part of the TM Floyd & Company Gap Analysis for payers will be the detailed inventory of all information system and interfaces to determine the extent of changes required to achieve 5010 and ICD-10 compliance. This is far more detailed than a normal systems inventory, as payers will have to identify all code-driven or code-dependent applications, systems, and interfaces and map the associated data flows.

For payers operating proprietary legacy systems that would require extensive remediation work, the timely decision to remediate, upgrade, or replace will be imperative. Many payers cannot afford the costs and risks associated with remediating legacy systems to compliance. The alternatives are to implement a commercially supported system or outsource claims processing to a third-party administrator.

Applications and Interfaces

Even payers that use commercially supported systems rely on custom applications and interfaces to perform particular business functions. Every application and interface that is touched by ICD-9, including through the use of DRGs based on ICD-9, will have to be modified to work with ICD-10.

From membership and underwriting through utilization review and provider management, the application and interface impacts for a payer could be overwhelming. For example, payers will need to adjust claims adjudication rules, change the formatting and sizes of fields, remap user and application-to-application interfaces, and redefine reporting functions.

Positive Impacts

Although the system impacts are immense and can be overwhelming, diligent planning and a strong commitment to an ICD-10 implementation can transform this regulatory mandate into a competitive advantage driver, including reducing the total cost of ownership for information systems. Payers may identify new business opportunities, such as providing third-party administration services for those payers not able to comply. Additionally, payers with the financial strength to meet the challenge may elect to incorporate other enterprise strategic initiatives during the process to gain further competitive advantage in the marketplace.