Estimated Costs and Benefits of Adopting the new ICD-10 Coding System

According to the RAND Science and Technology Policy Institute’s comprehensive technical report on The Costs and Benefits of Moving to the ICD-10 Code Sets, providers will incur costs for computer reprogramming, the training of coders, physicians, and code users, and for the initial and long-term loss of productivity among coders and physicians. The cost of sequential conversion (10-CM then 10-PCS) is estimated to run around $425M to $1.15B in one-time costs, plus somewhere between $5 and $40 million a year in lost productivity.

RAND calculated many of its cost savings estimates on the benefits resulting from the additional detail that ICD-10-CM and ICD-10-PCS will offer. The estimated savings from more accurate payments to hospitals for new procedures ranges from $100M to $1.2B. Benefits from fewer rejected claims range between $200M and $2.5B, and an estimated $100M to $1B will be saved due to fewer exaggerated claims. The identification of more cost-effective services and direction of care to specific populations would result in a benefit of $100M to $1.5B. This is in addition to any benefits that would come from better total disease management and better directed preventive care.

Blue Cross and Blue Shield sponsored a study to determine costs to the health care industry in adopting ICD-10-CM and ICD-10-PCS. The study indicated a cost range of $5.5-13.5B for systems implementation, training, loss of productivity, re-work, and contract re-negotiations during a 2-3 year implementation period. Over half of the costs would be borne by health care providers. Long term recurring costs for loss of productivity were estimated at $150-380M.