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Solving the ICD-10 Puzzle - Assessing Healthcare’s Implementation Strategies and Challenges

A substantial number — upwards of 50 percent — of healthcare payers won’t be in 100 percent compliance with full ICD-10 processing capabilities by the deadline. Compliance is also problematic and unlikely among all healthcare providers.— Robert Booz, Vice President & Distinguished Analyst, Gartner1

The Impact of ICD-10

The ICD-10 (International Classification of Diseases, Revision 10) mandate presents the U.S. healthcare industry with the most complex shift in diagnostics coding since the ICD-9 structure was released in 1975. The ICD-10 coding system requires nearly five and a half times the number of diagnosis codes included in the ICD-9 set2, as well as approximately 29 times the amount of procedure codes. Adding to transition complexity, the ICD-10 codes do not relate linearly to those defined within ICD-9. To achieve compliance by the Oct. 1, 2014, deadline, healthcare organizations must work fast and smart to assess transition impact and define a future state that aligns workflows, technologies and people appropriately.

This is uncharted territory. When we did 5010, we knew what we did for 4010. With Y2K, we had a date and scanned and fixed for it. With ICD-9, we didn’t have automation. What do we do now? — Senior IT Director for large regional hospital system with 2,000+ beds.

TEKsystems Research on Industry Approach to ICD-10 Mandate

TEKsystems is a leading services provider that has supported all segments of the healthcare industry for the last 25 years. In conjunction with industry trends that have surfaced over the last two decades, we have focused our healthcare services vertical around helping organizations improve patient care, meet meaningful use, achieve compliance, improve data management, modernize legacy systems and implement workforce planning programs that fuel and support all key initiatives.

To ensure our services support the industry’s clinical, business and IT goals, we regularly perform “voice of the customer” research within our client population. In late 2011, we partnered with a third-party market research firm3 to survey healthcare organizations about the challenges and strategies associated with ICD-10 compliance. This survey, one of the largest of its kind with this focus to date, collected responses from around 600 healthcare leaders. Providers represented the majority of the sample at 67 percent; payers comprised the remaining 33 percent. Organizations of all sizes were represented, with 30 percent coming from organizations grossing over $500 million in revenue. Responses were evenly split between IT and business functions.

Using the survey results as a platform for deeper discussion, we invited 14 high-level healthcare leaders from across the country to attend a focus group, representing four of the top U.S. payers and providers as well as small to mid size regional hospital systems and, in aggregate, $1 billion in program spend. The focus group featured Gartner’s ICD-10 expert, Robert Booz.

This paper summarizes key findings from our two-fold research study. Specifically, it examines the industry’s ICD-10 transition status, explores the approaches organizations use to tackle the ICD-10 challenge and outlines best practices emerging in ICD-10 workforce management.

ICD-10 Quick Facts

  • The International Classification of Diseases (ICD) is the international standard coding system used by healthcare organizations to code and index healthcare data.
  • In 1893, French physician Jacques Bertillon introduced his Classification of Causes of Death.
  • The World Health Organization (WHO) assumed responsibility for developing and publishing revisions in 1948.
  • Currently, the ICD is the most widely adopted classification system for diseases in the world.4
  • In 1993, the WHO released the tenth revision, known as “ICD-10.”
  • Under the ICD-10 Health Insurance Portability and Accountability Act (HIPAA), Congress mandates that all healthcare organizations update to ICD-10 by October 1, 2014.
  • After Oct. 1, 2014, ICD-9 codes will no longer be accepted and processed by health plans.
  • Non-compliance could represent significant fines levied by the Department of Health and Human Services (HHS).
  • Worst-case scenarios include lost revenue, increases in medical costs, significant backlog in Accounts Receivables and rework, and claims investigation.
Project managers may be a dime a dozen, but good ones aren’t. IT PMs can be found — business ones are not as easy. If we could find these people, we’d lock them down. There was a point in time when we would have said we’d completed our impact assessment, but it’s become a moving target."— Senior Technology Manager for one of the nation’s largest health benefits companies

Transition Status

Us vs. the WHO Measuring Stick

The World Health Organization (WHO)’s milestones provide a recommended set of deadlines for healthcare organizations to track their progress. Based on these milestones, healthcare organizations should be making significant progress toward remediation and continuing their training and education efforts. Testing efforts began in July of 2012.

Stages Toward ICD-10 Compliance*

  1. Impact Assessment

  2. Implementation Strategy

  3. Project Plan

  4. Business Process Design and Development

  5. Internal IT Systems Design and Development

  6. Training

  7. Testing

  8. Remediation: Maintenance of two versions, i.e., one for ICD-9 and one in compliance with ICD-10

  9. HIPAA 5010: An update to HIPAA 4010 as mandated by Congress with a compliance deadline of June 1, 2012

* As defined by the Workgroup for Electronic Data Interchange (WEDI)

Grappling With Compliance

One half of the respondents who completed the ICD-10 assessment indicated that their compliance efforts will have a larger impact on both IT and the business than initially expected. According to the director of health information technology for a leading East Coast-based healthcare provider, “Our assessment revealed a heat map that was red everywhere. So, then we had to start prioritizing by asking: what degree of red do we want to make it?” Forty-six percent of the survey respondents said that they underestimated the budget necessary to fund compliance projects. Alarmingly, 50 percent also said they underestimated the resources required to achieve compliance. The most-needed competencies were identical with the ones respondents indicated as most difficult to find — specifically, project managers, data architects, software engineers and coding specialists.

Initial underestimation of the ICD-10 effort has contributed to multiple challenges. Focus group findings revealed that early ICD-10 efforts were not always undertaken with the appropriate level of due diligence. One program management office (PMO) manager noted, “There was a point in time where we would have said we’d completed our impact assessment, but it’s a moving target and our data is now too stale.” Another PMO manager commented, “When we started, ICD-10 was so far into the future that no one took it seriously enough and we only did a 50 percent assessment. As a result, we found big gaps in what the business and IT told us they have and what they really have. We pretty much needed to start the assessment over.”

Even when due diligence was performed, many participants were not encouraged by the findings. Completed assessments revealed a major lack of understanding about current systems and data. According to a director of IT sourcing for a hospital with 800+ licensed beds and over 20,000 surgeries this year, “Our stakeholders don’t understand the data they are getting or transmitting.” Another attendee agreed. “Our organization seemed to have no real idea of how this is impacting them.”

Going ICD-10 Alone

Without a clear picture of the challenges ahead at the onset of their ICD-10 programs, over 35% of organizations reported attempting an exclusively internal solution, relying on existing staff to carry the project through each stage. However, only 34% of respondents identified the IT skills they will need for the transition, based on what they currently lack in-house.

Focus group participants lamented the early misconception that current staff could learn the required skills or absorb the work quickly enough to meet compliance milestones. Several participants noted that not only did they lack in-house competencies required to do the impact assessment internally, they found that they also lacked competencies required to guide an outside vendor toward an assessment framework that provided truly meaningful results. As the director of strategic partnerships for a payer responsible for 2.7 million customers said, “We learned painfully. The people that do the job are not always the best experts at defining and facilitating the overall strategy.” Without a realistic grasp on resource requirements, many healthcare organizations experienced capacity overload, frustration, rework and attrition of good people.

Partnering for Compliance

Due to the far-reaching impact of the ICD-10 transition, the majority of organizations opt to do it alone or with the help of staffing firms. Very few organizations are using a fully outsourced model. Rather, the primary partner strategies being employed are co-sourced models that enable the client to keep close to the strategic direction as well as the tactical decisions required to execute.

“Our integrator started strong, with top talent. Mid-stream, we started seeing more mid-level consultants we felt like we were training on the job. It slowed down our progress significantly and ultimately required escalation.” — Director for ICD-10 Operational Readiness

According to survey results, respondents using outside vendors as their primary sourcing strategy chose systems integrators (SI) approximately 24 percent of the time across all project phases. The use of an outside vendor to conduct impact assessments ranked highest at 27 percent and testing ranked lowest at 22 percent.

While survey findings revealed SIs as the most prevalent sourcing choice, focus group participants stressed that these providers do not offer problem-free solutions. The SI model leverages consultants who stay with the participant organization only as long as the SI — not necessarily the client — deems necessary. Without explicit knowledge transfer practices stipulated, the SI’s consultants end up taking their expertise with them when they transition to another engagement. This often leaves organizations without the critical information needed to take next steps. As a director for ICD-10 Operational Readiness stated, “Our integrator started strong, with top talent. Mid-stream, we started seeing more mid-level consultants we felt like we were training on the job. It slowed down our progress significantly and ultimately required escalation.”

For select project phases, surveyed organizations relied on IT staffing companies as their primary sourcers close to 20% of the time, notably in the areas of testing, training and remediation. Focus group participants who utilized staff augmentation expressed the importance of aligning with a select group of providers who knew how to partner, rather than simply supply resumes. As one corporate director of network contracting shared, “I’ve made the mistake of throwing my reqs to whoever can get me good-looking resumes fast and cheap. That only takes you so far. Now I rely exclusively on providers who have taken the time to understand me, know my business and give me people that they know can do the job I need them to do.”

A senior IT director for applications optimization reinforced this point. She commented, “To be successful in our ICD-10 program, we knew we couldn’t relinquish full control to an outside firm. We needed key skills and more bandwidth, though. So we built better partnerships with our staffing providers that could enhance the process we use to get great people in the door — and keep them there.”

Optimistic About Implementation

Despite the challenges that have thwarted progress thus far, most healthcare organizations remain optimistic about reaching compliance in time. Armed with critical insights and lessons learned from the early stages of their ICD-10 programs, almost three-quarters of respondents expect to complete the final three stages — remediation (65 percent), training/education (67 percent) and testing (68 percent) — in the next six to 18 months. Only 15 percent estimate that their remediation efforts will miss the compliance deadline.

What Strategies Are in Place to Master the Challenge?

Both survey and focus group data underline the lack of a universal solution — 42 percent of respondents indicated crosswalking as their chosen code processing approach, with replacement and remediation reported at 29 percent and 27 percent, respectively. Regardless of the chosen approach, several unifying themes emerged during the focus group as helpful tactics for gaining traction.

Managing Alignment of the ICD-10 Ecosystem

ICD-10 initiatives comprise a diverse ecosystem of key internal players impacted by the project. As the provider of the foundational structure for compliance, IT is clearly one of them. IT must, however, partner effectively with the business side of the organization to have any chance of designing and implementing a successful compliance effort.

Organizations that secured the required executive sponsorship, budget and skill sets had thoroughly sensitized their organizations to non-compliance risks and elevated ICD-10 as more than “just an IT problem.” Their ICD-10 programs were supported and represented by every segment and every business process. As a corporate director of contracting for a regional payer mentioned, “We’ve made it clear this isn’t an IT project. ICD-10 reaches into IT, but it is fundamental to the organization.”

Managing “Mission Creep”

Healthcare leaders need to closely monitor the scope of their ICD-10 projects. “Everyone is trying to tie their initiative and pet project into the ICD-10 bandwagon. Change control is hugely important for our success,” stated a director of IT sourcing during the focus group. A PMO manager from a provider organization reinforced this risk, recounting that, “Our initial plan had big budget overloads because we found things that suddenly attached to us that no one remembered saying we could or would do. We had to undertake a huge initiative to go back into every work group and process and ask, ‘Why did you think we were going to do this?’ They said, ‘Well, you were going to open the box and I’ve been trying to get this for the last two years.’” Successful ICD-10 initiatives regularly and carefully evaluated how their budgets tie back to what they committed to and what the stakeholders had initially requested.

“IT workforce scarcity—defined as rarity of critical qualifications and insufficiency of supply—is neither an IT problem nor a CIO problem. It is a business problem. More accurately, it is a business performance problem and a business continuity problem.” — Dianne Morello, Managing Vice President & Gartner Fellow Emeritus, Gartner

Managing the Skill Gaps

The human capital required for successful ICD-10 projects is, as one participant put it, “where the rubber meets the road.” Now, perhaps more than ever before, healthcare organizations are struggling to get the right skills and competencies required to complete each stage of compliance on time and within budget. The vice president of technology for a leading healthcare group serving over 75 million people worldwide stated passionately, “You can’t underestimate the value of the right people and the devastating effects of the wrong ones.” Talent sourcing and workforce planning strategies were deemed essential components to a successful ICD-10 program. “You can’t just throw out reqs to a bunch of staff augmentation firms, though,” said one medical director. “We needed an integrated plan that allowed our services providers to plug in and support our program strategically. We needed to figure out what we had and wanted to keep and what we didn’t have or preferred a partner to do for us. Then we needed to find the right partners. This wasn’t easy and it did take time.”

“Rising qualification thresholds, atrophied people pipelines, extreme specialization of IT skills, and decades of aging systems and applications will preoccupy CIOs and leave them unable to find, develop and retain the caliber of people they need to feed [critical] initiatives.” — Dianne Morello, Managing Vice President & Gartner Fellow Emeritus, Gartner

Who Supplies the Cavalry?

Regardless of technologies, methodologies and project plans, people are the core factor required to move an ICD-10 roadmap from milestone to milestone. While many ICD-10 implementations are well underway, the most critical stages still lie ahead and effective workforce planning is becoming increasingly crucial.

According to the survey, 55 percent of organizations report that their top challenge is finding and/or hiring required staff. ICD-10 project managers, data architects, software developers and coding specialists were identified as the four most difficult positions to fill. Unfortunately, focus group findings only reinforced the workforce difficulties, revealing that many healthcare organizations do not know exactly what competencies will be required, and to what scale, for all remaining stages. Participants shared the following challenges and success tactics involved in managing their workforce plans.

Managing Experience Levels

The majority of healthcare organizations need to bring in new hires to augment organizational bandwidth for their ICD-10 initiatives. Unfortunately, the number of new hires placed significant fatigue on existing staff to train and transition institutional knowledge. As the applications manager for one of the largest integrated regional healthcare delivery systems in the Midwest stated, “These newbies are at the mercy of what they’re being told — they don’t know the business and the systems and how they integrate. That means my best people are double stressed. They need to train their help before they can get the help they need.” Successful organizations carefully constructed training and onboarding programs to help decrease the time to new hire productivity.

Steep Learning Curves

“ICD-10’s complexity effectively stymies traditional large-scale initiative training methods,” said one vice president of professional services. Other participants described how training inpatient ICD-9 coders on the ICD-10 set can require up to three years before real proficiency is achieved. This timeline far exceeds most existing new hire learning models that span six to 10 months. Successful organizations shared the importance of skill development programs that could initially evaluate a learner’s initial skills, then work to progressively advance them to the skill level required for the program.

Developing an Organization-Wide Compliance Culture

Several participants expressed frustration at their inability to make independent work groups think and work holistically. “We have the people we need, but they act in a way that’s locally grown. To achieve our ICD-10 goals, we need to operate like an enterprise,” said one senior IT director. Successful organizations had cross-functional workgroups running ICD-10 programs or leveraged seasoned talent with comprehensive healthcare exposure to help guide the way. Commented one PMO manager, “Many healthcare professionals are not trained to think in terms of the downstream implications of their work. I go after the people who get the whole supply chain, because that’s what’s being impacted by ICD-10 — this island here and that one there.”

Competition and Retention

Attendees described their difficulties in finding and keeping quality people, especially as the compliance deadline approaches. Many sought to hire skilled professionals early in the hopes of keeping them for the long run. Shared one applications manager, “I’m trying to steal, build and buy great people, but I don’t know if those strategies are going to get us there on time — especially since everyone else wants the same people.” Successful organizations crafted competitive employee value propositions (inclusive of work/life perks) and built robust development programs. They also ensured leaders intentionally and formally interacted with their staff to facilitate high levels of employee satisfaction and engagement. As one director of testing for 5010 and ICD-10 stated, “I make sure I talk to my people and show them I care. They need to know I have a plan for them that really positions them well over the long run, or they’re gone and I’m stuck.”

Finding the Right People

One thing is clear — the healthcare industry is currently experiencing and will continue to see a severe labor shortage for health information technology (HIT) skills. The Bureau of Labor Statistics (BLS)6, the Healthcare Information and Management Systems Society (HIMSS)7 and the Office of the National Coordinator for Health Information Technology (ONC)8 foresee significantly increasing needs for HIT workers, with ONC’s most recent projection showing a necessary increase of 50,000 HIT professionals to meet the demands of the industry by 2015. Focus group participants felt the effects of this trend and shared their challenges in securing candidates who possessed the right balance across technical competency, cultural fit and vertical expertise. A director of IT sourcing stated, “Project managers may be a dime a dozen, but good ones in this space are certainly not.” One senior technology manager said, “I spend so many hours a week looking for great people. Too many hours.” Successful organizations aligned proactively with recruiters and talent sourcing providers are able to strategically partner with them. The best providers were vertically aligned and understood their client’s healthcare business. They were also consultative, working with clients to assess talent needs at each stage of the ICD-10 implementation, sharing labor market analytics to guide talent attraction programs and even offering training services to build required competencies in-house. Additionally, they possessed the size and relationship networks required to build comprehensive talent pipelines.

“I’m sitting here trying not to lose it. Our CFO has talked to three different vendors over the last three years. A month ago we revisited things again. At a minimum, I need someone who can walk me through some of this.” — Director of Health Information Technology, Payer


It is no secret that ICD-10 initiative owners are under immense pressure to fulfill compliance deadlines for their organizations. Equally clear is that many of them have initially underestimated the massive impact of the task at hand. Looking ahead, organizations must leverage lessons learned to grow wiser — and quickly. Regardless of the sourcing strategy or approach they opt to use, human capital requirements represent both a substantial risk as well as a great opportunity. Those organizations that invest in and focus on this critical, active ingredient to an ICD-10 program will be best positioned to rise to the challenge.

About TEKsystems®

People are at the heart of every successful business initiative. At TEKsystems, we understand people. Every year we deploy over 80,000 IT professionals at 6,000 client sites across North America, Europe and Asia. Our deep insights into IT human capital management enable us to help our clients achieve their business goals – while optimizing their IT workforce strategies. We provide IT staffing solutions, IT talent management expertise and IT services to help our clients plan, build and run their critical business initiatives. Through our range of quality-focused delivery models, we meet our clients where they are, and take them where they want to go, the way they want to get there.

TEKsystems. Our people make IT possible.

1 U.S. Healthcare Payers Should Assess ICD-10 Vendor Capabilities Against Three Issues: 31 August 2011 ID:G00215830 Analyst(s): Robert H. Booz