If you undergo an angioplasty in the US, your doctors and hospitals will bill your insurance company using just a single code to describe the cardiac procedure. If you’ve sprained your ankle, they could use one of four codes. All that is set to change dramatically in two years. On October 1, 2013, the US healthcare system will mandatorily shift to a newer system of coding through which doctors and hospitals bill insurers. Under ICD-10, as the new system is called, instead of the earlier single code for
angioplasty, there will be a staggering 1,170 ways of classifying the surgery, depending on the location, the device used and descriptions. There will also be 72 codes for a sprained ankle. The two extra digits in the new system (seven against five currently) will mean significantly more paperwork for American physicians and hospital administrators. For Indian IT companies, though, those two digits mean a $30-billion opportunity.
Currently, the US uses the ICD-9 classification, which has been around since 1979. The next revision was ready in the 1990s and about 25 countries around the world have already adopted it. But the US has been dragging its heels, citing high costs, the need for training staff and the complexity of the new codes, and has already deferred one deadline to switch to the new system. Now, with just over two years to go for this government-imposed deadline, the panic to make the transition is building up to a frenzy — and that’s where Indian IT companies come in.
Decoding the new system
But first, what is ICD all about? Developed by the World Health Organisation, the International Classification of Disease (ICD) is a standardised framework used across the healthcare industry to compile, report and track diseases and various health conditions. Numeric and alpha-numeric codes cover the diagnosis as well as treatment procedure, so that every health condition is assigned a unique code. ICD-9 comprises over 14,000 diagnosis codes and 13,000 hospital procedure codes. But not only is it outdated, it’s also running out of space, so codes for a particular ailment are shifted to other areas that still have room — some types of heart disease are currently classified in eye treatment codes, for instance.
That isn’t the only problem. The current system lacks specificity. For example, if a patient is treated for a burn on his right hand, ICD-9 records this only as a burn on the hand. So if he returns some time later with a burn on his left hand, the same code will be reported. That could mean trouble with insurance reimbursement claims since the patient will have to file additional documentation to prove there were two, separate injuries. In the new code, the extra characters will not only identify left from right but also the initial and subsequent encounters, ensuring ease of reimbursement. Not surprisingly, that means a multi-fold increase in the numbers of codes — 67,000 diagnostic codes and 85,000 hospital procedure codes, to be precise. Indeed, the idea is to have codes for every conceivable ailment, cause and treatment, from the obvious to the bizarre (see: There’s a code for that?). “Because of the dramatic increase in the number of codes as well as the size of the codes, one-to-one mapping [making the new codes a function of the old] isn’t possible,” says Amit Shukla, head of sales & client services for US, payer and provider (healthcare) vertical at Wipro Technologies.
There's a code for that?
ICD-10 has codes for every ailment and
injury — and then some
That increases the complexity of the conversion but, still, ICD-10 is expected to bring in several benefits to the creaking American healthcare system. Emerging diseases can be incorporated very quickly into the code-set and quality of care is likely to improve, given enhanced data collection. Pradeep Nair, global head and vice-president, life sciences and healthcare, at HCL Technologies, points out another advantage: it will improve the accuracy of payment systems and identify fraud and abuse by more accurately defining services rendered (the US follows a ‘payer’ model of healthcare where payments are made either by the government or third-party insurance companies).
The India advantage
There’s a lot of work to be done before ICD-10 can roll out onto computer systems across the US. And it involves not just technology, but people and processes as well. People will have to be re-trained to use the new codes, the underlying logic in business processes will have to be re-examined and IT systems will have to be overhauled. “The ICD-10 transition involves both business and system changes with financial implications, which cannot be solely addressed through a software code crawling engine,” says Eric Paternoster, CEO and director of Infosys’ Public Services, an American subsidiary of the Bangalore-based IT services firm.
The impact will be felt across the supply side of healthcare. While medical professionals will grapple with the complexity of the new codes, for payers, the impact ranges from processes like claims and eligibility verification, to functions like claim adjudication, underwriting and design of benefits etc. For providers, on the other hand, the new system will lead to changes in how electronic medical records are maintained and management of revenue cycles. That’s because initially, there may be an increase in rejection of claims due to incorrect codes although administrative costs will reduce over time since the specificity of codes will mean fewer claims will be sent back
with queries.
Not surprisingly, the big healthcare players in the US are turning to India for all their IT requirements and that’s where the opportunity lies. HCL Technologies has been chosen by leading healthcare payer United Health as well as Blue Cross and Blue Shield to support their transition to ICD-10. Infosys, Cognizant and Wipro, too, say they have been selected to help major payers and providers in the US make the transition to the
new system.
But the floodgates are yet to open. According to a December 2011 payer market survey by HealthEdge, only 22% of the respondents felt completely prepared for the new coding standard, while 37% said they were only starting to prepare for it.
Getting ready
How are Indian solution providers preparing? For starters, they’re ramping up their healthcare practices — although companies do not announce headcount numbers for specific industry verticals, revenue growth is a good indicator to capture the shift. And the industry-wise revenue break-up of Indian IT services companies reveals that healthcare is one of the fastest-growing verticals. For the quarter ended December 2011, HCL Technologies saw a 15.9% sequential growth in revenues in its healthcare practice. The growth at TCS and Cognizant: 14.8% and 11%, respectively. Cognizant earns as much as 26% of its total revenues from healthcare, against Wipro’s 10%, HCL’s 8.4%, TCS’ 5.3% and Infosys’ 1.8%. No wonder Vinayambika, senior vice-president of the healthcare practice at Cognizant, is quick to point out, “We have been focused on the healthcare space for over 17 years and have deep insights into key events and regulatory directives that impact the US healthcare industry.”
If head-hunters and executive search firms are to be believed, there’s a big scramble for talent. However, the search is not for large volumes of entry-level engineers but for experienced people with deep domain expertise. There aren’t too many people with prior ‘business experience’ in the payer and provider market in the US, so companies are falling over themselves to grab whoever they can.
Apart from adding people, IT services companies have also built automated tools to make a more compelling proposition. Infosys has a product called iTransform, which is an end-to-end ICD-10 offering that the company claims saves up to 50% of the cost and time to make the transition as compared to the manual process. To sweeten the deal further, Infosys is offering this product as a ‘hosted’ model, which means that clients don’t have to invest huge amounts upfront in building the infrastructure and can simply pay per use.
HCL Technologies has a tool called iCRM that identifies the financial and business implications of the transition and develops a roadmap to effectively deal with such issues. It also offers services around iCRM to expedite the process of implementing the new code. Similarly, Cognizant has built a T-10 platform, which starts from assessment and goes all the way to implementation. Wipro has also developed tools for the strategy, planning and implementation of the new system.
That is not all. Companies are no longer content with just implementation; they are looking to ink end-to-end deals, right from the consulting stage to road-mapping to remediation to testing and finally support. And this is where they hope to play their ‘full-services offering’ card by displaying competencies in IT consulting, systems integration, testing and support outsourcing.
Not all rosy
Will that be enough to succeed? Consultants say more than existing relationships with clients in the healthcare space, what companies need is deep understanding of provider and payer operations, especially with respect to billing systems and codes. “This is what poses the biggest challenge to IT companies, since there is a real dearth of people proficient in ICD-10,” says an analyst with a global consulting firm.
The other worry is the growing clamour in the US for another postponement of the deadline for compliance with the new system. The US is already among the last countries to make the switch from 9 to 10, but now the healthcare industry has a fresh argument. Rather than make the transition to 10, which is already a couple of decades old, why not wait a little longer and be the first to move to ICD-11, they suggest? If that lobbying works, the opportunity for Indian IT may also be pushed back — and it may well have to encode several thousand more classifications for heart surgery.
