HIPAA 1050, ICD 10 – and a whole lot of zeroes

Throughout Fairfield County and the rest of the nation, health care practices are facing big changes, including new HIPAA compliance requirements for patient records and more complex medical-coding requirements.

With the sluggish economy, uncertain reimbursements, rising costs and other issues, many health care providers are already feeling a cash-flow strain. Being prepared, especially for smaller practices, is essential.

On Jan. 1, Version 1050 of the Health Insurance Portability and Accountability Act (HIPAA) went into effect. It mandates that health care providers have the ability to report when patient records are accessed and by whom, and to identify what part of the record was viewed. It applies to records that are shared with the patient”™s permission, as well as those that are breached.

The second big shift is the switch in medical coding systems, from ICD-9 to ICD-10, which becomes effective in 2013. ICD-10 is far more complex, with the current number of codes ”“ about 13,600 ”“ rising to nearly 70,000.

These changes will impact physician practices, diagnostic facilities, homecare providers, residential centers, public and not-for-profit health care organizations.

Retraining staff and updating IT systems will be a major undertaking. Fairfield County health care providers need to assess their readiness, develop a plan and identify professional advisers. Among the issues to consider for both HIPAA and ICD-10 include:

What”™s required in terms of training and how will it affect operations?

While transition costs such as training are quantifiable, there are also hidden costs, such as reduced efficiency and productivity. This could mean seeing fewer patients or more time needed to do billing or compliance. In Fairfield County especially, the federally funded organization eHealth Connecticut is your best resource for information and technical support needed to make a successful transition. In addition, medical societies, state departments of health and newly formed regional extension centers are all great resources for how to manage the transitions.

Do I need to change or upgrade any software or hardware? Do I have enough cash to meet normal replacement needs plus any new ones?

Most businesses will require a comprehensive audit of equipment and technology, particularly if the last audit was done more than a year ago. That will help determine if the equipment and systems are capable of meeting Version 1050 reporting requirements and ICD-10. One good strategy is to create a map of all potential repositories of patient information, from imaging equipment to billing software.

Businesses may find that they need to upgrade, replace or buy new hardware and software. Health care bankers can also help an organization think about how cash flow will be impacted, and if they have sufficient liquidity to accommodate a temporary revenue slowdown. Cash flow may tighten, for instance, as new or upgraded systems and equipment are installed, staff is trained, and billing and reimbursement cycles slow down. Health care bankers are trained to customize loans to take into account installation, training and new billing cycle periods when assessing the loan amount.

Under these circumstances, cash management becomes even more important. Your banker should be a resource to help assess ways to accelerate cash capture through a change in collection methods and, in some cases, the addition of certain low-cost technology.

Health care providers are facing a challenging present and an uncertain future. By planning ahead, updating equipment, training staff and enlisting bankers and other professional advisers, they can comply with new regulations and keep their businesses in the black.

Mary Stuart Kilner is a Providence, R.I.-based senior vice president and regional manager for specialty banking for Waterbury-based Webster Financial Inc., with oversight for Fairfield County and Westchester County, N.Y. She can be reached at mkilner@websterbank.com.