NEW YORK--(BUSINESS WIRE)--The one-year extension of the deadline for hospitals and payors to transition to the International Classification of Diseases (ICD-10) is viewed as a positive credit development for not-for-profit hospitals, Fitch Ratings says. While the majority of hospital providers Fitch rates are prepared for the Oct. 1 transition, the potential disruption to the revenue cycle could have a negative credit impact on the sector (particularly on lower rated credits). President Obama signed the extension into law on Tuesday April 1 allowing more time for providers and payors to prepare for the change.
Under ICD-10, the number of codes used for diagnosis will expand by a factor of eight, which will increase coding complexity and likely challenge providers and payors in the near term. While a majority of providers have made the substantial investment in technology and personnel to be ready for the transition, the readiness of both governmental and commercial payors to adequately process claims and payments in a timely manner has been questioned. In our view, lower rated credits would be more susceptible to this risk as have less financial resources to absorb a potential delay in reimbursement.
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Hospital Hot Topic: ICD-10 Conversion