Fitch Ratings sees ICD-10 delay as positive for not-for-profits

The controversial delay in the rollout of the ICD-10 diagnostic and procedural codes is a positive for not-for-profit hospitals' bottom lines, a New York financial ratings agency 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),” Fitch Ratings said in a news release.

Most providers “have made the substantial investment in technology and personnel to be ready for the transition, the readiness of both governmental and commercial payers 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,” according to the Fitch statement.

The ICD-10 extension, embodied in the much larger legislation to enact the annual “doc fix” of the Medicare sustainable growth-rate formula, required HHS to push back the start date from Oct. 1, 2014, until no sooner than Oct. 1, 2015. President Barack Obama signed the bill into law April 1.

The American Hospital Association recently joined a coalition of healthcare industry organizations to protest any further ICD-10 delays, but their lobbying efforts apparently were outmatched by the American Medical Association and the Medical Group Management Association, which had pressed for more time.

Some hospital leaders were happy with the Congressional delay. Dave Clark, the interim administrator head of 18-bed Hardeman County Memorial Hospital-Quanah (Texas), which had filed for bankruptcy last May, said the delay will allow it to build up a financial nest egg to carry it through any financial disruptions should they occur when the country does convert to ICD-10. “This gives us our best shot,” Clark said.

Follow Joseph Conn on Twitter: @MHJConn