In the fall of 2015, Palomar Health faced a challenge familiar throughout the healthcare industry: how to meet the looming ICD-10 deadline in the most efficient and cost effective way? And while headlines touted the difficulties that both payers and providers would face—from budget shortfalls and system failures to potentially significant reimbursement delays and costly penalties—Palomar Health’s challenge was unique.
Palomar Health had an existing coding department. But attempting to address the ICD-10 transition on their own would mean significant expenditures on training and possible new hires, with no guarantee of success. On the other hand, outsourcing their coding functions, while still no guarantee of success, would remove transparency from the coding process. How much work would be done by each FTE they were paying for? Would their contracted staff be adequate for their needs? The answers to these questions could not be known if they turned over their operations to an outside organization with opaque pricing and no skin in the game. Both alternatives would require significant initial expenditures, and neither would give Palomar Health the flexibility it needed to accommodate what was anticipated to be an unpredictable transition: one in which fluctuations in personnel and outcomes were expected to be the norm.