Earlier this week, President Obama signed the bill known as the "doc fix," a one-year patch which adjusted Medicare reimbursements to prevent doctors suffering a 24% pay cut. While the doc fix was the primary focus of the bill, this legislation also caused a one-year delay of a contentious, but little-known, change in Medicare billing codes.
Why should I care?
Good question. The phase "billing codes" sounds downright boring. But the switch from ICD-9 to ICD-10 in Medicare creates the billing and coding infrastructure for the patient-centered health model that may be the future of American health care. These codes' greater specificity (there are 3,000-4,000 ICD-9 procedure codes, compared to 87,000 in ICD-10) will allow providers to more easily share information, encouraging collaboration and better patient health outcomes.
If that's not enough to convince you, consider this: ICD-10 adoption will not be optional. Physicians who do not change billing codes will be penalized by Medicare, and potentially by private insurers. This is intended to be a universal change in how American health care does business -- a true mega-trend. And three companies -- Athenahealth (NASDAQ:ATHN), Cerner (NASDAQ:CERN), and McKesson (NYSE:MCK) -- are providing the technological know-how to hospitals and physicians as they work to make the switch to ICD-10. This one-year delay has got their management teams furious -- they've been preparing for the billing change by selling their products and expertise to health care providers -- and now they have to wait another year.
In Friday's edition of Market Checkup, Motley Fool health care analysts Michael Douglass and David Williamson discuss these three stocks, what differentiates them, and why investors should keep their eyes on this trend.
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David Williamson and Michael Douglass have no position in any stocks mentioned. The Motley Fool recommends Athenahealth and McKesson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.