Family Practice News

September 1 2003 • Volume 33 • Number 17

Electronic health transactions rule
Most Doctors Not Ready for Oct. 16 HIPAA Deadline

There is leeway for those who are working on compliance, HHS says.

Joyce Frieden
Associate Editor, Practice Trends

Harry Reynolds is worried.

Mr. Reynolds is responsible for making sure that his health plan, BlueCross BlueShield of North Carolina, is ready on Oct. 16, the deadline for complying with the part of the Health Insurance Portability and Accountability Act (HIPAA) that regulates electronic health transactions.

That means making sure providers who contract with the plan will be ready to transmit electronic claims that comply with the new law. The health plan has tried everything: provider outreach, educational manuals, you name it. It has even set up a Web site where providers and clearinghouses can test their new claims formats with the plan, free of charge, as often as they like.

The plan receives claims from more than 6,300 providers who transmit through 544 different “portals”: vendors, clearinghouses, and the like. As of last month, only 11 of those 544 portals had indicated that they were interested in doing any testing.

“Everybody seems to be running down to the last minute to get HIPAA ready,” said Mr. Reynolds. He pointed out that the top 25 portals account for 73% of the plan's electronic claims, “but the 519 others equal 27%, and [getting them ready] is a little like hand-to-hand combat.”

As concerned as he is about HIPAA compliance, Mr. Reynolds became a lot less worried in July. That's when the Department of Health and Human Services, which is responsible for enforcing HIPAA, issued a three-page document that relaxed some of the compliance requirements.

“With the October deadline just ahead, HHS has received a number of inquiries expressing concern over the health care industry's state of readiness,” HHS officials wrote. “In response, the department believes it is particularly important to outline its approach to enforcement of HIPAA's electronic transactions and code sets provisions.”

In particular, Mr. Reynolds and officials at other health plans were worried about HIPAA's mandate that insurance plans must reject any claim submitted on or after Oct. 16 that did not comply with the new electronic transaction standard. If stringently enforced, that rule could have forced many providers to go back to submitting claims on paper and backing up processing for many insurers, which are no longer staffed to process large volumes of paper claims.

Not to worry, HHS said. The Centers for Medicare and Medicaid Services, which will be enforcing the new rules for HHS, “will not impose penalties on covered entities that deploy contingencies (in order to ensure the smooth flow of payments) if they have made reasonable and diligent efforts to become compliant and, in the case of health plans, to facilitate the compliance of their trading partners,” the document said. “Specifically, as long as a health plan can demonstrate to CMS its active outreach/testing efforts, it can continue processing payments to providers.”

That guidance is nice as far as it goes, but there still could be trouble ahead, according to Rob Tennant, senior policy advisor at the Medical Group Management Association's (MGMA) Washington office. That's because accepting noncompliant claims after the deadline “is voluntary on the part of the health plan. Plans could increase their float tremendously by rejecting wide scale numbers of claims. That's our concern.”

So MGMA is trying to get health plans to go on the record about their intentions. “We want them to say, ‘As long as the claim includes enough data for us to do our business, we won't reject it,’” he said.

Mr. Tennant acknowledged that providers might take advantage of lenient plans and delay complying with the transaction rules. “But what plans should do is say, ‘Mr. Provider, we'll continue accepting old formatted claims, but at some point we're going to flip the switch and you won't be able to get your claims paid, so let me give you an exact testing date,’” he said.

But Mr. Reynolds said that strategy would never work for his plan. “If you take 6,300 providers and figure that they need an hour apiece, and do it for 8 hours a day—well, you do the math.” The Web site solves that problem because multiple users can log onto it for as long as they need to, he said.

There are several possible explanations for why so few providers are ready, according to Jim Moynihan, principal at MMIEC, a HIPAA consulting firm in Agoura Hills, Calif.

“It's not an easy task for people with very old [computer] systems,” he said. “It's also fair to say that while there was a lot of advanced notice, people did not have faith that the government was really going to go through with it for some time. Any time there was a rumor that the feds were going to drop it, [provider system vendors would] cease work.”

That strategy was made even more attractive when providers saw the high cost of compliance, he continued. “People were hesitant to make this investment until they saw that it was real.”

There is another reason that so few providers are jumping to get ready, according to Dr. Andy Spooner, chair of the steering committee on clinical information technology for the American Academy of Pediatrics: They don't perceive HIPAA compliance as their problem.

If there is a problem with the billing format, he said, “who's going to complain? The person who's going to be brought to task is the software vendor or the payer. It's more of a thing that insurance companies and billing service providers are getting all nervous about.”

Mr. Moynihan, the HIPAA consultant, suggested that rather than just focusing on the hassles HIPAA has created, physicians should also consider some of the rule's benefits, such as standardizing electronic payments. “Being able to get paid for everything electronically, that's where the benefits are,” he said. “We should be able to go from payments measured in months to payments measured in days. We do it in restaurants, why can't we do it in health care?”

As to how many people are really ready for HIPAA, a recent audit by the HHS Office of Inspector General found that 94% of Medicare Part B providers “indicated a moderate to high level of satisfaction” that they will meet the October deadline.

However, the inspector general's report has been widely discounted, said Mr. Tennant, because of a presumed reticence by respondents to admit that they were having problems.

“If you've got a government compliance agency asking you if you're going to be in compliance a year from now, it's unlikely you're going to say no,” he said. “So the results are a little bit skewed.”

Copyright © 2003 by International Medical News Group, an Elsevier company.

Other HIPAA articles within this site:

Patient Privacy Rules Bring Wide Confusion
New Directives Often Misunderstood, August 18, 2003

HIPAA - The New Privacy Rules for Medical Information, June, 2003

Physicians Sue to Block HIPAA Privacy Rule, October, 2002