Enforcement of 5010 standards delayed until July 1

After processing glitches caused physician claims to go unpaid, CMS again puts off penalties for electronic HIPAA transaction violations.

By Charles Fiegl amednews staff — Posted March 22, 2012

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Federal officials have extended by an additional 90 days the enforcement deadline for physicians, health plans and claims processors to comply with the 5010 electronic transaction standards under the Health Insurance Portability and Accountability Act.

The decision to delay again the full implementation of the electronic transaction standards used to bill services throughout the health system comes as physician practices continue to report problems with claims processing, creating millions of dollars in unpaid claims. A number of outstanding issues led the Centers for Medicare & Medicaid Services to make the decision to hold off on enforcing the standards through June 30, the agency said in a March 15 statement. In late 2011, CMS had decided to move the enforcement date from Jan. 1 to April 1.

The latest postponement means that electronic submissions using the old 4010 HIPAA transaction format, or using the new 5010 standard but with formatting errors, will continue to be processed and paid without penalty. Despite the initial 90-day grace period at the beginning of 2012, the American Medical Association and others reported that physicians continued to experience payment problems. The organizations asked for an additional 90-day delay.

"CMS made the right call, and we appreciate the considerable effort they made to work with the AMA and respond to our concerns regarding the readiness of the industry," said AMA President Peter W. Carmel, MD. "The key to successful implementation of the industrywide standard is through continued collaboration with all stakeholders."

Health plans, vendors and physician practices have made steady progress by adopting the new standards, CMS said in its statement. The Medicare agency reported processing more than 70% of hospital claims and more than 90% of physician claims in the 5010 format.

But some practices that did attempt to make the switch to 5010 this year -- or whose billing representatives did so -- ran into cash-flow problems as a result.

In February, perinatologist Carlos Fernandez, MD, said revenues were reduced to a trickle at his practice in Toms River, N.J. His clearinghouse and the insurance companies that he bills were not using the same HIPAA format, and his claims were being rejected as a result. Processing improved when services were billed on paper instead of being sent electronically, he said.

Dr. Fernandez said he is not fully confident that his vendors and payers have addressed problems with 5010 to the point where they would be ready for the date CMS starts enforcing the new format. "Hopefully things are squared away, but I don't know if they are still submitting claims on paper."

Delaying enforcement will help the health care industry to continue to address problems, said Robert Tennant, senior policy adviser with the Medical Group Management Assn. He urged physician practices to monitor automated claims acknowledgement transaction reports, or 277CAs, that identify compliance issues with electronic claims.

A practice should lodge a complaint with CMS if a health plan or clearinghouse is not HIPAA-compliant, Tennant said. Physicians also can place market pressure on those causing payment problems by terminating relationships with claims clearinghouses or billing services.

"There are cases of $300,000, $400,000, $500,000 in outstanding claims from a clearinghouse and we said, 'Switch clearinghouses,' " he said. "And, in three days, they had their claims paid."

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