CMS Ending HIPAA Contingency

CMS announced today that it is ending the Medicare HIPAA Contingency plan, under which it has accepted non-HIPAA compliant Medicare claims.

According to the news release, as of October 1, noncompliant electronic claims will be returned.  This will affect a small proportion of providers:

As of June 2005 only about 0.5 percent of Medicare fee-for-service providers submitted non-HIPAA-compliant electronic claims.   The highest rate of non-complaint claims as of May was from clinical laboratories, 1.72 percent.  Only 1.45 percent of claims from hospitals were non-compliant and 0.45 percent from physicians.

However, even a small proportion of Medicare providers constitutes a very large total population and a large number of dollars.

According to Medicare's statistics, they paid out $236.5 Billion in 2001, the latest year posted on their statistics page.  In the four years since, that number has grown substantially.  If the number of compliant claims is half a percent, that leaves a ballpark denial rate of around $1 Billion a year.  Presumably the non-compliant providers tend to be smaller entities, so the number may be lower than this.

CMS Administrator Mark B. McClellan says they will spend August and September trying to get the rates up to 100% to avoid provider impacts.

More significantly, the other transactions are schedule to follow--soon--starting with the 835:

The contingency continues for other electronic health care transactions, but CMS expects to end the contingency plan for these transactions in the near future.  The remittance advice transaction is the next HIPAA transaction for which CMS expects to end its contingency plan.

Medicare tends to be the "heat shield" for the health plan community.  Few were courageous enough to announce their own contingency plans until CMS did the same.  Now that the King of the Jungle has said it's over, expect other payers to follow suit.

However, it's important to note that the announcement came from CMS-as-Medicare, not CMS-as-enforcer.  There is no directive to payers or anyone else that they are going to lower the boom on compliance.

That's great news for providers -- it means they can continue to decode all those non-compliant remittances without worrying about the HIPAA Police breaking down the door.  Thank heaven for small favors....

Comments

[Bob the Biller]

This is a trivial step on the path toward HIPAA TCS compliance. The Medicare Fiscal intermediaries and carriers should have met the original TCS deadline. How ridiculous to have taken this long to lift the contingency, and it is only being lifted for one transaction for one payer. Why isn't CMS lifting the contingency for all HIPAA transactions? Considering there is no real enforcement plan defined once the contingency is lifted, why not lift the contingency. What good is a law if it is not enforced? From a provider's perspective, the switch from NSF 5.0 to ANSI 837 is not as difficult as managing a different conversion schedule for every payer they do business with. The contingency draws this conversion out over a multi-year period, with no end in sight. This drawn out process is a bigger burden on the provider community, as the payer community can implement or partially implement or not implement these transactions whenever they want (not to mention changing their mind about how they will go about this). Payers can interpret the Implementation Guides in very different manners and there is no requirement that they publish a Companion Guide that might show the provider community their unique interpretations or requirements for the 837 transaction. Standards are great, too bad there are so many payer controlled sub-interpretations that each provider must adhere to if they want to get paid. Yet another example of the "Golden Rule" - He who has the gold, makes the rules. Obviously the payer community controls all aspects of electronic claim submissions and reimbursement; they control the testing process, with no industry standards to adhere to. There is not even a standard for payers to acknowledge receipt of electronic claim submissions. Because of the contingency, payers have more latitude to "loose" claims than ever before, with no penalty. It is easy to see how loosing a few claims can help a payer’s bottom line. Is there any provider entity that can document any type of savings as a result of 837 compliance? Given the costs providers have incurred from a system changes/upgrades perspective, adding billing and follow up FTEs and employing HIPAA consults and services, NONE can any honestly show an ROI today? Many providers have seen their A/R grow, their "cost to collect" has increased, reimbursement has decreased and the efficiency of their billing operations have diminished. Within the provider community, Medicare is typically regarded as a responsible payer, but Medicaid programs and commercial payers typically do not live up to that standard. If CMS wants to make HIPAA happen, payers should be subject to fines and penalties with respect to HIPAA TCS compliance, given the fact that they control the money. Set a hard date for TCS compliance and start fining the payers and only the payers! Unfortunately the Medicaid programs would bankrupt several states if this were to happen today. HIPAA title two is an example of an idea that has no implementation plan, no understanding of the prior use of edi in healthcare and no real enforcement. Those behind HIPAA title two need a hard dose of reality. Let’s consider the variations in defining "administrative simplification" by those that would question the definition of the word "is" while under oath. Is HIPAA TCS compliance a good idea? Only if it can realistically be implemented. So far this has taken way too long and we are to feel good that the contingency is being lifted for one transaction for one payer. BIG DEAL.