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The risk: cash flow. There are a number of scenarios that could cause all or part of certain types of electronic claims to be delayed. That would put increased pressure on already limited cash flows. Now would be a good time to begin discussions with your banker to assure that you have the credit lines you will need if payments are delayed.
The material here and the links from the following articles will provide information to assist you in working with your banker to define the issues and scope the risks. We will continue to follow this story as it evolves and keep you informed.
"Implementation specifications for the TCS are highly specific regarding the data elements that must be included in each unique transaction. However, it will be virtually impossible for a covered entity to be certain that its submission includes each of the required and situational elements that need to be present in every transaction it sends. This problem largely results from the ambiguity of 'situational' data and how they are applied by various health plans. Frequently, the reporting of the situational defined data is specific to the type of service, the category of provider, and the different health plan benefit coverage requirements, just a few of the items that influence reporting variations. Almost inevitably data elements will be missing for many of the individual transactions. This is true even if every health plan and provider is prepared to process the standard form of each transaction (or use a clearinghouse to provide the translation to a 4010 or other applicable format), and to use only the standard code sets required by the regulation. More importantly, it seems quite likely that health plans' HIPAA compliant systems may reject such transmissions as 'non-compliant.' In fact, some systems reportedly will reject an entire batch of claims as 'non-compliant' if one of the included claims is missing elements. The receipt of significant volumes of such rejection messages will inevitably cause the claims payment system to collapse.
"The problem for both the submitter and the health plan is that the content requirements established in the implementation specifications for each of the standard transactions in many, if not all cases, requires more data elements than is required to actually adjudicate the transactions. As such, even a covered entity that has passed general testing and validation requirements almost certainly will not be able to assure, for example, that a specific claim for a specific patient with a specific health plan includes all of the data elements required by the implementation specifications. Only actual experience in processing live claims for different types of services, by different categories of providers, with varying patient indications, and with differing health plan coverage requirements, will enable systems to identify what data elements are missing so that systems can be reprogrammed or clearinghouses can be engaged to insert all of the necessary elements the next time around.
"A system-wide implementation plan serves as a 'safety net' that is at the ready with respect to each provider-payer relationship if and when the adverse impact of the unintended consequences reaches a critical stage. It does not delay compliance obligations, but instead provides the information needed to achieve compliance while preventing cash flow disruption and saving the administrative costs of any interim switch to paper claims. Because the most critical unintended consequence is the disruption to the existing payment cycle between providers and health plans, and the resulting increase in administrative costs if claims submitters choose to use paper claims, we have focused our proposed system-wide implementation plan to protect existing cash flow payment cycles."
The American Hospital Association goes on to propose a plan that would assure payment of at least the prior year's daily average claims. Additional conditions would be provided to assure that the provider has the information they need to assure that future claims can be processed. More [registration required]
"Think of the transaction as a freight train with a locomotive in front and a caboose in back. In between the locomotive and the caboose, you have all sorts of cars - grain cars, coal cars, oil cars, etc. -- and they all are in a particular order. The vendor is going to provide that freight train for you and may put the cars in the right order. But it is going to be up to the provider organization to put the business processes in place to make sure the right information is loaded -- and only the information needed -- in the right car, at the right time, for the right type of claim. There are a lot of permutations to those claims that involve business process that most providers haven't gotten their arms around yet.
"… with some of them, the clearinghouse solution is their only solution. The provider must submit their data to a clearinghouse and then the clearinghouse is expected to translate that into a HIPAA-compliant transaction. But even in those circumstances, a clearinghouse cannot make a provider compliant. All they can do is take the data a provider gives them and use it to build a HIPAA-compliant transaction. The provider still has to be able to gather the data.
Lack of Test Time "We think that a significant amount of testing will occur in July, August, and September of 2003. And the problem is that all of these organizations will have to test with all of their trading partners. You can't just test once. That simply means there will not be enough time to get all this testing through the system.
"[Testing of these transactions] … is an order of magnitude greater than what we have ever done before. Many of our payor clients, for example, are already conducting 70% to 90% of their claims electronically. But it took 10 or 12 years to get there. With HIPAA, they have to compress 10 or 12 years of testing into six or nine months. When you add in to the equation the complexity of multiple claim types, it is a nearly impossible process for them.
"Typically, it takes three to four weeks to test the kind of transactions that are being used today, such as the UB92. I worked for a clearinghouse for 18 years, and it took three to four weeks to put a new payor into production. Using the HIPAA transactions -- the X12 transactions in healthcare -- it will take about six months of testing for each payor. In addition, the HIPAA transactions are very well structured, and you have to meet requirements that are pretty inflexible. It takes much longer to get it right.
Most complex, convoluted non-standard standard "From the provider perspective, each payor is different. We talked to a payor recently who has over 250 edits in what is called a HIPAA companion guide. If you take the complexity of that from the provider side, you are not only talking about multiple iterations of testing, but multiple iterations of testing for every payor. What we have now is probably the most complex, the most convoluted, non-standard standard known to man.
Majority of payors will be ready The majority of payors will be ready. They are working very aggressively. In fact, a couple of the payors didn't even file an extension request. They are ready. They were ready as of October 2002 to start accepting transactions …I would say Medicare, the Blues, and most of state-run Medicaid programs are in that category. Most of the smaller payors and third-party administrators are not yet ready and are not working with the providers. They are just too overwhelmed.
The economics "If a payor takes in a paper transaction, it is looking at probably close to $2 to $3 to process the claim. The cost goes up if the claim has to go through a number of hands. If a transaction comes in electronically with an 837, auto-adjudicates, and goes out with a remittance advice and an electronic-funds transfer into the provider's bank account, the cost to the payor is less than 50 cents. That's a compelling economic argument.
Cash Flow On the provider side, we are talking about cash flow. We also are talking about revenue-cycle improvement and operational efficiencies. That happens if providers get remittance advices electronically; if they get electronic-funds transfers, which they can automatically reconcile; and if they get claims-status information electronically. It also happens if they get referrals electronically -- now they don't have to call the payors -- and if they get eligibility information electronically.
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"There was something significant that has happened and that was the Enron scandal. The fallout from Enron is having an impact on CEOs to make sure they comply with the law. If a hospital executive says, 'I didn't want to spend $1,200 to prove my HIPAA compliance,' his position could be seen as negligence. Put yourself in the CEO's position, you are going to certify those financials. If you are aware -- as you should be -- that your organization isn't ramped up to become compliant by October 2003, CMS doesn't take your claims transactions, and you lose 30% to 40% of your revenue, you might face a backlash."
"At the time of our survey, 74 percent of the providers were ready to implement the HIPAA electronic standards, and 96 percent indicated that they had a moderate to high level of satisfaction that they expected to meet the October deadline.
"While fewer than 30 percent of the providers had begun any testing, 90 percent will have a testing strategy. Most of their testing strategies include internal and external data interfaces. Approximately one-fourth had begun to test transactions, as of November 2002. However, slightly more than 44 percent had received any notices from fiscal intermediaries or carriers regarding coordination of electronic transaction testing.
"Sixty-four percent indicated they have purchased or will be purchasing new software, hardware, systems components, or a combination thereof. … Approximately 84 percent of all providers are using systems vendors as part of their compliance strategy.
"Use of a clearinghouse varies by size, with 49 percent of small providers (<1,500 claims in June and July 2002) using a clearinghouse, 63 percent of medium providers (1,501 to 17,500 claims) using a clearinghouse, and 96 percent of large providers (> 17,501 claims) using a clearinghouse.
"Although 96 percent of the providers expect to meet the compliance deadline, 56 percent are developing contingency plans in the event their system is not fully compliant by October 2003.
"Approximately one-third of those who listed any barriers identified their trading partners (specifically third party payers, fiscal intermediaries, carriers, and/or CMS) as potential barriers to compliance."
We note with some concern that the questions in this survey appeared to be focused on whether or not the provider would be ready. As noted in the previous article, being ready to transmit does not mean that both parties to the transmission are ready to process a 'round trip' transaction until each type of transaction has been fully tested. More
"Moreover, the coverage now helps indemnify corporate policyholders from damages resulting from HIPAA events, such as unauthorized disclosures of protected health information (PHI) arising out of computer security violations," said Wynstra. He added, however, that 'the coverage will not cover fines levied by the government for HIPAA violations.'" More
"In addition, Sheriff McMeekin said he was working with the county attorney's office on Friday to determine if there is a legal way to require the hospital to provide Newman's medical condition to either a law enforcement officer or Deputy County Attorney Karen Townsend. Under HIPAA, the hospital is not allowed to release that information to anyone. More