American College of Physicians: Internal Medicine — Doctors for Adults ®

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With HIPAA rules, the action of others can make or break physicians' efforts

From the January/February ACP Observer, copyright 2004 by the American College of Physicians.

By Margaret Mulligan

When the government announced last fall that it would give physicians more time to comply with the HIPAA regulations governing electronic transactions, many practices viewed the move as welcome—and needed—relief.

In the months leading up to the Oct. 16 HIPAA deadline, there was much talk about whether physicians would be able—or willing—to revamp their systems in time to comply. As some practices who took an early stab at HIPAA compliance found out, however, their ability to prepare largely depended on the actions of others.

Some practices were hamstrung by software vendors that didn't upgrade their systems quickly enough. Other groups successfully updated their software but hit roadblocks when they tried sending test claims to health plans and clearinghouses.

The Diabetes Care and Information Center in Flushing, N.Y., for example, a four-physician endocrinology practice, worked for months to upgrade its software and train its staff. All those efforts, however, ran up against one factor the practice could not control: the ability of the insurers it contracts with to test their own systems.

"A lot of time was spent on training and software," said Lisa Berger, the group's practice manager. "But a lot of insurance companies hadn't updated their systems."

For many practices, those delays resulted in countless hours sending and resending claims. In some cases, physicians' claims went unpaid for weeks—or months—as payers struggled to get their own systems ready.

The good news is that by now, most payers have made substantial progress in meeting the new transactions standards. Reports of problems persist, however, particularly among certain clearinghouses.

To help practices that are still wrestling with the HIPAA regulations, we talked to several groups that have already tackled the compliance issue. Here are some of the lessons they learned, as well as tips to make the process run a little smoother.

The struggle for compliance

The transaction and code set rules, which are part of the Health Insurance Portability and Accountability Act (HIPAA), require everyone in health care to use the same format when sending and receiving electronic health information, such as claims and remittances.

While the new rules were supposed to take effect on Oct. 16 of last year, the College and other organizations argued that many physicians were not ready to meet the new rules. The reason? Health plans and software vendors were not prepared to test claims from physicians. Without some relief, the College argued, physician practices that weren't ready for the deadline—just about everyone—could be denied payment for their claims.

For many practices, their ability to comply was compromised by their practice management software. Maryellen Woodward, the billing manager for a four-physician internal medicine group in Baltimore, for instance, started working last June to bring the practice into compliance. Throughout the summer, she said she spent at least an hour a day on the phone with the group's practice software company.

"Some days we would receive reports that stated the information was sent," she said. "Other days, the reports would not print." Often, the group had to call its Medicare carrier to get copies of claims it had already sent in order to resubmit them electronically.

While bugs in the practice management software were eventually fixed, the practice had to contend with an entirely different set of problems with a service that sends claims to payers, Ms. Woodward explained. The practice used the service, which is among the largest in the state, to process claims to its biggest payers, such as Blue Cross/Blue Shield of Maryland.

Out of the blue, the service started sending them copies of information—including patient names, doctors seen, services provided and claim costs—from other medical groups in Maryland and Delaware.

"None of these claims was sent by our office," said Ms. Woodward. "It seemed funny that a goal of HIPAA is to protect privacy, but we received all the information the new law was trying to protect."

Clearinghouse problems

Other groups said they fell victim to a false sense of security, believing repeated assurances from clearinghouses that they had compliance under control.

Park Medical Associates, a 12-physician group with nine internists in Lutherville, Md., was told repeatedly that its clearinghouse would meet the new transactions standards. According to Sally Finkel, the practice's office manager, however, when the clearinghouse upgraded its system, it fell behind in claims processing by more than 60 days. In addition, the practice had to rebill several weeks of lost claims twice.

Another set of payment headaches cropped up when BlueShield, which was also apparently not quite up to speed on the HIPAA front, used the wrong format to send remittances to the clearinghouse. After making phone calls for the better part of a week, Ms. Finkel said, staff gave up waiting for electronic remittance and instead entered the payments manually.

Although the practice was ready to fully comply with the Oct. 16 deadline, the billing staff is still trying to assess what has and has not been paid, and what claims might still be falling through the cracks. Fortunately, the practice had adequate cash flow, and its accounts receivable are now almost back to normal levels. But "we suffered financially," Ms. Finkel said. "The insurance plans got to hold onto their money longer."

Money and time troubles

The fact that many insurers and clearinghouses didn't live up to their compliance promises was particularly galling to practices that spent significant sums of money preparing for HIPAA.

Cindy Mast, the office manager for her husband, Daniel D. Mast, FACP, a general internist and geriatrician in Lancaster, Pa., said the practice spent several thousand dollars on HIPAA compliance. The practice uses software to electronically transmit claims directly to Medicare and Highmark Blue Shield in Pennsylvania.

She began upgrading the practice's software a year and a half ago, but by the time the transaction deadlines came around, she needed to upgrade her systems again. The practice paid an even steeper price, Ms. Mast said, in time.

"We have spent hours and hours calling vendors and Medicare," she pointed out. The practice spent even more time checking vendor and payer updates, installing software, and trouble-shooting when transmission attempts failed.

"Time is money," said Ms. Mast, "and time on HIPAA transmission issues is time taken away from performing patient care and patient education."

At Flushing's Diabetes Care and Information Center, the practice likewise updated its systems three times, went through phone training with its software vendor, and received a barrage of updates from both payers and software companies. Despite those efforts, said practice manager Ms. Berger, "some insurance companies were still having trouble accepting electronic claims."

The group's solution has proven to be yet another time-killer. According to Ms. Berger, the practice is essentially running two parallel billing systems. If a payer is HIPAA-compliant, she said, the practice sends electronic bills. All others receive paper claims.

Lessons learned

How can practices still working on compliance avoid the same pitfalls? For one, Ms. Berger urged groups to demand on-site training from software vendors.

"You need more than phone training," she said. "Your vendor should have someone come into the office and sit with the billing coordinator and practice manager, and go through all the dots and dashes they will see on the reports." Only by actually working through some claims, she explained, will practices get a feel for what is acceptable in electronic transactions and what is not.

She also warned practices to be persistent in tracking their claims. Although the practice submits files electronically two or three times a week and gets reports back, she pointed out that reports often don't clearly indicate what the practice needs to do to make sure the claim is paid.

"If there is a set of two dots and the number '5', does that mean we need to get in touch with our software vendor or contact the clearinghouse?" she said. "The only time we know there is an error or denial is if it pertains to patient demographic information."

During this transition period, she said, practices have to be especially vigilant. "I have my billing staff responsible for follow-up calling on any claims that are three or four weeks down the road that have been submitted electronically and have not been paid," she said.

Park Medical's Ms. Finkel also said to expect to spend a lot of time tracking claims.

"I generate a printout of open claims, put account numbers on each open item and send the report via express mail to a manager to research," she said. "Call every day to follow up on problems, keep asking questions and talk to supervisors whenever possible."

Encouraging signs?

According to Carl B. Cunningham, Director of ACP's Practice Management Center, the success that practices are having meeting the HIPAA regulations is encouraging, despite the payer snafus.

"We know that physicians have struggled mightily with compliance on the transactions rule," he said. "The good news is that they are succeeding."

He has heard anecdotally that once practices solve problems with one payer, the process gets easier. "By going through the process with the first payer—Medicare would be the obvious one—you resolve a lot of the formatting issues in your billing system," he explained. "Going through the process with the next payer is easier."

One practice, for example, found it had to remove all commas from the text of its claims—"a mind-numbing and time-consuming process," Mr. Cunningham said. "But once the practice changed its process, that problem was resolved with the next payer."

He also offered a tip to help make the compliance process more manageable. While it makes sense to upgrade your systems to send electronic claims to those payers who represent most of your patients, don't try to do so for every single payer. You may work with some payers so infrequently, he explained, that it simply doesn't make sense to spend time on an upgrade for an occasional claim.

Instead, he recommended billing those claims through a clearinghouse. "You pay a fee for each claim, but if you look at doing this in terms of absolute dollars, it is more cost effective," he said. "Limit yourself to building interfaces for the five or so largest payers in your particular area, and contract with a clearinghouse for others."

Margaret Mulligan is a freelance health care writer in Cleveland.

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Got a HIPAA transaction complaint?

Run by the Centers for Medicare and Medicaid Services, the Office of HIPAA Standards (OHS) is responsible for HIPAA transactions and code sets enforcement. Say you've tried working with trading partners and accessing various other HIPAA resources, but you still have an unresolved issue with regard to transactions rules. You can, as a last resort, file a complaint via the Internet with OHS.

The complaint form provided by OHS allows health care providers, health plans, clearinghouses and others to submit written complaints regarding the HIPAA transactions and code set rules. You can register, upload files and track complaints online. (Because of privacy issues, the system does not let you fax or e-mail complaints.)

The complaint system site is only for transactions complaints. If you want to file a privacy complaint, contact the Office of Civil Rights at 866-627-7748. More information is online.

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