Climbing the mountain
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After arduous back-and-forth with CMS, vendors, dermatology practices achieve 5010 compliance

While the enforcement deadline for the 5010 version of the HIPAA transaction code sets has been delayed by struggles on both the physician and payer sides (see sidebar, “Deadline delay”), a number of dermatology practices have successfully navigated the transition in anticipation of the start of enforcement actions following the expiration of CMS’s extension on June 30. While dermatology practice managers report some challenges, a significant number have been able to work through early roadblocks and efficiently incorporate the new code sets.

Staying ahead

Many of the most successful implementations of 5010 have been the result of early testing and repeated rounds of feedback to vendors. Angela Short, MHA, the vice president of revenue management and corporate compliance for the Dermatology Group in New Jersey, a seven-location practice in the northern part of the state with 30 providers, said that her group began its 5010 initiative early in 2011 in order to just be able to make the necessary system upgrades. 

“We were two upgrades away from current status at the beginning of 2011, and we knew we had our work cut out for us,” Short said. “Though the upgrades didn’t cost us anything, we incurred staff time and costs as well as consulting costs to get our system ready for the upgrade. I’m sure every practice is dealing with something like that. There were significant upgrades necessary just for our system to comply with 5010 in time.”

As a result of the time and staff costs necessary to adapt to 5010, Short said that the practice also began to reserve operating funds to see itself through the transition process.

“Recognizing the potential cashflow impact that would happen to our practice, we started putting money aside so that we had cash to meet our expense,” she said. “We thought that would be necessary in case we encountered any issue with our claims not transmitting.” [pagebreak]

Many practices, according to Robyn O’Connell, principal consultant for health care management firm Hayes Management Consulting, used the 5010 window as an opportunity to clean up inefficiencies in the billing process. Having been through several 5010 implementations, she said the common thread among practices was the effort to clean house in respect to the billing and claims submission process.

“A big thing that I saw with the 5010 transitions — and all those I advised went pretty smoothly — was that my clients saw this as an opportunity. A couple of my clients took the extra step to migrate to a different clearinghouse,” O’Connell said. “I had a couple of them that migrated to a different way of doing the claims. I also had a few clients that took advantage of cleaning out a couple of inefficiencies in the process that they’d just let sit previously. It’s not only 5010, but a good chance to review what your claims logic is and start fresh. Those worked out really well in terms of improving overall efficiency.”

The implementation challenge and payment delays

Throughout the CMS rollout of 5010, the key message communicated to dermatologists was the importance of working alongside one’s vendors to test new claims processing procedures and work through potential delays in the system. According to Short, even larger practices with comparably vast resources found a number of difficulties early on with 5010 claims processing.

“One of the issues we had was on secondary claims where Medicare was the primary payer. It was related to our own computer vendor, [who had] a flaw in one of the upgrades. On the Medicare remittance, when we had a secondary payer and we were pulling the explanation of benefits, we would have to manually write in the Medicare internal control number,” Short said. “We have 19 physicians, 10 physician assistants, and one plastic surgeon. When you’re talking about a practice that sees 600 patients per day, even though we have staff in our building, it’s still time-consuming to have to do all of this manual work.”

In addition, O’Connell said that delayed payments have proven a sizable problem for the majority of the practices that she worked with during the transition.

“As far as the results, there was a significant impact on Q1 payments. I had one client that was down $5 million,” she said. “It wasn’t that they weren’t submitting claims, it was the turnaround, which was getting ridiculous. They weren’t getting remits back.” [pagebreak]

Reports of payment delays became widespread enough that the Medical Group Management Association (MGMA) drafted a letter in February to HHS head Kathleen Sebelius, describing “a situation that has led to considerable cash flow problems for physicians and their practices.” The group wrote, “Should the government not take the necessary steps, many practices face significantly delayed revenue, operational difficulties, a reduced ability to treat patients, staff layoffs, or even the prospect of closing their practice. As the transition to version 5010 is a mandatory step toward ICD-10 implementation, this raises even more concerns, understanding the magnitude of ICD-10 is exponentially greater than version 5010.”

One component of 5010 touted as a method of fraud prevention is the need to file the physical address where the medical services were rendered. As a health care consumer herself, Short said, she can understand and support the provision. As a practice manager, however, things have been more difficult as the bugs are worked out of her system.

“I know that every practice is probably dealing with how we have to list the physical address of the service provider, but of course we use a P.O. Box for our lockbox. There were upgrades from and communication with our software vendor, but there was never a discussion that we had to click off a setting in the insurance parameter to communicate to the payer that they need to send the check to the lockbox,” she said. “As a result, all of our checks started coming to our physical addresses, and you can imagine the disruption with checks going out to seven different places and trying to gather the checks and mail to the lockbox. Just getting the cash was a huge undertaking. You’d think that these computer companies would have a quick fix with the administrative functions for the insurance, but that’s not the case. I had staff actually going to all of the payers we have in our practice management system and clicking the little box for the check to go to a different address. I argued to no end with the vendor, and we still weren’t successful finding a workaround. We are still receiving some payments to the physical locations. That was probably the greatest disruption for us.”

Claims denial

In order to sidestep some of the most common problems with rejections and delays, Short implemented her strategy on the practice’s policy on Medicare claims in early 2012.

“I made the executive decision at the end of 2011 to hold all of our Medicare claims for 30 days to make sure that we were aware of the issues that other practices were encountering with 5010,” she said. “Then we could make sure that we got the fixes in place before we started submitting claims. Thankfully we had the cash flow to cover that.” [pagebreak]

As a result, Short said, the practice was able to sidestep denials in relatively short order, though the number of rejections has proven a continuing issue.

“From a Medicare perspective, we didn’t really encounter denials. I know that a lot of practices are dealing with denied claims as a result of 5010. Most of ours were in the form of rejections. That’s the first level of response that we receive from the clearinghouse,” she said. “The most common were related to our taxonomy code and NPI code listed for either our own provider or the referring physician. Our rejections from the clearinghouse went up 15 percent since the beginning of the year. We’re now down to normal levels, but in a technology-heavy practice, we did authorize a lot of overtime to work the rejections and make sure our claim was transmitted to the payer and adjudicated.”

With the 5010 deadline now past, dermatology practices have other compliance deadlines coming up to consider. By Oct. 1, a National Health Plan Identifier Number must be adopted, which will allow for a single payer identifier for use across all payers, similar to NPIs on the provider side. While many payers still continue to require legacy numbers, instead of only NPI, according to O’Connell, hopefully successful adoption in practices will eventually help bring the industry to a universal standard. In January 2013, new operating rules for eligibility and claims status transactions will go into effect, paving the way for easier real-time transactions. Offices will need to fully automate the transactions with their payers, working with software vendors and their office staff to make the switch from the current manual transaction standard that most small practices employ. Finally, after being delayed several times, the current deadline for mandatory ICD-10 use is Oct. 1, 2014. [pagebreak]

Deadline delay

The process of switching over to the 5010 version of HIPAA code sets has proven as difficult for payers as for providers. The Centers for Medicare and Medicaid Services (CMS) announced in March that it would delay any enforcement actions against non-compliant providers through June 30, 2012. The organization’s Office of E-Health Standards and Services (OESS) announced that while progress was steady — successful processing of 70 percent of Part A and 90 percent of Part B claims through Medicare’s Fee-for-Service program — additional time was needed for successful and complete implementation.

“OESS believes that that these remaining issues will warrant an extension of enforcement discretion to ensure that all entities can complete the transition,” the organization said in a statement released March 15. “OESS expects that transition statistics will reach 98 percent industry wide by the end of the enforcement discretion period [June 30].”

According to Robyn O’Connell, principal consultant for Hayes Management Consulting, even some of the largest payers were nowhere near ready for 5010 implementation in accordance with the timeline, she said.

“I expected the delay, mostly because it was clear that Medi-Cal wasn’t going to be ready. Since they’re one of the largest Medicaid payers in the country, I was not surprised. On the other hand, it had some benefits for some of my clients, because they knew that if these payers rushed, they were going to crash and burn on go live anyway,” O’Connell said. “I think that CMS saw that it should take more time to get it right rather than hit the deadline and having everyone spend hours upon hours on follow-up.”

What issues were troubling enough to lead to an enforcement delay? The Medical Group Management Associaton, in a letter to Kathleen Sebelius, Secretary of Health and Human Services, dated Feb. 1, 2012, took issue with the following aspects of 5010:

  • Issues with practice management or billing software that showed no problems during tests with Medicare Administrative Contractors (MACs), but saw rejected claims during the implementation period.
  • Issues with secondary payers.
  • Rejections due to address issues.
  • NPI numbers not being recognized.
  • Lost claims with MACs.
  • Previous submitter validation information not being transferred.
  • Sporadic payment of resubmitted claims.
  • Long call-hold times with MACs when attempting to discuss unpaid and rejected claims.
  • Unsuccessful claims processing despite using a “submitter” approved after successful testing with CMS.



Deadline delay