HIPAA Electronic Transactions and Code Sets: Testing and Planning

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Internal testing includes the installation of HIPAA-ready software updates by your vendor, but as previously stated does not mean that you are compliant with the law.  Many vendors are also receiving certification by a third-party such as Claredi, Edifax, or Foresight.  Software that has been certified is considered to be HIPAA-ready and should reduce the amount of time you must spend on external testing with payers, but does not ensure HIPAA-compliance.

The only way to ensure HIPAA TCS compliance is to conduct external testing with each of your payers.  External testing is often not successful on the first try and can take months to complete.  

For this reason, it is imperative to schedule testing with all of your payers as far in advance as possible.  In undertaking efforts to meet the October 16, 2003 deadline industry specialists are recommending that you prioritize your testing schedule so that you focus your efforts on the payers that represent the largest percentage of revenue for you practice.  

For example, if you are a general internist and 60% of your practice is comprised of “payer X” patients, you may want to complete testing with “payer X” before other payers.  

It is also important to note that if you successfully complete external testing with one payer, it does not automatically mean that you will be compliant with all other payers.  Work closely with your software vendor and all payers to ensure that all of your transactions are HIPAA-compliant.

HIPAA TCS Compliance Enforcement

The Centers for Medicare and Medicaid Services (CMS), responsible for enforcing the HIPAA TCS regulation, announced in July 2003 that it will not penalize covered entities if they have made "reasonable and diligent efforts" to meet the October 16, 2003 compliance deadline.  CMS will be investigating potential problems on a complaint-driven basis and will look for a "good-faith effort" from providers to test HIPAA-compliant transactions.  

Therefore, it is imperative that physicians work with software vendors to develop a schedule to test electronic transactions with as many payers as possible before the October 16 deadline.  It is also recommended that practices document all communications with software vendors, clearinghouses, and payers to help provide evidence that appropriate steps were taken to comply with the law.  For additional information on this subject, visit the following CMS website: www.cms.hhs.gov/hipaa/hipaa2/

Cash Flow Contingency Planning

Physician practices should prepare for the worst-case scenario if testing of 837P transactions is not successfully completed with all payers before October 16, 2003.  Some payers have indicated that they will only accept HIPAA-compliant transactions after October 15.  

However, others have represented that they will accept and pay all claims, even if they do not meet all of the HIPAA requirements.  

If you believe that you are not able to complete testing with a payer in time, you should immediately determine how they plan to handle this situation.

If a payer will only accept HIPAA-compliant transactions, you may be able to resubmit rejected claims by mailing paper claims to the payer, if allowed by your provider contract.  

However, keep in mind that other providers may encounter the same problem and will likely submit claims on paper as well.  Despite the 45-day prompt payment law in Massachusetts, most payers in all reality may not be equipped to process large volumes of paper claims, and considerable delays in receiving payment would be likely.  

Planning for such a scenario will avoid a cash flow crisis and allow you to continue to pay your staff salaries, rent, utilities, and other monthly obligations without disruption.