CMS to Delay Reimbursement For Noncompliant Claims

Effective July 1, health claims that do not meet the electronic transactions and code-set provisions in the Health Insurance Portability and Accountability Act (HIPAA) will be paid later than those that are compliant.

This delay means that Medicare carriers will pay noncompliant claims no sooner than 27 days after receipt instead of the standard 14 days, according to a March 1 iHealth article.

The goal of the processing change is to provide an incentive for physicians to increase compliance with the transactions code rule (Psychiatric News, January 14).

The Centers for Medicare and Medicaid Services (CMS) called the move “a measured step to end the contingency plan completely,” the article stated.

CMS preserved the October 16, 2003, deadline for compliance while allowing health care entities to operate under contingency plans to ensure the smooth flow of payments or business operations during the transition to the new standards, according to CMS.

HIPAA defines health care entities as health care professionals, insurance plans, and information companies.

CMS expects health care entities with contingency plans to be working toward complying with the transactions standards. In addition, health plans or payers should also determine the progress being made by their business associates to comply with the standards, according to CMS. Otherwise, the agency expects any health care entity that failed to comply with the requirements to submit a corrective action plan.

CMS is using complaint forms posted on its Web site as a vehicle to identify specific health care entities that are noncompliant (Psychiatric News, January 17, 2003).

Software Vendors Unprepared

Another dilemma for CMS is that the majority of its Medicare software vendors were not ready last October to accept and process HIPAA-compliant electronic claims. So CMS deployed a contingency plan to allow Medicare fee-for-service claims to be submitted using the old “legacy formats.”

A recent Healthcare Information and Management Systems Society survey of health care organizations found that only 40 percent of Medicare software vendors are ready to accept or transmit standardized HIPAA transactions. However, 45 percent of health care professionals and 50 percent of third-party payers surveyed were ready to transmit and receive HIPAA transactions, according to the article.

Identification System Coming

In other HIPAA-related news, CMS issued a final rule in January establishing a national identification system for health care providers.

The National Provider Identifier (NPI) is mandated by HIPAA’s administrative-simplification provisions.

The rule goes into effect May 23, 2005, at which time health care providers who engage in electronic transactions covered by the rules issued by the Department of Health and Human Services must apply for an NPI, according to a CMS press release. Providers who are not covered by these rules may apply for an NPI if they so choose.

HHS has issued rules for electronic transactions and code sets, privacy and security for certain individually identifiable health information, and the unique health identifiers used for employers. In the future, HHS will issue rules for unique identifiers for health plans.

“Use of the National Provider Identifier will reduce costs and improve efficiency in the nation’s health care system by eliminating the need for health care providers to maintain, keep track of, and use multiple identification numbers assigned by the various health plans they bill,” according to CMS.

Guidance about compliance with the HIPAA transactions code rule is posted online at www.cms.hhs.gov/media/press/testimony.asp?Counter=877. The CMS press release announcing the new NPI rule is posted at www.cms.hhs.gov/media/press/release.asp?Counter=946. ▪