Ironically, the surge in paper claims was caused by a federal program designed to expedite electronic claims. The HIPAA 5010 format-an electronic claims standard which took effect January 1-replaces its 4010 predecessor with a number of new reporting fields that enhance communications, at least in theory, between providers and payers in a standardized way.
Perkins attributes the temporary increase in paper to a lack of provider readiness around the new format. Simply put, if providers weren't prepared to submit claims in the new electronic format, they submitted them in the old-fashioned way-via paper.
Typically, 85 percent of El Paso's claims come in electronically, but during the first part of the year, that figure tailed off to around 75 percent, Perkins estimates.
El Paso offers a glimpse into the broader industry's adoption of the 5010 standard-a cluster of functions which accommodate claims submissions (including the expanded data fields required by ICD-10), claims acknowledgements and other transactions such as eligibility checks.
For the most part, the transition went well for larger payers and providers, experts say. But a sizable segment of the industry struggled with the new format's adoption, a largely technological challenge which required billing system upgrades followed by testing with trading partners. Some of the struggles stemmed from industry confusion over government policy around the transition.
CMS says no, then yes
After insisting for months there would be no change in the January 1 conversion compliance date, the Centers for Medicare and Medicaid Services in November 2011 announced there would indeed be a delay in the enforcement date-but not the compliance date.
That first enforcement delay pushed back enforcement until March 31. Then, a second delay was announced in March that put off enforcement until June 30.
The delays meant that in essence, providers and payers were still expected to have 5010 in place by January 1, but if they didn't, the government would not investigate any complaints around non-compliance.
The distinction between "enforcement" and "compliance" was lost on many. In any case, the transition required a substantial amount of preparatory and testing work-a task exacerbated by the often complex and knotted structure of the health care claims process.
For its part, El Paso First was ready for 5010 on the January 1 compliance date. The Texas Medicaid program did not budge on the date, despite the relaxed enforcement period announced by the federal government, Perkins says.
Philadelphia-based AmeriHealth Mercy, which handles Medicaid claims in six states, also was ready on January 1 for 5010, says Joe Miller, director of e-business.
Like El Paso First, AmeriHealth Mercy witnessed some providers struggling to comply with the format requirements, particularly one which requires a physical address rather than the commonly used P.O. Box number used by providers to indicate their location.
According to Miller, AmeriHealth told Emdeon, its claims clearinghouse, to not enforce software edits that would kick back claims still using the P.O. Box field. "If that wasn't done, we would have rejected up to 20 percent of the claims in the first week of 5010," Miller says.
By not taking a hard stance on the address field requirement, AmeriHealth was able to keep payments flowing, Miller says.
"We backed off the edit in the address field because we wanted to make sure we weren't hurting anybody," he says. "The address field was the main glitch." Miller praises Emdeon, noting that the clearinghouse was instrumental in helping providers attain compliance with the new format.
Payers not ready
But not all payers were ready to accept 5010 claims on January 1-a fact which ruffled feathers around the industry, particularly those of providers who invested time and resources to meet the compliance date.
"We worked with five hospital and group practice clients on 5010, and we put in the effort to make sure they were ready by January 1," recalls Tom Dombrosky, a director at Aspen, an I.T. consultancy. "We were disappointed with the lack of progress by many payers. In several states, Medicaid and Medicare payers were not ready to handle the transaction changes. Government payers did not live up to their own deadline."
Skipping a step
The lack of payer preparation meant delays in sending test claims in the 5010 format, a critical step that for many occurred at the last minute, leaving little time to identify and correct glitches, Dombrosky says.
Large vendors whose software portfolio encompasses practice management systems, such as Meditech, McKesson and Cerner, were ready with 5010 well ahead of the deadline, he notes.
But responsibility for testing still fell on their clients' shoulders. And for smaller hospitals with minimal I.T. staff, that was a chore often neglected or postponed, he adds.
CMS says the enforcement delays came as the result of numerous providers saying they would not be ready for 5010 by the first of the year.
But for many, the delay announcements only reinforced the already bad habits of industry laggards-while potentially punishing those striving to meet the deadline.
"The enforcement delays created confusion," says Jeff Strauss, associate director at Protiviti, a consulting company. "For CMS to say it wouldn't delay and then delay at the last minute sent the wrong message. Many payers and providers were confused by the difference between enforcement and compliance. Some held back on their work after the announcement."