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Tillinghast-Towers Perrin projects initial implementation costs for a mid-sized hospital (200-300 beds) of $775,000 to $3.5 million. That compares with an HHS estimate of $100,000 to $250,000 over 10 years, according to the study. A 50-member physician practice can expect to spend from $75,000 to $250,000 to comply, depending on the age and functionality of its information systems, according to the study.

Few provider organizations recognize the magnitude of complying with the transactions/code sets standards, study authors say. "Our industry telephone survey of hospital executives conducted in late 2000 found that virtually no hospitals have carefully considered the implications of HIPAA," according to the study. "Subsequent telephone interviews conducted in January 2001 reinforced this earlier finding and showed that many providers have still done little to prepare."

In general, hospitals are looking to health plans to take the lead in implementing standard transaction formats, the study says. Hospitals and other provider organizations also are relying on claims clearinghouses and billing agencies for much of the compliance assistance, but these entities aren't close to being ready, according to the study.

Compliance requires significant capital investment for clearinghouses and billing agencies and Tillinghast-Towers Perrin is unaware of any such entity that is fully HIPAA compliant, study authors say. For providers and their vendor partners, time is growing short, the study concludes. "Wholesale changes to the billing platform of the health care industry must be accomplished by October 2002. The unanswered question is: Will the industry be ready to embrace this change without significant reductions in service and a short-term increase in costs as organizations seek and implement remedies?"

The study's final question is a major argument in the Blues association's effort to delay the implementation date.