HIPAA Regulatory Alert

Working Group concerned about claims rejections

Slow-Pay modification is at issue

The HIPAA Implementation Working Group, a coalition formed to help providers and vendors better understand the process by which the HIPAA electronic standards are developed and modified and to increase provider and vendor representation in that process, has contacted Centers for Medicare & Medicaid Services (CMS) administrator Mark McClellan to express concern over a CMS instruction to fiscal intermediaries to reject claims lacking certain data elements not needed by Medicare for claims adjudication.

The Working Group letter, signed by the American Hospital Association, American Medical Association, Association for Electronic Healthcare Transactions, Laboratory Corp. of America Holdings, and WebMD, urged that CMS go no further in enforcing data content specifications and to focus instead on implementation of other transactions that will reduce administrative costs and benefit all participants in the health system.

The groups noted that because of the complexity and cost of the changeover to meet new administrative simplification standards, few trading partners were prepared to exchange HIPAA standard transactions on the Oct. 16, 2003, deadline, and CMS has permitted use of contingency plans during the transition phase as payers, clearinghouses, and providers continue to work out the thousands of details upon which successful transactions depend.

In its role as a payer, CMS also adopted a contingency plan for Medicare to ensure continuation of health care payments and provision of health care services while the transition effort is under way. The CMS contingency plan includes continued processing of health care claims submitted in the old "legacy" format while providers and payers resolve problems experienced exchanging transactions in the new HIPAA format.


The Working Group says health care providers and Medicare carriers and fiscal intermediaries have effectively used the contingency plan period to progressively migrate to the HIPAA format with limited disruption in health care payments or services, but contends that migration now is in jeopardy because of CMS’ Slow-Pay modification that the Working Group says is contrary to the HIPAA objective of reducing administrative costs and increasing efficiencies.

Under Slow-Pay, fiscal intermediaries were told to reject institutional health care claims missing specified data elements not needed by Medicare to adjudicate the claims. The Working Group maintains the change in policy increases the data-collection burdens of and financial risks to providers.

"CMS explained its action to enforce data content specifications by stating that private payers require Medicare to include this data when submitting claims through coordination of benefits transactions," the Working Group wrote. "We suggest that it is counterproductive to accommodate the demands of what we believe are a very small minority of payers when those demands will provide little or no benefit for those payers, impose added burdens on all providers, and bring no return on the providers’ investment of time and energy.

"We request that, going forward, CMS adhere to the principles of reducing administrative costs and increasing efficiency as outlined in the statute when implementing HIPAA. It is inconsistent with these principles to enforce extended HIPAA data content specifications prior to achieving systemwide format compliance for claims and implementation of other covered transactions that will bring immediate and systemwide cost savings."