5010 implementation may create cash flow crunch for your practice

If your billing systems are not compliant with new Health Insurance Portability and Accountability Act (HIPAA) standards by January 1, 2012, you will not get paid by Medicare. Even if you are compliant, you may still not get paid.

Following the last major change to HIPAA, the conversion to the National Provider Identifier in 2008, many physicians found themselves financially strapped for months as unanticipated issues delayed Medicare claims processing and payments. This time out, Medicare’s already up and running with 5010, but many physicians’ practices are way behind schedule in complying.

To protect your practice’s cash flow, the American Medical Association (AMA) recommends a two-part plan. First, accept that you really will need to transmit 5010 transactions by January 1. The Centers for Medicare and Medicaid Services (CMS) has made very clear that it will not further extend the implementation deadline. In addition, commercial insurance carriers have also said that they will reject noncompliant claims after that date.

Even though they risk not getting paid, 50% of physician practices surveyed by the Medical Group Management Association (MGMA) in March were “somewhat confident,” slightly confident” or “not confident” that they would be ready by the deadline. “The industry has been slammed with so many technology initiatives. Physician practices are implementing EHRs and trying to meet meaningful use. The $44,000 they’ll get for that is wonderful, but they can’t ignore HIPAA 5010 and expect to get paid in 2012,” says Cheryl Clancy of Jimenez Consulting Solutions in Scottsdale, Arizona.

“So many practices submit their claims through billing services and clearinghouses, it adds another dimension to this implementation,” adds Robert Tennant, a senior policy adviser with MGMA. “Physicians need to verify that their own systems are up-to-date and that these other partners in the billing process are as well.” Incomplete fields or other glitches could mean delays in payments or “flat out denials,” Clancy says. “And for payers, small doctors’ offices are at the bottom of the pecking order for resolving payment issues.”

Second, ensure your practice can receive payments through other means or access enough cash to get by for several weeks or months if problems develop after implementation. The AMA suggests discussing advance payment policies with your Medicare administrative contractor and commercial payers. In addition:

• Clear out any billing backlog. Submit every claim for 2011 in 2011 (even through the holidays), so you know those will be processed.

• Find out how to transmit transactions manually, if necessary.

• Secure a line of credit.

• Rein in spending in 2011 to create a reserve fund to cover the potential drop in revenue.

Reducing spending may be impractical for many practices that are only now planning their upgrades. While some vendors will upgrade practice management systems as part of their maintenance contract, more than half of the respondents to the MGMA survey did not know whether their vendor would charge for the upgrade and training for 5010.

You’ll want to find out soon whether the upgrade is covered: The nearly 23% surveyed that knew they would have additional costs associated with the move to 5010 estimated that they would spend about $11,000 per full-time physician, notes Tennant. “A 10-physician practice would be facing more than $100,000 in costs. In this economic climate, that’s quite a challenge.”