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HIPAA/LAW:
October 2003
"Reprieve From Looming Deadline for
Electronic Medicare Transactions"
by Steve Fox & Rachel Wilson, Esqs., Pepper
Hamilton LLP
A contingency plan recently announced by the Centers for Medicare
and Medicaid Services ("CMS") is a welcome reprieve for
countless providers with little hope of complying with the Administrative
Simplification Compliance Act ("ASCA") by the October
16th deadline. This plan insures payment of thousands of Medicare
claims (and indirectly, other claims; Blue Cross/Blue Shield subsequently
announced they would follow suit) that would otherwise have been
rejected after October 16th.
ASCA generally requires that all claims sent to the Medicare Program
on or after October 16, 2003 (the "Compliance Date") must
be submitted electronically, in accordance with the Transactions
and Code Sets Standards mandated by HIPAA (the "Standards").
However, under the contingency plan, CMS will accept non-compliant
electronic transactions ("Transactions") for a limited
period of time. An important caveat to keep in mind: this temporary
reprieve only applies to non-compliant electronic transactions;
it does not permit the filing of paper transactions unless one of
the very limited exceptions discussed in a previous column applies.
The Department of Health and Human Services ("HHS") has
indicated that contingency plans are an acceptable interim alternative
to compliance with the Standards, so long as payers and providers
are working in good faith to achieve compliance. Guidance issued
by HHS in July encouraged payers, like the Medicare Program administered
by CMS, to develop contingency plans for accepting non-compliant
Transactions if it determined that such a plan was necessary to
prevent an interruption in the flow of payments and other information
with its trading partners.
Upon review, CMS found the number of compliant electronic claim
submissions unacceptably low. Current industry estimates suggest
that less than twenty percent (20%) of electronic Medicare claim
submissions comply with the Standards. By requiring providers to
move from paper to electronic submissions, the Medicare Program
is expected to achieve significant savings. Approximately 139 million
paper claims are submitted to the Medicare Program each year at
a cost that is approximately three times the amount required to
process electronic claim submissions. An obvious benefit of the
contingency plan is the additional time it provides for implementing
the Standards. But another motivation is to maintain the efficiencies
achieved through the submission of electronic as opposed to paper
claim submissions, regardless of whether they are compliant. Without
a contingency plan, CMS feared that the many small providers who
currently submit Medicare claims electronically, and are exempt
from ASCA, might revert to paper claims. Given the cost savings,
there is a strong incentive formaintaining even the status quo.
How long will this reprieve continue? CMS has stated that it will
reassess the readiness of its trading partners at regular intervals
to determine how long the contingency plan will remain in effect.
In other words – stay tuned.
Read past HIPAA Legal Q/A articles.
Steve Fox, Esq., is a partner at the Washington, DC office of Pepper
Hamilton LLP, www.pepperlaw.com  .
This article was co-authored by Rachel H. Wilson, Esq., an associate
of Pepper Hamilton LLP. They may be reached at foxsj@pepperlaw.com.
Disclaimer: This information is general in nature and should
not be relied upon as legal advice.
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