Medicare Orders Slowing of Noncompliant Claims
[Posted 05/06/04]

The Centers for Medicare & Medicaid Services (CMS) has reiterated that effective July 1, Medicare carriers will slow the payment of electronic claims that don’t meet the HIPAA transaction and code sets standards. The agency called the move “a measured step toward ending the contingency plan completely.”

CMS will still accept noncompliant claims, but the agency in March instructed carriers to pay such “legacy” claims no earlier than 27 days after receipt instead of 14 days. Noncompliant electronic claims will therefore be subject to the same 26-day “waiting period” as paper claims.

Physicians have made great progress in the conversion to HIPAA-compliant billing systems, with 85 percent of Southern California physician claims and 81 percent of Northern California physician claims meeting the HIPAA electronic transactions standards. While this is good news, it also means that some 17 percent of Medicare claims submitted electronically by California physicians are not compliant and will be subject to the mandatory two-week “waiting period.”

While not the only source of noncompliant claims, billing services are currently the most common offenders. Will your claims be among those delayed?

Whether you submit claims through a billing service or clearinghouse or transmit them directly using vendor-supplied electronic billing software or Medicare’s free software, keep reading for more information on what you can do now to make sure your claims are not delayed.

Billing Service: NHIC has billing services that are not sending claims in HIPAA compliant formats. In the next two weeks NHIC will send letters to physicians whose claims are being submitted in noncompliant formats. If you use a billing service, ask your staff to be on the lookout for any correspondence from NHIC regarding your billing service.

NHIC has provided billing services with written notices once they have successfully tested their claims with NHIC. Protect yourself. Ask your billing service to provide a copy of the NHIC notice of successful testing. The testing may have been completed by the billing service or the billing service’s software vendor.

If the billing service cannot provide written confirmation, ask for their "submitter number." Call 213/593-6950 (Southern California) or 530/896-7189 (Northern California), give them your billing service’s submitter number, and ask if they are submitting your claims in the HIPAA required format. The submitter number is critical, NHIC will not be able to provide the information you need without this number.

Clearinghouse: NHIC has provided clearinghouses with written notices once they have successfully tested their claims with NHIC. According to NHIC, most clearinghouses are already submitting claims in the correct HIPAA-compliant formats. Physicians may experience delays, however, on claims that are rejected by the clearinghouse’s internal audit systems because of missing data. Unfortunately, some clearinghouses are not providing physicians with timely notice of the need for corrected information. (So far this year, CMA has intervened on several hundred thousand dollars worth of claims due to this problem.)

If you are using a clearinghouse, confirm your claims are being paid within 14 days. If they are not, confirm with your clearinghouse that you are providing all data they requested and make sure your staff know how to (and do) aggressively follow up to assure claims are cleared in a timely fashion.

If you have any concerns about the services your clearinghouse is offering, consider using InfinEDI (a CMA approved clearinghouse). CMA has confirmed through NHIC that InfinEDI is successfully clearing Medicare claims. InfinEDI reports to CMA that it files daily batches with close to a 100 percent acceptance rate.

Direct Submission via Vendor Software: NHIC has notified physician practices that directly submit claims using outdated software they need to upgrade to a new format. They have also notified some vendors that their software is noncompliant and advised them to make the needed corrections.

If you are not sure whether your practice has received an need-to-upgrade notice, contact your vendor to confirm you are using software for which your vendor has received written confirmation of successful testing with NHIC.

Your system must be able to send data in the 4010A1 format. If it cannot, your payments will be delayed effective July 1.

Medicare's Free Direct Submission Software: After July 1, physician practices using older operating systems will have to upgrade to Windows XP to continue to use Medicare's free billing software. The latest HIPAA-compliant release of this software—the only version from which claims will be accepted—requires computers using Windows XP as their operating system.

Call 530/896-7024 in Northern California and 213/593-6950 in Southern California for more information regarding upgrading to the compliant release.

Contact: Nileen Verbeten, 916/444-5532 or nverbeten@cmanet.org.