HIPAA's promise undermined by claims-processing tangle

Rules that were supposed to make life easier are vexing many physicians and slowing claims payment.

By — Posted Sept. 13, 2004

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Washington -- Like whispered messages in the children's game "telephone," most electronic claims filed by doctors are changed bit by bit on the way to their final destination.

As electronic transactions are passed down the line from physician to payer, they go through layer after layer of vendors, billing managers and often multiple clearinghouses. At the end of the line, the claim has been mutated -- transformed into a standardized format and filled with default settings for any required data left out of the original claim.

The result is that the claim the physician files and the one the payer receives are rarely the same thing.

This disconnect between these two main parties is creating what some experts see as a major obstacle for the implementation of national electronic transaction standards mandated by the Health Insurance Portability and Accountability Act. In many cases, problems have slowed claims processing and physician reimbursement.

Confusion has been only partially eased by the government's decision earlier this year to temporarily allow physicians to continue filing noncompliant claims, known as legacy claims.

"The way the current implementation and rollout is going is making things more complex and more costly for providers and payers," said Jack Scheffel, chief privacy officer at WebMD Corp., the country's largest medical claims clearinghouse.

The company recently published a white paper outlining current difficulties with carrying out the rules and steps the Centers for Medicare & Medicaid Services could take to ease the cost and burden of the standards.

HIPAA was meant to simplify communication between business partners in the medical field. But implementation of the law has allowed for so much variation in interpreting transaction standards that the goal remains elusive, according to WebMD.

Other third-party intermediaries agree that HIPAA has yet to simplify electronic transactions.

"They were complicated before, and they are still complicated," said Diane Kaye, vice president of professional and payer services at Athena Health, a Waltham, Mass., company that offers practice management services.

That complexity has left many physicians bewildered and often wondering where their claims are. Missing data or processing delays can lead to rejected claims, but physicians won't know the status unless they spend time on the phone tracking claims across the many layers of vendors, clearinghouses and payers.

"Typically, physicians learn that their vendor has received a claim but are not notified when the vendor is unable to retransmit the claim in the proper HIPAA format to the payer," AMA Executive Vice President Michael D. Maves, MD, wrote in a recent letter to CMS.

Physicians in the middle

In his letter, Dr. Maves also notes that basic communication between physicians and their vendors about the status of HIPAA compliance has been inadequate.

That could be because the companies have been so busy with their own compliance problems that they have had little time to ask physicians about the status of their efforts, experts said.

While not alone, WebMD has been particularly hard hit by complaints from physicians accusing it of slow adoption of HIPAA standards and worrying that they could see a hiccup in their cash flow as a result.

"I basically gave up on WebMD," said Arnold Rosenbaum, MD, a practicing physician and CEO and medical director of Seacrest DocSecurity, a HIPAA compliance certification company in Middletown, R.I. Dr. Rosenbaum said he was in the process of switching vendors because he is tired of waiting for WebMD to send him a HIPAA-compliant update for his billing software nearly a year after the implementation deadline.

With little feedback from payers finding its way back to physicians, it seems unlikely that practices will have the information they need to move toward compliance on their own. Without such communication, physicians don't know what new data to include in claims, when they should expect reimbursement, or whether and why a claim has been rejected.

Physicians don't even know what questions to ask, or even whom to ask, said Barbara McGowin, a consultant with HIT Recruiting, a Goose Creek, S.C., firm specializing in HIPAA compliance.

Physicians have to take a more active role in managing the relationship between their vendors and payers, rather than continuing to rely on those entities to achieve compliance without their input, she said.

Not doing so means that physicians are forgoing the potential benefits of compliance, such as knowing almost immediately whether they will be reimbursed for seeing a patient, said Nathan Beraha, MD, medical director of Anchor Medical Associates, which has offices throughout Rhode Island.

Staying on the sidelines

But physicians might not want to have to deal with it, experts said.

HIPAA transactions are really made up of two components: a standard format, which is the easy part, and a host of required and situational data elements, which is proving much more tricky.

While everyone has to use the same format, Medicare, Medicaid, private health plans and other payers all have their own interpretations of what data elements they need to adjudicate their claims. The plans publish those interpretations in guides. For example, one plan could consider pregnancy status a required element, meaning that doctors have to fill in that box no matter what; while others will only require it for patients who are women.

The result is that claims clearinghouses must deal with hundreds of variations in what information public and private insurers require for claims processing.

"What was meant to be a standard has over 400 specific deviations by different payers now," Scheffel said. "And that number is increasing all the time."

With that type of overwhelming complexity, it is no wonder physicians have relied on third parties to negotiate the HIPAA transition for them, experts said. WebMD receives less than 20% of claims from physicians in HIPAA format, according to the white paper.

"Variety may be the spice of life ... but not when it comes to payers," Dr. Beraha said.

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External links

WebMD white paper, "HIPAA Implementation: The Case for a Rational Roll-Out Plan," in pdf (link)

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