Published 6/1/2011
Karen Leeker

Are you ready for the HIPAA 5010 conversion?

Just 6 months left to implement new electronic claim transactions standards

Because nearly all Medicare Part B claims transactions are submitted electronically, orthopaedic practices must be prepared for new standard formats that go into effect on Jan. 1, 2012. These new electronic data interchange (EDI) standards—version 5010—replace the current versions of the standards (4010) for healthcare transactions.

What is 5010?
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandated that the healthcare industry use standard formats for electronic claims and claims-related transactions.

Because the current version 4010 format cannot support new developments in health care and the upcoming ICD-10 code set changes, all electronic healthcare transactions must convert to the HIPAA-compliant version 5010 on Jan. 1, 2012.

The Department of Health and Human Services (HHS) issued a final rule in 2009 replacing the current versions of the standards with version 5010. Certain covered entities—including health plans, healthcare clearinghouses, and healthcare providers—must adopt the new required standards for claims, remittance advice, eligibility, and claim status inquiry.

What does this mean for your practice?
The HIPAA 5010 conversion requires substantial changes to the information that is submitted on claims. If these changes are not made, processing of your claims could be delayed.

To prepare for the HIPAA 5010 conversion and avoid delays in reimbursement, the most important thing you can do is to contact your practice management software (PMS) vendor or billing service about the changes needed for your software. They can help you identify needed updates and make a plan for implementing these changes to your system.

For example, to be HIPAA 5010 compliant, electronic claims need to include a physical address location. Make sure your system can meet this requirement. Your PMS vendor may need to help you make this change.

To help guide your conversation with your PMS vendor, the Centers for Medicare & Medicaid Services (CMS) has a provider checklist on its 5010 Web site that offers sample questions, such as the following:

  • Can your current system accommodate both the data collection and transactions needed for version 5010?
  • If any upgrades are required, when will they be available?
  • Will there be a charge for any upgrades?

Other helpful tips to consider
The following tips can also help your practice ensure a sustainable cash flow throughout the transition to HIPAA 5010:

  • Submit as many claims as possible before Dec. 31, 2011.
    Because all transactions submitted on or after Jan. 1, 2012, must be in version 5010, have claims submissions as up-to-date as possible prior to the transition deadline. This step will reduce the number of outstanding claims and increase the ability to complete payment processing for these services without disruptions.
  • Limit year-end expenditures. Consider increasing cash reserves so you will be prepared to absorb any unexpected delays in reimbursement.
  • Establish a line of credit.
    Arrange access to additional funds through a financial institution, to maintain cash flow if reimbursement is delayed for any length of time.
  • Make “urgent” corrections to any system issues now.
    Prior to the transition period, establish procedures to handle any urgent corrections needed on practice management and billing systems. If system upgrades are done by internal staff, identify which staff members need to be involved. If vendors are involved, find out what processes they have in place to handle urgent needs.

To make sure your organization is ready for the HIPAA 5010 transition, contact your PMS vendor or billing service today.

Karen Leeker is the chief marketing officer at Gateway EDI.

AAOS Revenue Management Program powered by Gateway EDI
The AAOS Revenue Management Program was launched in February 2011, through a unique partnership with Gateway EDI. Designed to provide better claims processing and revenue management services to orthopaedic practices, this program will help AAOS member practices submit claims faster and more accurately to increase revenue and enhance cash flow.

Learn more about how the AAOS Revenue Management Program can help your practice reduce claims rejections, recover missed reimbursements, increase revenue, and save time—visit www.gatewayedi.com/aaos and request a personal demonstration. To speak directly with a knowledgeable representative, exclusively serving AAOS member practices, call Nick Challen at 1-800-969-3666, extension 1489.