"Administrative simplification" is something everyone wants. The upcoming changes required to achieve administrative simplification called for under HIPAA will be anything but simple.

Thinking back on the banking industry, many will remember when people had to physically go to the bank when they wanted to make a transaction. They had to be there during banking hours - and those hours were short. Now people bank from home and can get cash at any time of the day from ubiquitous ATMs. The convenience of banking transactions was the outcome of data standardization and electronic communications.

HIPAA lays the groundwork for a data revolution in health care. Imagine - being able to transmit a claim, receiving an automatic, electronic confirmation that the claim was received by the payer and being able to query and track that claim through the payer's system without having to pick up a phone.

Imagine electronically confirming insurance eligibility for your scheduled patients without staff having to call the payer patient by patient. Imagine being able to request authorizations and receive responses online. Imagine being able to receive wire transfers of payments and the automatic posting of remittances to your billing system.

Streamlining of data should be a significant benefit to the business aspects of the practice. The present, however, is filled with complex details, thorny choices, unanticipated expenses and confusion.

The decisions to be made by practitioners will be difficult. CMA is working to help bring some clarity on the choices ahead.

STEPS TO TAKE
Here is a nutshell version of steps to take to prepare for HIPAA transactions:

1. Determine if you are covered by HIPAA. Do you transmit or does a third party or clearinghouse transmit on your behalf, any of the following transactions electronically?

• Claims or encounter information
  
• Payment or remittance advice
  
• Claims status inquiry or response
  
• Eligibility inquiry or response
  
• Referral authorization inquiry or response

If the answer is yes to any of these transactions, you are a "Covered Entity" (CE).

2. If you answered no to all of the above, there is one more test. If you provide services to Medicare beneficiaries and your practice has 10 or more full-time employees (including physicians), you must bill Medicare electronically as of October 16, 2003 and thus you will be covered by HIPAA as of that date. If you do not bill Medicare or your practice employs fewer than 10 employees and you transmit none of the electronic transactions specified above, you are not a CE, and you do not have to pursue the following HIPAA readiness tests unless you choose to do so.

Note: after October 16, 2003, you can either submit uniform electronic transactions or paper claims. Non-uniform transactions will not be allowed.

3. Identify which transactions you currently perform (or desire to perform) electronically. If you only submit claims electronically, but perform the other functions manually, the claims transaction is the only one to focus on.

4. Find out if your software (or the software of your billing service) is ready for HIPAA transactions - it must be ready to transmit claims in the standard format by 10/16/2003. Failure to be able to do so will likely result in impaired cash flow.

Note: CMA has provided sample letters in the members only HIPAA Resource Center at www.cmanet.org that you can use for this purpose. You will need to make sure to log into the Members Only section first, then visit the Resource Center.

5. If your software (or billing service's software) does not already transmit claims in HIPAA standard format, find out if they are in the testing phase or if they will have to upgrade the software to be able to produce the standard format. You might ask if they will seek certification by one of the certifying bodies that assure systems have been properly tested.

Note: CMA will post a list of certifying bodies in the CMA HIPAA Resource Center.

6. If your software/billing service vendor has not begun testing or does not plan to seek certification, you need to examine alternatives to assure you can transmit compliant claims. Contact your clearinghouse to learn if they can accept the current transactions from your software/billing service and perform the mapping functions to make them compliant.

7. If your software vendor tells you that you need an upgrade, ask them if the upgrade will be sufficient to transmit the standard format directly to the payer - i.e. a clearinghouse will not be needed to properly prepare the claim. Find out how much their solution costs (upgrade and any required clearinghouse fees) and whether they can install the upgrade and train your staff by 10/16 before you authorize them to proceed.

8. If the costs identified in 7 above are higher than you believe reasonable or the vendor cannot assure completion of the installation by 10/16, return to step 6 and check other clearinghouses.

Note: CMA has a list of clearinghouses and vendors certified by Medicare in California posted in the CMA HIPAA Resource Center at www.cmanet.org CMA is also looking into the possibility of encouraging additional clearinghouses to enter the California market and provide discounts to CMA members.

9. If you cannot find a clearinghouse that can accept your billing services software's output and convert it to the standard format before 10/16/03, you have three options:

a. secure services from as billing service who can demonstrate ability to transmit compliant claims

b. purchase new software that is HIPAA compliant (although as a practical matter, it may be difficult to transition to a new practice management system by the 10/16 deadline)

c. convert to paper filing for non-Medicare payers and bill Medicare using the free electronic software Medicare provides; downloadable at www.medicarenhic.com/edi/EDIhome.htm.

10. If you opt to bill on paper, take steps to assure you have an adequate supply of forms on hand. There may be a surge in demand for 1500s as the deadline approaches.

11. If you are not satisfied with the solutions you have available, use the most acceptable option as a transition stage to get you past the 10/16 deadline and continue to explore better alternatives. Choices will get better as vendors and services adapt to the new rules, and the better options become more well known.

Note: CMA is also looking into practice management solutions that are HIPAA compliant and provide discounts to CMA members.

12. If you enter into a new or updated contract arrangement with a billing service or clearinghouse, do not presume the terms of the contract are the same as before. Review each contract, and make sure it is not more onerous.

MORE HIPAA INFORMATION FROM CMA: For useful information on HIPAA and an updated list of HIPAA workshops visit the CMA's HIPAA Help Section at www.calphys.org or the HIPAA resource center in the member's only section of www.cmanet.org