History: Per The Centers for Medicare & Medicaid Services (CMS) website, on January 16, 2009, Health and Human Services (HHS) published two final rules to adopt updated HIPAA standards; in one rule, they officially adopted the X12 Version 5010 for claim submission and related transactions. They mandated compliance by January 1, 2012. CMS still states on their website that this 3 year timeframe, “gives the industry enough time to test the standards internally, to ensure that systems have been appropriately updated, and then to test between trading partners before the compliance date.” This statement is anything but the truth as it relates to many health plans, and especially the Government and Blue plans.

HIPPA 5010 Transition

In another rule, HHS modified the standard medical data code sets for coding diagnoses by adopting the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10). They mandated the start date for the cut-over to ICD-10 as October 2013.

On November 17, 2011, the CMS Office of E-Health Standards and Services (OESS) reported that they would not enforce compliance with the HIPAA 5010 transaction set until after March 31, 2012 (big mistake). They also announced that the 90-day delay would not affect the implementation date for the ICD-10 coding system change, which as of that date remains October 1, 2013 (another big mistake).

The Current State of the 5010 Claims Format Transition: On Friday February 3, 2012 the Medical Group Management Association (MGMA) authored a scathing letter to the HHS Secretary, Kathleen Sebelius, outlining significant problems with reimbursement of claims following the transition to the HIPAA 5010 transaction sets. In the letter MGMA reports that many providers have not been paid by Medicare and TRICARE (we also see this pattern with many large Blue plans) since as far back as November 2011. Whether you are using HealthFusion® or another clearinghouse or practice management system, you may be impacted by the problems outlined in that letter. MGMA’s letter is an obvious indicator that the 5010 payment issues are industry-wide — affecting providers that use hundreds of different billing and clearinghouse systems. Yet the Government and Blue plans’ initial reaction has been to point their fingers at the practice management and clearinghouse industry. Recently they have been slowly taking responsibility for the problems they have created. I am certain that the overwhelming majority of the payment issues that providers have been experiencing are related to the payer community and I have the evidence!

Major Payment Problems Details (most of the list is per MGMA – the comments are mine)

  1. Billing systems and clearinghouses show no problems during testing but claims are rejected once the production phase starts — During the testing process many of the payers created test environments. To get certified for 5010, vendors were required to test against the payers’ test environment. Files that passed testing ended up failing in production; how could this happen? The Government and Blue plans were late to setup their testing; they created long lines for their constituents to test. They did not provide proper examples of their reports in time for the industry to accurately map to those reports, or they changed the report format at the last minute. Most clearinghouses and billing software systems wanted to test months prior to the deadline, yet they had to rush at the end of 2011 because the Government and Blue plans were way behind schedule with regard to modernizing their systems for 5010.
  2. Crosswalk national provider identifier numbers are not being recognized — Medicare unilaterally and mistakenly “unlinked” some providers from their enrollment database. While the majority of Medicare providers remain linked properly, we believe thousands of doctors have been unilaterally “unlinked”. The history on this issue is as follows: Over the past several years the Medicare Fiscal Intermediaries have been changing territories — they are now referred to as Medicare Administrative Contractors (MACs). During those territory reassignments, the linkages for enrollments via all clearinghouses have been lost for many, but not all providers. CMS mandated that, as of the first of this year, if a lost linkage was associated with a provider, that the MAC was no longer authorized to pay a claim for that provider. This was just plain stupid, trying to fix lost linkages at the time when the industry was already challenged by the 5010 transition does not make any sense. In fact, from the middle of December to January 5th, most every provider was impacted by a similar Medicare error.
  3. Medicare has defined a claim error type that they like to call a “496 edit”. In Medicare payer reports the error looks something like this:

    *** Batch, Reject *** LAST NAME, FIRST NAME *** Batch, Reject ***



    STATUS CODE: A8:496:85

    Acknowledgement / Rejected for relational field in error.

    Submitter not approved for electronic claim submissions on behalf of this entity.

    Many providers stopped receiving this error after January 5, 2012, but we believe thousands of other providers continue to receive this error, and they remain unilaterally unlinked from the Medicare enrollment database. Guess what happens when you are not linked to the enrollment database — you got it, no payment. To make matters worse, Medicare’s response to this issue was to stonewall the clearinghouses and billing system vendors. Most Medicare representatives that we contacted denied the issue, and their response was reminiscent of Soviet-style misinformation, their position was that these providers were never enrolled. An absurd response! They knew they were getting hundreds of calls with similar issues and we had the proof, enrollment paperwork and check numbers for claims as recently as December of 2011. If the providers were not enrolled, how could Medicare have paid last year and not this year? Their initial solution was that providers needed to re-enroll. We objected vehemently, because any further delays, especially a long enrollment process, was not acceptable. We needed to reach level 3 support at Medicare, and that is where we finally got the truth. Medicare assumed responsibility, did not point the finger back to the vendors, and agreed to a much more streamlined approach to re-linking providers to facilitate payment. The problem is that this never should have occurred. Enrollment database updates are not what we bargained for with 5010, and Medicare should never stop paying when they know the error is in their system and not with the provider. It just is not fair and has far reaching implications on patient care — which I will discuss later in this blog.

  4. Medicare contractors are losing claims — Medicare has a centralized claim editing system called the Common Edit Module; it is programmed with all of the claim edit rules shared by the various Medicare Administrative Contractors. The Common Edit Module has become its own version of the “Roach Motel” — claims make it in but they never make it out. Medicare has admitted that at times the Common Edit Module has become “overwhelmed” and malfunctioned, causing claims to randomly get lost.
  5. Sporadic payment of re-submitted claims are occurring with no explanation for rejections — Payers may deny a claim without a rational rejection reason, and then when the same claim is resubmitted the claim will be miraculously paid. Most good billing professionals are trained not to blindly resubmit claims, instead they are trained to try to understand the reason for the rejection, correct the claim, and then resubmit. When billing staff recognize that random resubmission sometimes works, they may blindly resubmit large batches of claims and “pray” for some payment. In the context of a practice that is desperate for proper payment because of payer payment delays, these resubmitted claim batches are further overwhelming payer systems. Payers have created a loop that self perpetuates and creates even more chaos.
  6. Call hold times of one to two hours are being experienced when contacting Medicare contractors — Payers that have botched the 5010 transition also did not plan for the increased call volume associated with the transition. Of course if they were paying claims correctly, if they would have not unilaterally “unlinked” doctors, or used 5010 to squeeze in new “rules” that they did not propagate or make part of the pre-5010 testing process, call volumes would be much lower. It is almost impossible to get a good answer from many payers regarding rejections. At HealthFusion® we have hired temporary employees whose job is just to phone a payer and wait on hold for hours, then when a person answers they pass the phone to one of our customer care professionals. Many times the payers do not accept calls at all because they are overwhelmed. The majority of the time when we do get a person and not voicemail, the “help” our staff receives is not useful or accurate. We see these long call hold times in most every state and across several payer types, but it is of course the worst with the Government and Blue payers. Medicare has reported that call volume has tripled since the transition to Version 5010. The fact that payer hold times are at least one to two hours is proof that the 5010 transition issues are industry wide (no single vendor could cause these types of hold times). Click on the following link for an audio example of a payer’s 5010 transition voicemail.
  7. Government and Blue payers have sporadically stopped paying claims or issuing reports for days at a time — We have observed many bulletins from payers that they have simply stopped paying claims, delayed claim processing, or have delayed reporting on claims. These delays imply that those payer systems are overwhelmed or require reprogramming — either way, they were not ready for the 5010 transition. Below is a recent example of a communication that indicates a processing delay issue — we have received many communications that are similar to this one:
  8. 5010 Transition Support

  9. Secondary payers are not ready — This month Medicare sent a bulletin (MLN Matter Number: SE1137) that explained the delay in COB processing when a patient’s supplemental payer has moved into 5010 production. For 30 days after that payer’s cut-over, providers need to file the affected claims directly with their patients’ supplemental payers, and they cannot rely on the standard automated crossover system that was in place prior to 5010. Basically, in this communication, Medicare is admitting that the traditional crossover claims system is not working for many payers, and is delayed for others.
  10. Other observations made by MGMA regarding payment problems include:
    • Older submitted validation information is not being transferred.
    • Claims are being denied for not having a description in the claim, although CMS did not send a notice of correction until Jan. 27.
    • Unsuccessful claims processing with no rejection reason cited is occurring, despite using a submitter that was approved by CMS.
    • Pay-to-address data fields are being stripped from the claim, and other address issues have emerged.

How widespread is the problem? Since thousands of providers have not been paid by certain payers as far back as November 2011, some providers have been forced to take out lines of credit simply to meet payroll and other expenses. We have noticed that certain government payers are now quietly owning up to their problems, and they’ve stopped blaming the providers or clearinghouses. They are starting to provide better answers and guidance than they did in the middle of January, but there is still a long way to go. We noticed that just this week one of the nation’s largest clearinghouses issued a bulletin that reported they had identified almost 100 production issues that required IT fixes. We see this type of activity in most every large clearinghouse — the rush to make up for poor testing environments and guidance provided by payers during the 5010 pre-production timeframe. Providers need to understand that every billing system and clearinghouse that is submitting in 5010 format has already been certified by the payer or their trading partner. One would think that if you passed testing then the claims submitted in production would be paid. In fact, it is the responsibility of those payers to pay claims that would have passed their pre-production testing, this is not happening. Payers are finding new and inventive ways to not pay claims, in some instances rejecting batches of thousands of claims because they want to reject a single claim within the batch.

What next? CMS realized (or should have) that there was a problem with the largest payers in the country, Government and Blue payers, with regard to the 5010 transition. Last summer CMS should have postponed 5010 until January 2013. This is a classic case of the fox minding the hen house, the government policing themselves. The Government payers and the Blues (which as far as I’m concerned are as bureaucratic as the government payers) were the least prepared and CMS had to know; yet they let 5010 proceed. Then in November they announced a short delay until March (no penalty for staying 4010 for an extra 3 months). This was too little too late. The payers are like ocean liners and most could not reverse course “on a dime”, they were already committed to 5010. They had to know they were unprepared for 5010, but their systems were at least partially programmed for 5010, and like an ocean liner headed into a hurricane they could only move straight into the storm and pray.

CMS must provide more transparency — Example: On January 25, 2012 they hosted a national provider call “Subject: Medicare FFS Call on HIPAA 5010 — Question & Answer Session”. On this call CMS admitted that they are having problems processing large batches of claims and that these large batches are contributing to the bottleneck at the Common Edit Module, which is delaying processing and reporting. Several clearinghouses complained about Trailblazer/PGBA/CGS denying claims for not being associated with Submitter ID (the unlinking issue captioned above). Others reported that Noridian/EDISS are not processing requests in a timely manner; they have not been responsive to linking ERAs to provider clearinghouse accounts. Some have waited up to two months to go live on ERA. Highmark was singled out for rejecting claims for the lack of rendering provider in situations where the rendering provider is not required per the 5010 rule. CMS has yet to publish any documents related to this call. In the past CMS has published audio versions of their Q&A sessions. Why is this call a secret?

Medicare must not create further complications with regard to the 5010 transition — CMS decided to move MAC assignments from Cigna Government Services (CGS) to Noridian on February 1, 2012. That move impacts Medicare in the states of Alaska, Arizona, Idaho, Montana, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming. Now providers are further burdened to make sure that during this move they visit the Noridian “Total OnBoarding” web portal to verify that Noridian has updated their profile information correctly, and make sure that they are confirmed to send 5010 837P (5010A1)-Health Care Claims Professional and receive 835 (5010A1)-Payment Advice. This was the wrong time to change MAC assignments and further burden providers with new administrative tasks.

MGMA is asking for further delay in enforcing 5010 until June of this year, that recommendation simply won’t help any payer that has already has committed to 5010. In addition, the process of downgrading claims from 5010 to 4010 is fraught with its own set of issues that we are currently observing and may make the issues worse. We do agree with the rest of MGMA’s recommendations to HHS, some of which are listed below:

  1. Instruct the MACs to immediately provide advance payments for physician practices that are struggling to meet the Version 5010 mandate.
  2. Permit clearinghouses and health plans to accept and adjudicate Version 5010 claims that do not have all of the required data content, but that have sufficient data content to be successfully adjudicated. HHS should encourage providers and health plans to concentrate strictly on the most critical data content requirements of the electronic claims and other transactions. Medicare should announce that, assuming the claim contains sufficient data to be adjudicated, minor errors in the claim will not trigger an automatic rejection.
  3. Instruct the MACs to expeditiously adjudicate all outstanding claims, both electronic and paper.
  4. Instruct the MACs to take all appropriate steps to ensure that they can accept and adjudicate Version 5010 claims in batch mode.
  5. Instruct the MACs to take all appropriate steps to ensure that call centers are manned appropriately and that they are able to answer incoming provider questions in a timely manner.

We also agree with the AMA that the ICD-10 transition scheduled for October 2012 should be postponed. ICD-10 should not proceed until such time that the industry has time to recover from the 5010 debacle. Providers cannot bear the burden for another round of poor preparedness related to a transition to yet another new standard. The payer community cannot police itself, and we call for an independent certification of payers prior to the introduction of any new standard related to physician payment. CMS should also recognize that the industry is gearing up for Meaningful Use Stage 2 in 2014, just 3 months after the scheduled transition to ICD-10; introducing two new standards within such a short time period is a disaster waiting to happen.

As a physician that had to make payroll and pay expenses, I can assure that HealthFusion’s® primary mission is to facilitate payment for our constituents. Each day we make a breakthrough with the payers, and just last week our team “freed up” thousands of claims that were inappropriately rejected by payers. We continue to work hard with our trading partners, and the payers and I believe that we will see steady improvement in payment this month, BUT the payers must cooperate and follow the recommendations made by MGMA. We call for a Congressional investigation of the botched CMS 5010 transition. If Congress had enough time to investigate the use of steroids in baseball, then they have time to investigate this important physician payment issue. I know firsthand, that as well-meaning as physicians are, they can’t provide care without fair reimbursement. We share MGMA’s concern that if payers continue to withhold payment, those disruptions will ultimately interfere with patient access to quality care.