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Consider your transactions options

HIM Connection, June 3, 2003

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The HIPAA transactions and code sets rule, effective October 16, 2003, covers health care providers who transmit any health information in electronic form in connection with a HIPAA transaction. Providers sending paper claims to a clearinghouse, which then processes them into electronic format, are also covered.

Covered entities have several options for adopting the transactions:

Direct transmission: HIPAA's ultimate goal is to get all covered entities to do this. In this approach, providers and payers exchange transactions directly. To accomplish this, providers and payers need the necessary information systems, including a translator and communications technology, to conduct electronic data interchange (EDI).

Clearinghouse for the standard transactions: This option might include a mix of direct transmission as well as clearinghouse use. Typically, if providers use a combination of the two, they send claims directly to Medicare, Medicaid, BlueCross/BlueShield, and a few other major commercial payers. They also use a clearinghouse to send claims to other payers, especially if they are concerned they do not have the electronic capability to establish the necessary connections with many health plans.

Some providers may continue to use a clearinghouse for editing services. In the past, these services were critical if a provider had many payers because each payer had its own set of rules on what data to submit. Under HIPAA, with a standard set of data content, services that help manage the various data requirements will not be necessary. Editing will continue to be necessary to make sure all required fields are filled, only valid codes are used, and so on. However, providers may find they can submit claims and other transactions more quickly if they bring this editing capability in-house, especially if it can be done in real-time.

Clearinghouse to format standard content: Providers whose vendors are not supplying translation software must use a clearinghouse in order to put the data into standard format or receive the data stream in an intelligible manner. Clearinghouses are prohibited from creating or modifying data content, so the provider must send all of the content to the clearinghouse, which then transforms it into a standard transaction. This option is also available to payers who may not acquire the translation software in time for compliance. However, if a health plan uses a clearinghouse in this manner, it is not permitted to pass the cost of the clearinghouse on to the provider.

Direct data entry (DDE): DDE refers to the use of a Web-based service into which employees key the standard data elements required by HIPAA for claims submission, eligibility inquiry, etc. Although the data elements must meet the HIPAA standards requirements, they do not have to be formatted into the X12N transaction for the transmission. There are advantages and disadvantages to DDE-both on the provider side, relative to work flow and operations, and on the payer side, relative to maintaining duel systems to receiving standard data.

Paper claims: With the exception of Medicare, which will only accept paper claims after October 16, 2003 from small providers, payers must also be able to accept current paper transactions. This is not a desirable option from many standpoints. First, since this is not an option for Medicare, providers must capture the necessary data elements for Medicare claims and have a system that will continue to generate UB-92s or CMS 1500s. They cannot simply drop the X12N transactions to paper, so they need to continue running an older version of their billing system to drop other claims to paper. Second, the cost of processing paper is significantly higher than processing electronic transactions. Over time, other payers may decide to contractually require electronic submission.

This week's HIM Connection was excerpted from the the book and companion CD-ROM, "HIPAA Transactions Made Simple: Achieving the Benefits of EDI," which provides a step-by-step plan to help you adopt the new HIPAA transaction standards. Go to http://hcmarketplace.com/Prod.cfm?id=1528&s=EHIMC for more information or to order your copy.

Sincerely,

Laura Motta
Editorial Assistant
lmotta@hcpro.com

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