Medicare Implements HIPAA Contingency Plan

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To avoid what one Medicare spokesman called a possible “health care system collapse,” the Centers for Medicare and Medicaid Services will implement a contingency plan that bends a rule the agency itself set in stone more than three years ago.

The “transaction and code set” or TCS rule, which federal lawmakers described in the Health Insurance Portability and Accountability Act of 1996, requires that all health care transactions take place electronically and use the same code sets by Oct. 16, 2003.

But by mid-September, fewer than 11 percent of the electronic claims that Medicare received were HIPAA-compliant, CMS said, and the threat of a massive backlog forced an agency decision to put the contingency plan in place on the deadline date. The plan will ensure continued processing of claims from “thousands of providers” who will not be able to meet the deadline and otherwise would have had their Medicare claims rejected, according to the agency.

“Implementing this contingency plan moves us toward the dual goals of achieving HIPAA compliance while not disrupting providers’ cash flow and operations, so that beneficiaries can continue to get the health care services they need,” said CMS Administrator Tom Scully in a Sept. 23 announcement of the decision.

The plan means Medicare will “continue to accept and process transactions that are submitted in legacy formats while [the agency’s] trading partners work through issues related to implementing the HIPAA standards,” explained Leslie Norwalk, CMS’ deputy administrator.

Even with the contingency plan in place, however, providers should not consider the delay an excuse to procrastinate, a CMS spokesman warned.

“We will pay claims as long as people are making a good faith effort to become compliant,” he explained, continuing that providers who are not engaged in active testing with partners will not receive the benefit of the doubt. To demonstrate “good faith,” CMS recommends that providers keep track of the efforts they have made to become compliant.

Additionally, CMS has acknowledged the fact that its new transactions system is unforgiving. Gary Kavanagh, director of business standards and systems operations at CMS told reporters that the new system rejects transactions that do not include all of the data that the TCS rule requires. This means one blank field can stop an entire transaction.

CMS said it will “regularly reassess” the readiness of its trading partners to determine how long the contingency plan will remain in effect.

HIPAA: Are You Ready?

Regardless of CMS’ contingency plan, HME providers must be prepared for the HIPAA compliance deadline on Oct. 16. For last-minute tips and questions, visit www.cms.gov/hipaa, or call 866/282-0659.

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