Keep a watchful eye on 5010 claims denials while stepping toward ICD-10 readiness

Effective Jan. 1, 2012, healthcare transactions began their journey across the new 5010 transaction format. On March 15, 2012, CMS’ Office of E-Health Standards and Services announced that it would again delay enforcement of the HIPAA Version 5010 transaction standards for three months. Physician practices may therefore continue to submit electronic claims using Version 4010 through June 30, 2012, without penalty. Although CMS will not enforce compliance until July 1, the implementation date for Version 5010 is still Jan. 1, 2012, and all covered entities should continue to make every effort to comply with the new standards.

Physician groups may be experiencing unusual denials, payments sent to an incorrect address or less expedient cash flow since Jan. 1, 2012. These issues should be reported to payers and clearinghouses immediately for resolution; groups can work with their payer representative, clearinghouse or billing agency to ensure these issues are being addressed.

As expected, there have been disruptions in processing claims by some payers. The effects of these disruptions vary among physician practices and depend heavily upon the specific payer mix of each practice and the readiness of those payers. Medical Management Professionals, Inc. (MMP) has observed the following:

  • A significant spike in payer denials, directly related to 5010.

  • Some payers still have not converted to 5010.

  • Payers that did not adequately test prior to the deadline have had significant problems.

  • Some payers have had to migrate backwards from 5010 to 4010 in order to process claims.

  • Some payers that successfully tested before the deadline had catastrophic claim payment errors when claim payment systems were moved to full production.

  • Errors on production claims that were not present in the testing process due to different edits in payers’ production systems.

  • Payers that were successful in production one week spiked claim denials in a subsequent week when they turned on additional edits in their production systems.

  • The first months of the year are typically difficult cash flow months due to the restart of many patient deductibles as well as the difficulty in collecting patient payments; but preliminary data suggests that 5010 had an additional negative impact on cash flow.

  • Please note that these are payment “delays” not payment “losses.”

The ideal response
Daily vigilant monitoring of claim denials for all payers is the most precautionary way to reduce risks in revenue, as well as ensuring ongoing dialogue with billing system vendors, payers and clearinghouses regarding claim denials and corrective actions. Currently, temporary work-arounds and permanent fixes are in development to eliminate 5010 denials. Monitoring industry publications for specific information on problems with specific payers will keep your practice in front of the major issues affecting the change.

The next step: ICD-10-CM
As practices implement 5010 transactions, the next logical step is preparation for ICD-10 code changes. There are significant issues and potential concerns that hospital-based practices should be aware of with respect to ICD-10 implementation. By preparing early, however, practices can alleviate several operational and budgetary issues. Below are some recommendations for practices as they start the implementation process.

  • Keep cost considerations in mind. Practices should consider all facets of their business as they estimate costs for ICD-10 implementation, including size, physician training, technology and overall adaptation. 

  • Adapt to the changes. Physician practices, hospitals and referring providers must quickly adapt to necessary documentation changes. 

  • Communicate with vendors. Billing companies such as MMP are currently working with billing system vendors, claims clearinghouses and outsourcing partners to ensure they are ready for ICD-10. 

  • Stay abreast of payer payment policies. Most commercial insurance carriers have indicated they will “crosswalk” ICD-10 codes back to ICD-9 codes for payment purposes. 

  • Brace the group for revenue changes. Practices can and should prepare for a potential disruption of cash flow.

Strategic thinking and preparation that involves costs analyses and effective communication with vendors and payers will ensure that practices will be ready to implement these changes by 2013. In many cases, a third-party billing or practice management company can help a practice keep up with 5010 compliance measures and prepare for ICD-10 implementation in regard to the above tactics.

In any case, practices must prepare now for the financial implications that will occur as ICD-10 is implemented.

Joseph Degati is chief technology officer with MMP.