Form 5010 Changeover Causing Payment Delays

Transition to new form began on January 1, 2012, most laboratories can expect to see revenue shortfall

CEO SUMMARY: Even after testing compliance with HIPAA Form 5010 for more than a year, one out of four payers is not ready to pay claims using this new form. Claims payment experts are telling clinical labs to expect some shortfall of revenue in coming weeks as payers struggle to program their systems to cleanly handle claims submitted on 5010 forms. Executives from XIFIN, Inc., and Gateway EDI, Inc., offer insights and recommendations as to how labs can deal with a less than ideal situation.

BECAUSE MANY PAYERS were not fully ready to implement HIPAA Form 5010—which became mandatory on January 1, 2012—approximately 9% to 20% of laboratory test claims are going unpaid.

That’s the estimate of claims payment experts who spoke during an audio conference on January 18 sponsored by THE DARK REPORT. If there is good news in these developments, it is that the larger proportion of claims filed with Form 5010 are being paid without a problem.

However, there is some bad news, because certain payers were not fully prepared for Form 5010 implementation on January 1. These experts predict that it is most likely that most clinical laboratories and pathology groups will experience a shortfall in revenue of some significance in the coming weeks.

“As an industry, we’re probably at the most painful part of 5010, which is the transition,” said Matt Warner, Associate Vice President of Operations at XIFIN, Inc., a company in San Diego that assists labs and other providers in getting paid.

“But the bigger problem is that the burden of compliance is borne disproportionately by providers. Providers risk lost revenue due to timely filing limits if billing is not prompt and accurate.

“Payers have far fewer incentives to comply with the standards,” explained Warner. “After all, if providers, including laboratories, are unable to resubmit claims within the required window of time, it means payers simply make fewer payouts.”

Lâle White, Executive Chair and CEO of XIFIN, agreed. “The business impact for the 5010 production can be extraordinarily significant for laboratories,” she stated. “It could translate into lost revenue or late revenue, and increased costs.

“If needed, resubmission of claims could be delayed as labs research the issues behind rejections of the claims in question,” continued White. “These glitches are inevitable, so the real issue is that every lab must be prepared to deal with them rapidly and promptly.

“Based on our experience with our laboratory clients, approximately 91% of claims volume is using 5010 forms” she noted. “By contrast, only 75% of the payers are in production and prepared to accept 5010 claims. Further, among our payers, 7% remain in the testing phase, 5% have completed testing and are about to go live, and 11% of payers are still not ready to do testing.

Some Payers Unprepared

“Generally, it is the smaller payers that are still not fully capable of accepting and processing 5010 claims, and their number is significant,” added White. “Fortunately, this group of payers represents just a small portion of all claims being filed by providers.

“For this reason, we believe that the payers not ready for Form 5010 testing represent only 2% of claims,” she said. “Payers now in the progress of 5010 testing represent about 6% of claims. About 1% of payers have completed testing but are not yet paying claims using Form 5010.

“In this healthcare-wide conversion, the obvious goal of every clinical lab and pathology group is to have no interruption in the revenue stream,” explained White. “However, it is naïve to suggest that labs would not experience any interruption whatsoever.

“Remember, this is a significant transition,” she continued. “The last transition in submission and remittance was seven years ago. That was when Form 4010 was introduced. To get through Form 5010 implementation, the billing departments of labs need to be on the alert to identify the different kinds of problems, then address them in the most effective and efficient manner.”

Form 5010 Claims Unpaid

Unpaid claims are also being observed at Gateway EDI, a large claims payment clearinghouse in St. Louis, Missouri. “Of all the common problems experienced by labs, the biggest is unpaid claims,” stated Jackie Griffin, Director of Client Services, Training and Project Implementation at Gateway EDI. “An estimated 20% of claims were going unpaid as of January 18—even though the volume of claims paid successfully has been rising since the January 1 effecttive date of 5010 implementation.

“Gateway began the transition to 5010 in November,” she explained. “As of today (January 18), we have about 80% of our claim volume going out via 5010. We have migrated all Medicare contractors for Part A and B and most Blue Cross/Blue Shield plans. We also migrated the Medicaid programs that were ready and all large commercial payers.

“That 80% of our claim volume is going to large payers,” Griffin noted. “That’s about 1,100 of our 2,700 payers. The other 1,600 payers have been approved to use Form 5010 and Gateway EDI is in the process of scheduling production dates to get them switched over.”

Form 5010 Claims Unpaid

Like the team at XIFIN, Gateway EDI recognizes that some payers have yet to bring up their systems to accommodate Form 5010 claim submissions. “A certain percentage of payers are still testing,” she added. “We are waiting for approximately 70 more payers to make plans with us to begin accepting claims submitted on 5010 forms.”

To stay ahead of these developments and protect cash flow, clinical labs and pathology groups are advised to take three specific steps. “Step one is to be sure that you have the resources and expertise in-house to review payment files adequately,” advised White. “The goal here is to have knowledgeable people in your billing department who can speedily and accurately recognize the issues that surface, then work effectively with the payers involved to address those problems.

“Step two is to have surveillance tools and processes in place to quickly identify issues,” she continued. “Your lab’s billing team should have a defined process that allows them to spot problems, then develop an action plan to address those specific issues with the individual payers.

“Step three involves the relationship your lab has with individual payers,” she stated. “It is essential to have the proper contacts and influence within each payer so your billing team can quickly resolve issues and restore timely payments flowing back to your laboratory.

Inundated With Questions

White summarized the situation with an observation and a recommendation. “Unfortunately, many payers are inundated with questions,” she said. “Their call centers are overburdened and their service teams are unable to answer calls.

“At the moment, the transition to Form 2010 is overwhelming payers with a flood of issues that surface as tens of thousands of providers submit claims,” White explained. “Thus, the single most important thing labs can do is to carefully scrutinize all payments as they come in—and throughout the transition period—to make sure they are being paid accurately and appropriately within their contracted guidelines.

“Remember, this time period is not ‘business as usual’ for any payer,” concluded White. “Therefore, the laboratory should be prepared to act promptly as it receives claims, identifies problems, and, prepares to resubmit claims. Prompt attention and action in this regard will help the lab avoid significant interruption in payment remittals by payers.”

Biggest Payers Ready For Form 5010 Claims

MOST OF THE NATION’S largest payers have completed the transition to HIPAA Form 5010. “They are paying claims in a timely fashion,” said Lâle White, Executive Chairman and CEO of XIFIN, Inc.

“For example, large payers, such as Aetna, Cigna, Humana, Health Partners, and most of the Blue Cross/Blue Shield plans are ready,” she said. “Availity, which handles Florida Medicaid, and some of the clearinghouses, such as Capario and Emdeon, are ready.

“All of the Medicare administrative carriers (MAC) are live and in production,” explained White. “However, at some MACs, there remain a number of outstanding issues that are still being resolved, even though they are converted to 5010.

“On the opposite end of the spectrum, Kansas and Missouri Blue Cross are still in testing mode and are not ready to go live,” she noted. “GHI, the same. HMSA in Hawaii is live for 5010 production but is still in testing mode for supplementary files. This means denials for providers who deal with Hawaiian payers. There are hopes that HMSA will be fully up to speed with 5010 in February.”

Across the nation, it is a different story with state Medicaid programs. “A number of Medicaid payers are not ready yet,” observed White. “New York Medicaid is one of them. In California, MediCal will not even begin testing its system for 5010 claims until the summer.”

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