I am Carl Cunningham, Director of the Practice Management Center for the American College of Physicians (ACP), the nation’s largest medical specialty society, representing over 115,000 physicians and medical students. The Practice Management Center (PMC) is responsible for providing guidance and assistance to College members on the management of their practices. For over two years we have been deeply involved in providing physicians with support on all aspects of HIPAA, including the Transactions and Code Sets (TCS) Rule. We are therefore pleased to provide testimony to the National Committee on Vital and Health Statistics (NCVHS) regarding contingency planning options presented in a letter dated April 15, 2003, by Ed Jones, Chairman of the Workgroup for Electronic Data Interchange (WEDI).
a) Permit compliant covered entities temporarily to accept standard transactions even if data content is partially incomplete.
b) Allow a short transitional period in which covered entities may accept non-standard electronic transactions from trading partners that are still striving to achieve compliance with HIPAA TCS standards.
Based on available, mostly anecdotal information (see Appendix), it appears that many physician office practices have taken preliminary steps toward TCS implementation, but they have yet to launch the important follow-through measures required to achieve full compliance. With the Privacy Rule deadline now behind them, they are better positioned to focus on TCS implementation; however, there is little they can do until their trading partners are ready to begin testing. Experience so far has demonstrated that some partners clearly are not ready.
If practices are going to meet the TCS implementation deadline, we must all work together to educate them about the technical requirements and prod them into early action. Any inability of partners to begin testing will only reinforce the natural inclination of many practices to put off implementation until immediately prior to the deadline – an inclination observed with both Y2K and Privacy Rule implementation. Such wide spread delays will cause a severe testing logjam as the deadline approaches, thus making timely compliance virtually impossible.
If claim payments were then to be automatically cut off for those practices failing to meet the deadline, the consequences could be disastrous. Lacking financial reserves, private practices cannot absorb serious cash flow disruptions without quickly slipping into insolvency due to their recurring payroll and other expense obligations. Furthermore, if a practice waits too long to discover that its current practice management system (PMS) software cannot be made HIPAA compliant, it will need several weeks to replace its software system.
Fixing the blame for such payment cutoffs on the practice’s own procrastination would be easy but both unfair and irresponsible. Not only is this penalty vastly out of proportion to the practice’s transgression, but it may result from a PMS vendor or health plan’s inability to begin timely testing. Yet the price will be paid almost entirely by the practice. And there are potentially severe systemic consequences that cannot be ignored. According to WEDI, these include substantial rejections of non-standard electronic transactions, disruption of payment flows to providers, reversion to paper transactions by those covered entities incapable of generating standard format transactions, and resulting inability of payers to handle the increased volume of paper claims – all of which potentially could produce the so-called “train wreck”. Moreover, the harm thus inflected will result, not from uncontrollable natural causes, but from conscious federal government decisions over which the Department of Health and Human Services (HHS) exercises discretionary control.:p>
Understanding the current state of TCS implementation among medical practices requires understanding the setting in which most them operate. Roughly 70% of ACP’s practicing physicians work in private practices of less than twenty physicians; about one-third are in solo and two physician practices. The smaller the practice, the more it tends to resemble a mom and pop business, such as a family owned dry cleaners, restaurant, or convenience store. Small practices do not accumulate retained earnings nor other financial reserves.
They do not employ internal lawyers, systems managers, accountants, MBAs or other professional staff to plan and organize their administrative functions. Most are run by office managers who rose through the ranks and may lack college degrees. Since all other practice personnel are fully dedicated to processing patients, the office manager daily struggles to keep patient flow moving smoothly, put out operational fires, and perform essential business activities.
Skyrocketing malpractice insurance premiums and declining Medicare reimbursement have intensified the economic pressures, thus forcing cuts in practice expenses and increased patient workloads for physicians. The practice survives by minimizing all possible distractions from normal operations.
Into the physician practice setting dropped the complex and intrusive HIPAA Privacy Rule. ACP’s attempts to explain the Rule produced a 140-page manual. Physicians initially reacted with sputtering rage, followed by a period of denial. Eventually, however, the Rule was modified; physicians gradually recognized that patient privacy is familiar territory for them and that they had no choice but to comply; so they got on with the task of meeting the April 14 implementation deadline.
Reaction to the Transactions Rule has been quite different -- an almost eerie calm. Why? Physicians do not pretend to know much about computer technology; so they instead rely heavily on outside practice management system (PMS) vendors. Naturally they assume that their vendors will supply whatever software updates may be needed to meet the new TCS requirements. If a practice bothers to ask about the requirements, their local vendor is likely to respond with the usual salesman’s bland reassurance: “You’ll be OK”. The practice is unlikely to understand the need to ask more specific questions or to undertake the internal follow-up steps required to reach compliance by October 16, 2003. Meanwhile, the vendor in whom the practice is entrusting its future is not a covered entity that is legally required to meet the TCS implementation deadline.
Realizing our physicians’ vulnerability and their necessary preoccupation with Privacy Rule implementation, over the past year ACP’s Practice Management Center constantly has endeavored to raise their awareness of the Transactions Rule requirements. We were therefore distressed to hear recent analyst reports suggesting that physician practices have yet to begin actively implementing the Transactions Rule. With limited internal resources, little understanding of the technical task, trading partners that may not all be ready, and only five months remaining, we think the risk that some practices will miss the TCS implementation deadline is substantial.
ACP strongly agrees with WEDI’s assessment that the TCS Rule deadline poses potentially serious and unintended adverse consequences. We also agree that HHS should take immediate action to ameliorate these potential consequences and that both courses of action recommended by WEDI are appropriate and should be adopted, i.e.:
We also ask that both courses be adopted to assure that the corrective measures address the problems of all practices, not just those in a particular category.
In supporting the WEDI recommendations we would like to clarify two points:
We also propose two modifications of WEDI’s recommendations to enhance their effectiveness in achieving the stated goals:
Instead, payment of non-standard electronic claims should be allowed to continue beyond 10/16/03, provided that the provider is making acceptable progress and meeting the terms of its correction plan. This approach would enable HHS to confine the payment cutoffs to those practices that willfully refuse to implement TCS, rather than indiscriminately slam the payment door on everyone who misses the deadline. Controlled payment cutoffs will also modulate the systemic impact on the healthcare industry and thus help prevent the potential “train wreck” WEDI has outlined.
Clearly the Secretary of HHS has authority to pursue a flexible approach in implementing the TCS Rule. By exercising that authority he can prevent the unintended, adverse consequences of a sudden and arbitrary cutoff of payments to providers. HHS implementation procedures for HIPAA have thus far been reasonable, fair, and flexible. We therefore have every confidence, and urge, that similar flexibility be exercised in managing the issue of Medicare and health plan claims payment following the TCS implementation deadline. Thank you.
Carl Cunningham
Director, Practice Management Center
American College of Physicians
(Text accompanying Power Point slide presentation)
Understandably concerned about recent reports that physician practices might not be taking steps to prepare for the Transactions Rule implementation but perplexed by the lack of hard data to support these suppositions, I decided to take the pulse of some physicians attending ACP's annual meeting, held in San Diego during the first week of April 2003. The very limited and informal straw poll we conducted was by no means a scientific survey. Nor would I make any claim for the numerical predictability of the results. Most of the questionnaires were distributed at only two workshops. One course gave instruction about HIPAA; the other did not. The sample size (92 responses) probably was inadequate. Bias could be reflected in the particular group of physicians polled and in those who then self-selected to respond (<50%). Nor was any attempt made to determine the respondents'; knowledge of practice operations.
Despite these limitations, I have been asked to present to you the results of our crude poll -- primarily because it represents one of the few actual samplings taken on this important topic. Hopefully, the results may at least narrow the range of our concerns and help focus efforts to prepare for contingencies following October 16.
The questionnaire used in our poll is included as Attachment A. Attachment B provides a set of slides describing the straw poll. The results are repeated in the following summary table:
| HIPAA Transactions Survey, Annual Session 2003 | |||||||
| Total # | Required to | Discussed | Verified | Software | Test by | Content | |
| Surveys | comply (CE's) | w/ vendor | 837 | updated | 4/16/03 | elements | |
| HIPAA Course | 46 | 89% | 80% | 62% | 64% | 55% | 40% |
| Finance Course | 34 | 91% | 78% | 62% | 66% | 72% | 50% |
| Booth | 12 | 67% | 100% | 100% | 75% | 88% | 63% |
| Overall | 92 | 87% | 87% | 71% | 71% | 70% | 49% |
| *Note: Response percentages for questions 2-6 exclude non-CE's | |||||||
Only subjective conclusions can be drawn from these data and doing so obviously entails substantial interpretation. Nevertheless, some broad observations seem reasonable. Responses to the first three questions suggest at least that physicians are aware of their need to comply with the Transactions Rule and have already determined whether they are covered entities. A substantial percentage of them also have made contact with their PMS vendors and expect to be capable of submitting compliant 837 claims by the October deadline. While these conclusions seem reasonable and consistent with available anecdotal information, the data we received on completed software updates seems inflated – PMS vendors undoubtedly are installing software updates, but we doubt they have already completed the task for well over a majority of the practices.
Even less convincing are the very positive responses to our remaining two questions. Some of this data – indicating that high levels of testing would take place prior to 4/16/03 and that nearly half the practices already had identified the new content elements -- is counter-intuitive and seemingly inconsistent. For example, more Finance course respondents said they are testing than said they have installed the software updates needed to conduct such tests. Likewise, testing and new content identification appears significantly lower for those who attended the HIPAA course, where TCS was explained, than for the other two groups, where no explanation was given. This inverse relationship between knowledge and implementation probably suggests that many respondents who received no HIPAA instruction simply did not understand the last two questions very well.
The positive results regarding internal implementation tend to contradict other available, anecdotal, information indicating that few practices have begun to test, identify the required new content elements, or train their staff to implement TCS. Since most physicians are not intimately involved in the details of operational implementation, our respondents may have assumed that more follow-up implementation was taking place internally than is actually the case. This theory is consistent with the results of a “show of hands” at a recent HIPAA workshop held in up-state New York. With mostly staff employees attending, the audience confirmed that a very high percentage of practices had contacted their PMS vendors but that very few of them had begun testing or initiated the “content” identification steps needed to prepare for TCS implementation.
To help round out the picture, the final Power Point slide presents the results of a member survey conducted in March, 2003, by the Professional Association of Health Care Office Management (PAHCOM), whose membership is composed mostly of medical office managers in small practices. PAHCOM polled its 3233 members about a variety of topics, including HIPAA TCS claims testing. With 1258 (38%) of them responding, 18% said they already had completed TCS testing and 43% had scheduled such testing. The remainder either did not understand the question, thought it didn’t apply, or simply did not respond to it. It is unknown how many of the scheduled tests subsequently were successfully completed. Because professional organization membership is uncommon among office managers, the PAHCOM practices presumably are, on average, more sophisticated administratively than other comparably sized practice. We therefore would expect testing levels for all practices to be lower than those for the PAHCOM practices.
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Dear Physician,
The Health Insurance Portability and Accountability Act (HIPAA) Transactions rule requires that all electronic claims comply with new HIPAA standards, effective 10/16/03. To help determine the progress physician practices are making toward meeting that deadline, we would greatly appreciate you taking a moment to answer the following brief questions. Thank you for your assistance.
YES_______________ NO______________ Don't Know_______________
(If no, please skip the remaining 5 questions)
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YES_____________ NO________________
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