COMMISSIONER ANNOUNCES CONTINGENCY PLAN FOR HEALTH CARE CLAIMS
Action aimed at ensuring prompt payment

TRENTON - The Department of Banking and Insurance today issued a bulletin alerting the health care industry of a contingency plan for the October 16 federal deadline to file all medical claims electronically.

The bulletin is the most recent step in the Department's ongoing effort to ensure prompt payment of claims to hospitals and physicians, who face deadlines to comply with the Health Insurance Portability and Accountability Act (HIPAA).

The act set an October 16, 2003 deadline by which all Medicare and Medicaid claims must be filed electronically, and all other claims that are filed electronically must be in compliance with HIPAA uniformity standards.

HIPAA, which was enacted in 1996 to ensure uniformity and reduce costs in claims handling, promises to save the health care system in New Jersey $780 million, according to a study by Thomas Edison State College.

"New Jersey will continue to stand up for our doctors, hospitals and other providers to make sure they get paid in a timely manner,'' Insurance Division Director Don Bryan said.

The Centers for Medicare and Medicaid Services (CMS) in Washington, D.C., recently announced that it was implementing a contingency plan to accept non-compliant electronic transactions after the October 16 deadline.

The practical effect of this announcement is that Medicare claims will continue to be paid, notwithstanding some deviation from the HIPAA transaction and code set (TCS) standards. This is consistent with another bulletin issued on August 19 by the Department, which emphasized the need to adhere to New Jersey laws governing the prompt payment of medical and dental claims.

"Considerable time and resources have been spent in this effort and the projected savings for all parties will be significant and fully justifies this effort. The contingency plan will come to an end, at which time the use of HIPAA-compliant claims will then become mandatory. While the length of this grace period is not yet known, it is clear that it will not last very long," according to the bulletin.

Commissioner Holly C. Bakke, who has made HIPAA a top priority, has urged all parties to continue to strive for full compliance. The announcements do not constitute an extension of the October 16 deadline, but establish a contingency plan which will permit the continuation of the payment of medical claims while payers and providers move forward with their plans for the full deployment and implementation of the HIPAA TCS standards.

All providers, payers and their trading partners are reminded that they must have an established plan for the use of HIPAA compliance standards; test the standards and be prepared to demonstrate all compliance training, testing and out-reach efforts with trading partners; and recognize that full complete and total compliance with the HIPAA TCS standards will be required in the near future.

Commissioner Bakke previously stressed that, in bringing claims in compliance with HIPAA, insurance companies and other payers are not exempt from New Jersey's prompt pay laws, which require that electronically submitted clean claims be paid within 30 days of receipt and paper claims be paid within 40 days.

"Notwithstanding the federal rules, the Department expects compliance with New Jersey's clean claim and prompt pay laws," Commissioner Bakke has said.

Despite continued efforts by the Department, the federal government, the New Jersey Hospital Association and the New Jersey Medical Society to remind doctors, dentists and other providers of the deadline, recent studies and test pilots showed an alarmingly high number of claims would be rejected and unpaid if the deadline were today because the claims were not HIPAA-compliant, according to William O'Byrne, manager of the Department's enforcement unit.

New Jersey has emerged as a leader in the efforts to become HIPAA-complaint, and the consensus guides on the Department's Web site have helped direct insurance departments throughout the country, noted O'Byrne, who has been asked to serve on several nationwide panels and committees on the subject.

O'Byrne attributed the success of the consensus guides to the fact that they were developed by a wide range of professionals - from all aspects of the industry - who comprised an implementation task force formed by the Department.