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News Release New Jersey Department of
Banking and Insurance
Commissioner Holly C. Bakke
For Immediate Release:  October 16, 2003 For Further Information::  Ellen Lovejoy - (609) 292-5064


TRENTON - Banking and Insurance Commissioner Holly C. Bakke today urged all doctors, dentists, hospitals and other medical providers to comply with today's deadline to meet federal standards for electronically filed health care claims.

"We want to ensure the timely payment to medical providers, assuring continued access to care for patients," Commissioner Bakke said.

Today's reminder of the deadline is the most recent step in the Department's ongoing effort to ensure compliance with the Health Insurance Portability and Accountability Act (HIPAA), which was enacted in 1996.

The Department recently implemented a contingency plan after early tests showed that strict enforcement of today's deadline would have halted payment of billions of dollars in claims to doctors, dentists, hospitals, and other providers. But Commissioner Bakke today reiterated that the contingency period will be brief.

"None of us wants thousands of providers unpaid for the services they deliver," said Commissioner Bakke said. "Don't be complacent. Be compliant."

The federal law 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 meet the uniformity standards of HIPAA.

Switching to electronic claims promises to save the health care system in New Jersey $780 million, according to a study by Thomas Edison State College.

Despite continued efforts by the Department, the federal government, the New Jersey Hospital Association, and the New Jersey Association of Health Plans to remind doctors, dentists and other providers of the deadline, recent studies and test pilots showed that an alarmingly high number of claims would not be paid if the deadline were strictly enforced today.

Horizon Blue Cross Blue Shield of New Jersey has done significant data analysis of physician HIPAA readiness based upon claims data currently being submitted through WebMD. Analysis utilizing four months of physician data, with approximately 4 million claims from New Jersey, has shown that 0% of claims being submitted during a May through August timeframe to Horizon Blue Cross and Blue Shield were considered compliant.

One study by the clearinghouse WebMD of $24 million in claims nationwide found that not one met the strictest HIPAA requirements.

"It would be a major burden to providers and patients to stop the flow of billions of dollars worth of claims," Commissioner Bakke said. "It certainly is in the best interest of the medical community to comply."

The federal Centers for Medicaid and Medicare Services in the U.S. Department of Human Services has told insurance carriers that they can temporarily continue to process claims that are not 100% HIPAA compliant. And the Department recently reminded carriers that they are not exempt from state prompt-pay laws.

Some major carriers have expressed their willingness to process as many claims as possible if they contain only minor HIPAA violations. In its enforcement of prompt pay laws during this contingency period, the Department intends to be reasonable in monitoring carriers' actions and focus its reviews on payment patterns.

But Commissioner Bakke again stressed that the contingency period is expected to be short.

"Very soon, I expect both the federal and state contingency plans to end and total compliance will be mandatory," Commissioner Bakke said.

"While the length of this contingency period is not yet known, it is clear that it will not last very long," Bakke said.

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 transaction code standards will be required in the near future, according to CMS and a bulletin issued by the Department on August 19.

"The Medical Society of New Jersey recognizes the efficiencies and cost savings inherent in the HIPAA Electronic Transactions and Code Sets. At the same time, we understand the difficulty in achieving compliance with these new standards in a complex medical practice environment," Mark T. Olesnicky, MD, President of the Medical Society of New Jersey, said yesterday. "MSNJ is encouraging its physician members to test the processing of claims with insurance companies in a HIPAA-compliant format as soon as possible."

Joseph A. Carr, Chief Information Officer for the New Jersey Hospital Association said, "We are very proud of the effort our hospitals put into testing in preparation for the new HIPAA transaction formats. This effort is clearly evident, with more than 50 percent of New Jersey hospitals submitting compliant HIPAA claims to Medicare several weeks before the deadline."

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 William O'Byrne, manager of the Department's enforcement unit. O'Byrne serves 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.

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