New rule effective July 1: CMS targets claims that aren't HIPAA compliant; Penalty is longer waits for payment.(News)

WASHINGTON -- Not quite compliant with Medicare's new standards for electronic claims? Prepare to wait longer to get your claims paid.

To encourage more providers to become compliant with electronic transaction rules required under HIPAA (the Health Insurance Portability and Accountability Act of 1996), the Centers for Medicare and Medicaid Services is instituting a new rule on July 1: electronic claims that are not HIPAA compliant will be paid within 27 days--the same amount of time as for a paper claim--compared with about 13 days for compliant electronic claims.

This rule has generated some controversy, Gary Kavanagh, director of the Business Standards and Systems Operations Group at CMS, said at a meeting of the Practicing Physicians Advisory Council (PPAC). "We have heard from some physician groups that we're unfairly burdening providers with this change, but the facts are that providers are a covered entity under HIPAA."

Although some providers are still not compliant, the switch to standardized electronic claims is going well overall, Mr. Kavanagh said. "Eighty-three percent of all incoming [Medicare] claims are in compliance with HIPAA," he said. "We haven't experienced the 'train wreck' [that people feared], but we've got to keep moving forward to reach true HIPAA compliance."

CMS is not having quite as much success with the electronic remittance portion of the law, "but we are making progress," he said, noting that about 75,000 entities are letting Medicare pay them electronically.

"Providers are a little reticent to adopt electronic remittances because of concerns about accuracy," he said. However, providers also are concentrating a lot of energy on making their claims compliant, so as they get more comfortable with the claims standard the number of electronic remittances will probably go up, Mr. Kavanagh said. Another part of the HIPAA law, the new National Provider Identifier system, is also progressing well, and physicians should be able to start applying for their numbers next spring, according to Patricia Peyton, health insurance specialist in CMS' Office of HIPAA Standards.