The U.S. Department of Health and Human Services (HHS) has mandated that the standard for electronic healthcare transactions be updated from ANSI X12 Version 4010/4010A1 to ANSI X12 Version 5010 for HIPAA-covered electronic healthcare transactions.

The compliance date for HIPAA-covered entities to send all electronic healthcare transactions in the 5010 format is January 1, 2012. The Centers for Medicare & Medicaid Services (CMS) announced on November 17, 2011, an updated enforcement date of March 31, 2012. Providers should have been prepared to move forward with the January 1, 2012, compliance deadline and the same is true for payors and vendors. The following overview offers insight into steps health systems and hospitals can take to minimize re-work and impact to cash flow during their transition to 5010. Below is a description of some of the potential impacted areas and suggested steps providers can take to address them.

With the adoption of the 5010 guidelines, covered entity healthcare organizations should be prepared for payers to reject claims and potentially deny line items that may not be expected. Providers need to focus on working with 5010 payors to review rejections, return to provider (RTP) files, and denials. In addition, they should work with their claims system technology vendors to help build payer-specific edits as needed. Providers should closely monitor all 5010 communications from their vendors for edit modifications, or other system changes, implemented during this dynamic time.

Causes and Types of 5010-Related Payor Rejections

With ever-increasing margin restrictions, providers should be as prepared as possible for the potential of various 5010-related payor rejections affecting cash flow. There are various causes and types of possible 5010-related payor rejections that providers could encounter.

Payors have been interpreting 5010 guidelines in a variety of ways. In many instances, payors have rejected claims for reasons not identified during 5010 testing because of their specific interpretations of the 5010 Technical Report Type 3 (TR3) guide. Monitoring rejections and continuously working with payor mix is critical to providers in understanding and adapting to the differences in the payors’ specific interpretations.

Due to the late introduction of the 5010 errata changes in October 2010, covered entities had to go back and modify their systems to accommodate the 5010 errata versions. Many payors did not start testing on the errata versions until early summer 2011. In general, payors focused their testing efforts on 837 claim files only and provided minimal, if any, testing for electronic remittance advices (ERAs), eligibility, or claim status transactions. As a result, providers may experience rejections at the claim level or batch level because production adjudication yields results that testing could not identify.

Production claims provide visibility into second-level 5010 requirements, which may not clearly define the codes or the situations applicable. Second-level 5010 requirements are not made public via published payor companion guides. Edit application may vary in severity and location based on payor adjudication. The rules severity may be defined by the adjudication responses by payor.

Reasons for Rejections

Implementation of the new 5010 transaction set involves a change in requirements related to information on claims. Here are seven changes that must be made to avoid 5010-related payor rejections.

Billing provider address. The billing provider address may no longer contain a lockbox or a post office box address. Instead, the billing provider address must be a physical street address that is associated with the provider’s national provider identifier.

Nine-digit zip code.The new 5010 transaction set requires a nine-digit zip code for both the service facility and billing provider location only when the addresses are in the United States or Canada. It is important to note that the zip code must be a valid zip code and not simply meet the length requirements.

Type of admission. Previously required only for inpatient visits to indicate the source of admission for the patient, the type of admission is now required on all institutional claims. The definition of these required data has changed to represent priority (type) of admission or visit.

Provider assignment codes.Formerly, this code was a situational requirement used primarily for Medicare claims. The completion of this field is now a requirement for all payors.

Accommodation rates. The accommodation rates sent in the SVD206 field have been eliminated.

Signature source. Previously used to indicate how and what type of signatures are on file for a patient, this field is now required when a signature has been provided on a patient’s behalf.

Insurance type code. The requirement for this information has changed from being required to being required when the payor identified as being other payor information is Medicare and when Medicare is not the primary payor.

What Revenue Cycle Leaders Should Do

Providers will find a large variation in payor readiness and in payors’ translation of the rules. Providers need to understand their payors’ timelines and translation of their edits. Providers’ vendors should understand the 5010 guidelines, and the additional governing sources—National Uniform Billing Committee (NUBC) and CMS—for a complete 5010 claim definition. This will allow providers to work closely with their vendor to help the payors provide the proper guidance as it relates to their translation of 5010 and their schedule. This is a critical time for health care, and it is important for providers to find the right partner to help get past these complex, government-mandated changes.

Version 5010 replaces the X12 standard that covered entities must use when conducting electronic transactions. The compliance date was Jan. 1, 2012. Version 5010 is essential to the adoption of ICD-10 codes.

5010 Provider Readiness Checklist

• Identify changes to data to accommodate the 4010 to 5010 key changes
• Identify your portfolio of systems and vendors to understand the full impact of 5010
• Update workflow and business processes
• Identify staff training needs and build a training plan

Claim Transaction Readiness

• Import claim files for testing
• Review and adjust your claim file for optimal results
• Understand payor and vendor implementation timelines
• Plan resources accordingly
• Review payor-specific 5010 edits