November 2003 AAOS Report

AAOS advises: 'Comply with the TCS as soon as possible'

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) Transactions and Code Sets (TCS) regulations establish standards for the electronic transmission of certain types of information including health insurance claims. Doctors were told to begin complying with the regulations on Oct. 16, 2003. On that day, all but the smallest practices were required to start submitting their Medicare claims electronically.

Many physicians, however, have been experiencing difficulty in achieving compliance with the regulations. Therefore, on Sept. 23, the Centers for Medicare and Medicaid Services (CMS) announced a contingency plan whereby the agency would continue to accept and process "legacy claims" (including electronic claims in the current HCFA/CMS-1500 format) after Oct. 16 for an unspecified period. Soon thereafter, Blue Cross and Blue Shield Association deployed a similar plan for its 46 member companies.

Thus, the serious cash flow problems envisioned by AAOS and other medical groups may not occur in most physicians' offices, at least in the short term. Some disruptions, however, will likely occur in certain locations and in connection with certain payers. Moreover, all payers will ultimately stop paying legacy claims at some future date.

Consequently, it is in AAOS members' best interests to comply with the TCS as soon as possible. It is also a good idea for anyone who might experience disruptions that could threaten their practice to obtain a line of credit to cover short-term operational expenses. Information on achieving TCS compliance is available on the Practice Management Center's Compliance section of the AAOS Web site.

Members should bear in mind that the CMS contingency plan does not alter the requirement imposed by the Administrative Simplification Compliance Act, which states that practices with more than 10 staff members had to start submitting claims electronically as of Oct.16. CMS representatives have, however, unofficially said that they will not enforce this requirement immediately. The agency will conduct audits of practices at some future date. If CMS concludes that a practice should be submitting claims electronically but isn't, then payment for claims may be denied prospectively, and fines and penalties may be levied.

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