HIPAA Modification Rule

1. What was adopted under the HIPAA Modifications

• Rule Version 5010 of the X12 standards suite of administrative transactions
• Version D.0 of the NCPDP suite for retail pharmacy
• Version 3.0 of the NCPDP Suite for Medicaid pharmacy subrogation
• Version D.0 orVersion 5010 for retail pharmacy supplies and services, based on trading partner agreements

2. Why Version 5010?

Version 4010 is outdated:

• More than 5 years since initial implementation, but 8 years since balloting of the current version
• Many situational and required rules did not fit business practices of the industry
• Industry relied extensively on companion guides, limiting value of standards
• Many transactions were not implemented at all because of limited utility and value

Version 5010 is an improvement because it…

• Includes structural and content oriented changes
• Incorporates more than 500 change requests
• Resolves ambiguities in situational rules
• Provides more consistency across transactions –most rules are the same throughout the suite
• Shortcomings have been addressed to increase value of transactions such as referrals and authorizations.

3. Why Version D.0?

Version 5.1 is outdated:

• More than 5 years since initial implementation, but 8 years since balloting of the current version

Version D.0 is an improvement because it:

• Incorporates change requests submitted by the industry to accommodate changing business needs
• Incorporates changes necessitated by the requirements of the Medicare Prescription Drug Improvement and Modernization Act (MMA)

4. Policy features of HIPAA modifications rule

• Compliance date for 5010 and D.0
• Mandatory compliance on January 1, 2012 –all covered entities
• Internal Testing to begin on or after January 1, 2010
• External testing to begin on or after January 1, 2011

• No entity may require another entity to use the new version of the standard without agreement between the two parties for testing and implementation

• Ability to use X12 or NCPDP for retail pharmacy supplies and services
• Supports existing industry practice
• Requires agreement between trading partners

• Compliance date for Version 3.0
• Mandatory compliance on January 1, 2012 –all covered entities except small health plans
• Small health plans have until January 1, 2013

5. Benefits of Conversion: 5010/D.0/3.0

• Less ambiguity in the TR3 (guides)
• Enhanced usability and usefulness of certain transactions such as referrals and authorizations (X12 and NCPDP)
• Improved utility of the NCPDP standards, compliance with Part D requirements
• Reduces reliance on companion guides
• Supports increased use of EDI between covered entities
• Supports E-Health initiatives now and in the future
• Version 3.0 provides standard method of recouping State Medicaid funds paid inappropriately

6. Who is Affected?

All HIPAA Covered Entities

• –Providers
• –Health Plans
• –Clearinghouses

Business Associates of Covered Entities that use the affected transactions

• Billing/Service Agents

7. What must be changed?

•The formats currently used must be upgraded from X12 Version 4010A1 to 5010 and from NCPDP 5.1 to D.0

•Systems that submit claims, receive remittances, exchange claim status or eligibility inquiry and responses must be analyzed to identify software and business process changes

•The new versions have different data element requirements

•Software must be modified to produce and exchange the new formats

•Business processes may need to be changed to capture additional data elements now required

•Transition to the new formats must be coordinated:

• –continue to use the current formats for some Trading Partners’ exchange
• –start to use the new formats with other Trading Partners

8. HIPAA 5010 Scope

•New ASC X12 standard acknowledgement and rejection transactions

• –The Functional Acknowledgement 997 is being replaced by the 999 transaction
• –The Claims Acknowledgement (277-CA) will be used to replace proprietary error reporting

9. Enhancements included with 5010

•Enhancements are focused on functional areas requiring 5010 changes and are limited to:

• –Improving claims receipt, control, and balancingprocedures
• –Increasing consistency of claims editingand error handling

• Provides common edit definitions to be used by all systems and jurisdictions

• –Returning claims needing correction earlierin the process
• Adds edits for common mistakes to the front end MAC systems, rather than waiting to do these edits in the adjudication systems

• –Assigning claim numberscloser to the time of receipt
• The front end systems will assign the base claim number (in the format expected by the adjudication system), and have the adjudication system add any suffix necessary for split or adjustment claims

10. HIPAA 5010 Scope vs. ICD-10 Scope

The HIPAA 5010 project is a pre-requisite for the ICD-10 project

•What 5010 DOES do:

• –Increases the field size for ICD codes from 5 bytes to 7 bytes
• –Adds a one-digit version indicator to the ICD code to indicate version 9 vs.10
• –Increases the number of diagnosis codes allowed on a claim
• –Includes some of the other data modifications in the standards adopted by Medicare FFS

•What 5010 DOES NOT do:

• –Does not add processing needed to use ICD-10 codes
• –Does not add a crosswalk of ICD-9 to ICD-10 codes
• –Does not require the use of ICD-10 codes

The 5010 format allows ICD-9 and/or ICD-10 CM & PCS code set values in the transaction standard.

The business rules for using ICD-10 code set values will be defined with the ICD-10 project.

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