Medicare extends HIPAA’s Oct. 16 deadline

Sunday, September 28, 2003

September 29, 2003

WASHINGTON - CMS will implement a contingency plan to accept noncompliant electronic HIPAA transactions after the Oct. 16, 2003 compliance deadline. This plan will ensure continued processing of claims from thousands of providers who will not be able to meet the deadline and otherwise would have had their Medicare claims rejected.

"Implementing this contingency plan moves us toward the dual goals ofachieving HIPAA compliance while not disrupting providers' cash flowand operations, so that beneficiaries can continue to get the healthcare services they need," said CMS Administrator Tom Scully.CMS made the decision to implement its contingency plan after reviewingstatistics showing unacceptably low numbers of compliant claims beingsubmitted.
"Medicare is able to process HIPAA-compliant transactions," saidTom Grissom, director of CMS' Center for Medicare Management, "butwe need to work with our trading partners to increase the percentage ofclaims in production."
The contingency plan permits CMS to continue to accept and processclaims in the electronic formats now in use, giving providers additionaltime to complete the testing process. CMS will regularly reassess thereadiness of its trading partners to determine how long the contingencyplan will remain in effect.
The authority to implement a contingency plan was provided by guidanceissued by HHS on July 24. CMS recognized that transactions oftenrequire the participation of two covered entities and thatnon-compliance by one covered entity may put the second covered entityin a difficult position. The guidance stated that covered entities thatmake a good faith effort to comply with HIPAA transactions and code setstandards may implement contingencies to maintain operations and cashflow.
CMS announced its contingency plan on September 11, but at that timehad not made a decision on whether the plan would be implemented.Today's announcement means the CMS plan will be implemented on October16, 2003.
"We encourage other plans to assess the readiness of their tradingpartners and implement contingency plans if appropriate," Grissomsaid.