Old Fashioned Computer
Photo courtesy: IMLS Digital Collections & Content
Old Fashioned Computer
Photo courtesy: IMLS Digital Collections & Content

Updated on March 2 with new information.

By Rose Hoban

Changes in processing billing claims required by the federal government at the start of this year have caused cash-flow problems for some doctors around North Carolina.

“We realized we weren’t getting payments,” said Beth Goldstein, a dermatologist who’s part of a large practice in Chapel Hill. “We’re a small business and if you can’t process any of your payments, you can’t meet payroll, or pay your bills.”

How doctors get paid

Few doctors actually bill an insurer directly for all their patients who get care. Insurance companies and government payers all have different billing requirements, which makes it hard for small offices to keep up. So many doctors’ offices use billing clearinghouses, companies that do the billing for doctors.

The clearinghouses submit bills to insurers, and then pass the payments back to doctor’s offices.

Complicating this process is the fact that there are now hundreds, of software packages doctors use to manage their offices and that software needs to communicate with the software at the billing clearinghouses.

All this activity is regulated by standards set out by HIPAA, the 1996 law that protects patient privacy. In January 2009, CMS, the Centers for Medicare and Medicaid Services, finalized new privacy standards for electronic transmissions that the software for doctors’ offices, billing clearinghouses, and payers would have to meet. Those standards went into effect on Jan. 1 of this year.

Realizing that not all doctors were ready with these changes, some groups raised red flags about it ahead of time.

“We sent a letter in October to Health and Human Services in October warning that things weren’t looking good,” said Bob Tenant, senior policy advisor at the DC-based Medical Group Management Association. MGMA represents about 280,000 doctors practicing in medical groups nationwide.

“The bigger companies were ready,” Tenant said. “But even ones that were ready are having problems.”

“CMS required contractors to be ready a year in advance and to run tests. But we’re hearing that practices tested successfully, and now that they’re sending live claims for payment, they’re having their payment requests denied.”

Tenant’s organization sent another letter this past week to DHHS Secretary Kathleen Sebelius recommending, among other things, that the implementation deadline for the new standards be pushed off by another six months to give everyone time to finish getting ready.

Lack of payments affect cash flow

Beth Goldstein said her practice has had problems getting approval for claims they’ve submitted, and it’s choked off their cash flow.

“We tested our software with our clearinghouse,” Goldstein said. “There were issues that were corrected and we got a green light.  They told us ‘your claims are going to go through.’”

But come January, that wasn’t the case. Goldstein’s office starting sending in bills about the second week of January. It took them about a week to realize all their requests were being denied.

“From best of what we could tell, our billing software company cleared us appropriately,” Goldstein said. “The software is OK.  The problem seems to be the clearinghouse.”

“It’s hard to identify what the problems are for individual medical practices,” said MGMA’s Tennant. “The clearinghouses are pointing the finger at payers like Medicare and Medicaid, the payers are pointing at the clearinghouses, the clearinghouses say the problem is with software. A lot of practices literally don’t know who to turn to and don’t know how or when their claims will get paid.”

“I think it’s pretty widespread,”Tennant said. “We’re not hearing it’s one clearinghouse or health plan, it’s multiple, and not one software system.”

“It’s an industry wide problem,” said Jackie Griffin, client services director with Gateway EDI, the company that handles Goldstein’s office. “We’re not the only ones.”

(Calls to CMS were returned, but a spokesperson deferred any further comment until this week – look for an update on this story).

Déjà vu all over again

When a previous iteration of these rules went into effect in 2003, “it took the industry about three months to get things back to normal after that change,” Griffin said. “And then the same thing happened after the federal government implemented (a new) national provider ID system in 2007. There was a period of about three months that we had to work through issues.”

Griffin said her company has had everyone working overtime since the beginning of the year and has pulled staff from other departments to answer calls, which have been backed up sometimes as much as seven hours.

“We have noticed the call times starting to dwindle,” Griffin said. “We’ve seen a slight reduction in phone calls, more billing acceptances coming through and the money flowing again.”

Griffin noted that the federal government won’t penalize anyone for not being in compliance with the new standards through the end of March.

Chapel Hill dermatologist Beth Goldstein says luckily she and her partners have a good relationship with their bank and were able to get a loan to tide them over until payments start flowing without trouble.

“We were able to meet payroll, but this has been stressful,” Goldstein said. “This is on top of trying to implement electronic medical records which is stressful in itself.”

“It could take as much as three months to get everyone running smoothly,” said Gateway’s Griffin.

And there’s more upheaval to come.

Griffin said doctors should expect similar problems in the future as more changes roll out in coming years.  In October 2013 a completely new set of billing codes will go into effect that will affect everyone in the health care industry. And more changes will come when heath reform goes into effect in 2014.

Note: In the last paragraph, the article originally stated billing codes would be changing in January, 2013. Actually, they will be changing in October 2013. Update March 2: The Department of Health and Human Services has said it will delay implementation of new billing codes past October 2013, due, in part, to the trouble clearinghouses, insurers and doctors’ groups had in implementing billing changes this winter.

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Rose Hoban is the founder and editor of NC Health News, as well as being the state government reporter. Hoban has been a registered nurse since 1992, but transitioned to journalism after earning degrees...