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HIPAA 5010: Are You Ready?
Christine Tremblay

Despite recent guidance from Health and Human Services (HHS) to extend the HIPAA version 5010 deadline to March 31, 2012, we encourage all entities that are required to be 5010 compliant to continue to implement and test systems for 5010 compliance by the January 1, 2012, deadline. Industry experts agree problems may not be detected in testing and that, ultimately, those problems may not be fully transparent until the new versions are fully implemented across healthcare continuum “live” systems. Software testing, upgrades, and new system implementations will continue across the industry, with more health plans and vendors declaring their 5010 “readiness.” As with all technological changes of this size and scope, industry participants should be prepared for some bumps in the road to full compliance, which could affect practice operations, resources, and revenue.

The Medical Group Management Association (MGMA) recently urged HHS to implement a contingency plan based on a survey issued to providers that indicated only 4.5% of responding practices rated their 5010 implementation as fully complete, while 50% rated it as 26% to 99% complete, and 40% rated it as less than 25% complete.1 The MGMA recommended delaying the January 1 deadline so covered entities would have more time to fully comply with the new version.

Endeavors to reach full compliance with all transactions across all participants have taken considerable effort industrywide and have directly affected providers, health plans, and vendors. With a plethora of new compliance initiatives to assess and implement—including HIPAA 5010, meaningful use, care coordination programs, and ICD-10—providers have had to closely evaluate how well their software systems and vendor partners meet their current and future needs. Practices have been faced with upgrades to existing software or the implementation of new EHR, practice management, and billing systems. Vendors and health plans have been managing tight development and testing schedules that allow little room for error.

In response, the Centers for Medicare & Medicaid Services (CMS) issued guidance on November 17 that announced a delay in the enforcement of the new standard until March 31, 2012.2 The statement cites delays in software implementations and low volumes of transaction testing across some industry segments as reasons for the deferral, allowing covered entities an additional three-month window to complete the conversion process. The new 5010 version of the standards specifies more than 500 changes from the 4010A version across most electronic transactions, including eligibility, claim status, referrals, claims, and remittances. Ultimately, the CMS’ decision to delay enforcement should mitigate the risk of business disruption for entities that are not fully ready to implement on January 1.

Who is required to upgrade? 

Physician practices, hospitals, health plans, clearinghouses, pharmacies, and dentists are required to comply with HIPAA version 5010. Providers will continue to rely on software vendors to provide the solutions to achieve compliance for both 5010 and ICD-10.

What is changing?

The new HIPAA 5010 version strives to clarify the structure and content of transactions to remove ambiguity and speed the process of implementations. It supports National Provider Identifier regulation and creates the infrastructure to support ICD-10 mandates. New content will enhance the usability and usefulness of transactions, such as remittance advice, where a field has been added for health plans to reference patient-specific policy information on how a claim may have been processed. Data content that is no longer used has been removed from transactions.

Why is this deadline so important?

Transactions that are not in compliance with HIPAA 5010 will be rejected, resulting in failures, rejected claims, and physician practice cash flow interruptions.

What do industry participants need to do to prepare?

1. Assess the electronic workflows in your office. Determine how much of a change the switch to 5010 will have on your current business practices and systems.

2. Contact your vendors, health plans, billing services, and clearinghouse. Contact vendors for specific details regarding system upgrades. Ask them when they expect their upgrades to be completed. Ask your health plans when they’ll be able to accept 5010 transactions.

3. Install vendor upgrades or replacement software. Schedule the implementations with your vendor and ensure that the installation of upgrades is complete.

4. Conduct internal testing and staff training. Once implementations are completed, conduct internal testing of your systems to ensure you can send and receive 5010 transactions. Allow enough time to resolve problems and train staff on the new system.

5. Conduct external testing with your clearinghouse, billing service, and health plans. Contact your vendors to conduct testing with them to ensure you can send and receive transactions properly.

6. Make the switch to 5010. After completing external testing, you may switch to using only 5010 transactions.

The American Medical Association (AMA) provided a preparatory fact sheet on implementing HIPAA 5010 in time for the January 1 deadline.3 The guidance from the AMA assumes that existing systems can be upgraded for the 5010 changes, but many older systems cannot be made compliant, forcing providers to replace their software solutions. Many clearinghouse vendors are offering “bridge solutions” to providers that have not yet implemented a 5010-compliant solution for submitting claims. This is a valid option to consider. It allows a practice to continue to use the software that produces a noncompliant version of the claim and have those claims “upgraded” to 5010 for compliance purposes.

Should your office have a contingency plan?

Nearly 30% of the practices that answered the MGMA survey expect a loss of productivity during or after the 5010 implementation. If electronic transaction processing fails, practices can face administrative problems ranging from checking patient coverage and determining patient financial responsibility to claims submission and payment posting. Physician practices can take steps to mitigate the risks. Analyze the workflows in your office that could be affected by interruptions in electronic transactions. Some examples are listed below:

Eligibility: Do you use an automated eligibility process within your practice management software? Do you have an alternate method to check patient eligibility? This may require some research and additional staff training to implement.

Claims: Do you have a solid process in place to deal with rejected claims? HIPAA 5010 implementations may cause more claims to be rejected for invalid information and will have an impact on cash flow. Planning for additional resources to research and correct rejected claims could mitigate this risk.

Cash flow: According to the MGMA survey, nearly one-third of practices plan to open a line of credit with their local financial institution, and an additional 35% plan to set aside additional cash reserves. A line of credit may be a prudent step to take to lessen financial risks.

Remittance: Do you have an automated process in place to reconcile the remittances you receive from health plans? If that process is disrupted, do you have the staff in place to post payments manually?

— Christine Tremblay is the product manager responsible for revenue cycle solutions at NaviNet, including the newly launched Doc Xchange.


1. Merrill M. HIPAA 5010 contingency plan needed, says MGMA. Healthcare IT News. http://www.healthcareitnews.com/news/hipaa-5010-contingency-plan-needed-says-mgma. October 25, 2011.

2. Centers for Medicare & Medicaid Services. Centers for Medicare & Medicaid Services’ Office of E-Health Standards and Services announces 90-day period of enforcement discretion for compliance with new HIPAA transaction standards. Press release. http://www.cms.gov/ICD10/Downloads/CMSStatement5010EnforcementDiscretion111711.pdf. November 17, 2011.

3. American Medical Association. 5010 implementation steps: getting the work done in time for the deadline. Fact sheet. http://www.ama-assn.org/ama1/pub/upload/mm/399/hipaa-5010-timeline.pdf. Updated March 18, 2011.