October 16th:

1

• October 16th
• What Happens Now?
• HIPAA Collaborative of Wisconsin
• April 25, 2003
• Peter Barry
• peterbarry_at_aol.com

2
The Problem

• Fact Not everyone will be ready
• Secretary cannot not enforce the law
• Claims are the big issue
• Cash flow of 1/7th of the nations economy is the
  big worry
• Mass reversion to paper is calamity
• There are no statistics on the problem therefore
  no control therefore no national management.

3
The Risks

• Rejection of nonstandard transactions
• Reversion to paper (wont go electronic again)
• Financial Chaos
• Invokes Sarbanes / Oxley if publicly traded
• Litigation cooperative industry turns
  adversarial lawsuits all over the place
• Paper will cause backlog, invoke prompt pay
  penalties
• Societal forces will go outside the system to
  solve the problem

4
The Three Requisites to Success

• Transaction certification
• Managed legal relief
• Measured Compliance

5
The Conflict

• Goal of Third-Party Testing is to find every
  error
• Goal of Third-Party Certification is to
  demonstrate capability
• But Goal of Production is to keep the work
  flowing maximize dont harm cash flow no
  reversion to paper

6
The Four Strategies

• Heroic strategy (I wont accept any error)
  (Wont happen no heroes here)
• Grace-period strategy (Allow legacy systems to
  operate for a time)
• Measured compliance strategy (Tolerate reasonable
  error level, but report all errors back to
  sender)
• Laissez Faire strategy (Im not my brothers
  keeper)

7
WEDI Letter to Tommy Thompson

• Recommended
• Grace Period Strategy
• Relaxed edits (something less defined than
  Measured Compliance)
• HHS give guidance on what it means for a
  transaction to be compliant
• Does not address legal authority
• Does not address how to manage the largest
  conversion in history

8
The Legal Authority for Relief

• SEC. 1176(b)(3)(A) a penalty may not be imposed
  if--
• (i) the failure to comply was due to reasonable
  cause and not to willful neglect and
• (ii) the failure to comply is corrected during
  the 30-day period beginning on the first date the
  person liable for the penalty knew, or by
  exercising reasonable diligence would have known,
  that the failure to comply occurred.

9
The Legal Authority for Relief (2)

• SEC. 1176(b)(3)(B) (i) The 30-day period may
  be extended as determined appropriate by the
  Secretary based on the nature and extent of the
  failure to comply.
• In ASCA, the provision to exclude providers from
  receiving Medicare payments if they do not send
  standard is permissive the person may be
  excluded at the discretion of the Secretary.

10
Willful Neglect

• Neglect. The omission of proper attention to a
  person or thing
• Willful Neglect. Intentional neglect deliberate
  neglect.
• Blacks Law Dictionary

11
Reasonable Cause

• Reasonable Cause is being used in the sense of
  Reasonable Care, not Probable Cause
• Reasonable Care. As a test of liability for
  negligence, the degree of care that a prudent and
  competent person engaged in the same line of
  business or endeavor would exercise under similar
  circumstances.
• Blacks Law Dictionary

12
Tommys Requisite Findings

• Cannot result from Willful Neglect
• Must result despite Reasonable Care
• The nature and extent of the failure to comply
  in Tommys opinion must justify a longer period
  than 30 days
• Seems to be case specific, not written for
  blanket amnesty

13
Case Specific or Blanket Amnesty?

• Blanket amnesty cannot be managed same as
  declaring a new deadline
• Sec 1176 30-day-to-correct section is written in
  case specific form. Extension is granted
  one-by-one.
• Instead if relief is given one case at a time,
  then the government gets statistics on where we
  are, how much more to go.
• Case Specific gives the tools to manage the
  largest computer conversion in history

14
The Relief Process

• The guilty pair of covered entities applies for
  more time.
• Application is online usually by the plan or
  clearinghouse on behalf of itself and each
  trading partner
• Application attests to the requisite findings
• Governments computer approves it
• Monthly update to the online record
• Specific intervention only toward the end

15
Legacy Grace Period

• Permitted for reasonable period
• Keep the work flowing commitment to stay
  electronic
• Conversion to standard by provider and plan with
  aggressive but safe speed
• Report status of conversions to government

16
Measured ComplianceThe Errors

• Interchange and Format Errors
• Implementation Guide Errors
• Missing or faked data needed
• Missing or faked data not needed
• Irrational data
• Companion Guide Errors

17
Measured Compliance The Actions

• Reject
• Accept and Deny
• Accept and Pend, Call, Correct
• Accept and Adjudicate

18
Measured Compliance Rejection

• What does Reject a Claim mean?
• Where in system does reject occur?
• Relation to Prompt-Pay Laws
• Real question is, are you rejecting because you
  cant adjudicate, or heroically because its not
  standard?

19
Measured Compliance Percentages

• Accept on Percentage of compliance
• Odd claim in error
• Consistent error
• Consistent error on situations
• Consistent errors that really dont matter to the
  plan

20
Measured Compliance

• Set percentages by type of error e.g.
• Slowly squeeze the percentages
• Report all errors to provider even if accepting
  and paying the claim

21
Recommendations

• Require Third-Party Certification
• Government to manage legal relief
• Grace-Period Strategy keep old systems going for
  decent interval
• Use Measured Compliance Strategy after conversion
  to X12 maximize throughput