N.J. Commissioner Warns Failure to Comply with HIPAA Could Bring System to a Halt

October 24, 2003

New Jersey Banking and Insurance Commissioner Holly Bakke this week joined officials from across the health care system to highlight the need for medical providers to immediately move to follow a federal law for health care claims.

Failure to comply with the federal Health Insurance Portability and Accountability Act (HIPAA) could reportedly cause the health care system to grind to a halt. Doctors could go unpaid for their services, and patients’ access to medical services could be blocked.

“Failure to follow the law can mean thousands of doctors, pharmacists, dentists and all other medical providers will not get paid. That is unacceptable,” Bakke said during the State House press conference. “We all have an obligation to ensure the delivery of quality healthcare to the public by protecting the economic integrity of healthcare providers.”

Switching to an electronic claims-filing process reportedly promises to save billions of dollars in the healthcare system and ensure uniformity and fairness.

The federal law set an Oct. 16, 2003, deadline by which all Medicare and Medicaid claims must be filed electronically, and all other claims that are filed electronically must meet the uniformity standards of HIPAA.

The Department recently implemented a contingency plan after early tests showed that strict enforcement of the Oct. 16 deadline would have halted payment of billions of dollars in claims to doctors, dentists, hospitals, and other providers. But Bakke reiterated that the contingency period will be brief.

“Don’t be complacent. Be compliant,” Bakke said. “This is the opposite of Y2K, where people feared a meltdown. This situation is just as if not more serious. If doctors don’t get paid and can’t paid bills, they ultimately won’t be able to see patients.”

Bakke was joined with representatives of Thomas Edison State College, the New Jersey Association of Health Plans, the New Jersey Hospital Association, Horizon Blue Cross and Blue Shield and the Medical Society of New Jersey.

“Reducing administrative costs of providing healthcare through the use of current technology, as is used in other industries such as banking and retail, can have a major impact on improving the efficient delivery of healthcare in an economical, accurate and timely manner,” said Mark Gordon of Thomas Edison State College, which conducted a study that reportedly showed switching to an electronic claims system nationwide could save New Jersey more than $700 million.

Despite continued efforts by the Department, the federal government, and the associations representing insurance carriers, hospitals and doctors, to remind industry employees of the deadline, recent studies and test pilots showed that an alarmingly high number of claims would not be paid if the deadline were strictly enforced today.

The federal Centers for Medicaid and Medicare Services in the U.S. Department of Human Services has told insurance carriers that they can temporarily continue to process claims that are not 100 percent HIPAA compliant. And the Department recently reminded carriers that they are not exempt from state prompt-pay laws, but that the department will be reasonable in its reviews during this contingency period.

“Given the high cost of health insurance these days, it is critical that all of us work to increase efficiency and, thereby, contain costs,” said Michele Guhl, head of the New Jersey Association of Health Plans. “HIPAA compliance is critical to that effort, and no part of the healthcare delivery system should be exempt from shouldering its share of that responsibility.”

“The Medical Society of New Jersey encourages its member physicians – and all physicians – to be vigilant in demanding that their software vendors and clearinghouses be certified HIPAA-compliant,” added Dr. Mark Olesnicky, president of the Medical Society of New Jersey. “Once that is assured, physicians should test the system by transmitting compliant claims in a test mode. This is necessary to verify that all parties involved in the system are capable of completing the transaction.”

All providers, payers and their trading partners were reminded that they must have an established plan for the use of HIPAA compliance standards; test the standards and be prepared to demonstrate all compliance training, testing and out-reach efforts with trading partners.

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