Ready for 5010?

If Not, You Might Go Broke Next Year

Texas Medicine Logo

Cover Story – November 2011

Tex Med. 2011;107(11):10-16.

By Crystal Conde
Associate Editor

If you want to be paid for providing medical care next year, read on.  

Jan. 1, 2012, marks a major change in the way practice management and electronic health record (EHR) systems send and receive electronically transmitted health information, such as claims. Medicare, Medicaid, and the commercial insurance companies will stop paying physicians and other "covered entities" that do not comply with Health Insurance Portability and Accountability Act (HIPAA) 5010 electronic claims standards by Jan. 1.  

TMA President C. Bruce Malone, MD, says HIPAA 5010 represents a "new wave of regulations in medical practice." 

"TMA's role in HIPAA 5010 is to provide resources for physicians to ensure they don't get caught in what could potentially be a regulatory nightmare. It's essential physicians prepare for the switch to the new transaction standards for electronic claims," Dr. Malone said. 

Covered entities include physicians, clearinghouses, insurers, and others with access to digital personal health data. Workers' compensation programs are not covered entities under HIPAA. Also, practices with fewer than 10 employees that don't currently submit claims electronically don't have to comply. If you're unsure whether you're a covered entity, consult the online chart  [PDF] developed by the Centers for Medicare and Medicaid Services (CMS). 

Compliance with HIPAA 5010 does not apply solely to practices with HER systems. It applies to claims submitted through practice management systems. All claims sent electronically, whether through a clearinghouse or directly to a payer, must use the 5010 transaction standards.  

Alexis Wiesenthal, MD, a San Antonio internist, started preparing for the transition to Version 5010 when her two-physician practice adopted an EHR in April. Her strategy for successful 5010 implementation is to delegate and supervise. Dr. Wiesenthal has practiced for the past three years with her father, Martin Wiesenthal, MD. They appointed one of their 20 employees to oversee the practice's HIPAA 5010 conversion.  

"Avoiding an interruption in cash flow during the transition is vital to medical practices. I think it's important to identify a project leader early on because there are so many details that need to be organized in the 5010 implementation. Physicians need to communicate with the project leader to ensure that person is monitoring the transactions and addressing any problems that surface," she said. 

Dr. Wiesenthal realizes implementing HIPAA 5010 is necessary for the financial viability of her practice, which accepts Medicare and Medicaid and contracts with 15 private insurers. The decision to select an employee to oversee the HIPAA 5010 transition is keeping the practice on schedule to meet the Jan. 1 deadline. 

"She developed a plan and is working directly with vendors to determine what we need to do to comply. She has kept us organized with the payers, clearinghouses, and vendors," she said. 

The implications of HIPAA 5010 span beyond 2012. ICD-10 will replace ICD-9 on Oct. 1, 2013, and physicians must convert to HIPAA Version 5010 software standards to use the new coding system in electronic transactions. The switch to ICD-10 involves updated codes and transactions standards that will cover electronic claims, insurance eligibility verification, claim status inquiries, requests for authorization, and electronic remittance data.  

Physicians can stay abreast of TMA's educational programs by contacting Heather Bettridge, TMA practice management consultant. Ms. Bettridge is a certified professional medical coder and has advanced training as a professional medical auditor. She is maintaining a database of physicians who wish to be notified of TMA's upcoming workshops, seminars, and webinars. In the meantime, physicians can plan ahead by visiting TMA's webpages dedicated to  HIPAA 5010 and ICD-10. (The February 2012 issue of Texas Medicine will have more information about ICD-10. Plus, you can earn continuing medical education credit by reading the articles in that issue and answering a few questions.) 

If the conversion to HIPAA 5010 is news to you, act fast and find out whether you need to upgrade your electronic billing systems. Failure to prepare for 5010 could result in claim rejections, payment delays or loss, unexpected expenses, or the financial ruin of your medical practice.  

Luckily, TMA, the American Medical Association, and CMS have a plethora of tools to help you prepare for the transition to HIPAA 5010. (See "TMA Helps You Get Ready for HIPAA 5010.") 

If you haven't started preparing, don't count on the government to push back the deadline. Todd Moore, MD, an Arlington colorectal surgeon and a member of the TMA Ad Hoc Committee on Health Information Technology, urges physicians to act immediately if they haven't yet taken steps to comply with HIPAA 5010.  

"I don't think we can hold out hope for any delays. The Jan. 1 deadline seems fixed. Physicians need to prepare now, or they'll be working for nothing next year," Dr. Moore said. 

Dr. Wiesenthal advises unprepared physicians to contact their vendors, payers, and clearinghouses. (See "Questions to Ask.") 

"Talk to them about what they have done to comply with the new transaction standards, and have a list of questions on hand," she said. "Determine the workflow modifications that you need to make, and take action right away." 

TMA established the HIPAA 5010 Resource Center on the TMA website to help you get ready. 

Test Your System

HIPAA 5010 essentially is a means to submit more comprehensive claim forms – up to 12 diagnosis codes on one claim. It's vital that you test the 5010 transactions with trading partners -- payers, clearinghouses, and billing services – to prevent cash flow disruptions.  

Before testing, make sure you have taken these steps to prepare:   

  • Run all available updates for your practice management system. Find out if your vendor charges for updates. You may need to upgrade your hardware to support new technology requirements.  
  • Check with your practice management system vendor to ensure your system complies with HIPAA 5010. Most vendors have HIPAA 5010 information, including testing timelines, on their websites, or you can call your representative. The vendor should be testing 5010 with the electronic data interchanges it supports. Links to these sites are posted on the 5010 Resource Center on the TMA website. 
  • Check with your electronic data interchange (EDI) vendor or clearinghouse to ensure compliance. This information also will be available on the EDI website. The EDI vendor tests 5010 with the payers it supports. 
  • If your practice submits claims directly to a payer, you must work with the payer to schedule transmission testing.  
  • Once you've confirmed compliance with the practice management system and EDI vendors, it's time to coordinate test transmissions with your EDI. 

 CMS has a guide to communicating with vendors about ICD-10 and HIPAA 5010 [PDF] available online. 

Dr. Wiesenthal's practice successfully completed Level I testing and is now doing Level II end-to-end testing, which requires practices to submit past claims data in the 5010 format to their trading partners. Level I testing entailed demonstrating the practice could create and receive compliant transactions internally.  

"So far we've submitted 2009 claims to our clearinghouse for Level II testing, and we haven't received notice of any problems," Dr. Wiesenthal said. 

When transitioning to HIPAA 5010, Dr. Wiesenthal says, practices must pay attention to detail. For example, HIPAA 5010 requires updating of all facility addresses in a system with a nine-digit ZIP code. And physical addresses must replace post office box addresses. You may view the CMS side-by-side comparison of the current and new transaction formats online.

Dr. Moore's practice plans to test the EHR system soon to ensure it's capable of transferring patient information in 5010. He encourages physicians to allow ample time to assess and fix any problems they encounter in the tests. 

CMS conducted a National 5010 Testing Day June 15 and hosted National Testing Week Aug. 22-26 to help physicians prepare for the switch to HIPAA 5010. TrailBlazer Health Enterprises LLC compiled a list of the top 10 errors for HIPAA Version 5010 claims. Common errors include invalid ZIP codes, addresses, National Provider Identifier numbers, and tax identification numbers.  

Billy Quarles, media relations specialist for BlueCross BlueShield of South Carolina, says physicians should consult TrailBlazer's 5010 Information page, Data Interchange/5010.aspx, for guidance on fixing problems before Jan. 1, 2012. Texas physicians also can contact TrailBlazer's EDI Helpline at (866) 749-4302. 

For information on Medicare and Medicaid, visit the CMS Versions 5010, D.0, and 3.0 Overview page.  

Remember: HIPAA 5010 is not a Medicare-only program. All payers must comply. Check the websites for each of your private payers to find testing tips, timelines, and training specific to them.  

The links to the sites are posted on the 5010 Resource Center on the TMA website. 

5010 Holds Promise, Risk

Embracing the HIPAA Version 5010 transaction standards by fully integrating it into your work systems and workflow – rather than merely complying with it – will put your practice on the right track. For instance, Version 5010 corrects many of the flaws of the 4010 version. Since Version 4010's launch in 2003, software developers have tweaked and patched it to its limits.  

Version 5010 incorporates hundreds of changes the medical community has asked for. Here are some of the changes your billing staff will find in the new system:   

  • Loop 2010AC: addition of the pay-to plan;  
  • SBR (subscriber) loop: allows eight additional payers beyond primary, secondary, and tertiary; 
  • Loops 2010BC and 2010BD: deletion of the responsible party and credit or debit card; and 
  • Modifications to the HI segment to allow submission of ICD-10 diagnosis codes.   

Physicians can begin to realize the administrative simplification and subsequent savings that HIPAA promised. For example, authorizations will be streamlined, saving time and hassle on the phone for physicians and staff.  

Dr. Wiesenthal hopes the switch to HIPAA 5010 will lead to improved patient care, seamless workflow, and faster claims processing. 

"If I order a CT scan and can get it approved faster, that will expedite care for my patients and lead to a higher level of care," she said.  

She acknowledges, however, that the transition is an enormous undertaking. 

"It sounds like a lot of pieces have to fall right into place in a short amount of time for this transition to run smoothly. It will take a concerted effort among many groups with different systems," she said.  

Dr. Moore says the 5010 standards for electronic transactions could improve a practice's business operations.  

"I think there is the promise of efficiency with version 5010, and it could pave the way for widespread use of EHRs," he said. "I'm hopeful this change will lead to faster payments and more transparent claim processing." 

The new electronic transactions standard also could facilitate reporting clinical data for quality performance measures, a driving factor for future payment of claims and performance bonuses, he says. 

He admits the transition to HIPAA 5010 places a technological burden on many physician practices. He and his wife, Angela Moore, MD, a dermatologist, rely on their office manager to keep their EHR up to date. 

"We lean heavily on our office manager, who joined our staff when we transitioned to an EHR eight years ago. The office manager has kept up with the HIPAA 5010 requirements and has been asking questions of our vendor and clearinghouse," Dr. Moore said.  

Upgrading a practice management system to comply with HIPAA 5010 requirements may come with a hefty price tag for some practices. Dr. Moore says his EHR vendor contract includes periodic upgrades at no additional charge. 

"Having a service contract that assured us of updates and a vendor that's large enough to deal with federal mandates have been helpful," he said. 

TMA's  electronic medical record comparison tool includes information on costs associated with purchasing EHRs for solo-, two-, and 10-physician practices. It doesn't feature upgrade costs, as they vary among vendors. Physicians should contact their EHR and practice management system vendors to ask about the price of upgrades. Some companies include upgrades in their annual license fees.  

Mike Moskovitz, vice president of health care lending at SNB Bank of Austin, says physicians applying for a loan for hardware and software purchases should allow 30 days for application processing. They will need to submit financial statements and evidence they are able to repay the loan. 

"When making large asset purchases, physicians need to consult their financial advisors," he said. "They should typically expect to pay back the loan over a 48- to 60-month term."  

AMA warns that despite the health care industry's best efforts to prepare for the 5010 compliance deadline, risks remain. Practices should anticipate unexpected complications that could cause cash flow interruptions.  

AMA suggests physicians take the following precautions to keep payment flowing to their practices after Jan. 1, 2012:   

  • If you submit claims to Medicare fee-for-service, talk to your Medicare administrative contractor about its advance payment policy. Ask about the format for a request, where to send a request, and timeframes for money distribution. 
  • Talk to your commercial payers to see if they have any advance payment policies. 
  • Establish a line of credit with a financial institution. 
  • Limit spending in the months before the compliance deadline to build up the practice's cash reserves.  

RECs Can Help

Dr. Moore encourages primary care physicians to take advantage of HIPAA 5010 services available from the regional extension centers (RECs).  

"The RECs are a great resource with services that really can help physicians," he said.  

Indeed, Texas' four RECs can provide technical consultants to help physicians meet deadlines and HIPAA 5010 transaction requirements as part of their electronic health record consulting services. Consultants can explain the relationship between HIPAA 5010 and the subsequent migration to ICD-10. REC members will receive a workflow analysis and gap analysis that can help identify potential problems and determine readiness for HIPAA 5010 compliance dates.  

Physicians who enroll in REC services also will benefit from their expertise in creating a testing strategy to ensure HIPAA 5010 compliance with health plans, clearinghouses, and software vendors. 

All four Texas RECs charge primary care physicians an annual subscription fee of $300 for their services. In return, physicians receive services worth at least $5,000. Physicians who are specialists but can attest to providing primary care also are eligible to receive REC consulting at the subsidized rate. Other specialists can receive a quote for customized services.

A list of the Texas RECs is on the TMA website. 

TMA staff can answer your questions about REC services. Call TMA Health Information Technology Director Shannon Moore at (800) 880-1300, ext. 1411, or (512) 370-1411, or e-mail You also can call HIT Marketing and Resource Coordinator Tyler Patterson at (800) 880-1300, ext. 1372, or (512) 370-1372, or e-mail   

Crystal Conde can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by email.


TMA Helps You Get Ready for HIPAA 5010

Visit the TMA HIPAA 5010 Resource Center. It features questions to ask vendors; contact information for electronic health record (EHR), practice management, and clearinghouse vendors; guidance on financing upgrades and new systems; and an action plan for practices. (See "Eight Steps to HIPAA 5010" below.)

TMA conducted a Tele-Town Hall Meeting on the HIPAA 5010 electronic claim standards in September. TMA President C. Bruce Malone, MD, moderated the discussion, which featured expert presentations from TMA physician leaders and staff members. Physicians who participated in the call learned the details of the conversion, how to prepare to upgrade their practice management or EHR systems, how to develop an action plan, and the impact of 5010 on a practice's business functions. To listen to a recorded podcast of the discussion, visit the TMA website

Assistance with planning for the transition to HIPAA 5010 also is available from the regional extension centers (RECs).  

The American Medical Association's 5010 Toolkit: The Physician's Practical Guide to Implementing HIPAA Version 5010  [PDF] includes 5010 implementation steps and a checklist, information on testing for 5010 compliance, and more.  

Alexis Wiesenthal, MD, a San Antonio internist, says her staff took advantage of HIPAA 5010 educational resources from the Centers for Medicare and Medicaid Services and training provided by the practice's EHR vendor.  

  Back to article


Eight Steps to HIPAA 5010

TMA crafted the following eight-step action plan you can use to achieve Health Insurance Portability and Accountability Act (HIPAA) 5010 compliance:   

  1. Contact your vendors – for your practice management system, electronic health record (EHR) system, and/or your claims clearinghouse – to ensure they upgraded your software for 5010 compliance. Visit the TMA website for a list of questions to ask and a list of the most popular vendors in Texas.  
  2. Check the 5010 Update pages on the TMA website for Medicare, Medicaid, and health insurance payers.  
  3. Identify changes to data-reporting requirements.  
  4. Once you have the upgrades, test the system to ensure claims are going through – whether you process through a clearinghouse or directly with the payer.  
  5. Identify potential changes to existing practice workflow and business processes.  
  6. Identify staff training needs.  
  7. Budget for implementation costs, including expenses for system changes, resource materials, consultants, and training. 
  8. If you are looking for a new system, consider upgrading to a companion practice management/EHR system.  


Questions to Ask    

Arm yourself with information for the Health Insurance Portability and Accountability Act (HIPAA) 5010 conversion. Questions you should ask electronic health record and practice management system vendors include:  

  • Can my current system accommodate the data collection and transaction conduction for 5010? 
  • Will you upgrade my current software? 
  • Is there a charge for the upgrade? 
  • When will the upgrade be available? 
  • When will you complete the upgrade installation? 
  • When may I send test transactions? 
  • Will I need to purchase a new software system and/or hardware? 
  • When will the installation to my system be complete?   

The American Medical Association suggests asking clearinghouses, billing services, and payers these questions:   

  • Will you upgrade your systems to accommodate the 5010 transactions? 
  • Will you increase your fees for the 5010 transactions? 
  • When will you complete upgrades? 
  • When can I send transactions to you to test that the system will work? 
  • Will I need to renegotiate my contract or electronic data interchange agreement based on the move to the 5010 transactions? 

  Back to article

November 2011 Texas Medicine Contents
Texas Medicine Main Page