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The New 5010 Transactions- Are You Ready?
Written by: Peter Bowhall

Many of us have heard about the new 5010 standard for electronic healthcare transactions. So what is 5010, what are the benefits, how will it impact our claims and other billing functions, when do we need to be ready and—finally, what can we do to get ready?

What 5010 is. All healthcare electronic data interchange (EDI) transactions use the current HIPAA mandated 4010A1 transaction sets for claims and remittance advice processing, eligibility and claim status inquiries, and referral authorizations. That will change on January 1, 2012 when all EDI transactions between providers and payers must be transmitted using the new 5010 transaction sets.

Many of us have struggled with the 4010A1 on several fronts. The 4010A1 doesn’t always accommodate our specific billing requirements—whether we are a provider or a payer. There are many ambiguities within the 4010A1 that payers interpret differently. Consequently, what is mandated by one payer may not be acceptable to another payer.

The 5010 contains over 850 changes across all transaction sets. Many data elements have been added, removed or changed to accommodate specific billing needs—including ICD-10 diagnosis and procedure codes. The 5010 is more specific in terms of what is to be reported and when, so as to improve clarity and tighten interpretation among both providers and payers. Functional improvements have also been made in a number of areas. For example, eligibility inquiries will offer additional patient search options and provide better information on responses.

The 5010 involves more than just software programming. Your business processes—what data you collect and how you report it—will also be impacted. For example, the Billing Provider address can no longer be reported as a PO box and must include a nine digit zip code.

What are the major benefits?  We have already mentioned improved clarity and tightened interpretation among payers. This will allow your software vendor (or your own software developers) to program their billing module with fewer payer specific variations—and get it right for all payers. Other major benefits:

• Electronic Coordination of Benefits (COB) processing will be less error prone due to more clarity in claims processing and improved balancing on 835 remittance advices. The 835 codes marked as “Not Advised” have been removed. Links for payer medical policies have been added to the 835.
• The Centers for Medicare and Medicaid Services (CMS) will be implementing one standard electronic acknowledgment and rejection transaction (currently, most are not electronic and vary in format by jurisdiction) across all jurisdictions. This will allow your software vendors to develop a single module to cover all jurisdictions. CMS will also be increasing the consistency of claims editing and error handling. They will be returning denied claims sooner by transferring edits for common errors from adjudication to their front end systems.
• Eligibility responses from payers will be required to include how to report the patient on subsequent transactions—as well as plan name, effective dates, the primary care provider, all other known health plans and nine categories of benefit information (medical care, mental health, etc.). Pay-to-plan information for Medicaid subrogation has been added. Support for 45 new patient service type categories has also been added.

Key dates to remember. Whether or not you are on board yet, the countdown has begun for providers, payers, clearinghouses, practice management software vendors and software developers. In addition to your own capability to send and receive 5010 transactions, you will also need to test with each payer and/or clearinghouse that you exchange transactions with directly.

• Testing: Some payers and clearinghouses will allow you to begin testing in 2010. The remaining payers and clearinghouses will accept testing in 2011.
• Dual production: Payers and clearinghouses will begin accepting 5010 production transactions in 2011. However, they must also continue to accept 4010A1 transactions throughout 2011.
• Full production: Beginning January 1, 2012, all transactions between providers and payers must be transmitted using the 5010 transaction sets. 4010A1 transactions will no longer be accepted.

In other words, you should be ready to begin testing with your payers and clearinghouses no later than December 31, 2010—and you should be ready for production no later than December 31, 2011.

What can you do to get ready? We all know that changes—and especially software changes—always take longer than we expect. We are also acutely aware of the reality and limitations of our current systems and resources. So, what can you do to get ready?

First and foremost, do not expect a pushback of the mandated January 1, 2012 date. Unlike the previously mandated 4010A1 implementation date, there is every indication that CMS is on target with their 5010 implementation plan. CMS will begin testing in the 2nd quarter of 2010. The author recently attended a Workgroup for Electronic Interchange (WEDI) conference on 5010 implementation and it was reported that CMS is on target.

If you use a practice management system vendor, know what your vendor’s plans are—specifically with regards to the payers and clearinghouses that you exchange transactions with and their testing/production schedules. Make sure that you have an understanding of your vendor’s timetable. Also find out if your vendor is going to charge additionally for any updates related to 5010. You will need to put that in your budget.

If you rely on your own software developers for the 4010A1 to 5010 migration, you need to make sure that they have a plan in place. A 4010A1-5010 gap analysis that identifies all changes from the 4010A1 to the 5010 is available on the CMS website (or contact the author for more information). As part of your plan, you should identify what your payers’ and clearinghouses’ schedules are for testing and implementation. And test, test, test!

Don’t assume that 5010 is only a software change! You will have problems if you leave 5010 implementation solely in the hands of your vendors or software developers. There are a number of revisions to claim processing that will require you to change and/or capture additional data. Plan now to find out what those changes are so that you will have the right procedures in place when your software is ready.

As you enter 2011 and you have some payers accepting the 5010 and other payers still requiring 4010A1—what should you do? You will likely want to send only one format and not have to maintain a crosswalk of which payers have converted to 5010 and which still require a 4010A1. Look to your clearinghouse partners to handle some or all of your 4010A1-to-5010 and 5010-to-4010A1 conversion needs.

About the author:
Peter is CEO and the chief architect of ClaimRemedi. He has over 25 years of experience in the development and implementation of practice management, revenue cycle and electronic transaction processing systems in the healthcare industry. He was also a co-founder of HealthPro, the leader in community health center software solutions, prior to its acquisition by WebMD. Peter holds BS and MS degrees in Engineering from the University of Wisconsin at Madison. He can be reached at pbowhall@claimremedi.com.

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