BCBSKS Prepares for HIPAA Implementation. February 20, 2003 S-03-03

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1 February 20, 2003 S Questions: Contact your Professional Relations Representative, or the Professional Relations Hotline in Topeka at or OUR WEB ADDRESS: The Blue Shield Report is published by your Professional Relations Department. Communication Coordinator Larry Callahan IN THIS ISSUE: BCBSKS Prepares for HIPAA Implementation...Pg. 1 Blue Cross and Blue Shield Implements HIPAA Transactions and Code Sets...Pg. 2 Details About Transactions with BCBSKS...Pg. 3 BCBSKS Privacy Implementation...Pg. 5 BCBSKS Security Implementation...Pg. 5 Administration Simplification with HIPAA & 5 BCBSKS Prepares for HIPAA Implementation Blue Cross and Blue Shield of Kansas (BCBSKS) is allocating significant resources to meet the Health Insurance Portability and Accountability Act (HIPAA) Administrative Simplification compliance deadlines. Many efforts are well underway, reaching across every department of BCBSKS, including claims, membership, medical affairs, electronic media services, marketing, customer service and legal departments. Over the past two years, we have completed gap analyses, educated our staff, and studied how electronic and paper business processes will be changing as a result of exchanging standard Electronic Data Interchange (EDI) transactions and integrating code sets. Many enhancements are taking place within our computer systems for claims, membership, pre-certification, referral, and several down-line processes. Web-based solutions for the 200 series transactions will be provided to our trading partners in addition to the ANSI ASC X12N standard format. The 200 series transactions include Eligibility and Response ( ), Claims Status and Response ( ), Referral and Pre-Certification (278).

2 Blue Shield Report S February 20, 2003 Page 2 Blue Cross and Blue Shield Implements HIPAA Transactions and Code Sets BCBSKS will begin HIPAA implementation activities the weekend of March 28, System availability will be limited on Monday, March 31, 2003, as the final implementations occur to integrate HIPAA compliant operations on April 1, More information will be forthcoming closer to the implementation date. Providers may continue to send claims electronically through Administrative Services of Kansas (ASK) to BCBSKS, as they do today using proprietary formats. These formats will be converted into the standard formats required under HIPAA. Some information will be automatically generated in order to perform this conversion. This information will not affect claims processing. This conversion will allow claims to enter the BCBSKS HIPAA systems for processing. What Will Change and How Do I Get Ready? Most functions of the Paperless Inquiry and Claims System (PICS) will no longer be available after March 28, If you are using PICS for claim status inquiry, eligibility inquiry, or to enter referrals, these services will be available at the BCBSKS Web site, You will need to obtain Web access and establish a provider profile to access these services. Your practice may set up as many unique user profiles as needed. The hospital abstracts and precertification functions will remain through PICS until further notice. Eligibility, claim status, referrals, and precertifications may also be available through your practice management system. Providers are encouraged to check with their practice management vendors to inquire if they will support these transactions. Throughout the HIPAA implementation, preparations were taken to narrow the differences between the defined HIPAA requirements and paper claims filing and remittance advice that providers are familiar with today. Claims Filing If you are not using a clearinghouse to convert your non-standard transactions to the standard, claims filed on or after October 16, 2003, must be in the compliant version of the ANSI X12N 837. The paper claim submitted with the required fields will be entered and processed. The additional data elements that are part of the HIPAA electronic claims standard are not needed to adjudicate a claim in the BCBSKS claims system. If you have not already done so, ask other payers what changes they have made in their paper claims filing requirements and communicate this information to your practice management software vendor. Remittance Advice The paper remittance advice will contain additional columns of information that are also found on the HIPAA compliant electronic version remittance. These new fields contain information on the portion of the claim not covered, coinsurance, copay, and deductible amounts. The remittance advice will continue

3 Blue Shield Report S February 20, 2003 Page 3 to report the codes as submitted on the claim. If codes are bundled in the claims adjudication process, the remittance advice will contain both sets of codes with remark codes and/or adjustment reason codes explaining what has occurred in the adjudication process. In addition to the fields representing the total charge, amount allowed, and provider write-off, a new field titled other adjustment payer initiated has been added. The other adjustment payer initiated field or column on the remittance advice will display charge balances associated with bundled codes and additional payments, which will process as voids and repayments for balancing purposes. These are just a couple of examples of when the other adjustment payer initiated adjustment columns would be used. The greatest benefit of the HIPAA remittance format is the transaction is based on true accounting principles; the columns must balance across and down on the remittance advice. These principals allow providers to achieve a level of administrative simplification by having electronic payments post directly to patient accounts through their practice management system. Eliminating additional data entry for payments may prove beneficial to some practices. Remittance Advice Guide Providers will no longer receive a BCBSKS remittance advice guide or booklet. The codes in the BCBSKS remittance advice booklet are not part of the standard code sets adopted by HIPAA. The new remittance advice will contain the HIPAA remark and adjustment reason codes. The remark codes are published by the Washington Publishing Company and may be printed from their Web site, select HIPAA and then codes sets. The web-based claims status transaction and the remittance advice crosswalk application that may be found only on the BCBSKS website will assist in managing the transition from the current paper remittance advice to the HIPAA codes that will be on the remittance. Details About Transactions with BCBSKS Health Claims or Equivalent Encounter Information Standard Transaction Form: X Health Care Claim Trading partners may begin testing their EDI systems with ASK now to ensure that they meet syntax and implementation guide standards. Common and payer specific editing also will be tested. Contact ASK to obtain specific information on the testing requirements and schedules. Remittance Advice Standard Transaction Form: X Remittance Advice The transaction will also post automatically to the provider's patient accounts using the provider's patient account identifying system. Unlike the limitations of today's remittance advice, the 835 requirements provide for reporting services as they were submitted on the claim. This is in addition to the payer's policies of bundling and unbundling of services on the claim, allowing the provider to view exactly how the payer processed the claim.

4 Blue Shield Report S February 20, 2003 Page 4 The same is true for adjustments. If a line item is adjusted on an adjudicated claim, the line item is brought forward, the adjustment made and the difference in payment or refund is indicated. Providers who employ the 835 electronic remittance advice will experience great improvement over their current processes of manually calculating and posting to patient accounts. Finally, with regard to the 835, HIPAA will require all payers to use the same set of remark codes in the 835 transaction to communicate how the claims are adjudicated. Although the codes will be generalized compared to the codes currently used by BCBSKS, the benefit for providers is all payers, including Medicare, will use the same set of remittance advice remark codes. Health Claim Status Standard Transaction Form X12 276/277 What has Blue Cross and Blue Shield of Kansas done with my claim? No longer does your staff need to contact the customer service center to obtain claim status information. This inquiry is a quick method to monitor outstanding claims and control accounts receivable. It is important to note the information relayed in the 276/277 will not be as detailed as the 835 transaction. The (835) remittance advice will provide the claim payment information similar to what is currently conveyed through the provider remittance advice and is sent only upon completion of the claim. The 276/277 will allow providers to track the progress of the claim through the processing system. The claim status information currently available on will change to become HIPAA compliant. The information displayed will be limited to what is available in the 276/277 and specific payment amounts will be communicated either through the 835 transaction, or the paper remittance advice. An additional page has been added outside of the transaction that will provide much of same information on the (835) remittance advice. Referral Certification and Authorization Standard Transaction Form X Providers in Kansas have used an on-line application (PICS) for this process for several years that does not meet HIPAA requirements. Because of this, BCBSKS has developed a Webbased version of this transaction to replace the current process. The Internet referral form offers provider and member lookup features. Services are arranged by type of service for easy navigation and service selection. Once sent to BCBSKS, a copy is available in the secured area of for the specialist to retrieve. If desired, there is an option to print the referral. To receive maximum benefits, managed care programs, with the exception of Premier Blue Access Option, require a referral for members sent to a specialist. Paper forms are hard to follow and often information is overlooked, necessitating a call to the provider office for the needed information. Eligibility Benefit Inquiry and Response Standard Transaction X12-270/271 Information on patient coverage on the spot while the patient is in the office. It has never been easier to verify benefits and collect deductibles, coinsurance, and co-payment amounts. Get the staff off the phone and onto the Internet to maximize your cash flow potential and visualize efficiency improvements within the practice. The current eligibility information on the website will change to comply with HIPAA data requirements.

5 Blue Shield Report S February 20, 2003 Page 5 BCBSKS Privacy Implementation The Corporate Privacy Program established at BCBSKS has begun an extensive evaluation of current business practices to identify the current uses of protected health information (PHI) and how PHI is disclosed. Appropriate safeguards will be put in place to protect PHI throughout the organization. HIPAA privacy requires security procedures to safeguard PHI; therefore, changes are being incorporated to authenticate callers and visitors to the BCBSKS Web site when PHI is requested. Providers will be asked to provide the following information when calling the Professional Relations Hotline or Customer Service as an authentication measure: Required information: Provider number or tax ID Provider name Member s ID number or social security number Additional Information: Inquirer s name and phone number Members Identification number or social security number BCBSKS Security Implementation BCBSKS has conducted a thorough system security evaluation. Steps are being taken to place greater security measures to ensure protected information exchange and to ensure system access by providers or other business associates are conducted through secure channels. Providers may experience changes in their sign-on procedures. Providers will be responsible for maintaining their own access passwords, and providers will need to establish a unique profile in order to communicate electronically with BCBSKS. Administration Simplification with HIPAA & The Internet is a valuable tool that brings efficiencies to the provider practice by providing solutions to three of the procedures in practice management: 1. Eligibility inquiries 2. Claims status inquiries 3. Referrals for managed care

6 Blue Shield Report S February 20, 2003 Page 6 The Internet may be integrated into daily practice activities and become an essential element for all areas of the provider practice. Checking eligibility, checking status of claims, researching paid claims to determine correct processing, or entering managed care referrals can be done electronically. Each practice operates differently and Internet access should be evaluated as a tool to maximize productivity. Set up your provider profile today and begin taking advantage of the Internet services. The process is easy and the practice may have as many unique user profiles as needed. An subscription is available for providers and practices to conveniently receive messages when new information is available at The Web site is secured with Verisign security software.