By Ofer Zur, Ph.D.
Adapted from: The HIPAA Compliance Kit, by Ofer Zur, Ph.D.
Options In Regard To Billing Under HIPAA
- Never do any insurance billing. If you are in a 100% (not even 99%) fee-for-service practice or private pay, you may choose this option. With this arrangement you can still give your clients personal paper invoices but not insurance bills. You can be HIPAA compliant and still not send electronic or other billing.
- Give paper invoices to your client to submit to their insurance companies. However be aware that most insurance companies are likely to deny paper claims in the future. You can be HIPAA compliant and still not send electronic.
- The low-tech therapist or computer-less option – Contract with a billing service: his is the option is for therapists who do not want to deal, themselves, with computers, electronic billing, special software or do not even own a computer. In this arrangement therapists contract with a billing service and have them sign a HIPAA Business Associate contract. Therapists then simply fax or mail the claims to the billing service, weekly or monthly. The billing service submits the claims on the therapists’ behalf to a clearinghouse, which converts them to a HIPAA-compliant electronic format and submits them to the insurance companies. The billing vendors charge between 3% and 15% for only what they successfully recover. In other words the billing service gets paid only a percentage of what therapists are being paid by the insurance companies. This option is likely to be the most popular among therapists. Make sure that you check the vendor thoroughly before you contract with them. Preferably, the vendor will focus on working with therapists rather than working with many types of health care providers.
Updated recommended resources
- Online input directly to a clearinghouse – No special software required: In this option, where only Internet access is required, therapists simply enter clients’ information online without any special software. The billing service (via a clearinghouse) or the clearinghouse handles the conversion and transmission of claims for therapists. For this web-based application, you just need Internet access and a contract with a company. This option is for therapists who need (or choose) to submit insurance bills electronically themselves but do not want to deal with any practice management and billing software. An example of such clearinghouses is PayperPath.
- Use billing software to submit to a clearinghouse – For the techi-therapist: In this option therapists start the process on their computer by installing a medical billing software, such as the popular Medisoft software for about $200 to $800. Then therapists submit the claims to a clearinghouse, such as Eclaim via a modem. The clearinghouse correct or clean the claims that the therapists submitted to them and then submit them to the insurance companies on the therapists behalf. There are hundreds of billing software products available and probably as many clearinghouses. Therapists are encouraged to study, review and compare the options.
Recommended resources.
- Submit directly to insurance companies – For the high-techi-therapist: n this option therapists transmit the insurance claims themselves from their own computer directly to the insurance companies. In this case they have to purchase a practice management HIPAA-compliant software. Of course, they have to test and make sure that it is HIPAA compliant and is interfacing smoothly with the insurance companies’ computer systems. Obviously, each kind of software has its own technical requirements that your computer must meet first, i.e., Windows XP, a certain amount of available MB hard drive space, a certain amount of memory, Pentium 3-500MHz or faster. In general, this option is suitable for the more technologically savvy practitioners, therapists with a techie assistant and for those who work with only a few insurance companies. Claredi is making available a program to “de-identify” X12 HIPAA transactions that should facilitate the testing of the HIPAA transactions without compromising individuals’ privacy. The software is free for all users. If you choose this option, you will need to test your system thoroughly.
- Remote online access to insurance companies – For the somewhat techi-therapist: In this option therapists submit bills or other data directly to insurance companies, one at a time, via the web, on online forms provided by each insurance company. Similar to the second option, above, for this web-based application, therapists just need Internet access and a contract with a company. Insurance companies provide therapists with “dumb” terminals, which are, in essence, remote extensions of the insurance company’s computer. This option is most useful for therapists who work with a very few insurance companies.
The HIPAA Transaction Rule: Table Of Contents
1. What is The Transaction Rule?
- The Transaction Rule is a manifestation of one of the original intents of HIPAA regulations for uniformity in electronic transactions, where claims are streamlined and the whole industry is effectively communicating in one language.
- The Transaction Rule requires standard formatting (a single common language) of electronic transactions, such as health care claims (electronic billings).
- The Rule involves covered transactions, such as (a) electronic billing/claims, (b) electronic payment or payment remittance advice or electronic inquiries about (c) plan eligibility and coverage, (d) claim status and (e) referral authorization.
- The rule applies whether you or anyone acting on your behalf conduct any of the above “covered transactions.”
- In many ways, the Security Rule is more relevant to computer programmers and designers of computer systems than to psychotherapists. This by no means reduces the responsibility for you, as a therapist, to know the regulations, fully comply with the rule and verify that others, who act on your behalf, are also in compliance.
- The rules are based on Electronic Data Interchange (EDI) standards, which allow for the exchange of information from computer to computer without human involvement.
- HIPAA requires every provider, who does certain business electronically, to use the same electronic format, code sets and identifiers.
- Under HIPAA, transactions are defined as the electronic exchange of information between two parties to carry out financial or administrative activities related to health care. Electronic exchanges include transmissions over the Internet, leased lines, dial-up lines, private networks and those done by physically moving magnetic tapes, diskettes or compact disks from one location to another.
- The Transaction Rule’s compliance date was October 16, 2003.
- There are no requirements for therapists to engage in electronic billings. However, therapists who do not bill electronically may find it hard to work directly with insurance companies who are likely to respond very slowly, add extra fees and, ultimately, reject paper claims.
- Therapists who choose to transmit claims electronically, or engage in other covered transactions, need to employ practice management systems (PMS) or billing systems with HIPAA compliant software or contract with an outside party, such as a clearinghouse or billing service, which will handle the conversion and transmission of data, such as insurance bills, etc.
- Using clearinghouses or billing services is likely to become a common, simple and easily effective option for many therapists.
- Testing your and your associates’ systems for compliance well ahead of the deadline is very important. The testing, usually done by computer experts, should include everything from your computer all the way to the health plan’s computer system. You must test each health plan or clearinghouse you have a contract with. Testing should cover areas such as testing of integrity, requirement, balancing, situations and code sets. It should include online and trading partner testing. Of course one must use the results of the testing to adjust the entire system so that it is brought into full compliance. If you use a web-based application or DDE you must test that the covered transactions comply with the standard for each health plan you intend to conduct business with.
- Don’t panic. There is information later in this section that will help you take care of all these requirements.
- If you have a software vendor, you must verify that the software was tested and is in full compliance with HIPAA. Also you have to verify that your computer is in compliance with the Transaction Rule and that all the necessary changes and modifications were done. Document the correspondence regarding these issues well.
- If you use a billing service or clearinghouse, verify that the process, software and computers are in compliance with the Rule and that they tested their software. Document the correspondence regarding these issues well.
- If you are all set and are fully HIPAA compliant on your end but the health plans still reject or deny your HIPAA compliance claims, they are likely to pay fines and penalties. If you experience such a problem, you can file a complaint with Centers for Medicare and Medicaid Services, which oversee the HIPAA regulations complaints (CMS hotline: 866-282-0659).
- There is a lot of concern that many therapists, clinics, insurance companies, and even hospitals and states are not ready to handle all the complexities involved in the Transaction Rule by the October/03 deadlines, or even months after that.
- Some therapists may decide to temporarily revert to paper billing in light of the complexities involved in implementing the Transaction Rule.
2. Does HIPAA Mandate Therapists To Use Electronic Claims?
- No. HIPAA does not mandate the use of electronic claims.
- However, as was noted several times throughout this Kit, not using electronic billing or other transactions does not mean that a therapist should not become HIPAA compliant with regard to the many important other aspects of the regulations.
- In the long run it is not likely that therapists will be able to get reimbursed by insurance companies unless they submit electronic claims. Some insurance companies will not process paper claims starting October 16, 2003.
- If you have fewer than 10 employees, you will be able to bill Medicare, for a while, using paper claims.
3. Which ICD, DSM Or CPTC codes Are Required Under HIPAA?
- HIPAA requires the use of standard code sets of ICD and DSM.
- ICD-10-CM took effect on 10/1/2015
- Many therapists have already been using the CPT codes to report procedures.
- Under HIPAA, insurance companies who process insurance claims electronically are only required to accept ICD diagnosis codes. There is no requirement that insurance companies also accept DSM codes.
- Insurance companies, in the future, are most likely to only accept electronic claims that use ICD diagnosis codes.
- ICD, like the DSM, is a list of codes and their corresponding mental disorders or medical conditions.
- Psychotherapists who submit electronic billings, under HIPAA, have to convert their DSM-5 diagnosis codes into ICD-10-CM diagnosis codes.
- In many cases — but not all — the ICD code and description will be identical to the DSM code.
- DSM conversion to ICD is generally very easy because most categories of these two texts correspond well with each other. Many codes have the same number in DSM and ICD, but the descriptions differ slightly.
- Several ICD disorders do not have a corollary in DSM, and a few DSM disorders do not have an ICD corollary.
- The transition to the ICD is not very difficult. As most disorders correlate well, the process simply involves using an alternative set of diagnostic codes.
- Therapists who use a billing program that still uses the DSM should contact the program developer for a patch to allow them to use ICD codes.
- You can download the sections of the ICD online. Make a search on Google for ever changing resources. While there are many ways to access ICD online, a printed version is available in bookstores.
- Resources:
More information about ICD and how to order it
Understanding ICD-10-CM and DSM-5
4. What About Uniformity Of Electronic Claims?
- HIPAA requires all insurance companies and therapists to use identical or standardized forms for all electronic claims and other covered transactions.
- A major aspect of the original intent of HIPAA regulations is the mandate for uniformity in electronic transactions. The hope is that this will streamline claims and, therefore, reduce costs and increase efficiency.
- Under HIPAA, a handful of standardized transactions will replace about four hundred types of transactions currently in use. The American National Standards Institute (ANSI) X12N standards have been adopted for all transactions (except retail pharmacy). For mental health, the old HCFA 1500 claims form will be replaced by the X12 837 or ANSI 837 Professional Form.
- The idea is that everyone involved in the health care industry will use a common language on their claims and billing for items, such as certain uniform codes for each diagnosis, procedure and service.
- Each of the HIPAA standard transactions has a name, a number and a business or administrative use.
- The electronic forms include a standard format, standard data content, and standard codes.
- Each provider is assigned an identifier number to use with all his or her covered electronic transactions. (See section below for more details.)
- The general goal of the Rule is to have greater security and efficiency and reduce mistakes through electronic authentication that identifies each person who enters or alters information in the electronic record.
- HIPAA does NOT mandate psychotherapists to use computers, to bill electronically or use any electronic transactions. If you never bill or deal with insurance companies, you do NOT need to worry about the electronic claims aspect of HIPAA.
5. What Is The Role Of A Clearinghouse?
- Clearinghouses act as an intermediary between therapists and insurance companies. They can take your bills and translate them into electronic bills, acceptable by the insurance companies.
- Health care clearinghouses serve two functions: (a) they provide an electronic means of connecting therapists and health plan information, if therapists and health plans do not establish direct connections with each other; and (b) they translate non-standard formats into standard formats for therapists who cannot (or, soon, no longer) send or receive transactions in standard formats. See above for options using clearinghouses.
- There is no mandate for therapists to use a clearinghouse.
- Clearinghouses are business associates, which means you must have a HIPAA mandate contract before you start working with them. Most of them are likely to have such a contract ready for you. Check with them before you send them your own. Of course, carefully, review the contract and, if necessary, consult with an attorney before sign it.
6. What About The Identification Standards?
- The use of standard identifiers is one of HIPAA’s key elements. Many different identifiers are used at present, making it difficult to link health care records across different care settings and health plans.
- There are serious privacy concerns with identifiers that still need to be addressed.
- To make it easier to process, coordinate and share health care information electronically, HIPAA mandates the use of identifiers for four groups: (a) providers (including psychotherapists), (b) employers, (c) health plans and (d) individual patients.
Identification Standards for Psychotherapists:
- National Provider Identifier (NPI) is a 10-position numeric identifier for each provider or therapist. It is akin to a Social Security Number or an Employer Identification Number.
- All insurance companies dealing with therapists will use this single NPI for each therapist.
- Psychotherapists in private practice will receive their own NPI as any other health care provider, but practitioners who are employed by clinics, agencies, and counseling corporations will use the NPI that the organization has been assigned.
- Therapists who receive reimbursement from Medicare of other federal or state programs, such as Federal Employee Health Benefit Plans or Victims of Crime, should consider getting an NPI sooner after May 2005, rather than later, regardless of whether they submit claims electronically or by mail.
- Any therapists who deal with insurance companies, whether electronically or not, are likely to benefit from having an NPI, which will become the standard identifier for practitioners.
- While covered entities must obtain the NPI, a therapist, who is not a covered entity, may also obtain it (in fact is highly advised to do so).
- Obtaining an NPI does not turn a therapist, who is not a covered entity, into a covered entity.
- NPIs are issued by the National Provider System (NPS), an agency in the Center for Medicare and Medicaid Services (CMS), based on information entered into the NPS by one or more organizations known as “enumerators.” Enumerators are organizations that are responsible to assign identification standards.
- Each therapist will ultimately have one number, which s/he will use in all communications with all insurance companies and other agencies.
- Once a therapist is assigned a number it will stay with him/her for life. It would be de-activated when the therapist retires or dies.
- The NPI contains no “embedded intelligence”, that is, it contains no information about the provider, such as state, gender or even profession.
- Clarity regarding PNI will emerge by the May 2005 deadline.
Identifiers for Health Plans, Employers and Patients:
- Health Plans: The health plan identifier has been drafted to apply the work that HCFA did for a Medicare Payer ID to all health plans nationwide.
- Employers: The employer identifier is based on the de facto standard, the Internal Revenue Service assigned Employer Identification Number (EIN). The EIN has nine numeric positions. The Employer Identification Number (EIN) issued by the IRS was selected as the identifier for employers. This regulation was published in July 2002 and the compliance date is 2004.
- Patients: The patient identifier is the most controversial of the proposed identifiers even though it does not contain “embedded intelligence”, that is, it contains no information about the person, such as state or profession. A unique patient identifier may never be established.
7. What Are Code Sets?
- Code sets are any set of codes used to encode data elements, such as medical diagnostic codes, medical procedure codes or (postal) address zip codes. The codes sets include both the codes and their descriptions.
- Administrative Code Sets are non-medical code sets that characterize a general business situation rather than a medical condition or service. Under HIPAA these are sometimes referred to as non-clinical or non-medical code sets. Examples of Administrative codes include states’ abbreviations, zip codes, telephone area codes, areas of providers’ specializations or reason for denial of claim.
- Medical Code Sets are codes for medical conditions (diagnoses), treatments, settings, etc.
- More details about Code Sets
- Thousands of local codes will be replaced by standard ones. As the Rule intended, this will enable all covered entities to effectively communicate in one language. This will also put an immense burden on many states and on Medicaid, who will have to switch to the new HIPAA codes.
8. Does Medicare Mandate Electronic Billing?
- In general, in the future Medicare, like many other insurance companies, will not accept paper claims and all bills should be submitted on the new HIPAA-Standard electronic claims forms.
