Bumps in the road to the implementation of the national provider identifier process.

“We’re from the Government, and we’re here to help.” Famous last words, and how often we’ve heard them, smiled wryly, and joked to each other. “Yeah right, just what we need — more help from the government.” And yet, at least in the case of NPI (National Provider Identifier), it seems as if for once the government has initiated a process that really could help, even if some on the business side of medicine have not yet fully benefited from its promise to simplify claims submission and processing, and speed up payments.

May 23, 2008, signaled the “drop-dead” date by which all physicians were to have obtained and to have started using unique provider numbers, a NPI, for submitting HIPAA-compliant claims to Medicare, Medicaid and commercial third-party payors. NPI is a component of HIPAA (Health Insurance Portability and Accountability Act), and a mandated protocol that should have portended immediate and profound administrative simplification and cost-savings for medical business offices.

Rather than having to keep track of and submit different provider ID numbers to each payor, the NPI strips away the “bloat” and allows offices to program their billing software with unique identifiers that, according to plan, assure claims routed to any payor are processed quickly, with payments then sent to the correct address. However, the devil is always in the details.

Almost every physician is now using a NPI. For many business offices the transition has gone quite smoothly, and for some it has been almost a non-event. However, for others the problems associated with moving from legacy identifier to NPI range from manageable inconvenience to chaotic cash flow disruption with seemingly endless frustration.

Initial Reports Show High Rejection Rates

On May 29, 2008, Modern Healthcare Online filed one of several early reports that the mandated switch to NPI was not going as smoothly as hoped. Various claims processors were reporting immediate, two-fold increases in rejection rates from “the Blues,” four-fold rejection increases on Medicare claims, and even higher increased rejection rates for Medicaid.

One of the largest clearinghouses, Emdeon (approximately 300,000 providers), had rejected 24% of post-May 23 Medicare claims compared to a 6% rejection rate prior to May 23. And as reported in the June 9, 2008, issue of Part B News, that 400% jump represented 74,000 rejected claims totaling about $34 million in pending payments — certainly not pocket change. In addition, Emdeon reported rejecting 26% of Medicaid claims vs. 4% prior to May 23.

And Emdeon was not the only entity reporting disturbing claims rejection rates across all medical specialties. American Medical Billing Association, an industry trade group, cited one example where only 12 physicians of a 42-physician group in California were successful at getting their claims paid.

Yet other entities reported less dramatic increases. For example, according to Part B News, Gateway EDI (approximately 40,000 providers) noted only a nominal rise, from 5% to 7.5%. And while opinions vary as to the reasons for the great disparities, it seems that the answer may depend in significant part on how non-compliant claims are processed on their way to payment.

For example, an executive at Emdeon told Part B News that his company’s rejection rates were high because Emdeon won’t automatically strip legacy identifiers from claims unless there is written instruction to do so. On the other hand, Gateway routinely does strip legacy identifiers. And when a clearinghouse strips the legacy identifier or takes some other proactive step to “clean” the claim before passing it on for payment, that action reduces the aggregate rejection rate.

Are the Problems Localized or Widespread?

Some, but certainly not all problems seem localized to one state, one plan or one intermediary. For example, one Florida administrator commented to me that while her practice is not experiencing unusual denials from other payors as a result of NPI implementation, Medicaid is rejecting claims if only the NPI is included. At least in the opinions of some, the problem seems to be that Florida Medicaid was not ready on May 23 and, therefore, until that situation changes, practices still must include the legacy numbers in order to get their claims paid.

A California administrator reported to me that her billing department was having a lot of problems with the interface between its practice management software system and clearinghouse.

“We use Emdeon but cannot get reports from them, even after our practice management system’s first NPI software upgrade. Our software vendor refuses to support any clearinghouse other than ENS, even though they originally contracted with Emdeon,” she explained. “We tried going directly through Emdeon, but our practice management system doesn’t interface, and we’d have to hand-key every claim into their Web site, doubling our work since we can’t simply download claims from our system and then upload them to Emdeon.

“We continue to have issues with NPI because of our software vendor. They neglected to include a component in our NPI upgrade, and after two failed attempts by them to download the necessary information we were finally able to get the upgrade into the system — presumably, this time, including everything. We are now awaiting the ‘verdict’ on our first EDI transmission to Medicare.”

Why So Many Problems When it Seems as if This Should be so Simple?

How hard can this be? On each claim, insert the NPI into applicable fields requiring provider identification.

Apparently even that simple instruction can be misread, misinterpreted or misapplied. Take your pick — some billing departments simply are not getting it right. So where’s the confusion? What makes the seemingly simple so difficult?

CMS reports that practitioners and claims processors overwhelmingly are NPI compliant, and that 95% of all claims are submitted with the required NPI number. However, despite the inclusion of the NPI, a few problems are repeatedly cited as the main reasons claims are being rejected. Among the most common are:

• The Employer Identification Number (EIN) or Social Security Number (SSN) submitted to Medicare does not match the Taxpayer Identification Number (TIN) on the Medicare “crosswalk.”
• When an EIN or SSN is submitted (not mandatory), the specific qualifiers for the EIN or SSN are not included.
• The provider ID is invalid or missing altogether.
• The provider’s NPI or EIN are not on the “crosswalk.”
• The provider’s NPI and TIN are not tied in the payor’s database.
• A Medicare legacy identifier is incorrectly submitted in the primary and/or secondary provider loops. (Since legacy numbers are no longer used in any Medicare transaction, inclusion of one will automatically trigger a rejection.*)

And so we have a bifurcated (trifurcated?) problem starting with the medical practices and then, in some cases, compounded by clearing houses and/or payors. Perhaps billing offices are entering a NPI in the appropriate field(s), but then they’re also tagging on extraneous, or even unwanted information that causes a “hiccup” in the processing. If an intermediary “cleans” the claim, it can then go for payment (where it might still be rejected). But if, instead, the intermediary rejects the claim rather than removing the unwanted data, then it’s back to square one for the billing office staff. In all of that there should be some clues to reduce chances that claims will leave a business office in anything but “perfect” condition for payment.

Even so, when you peel back the layers of this onion, the causation of most of the problems may be quite simple. And it all begins with the affected practices, those darned legacy numbers, and how physicians originally applied to their various payors.

How the (Supposedly) Simple Became Complicated

Suppose a physician originally applied to Medicare using his name, John Jones, MD, and social security number. For years, staff submitted claims and there were no problems. Now along comes NPI, and his staff files the application for an NPI number, this time using the practice’s new legal name, Dermatology Associates, PC, and an EIN.

But by using the new legal name and EIN on the application, practice staff unknowingly starts a series of events that will lead to huge problems. The Medicare legacy crossover tax identification number doesn’t match, and with the mandatory use of NPI as of May 23, suddenly some/many/all of Dermatology Associates’ claims are rejected, and cash flow drops.

Why did that happen? Because the practice’s name and the number used to file federal taxes (SS or EIN) must be the same as those used on the NPI application. If the identifiers used to file taxes are not the same as those shown on the NPI application, the process is interrupted. Similarly, if the addresses on file with Medicare and on the NPI application were not identical, then claims won’t be paid since Medicare doesn’t forward mail (to prevent fraud).

Unfortunately, Medicare never made this clear in the months (years) leading up to May 23. How many of the current problems could have been prevented if only medical practice staffs had known to check to see that their NPI applications used the same name, ID number, and address as currently used for filing federal taxes – not the information those practices might have used when originally applying to Medicare years ago?

Now it would seem that there should be a simple corrections form that practices could use to get these identifiers correctly aligned. But no, remember with whom you’re dealing — it’s the government. And nothing is simple.

Without an easy way to correct the demographic information, when they learned of the crossover irregularities many business offices figured the solution lay in filing new applications that included the correct numbers. But then the doctor had two NPI applications in the system, both in all likelihood working against each other and exacerbating the problem rather than moving it toward a solution.

If that were not enough, some practices suddenly found that their carriers had changed. Billing offices were dealing with new entities, new procedures and innumerable new opportunities to throw monkey wrenches into the works.

Fighting the Right Battle

Inga Ellzey, President/CEO of Inga Ellzey Practice Group, Inc., and Dermatology Billing Associates (a national billing service) points out that physicians who find themselves in a NPI mess first have to know the source of their problem(s) if they’re to get back on track. Simply filing another application won’t open the payment spigot.

For example, assume there are two associated issues complicating a practice’s implementation of NPI. And assume that the fix for issue “B” is predicated on “A” being correct. If the practice does not know about “A,” or does not know about this precondition and attacks issue “B,” it’s only wasting time and resources fighting the wrong battle.

So while a practice may find it necessary to effect a fix with its software vendor, endless angry calls to that vendor likely won’t get claims paid if the business office has not already confirmed that the physician’s NPI application data is congruent with the tax filing information. Battles must be prioritized, and so the first thing to check is how the practice files its taxes. Everything else flows from that starting point.

This may mean the practice has to make some changes in the information used to identify the physician so that everything reports in parallel with the federal tax return.

Looking Ahead

The clearinghouses and payors are painting a rosy picture for the future. All of them likely anticipated initial spikes as legacy numbers were dropped and the NPI became the requisite piece of data. But the initial “hiccups” should quickly disappear and rejection rates should decline as systems run more smoothly and as claims become increasingly more compliant.

Could some of the clearinghouses and software vendors and payors have been better prepared before May 23, and then delivered much better support immediately following? As noted above in the problems described by the California administrator, absolutely. But then it’s also clear that some number of billing offices were not ready to hit the ground running.

Some practices significantly dependent on Medicare now find themselves unable to submit claims to CMS. Without pointing accusing fingers, what about these unfortunates caught up in a nightmare and experiencing severe cash flow problems yet to be resolved?

There may be a lifeline available. CMS announced an advanced payment program that will be available to some physicians experiencing cash flow problems. Physicians should contact their carriers to determine if they might qualify. Carriers will make determinations on a case-by-case basis.

Gil Weber is a nationally recognized author, lecturer and practice management/ managed care consultant to physicians and industry. He can be reached at (321) 255-6018 or by e-mail at:
gil@gilweber.com. Also, visit his Web site at www.gilweber.com.