On August 22 CMS published the proposed rule for public comment on industry conversion to new versions of the transaction sets now being used to bill claims and reconcile payments, as well as several ancillary transactions. The compliance date for the new versions — 5010 of the X12 standards and D.0 of the NCPDP standard — is April 2010. These will replace X12 version 4010/4010A and NCPDP version 5.1. Medicaid programs would be required to use the NCPDP version 3.0 Medicaid Subrogation Standard when billing third-party payers that may be responsible for payment.

Behind the reasoning for the new versions is that the current X12 standard in use cannot handle ICD-10 codes. CMS wants to replace the ICD-9 code set with ICD-10, and issued a separate proposed rule about this on the same date. In addition, since the launch of Part D, it was necessary to invoke workarounds with the NCPDP version 5.1 to accommodate the coordination-of-benefit requirements of Part D claims.

The proposed date for compliance with the new standards is April 2010. However, based on industry experience with the transition to the HIPAA standards now in use, this deadline may be overly optimistic.

CMS estimates that the cost of converting to 5010 of the X12 835 (the required electronic transaction for payment reconciliation), and D.0 will total $95.1 million to $183.6 million. Included is an estimated higher monthly software maintenance fee for independent pharmacies, which CMS sees as the only cost to independents. CMS pegs this at $540,000 to $1,080,000 for 18,000 independents. This comes to $30 to $60 a year per pharmacy. My guess is that it will be $30 to $60 per month, not per year.

CMS feels that the benefits from using the new standards will more than offset the costs involved. These savings will be derived from higher pharmacist and technician productivity from not having to spend time trying to get claims successfully adjudicated, avoiding audits, getting more accurate payments, and seeing the overall improved operational savings that better standards will bring. According to CMS, based on the enhancements to D.0, the pharmacy would be transmitting the correct fields with the correct data with more detailed pricing information — so pharmacies would be paid correctly, patients would be paying the correct co-pay, and there would be fewer recoupments or refunds when a pharmacy is overpaid for a claim. The savings anticipated would be $1.4 billion to $2.8 billion. This would, in theory, spin off net savings of $1.3 to $2.8 billion. I remind you, these are the government’s estimates, not mine.

I throw these numbers out in order to grasp the cost of moving to new standards. As for the savings projected by CMS, whether these are ever realized is anyone’s guess. I do know that when we moved from 3.2 to 5.1, the savings projected at that time quickly evaporated due to all the implementation problems the industry experienced. The transition to new standards never goes smoothly. There are just too many moving parts.

To download a copy of the proposed rules from the August 22 Federal Register for the transaction and code sets, go to http://edocket.access.gpo.gov/2008/pdf/E8-19296.pdf and http://edocket.access.gpo.gov/2008/pdf/E8-19298.pdf. I welcome your comments on all of this, so feel free to email me at wal@computertalk.com.  CT

Bill Lockwood is the publisher of ComputerTalk.