ENGLEWOOD, CO – A majority of medical groups have not completed critical software upgrades for transition to HIPAA Version 5010 electronics standard, nor have they scheduled testing with health plans, according to follow-up research by the Medical Group Management Association (MGMA).

Medical practices face disruptions in claims processing and other essential administrative transactions if they don't successfully implement Version 5010 by the Jan. 1, 2012, compliance date. To assist physician practices with the transition, MGMA is calling on practice management system software vendors to intensify their rollout of compliant products, and on health plans to schedule testing. MGMA has also called on the government to develop contingency plans should the industry not be ready to meet the compliance date.

[See also: 5010 national testing days announced.]

Most groups rely on their practice management system software to conduct the HIPAA electronic transactions. Only 29 percent of respondents believed their current practice management system software would permit them to use Version 5010, and 50.3 percent of respondents said their software would require an update. Also, 4.5 percent of respondents indicated their software would need to be replaced. More than 30 percent of respondents indicated they had not received any communication from their practice management software vendors regarding the change to Version 5010.

"We are growing increasingly concerned regarding the ability of medical group practices to meet the Jan. 1 deadline," said William F. Jessee, MD, MGMA president and CEO. "Our research indicates a significant number of practices have been forced to wait for their practice management system software vendors to make the required modifications before they can begin to test with clearinghouses and health plans.

[See also: Medical groups not prepared for HIPAA 5010 compliance.]

"Respondents who have already upgraded or replaced their software have incurred more than $16,000 per physician in expenses, which includes the cost of software, hardware and staff training,” Jessee said. “This is a significant expense for a medical practice in this challenging economy. It is critical that vendors communicate their readiness status and the expected transition costs to groups quickly to permit practices to appropriately budget and plan."

MGMA's research also found:

• Implementation – Many respondents (45.2 percent) stated they have not started their implementation of Version 5010; 45.9 percent have partially completed implementation, and only 2 percent reported they had completed implementation.
• Testing –  Nearly 40 percent of respondents (38.2) indicated internal testing had not yet been scheduled; 40.8 percent said they planned to start testing between March 2011 and December 2011. Another 2 percent did not plan to start internal testing until after January 2012 (the deadline for compliance with the new standard), while 9.2 percent of respondents had started to test.

A large number of respondents (49.7 percent) reported that external testing had yet to be scheduled with major health plans; only 2.7 percent reported that this external testing had already been initiated with all of their major health plans.

"As only six months remain before the compliance date, the Centers for Medicare & Medicaid Services must aggressively augment its outreach to both physician practices and practice management system vendors," Jessee said. "MGMA urges the government to institute an appropriate contingency plan to avoid widespread cash flow disruption in the industry, should dramatic improvements in the implementation status of providers not be observed in the next few months."

MGMA and the American Medical Association have jointly developed several tools to help practices meet the new requirements, such as the Selecting a Practice Management system Toolkit and the Practice Management System Software Directory.