Version 5010: More Than a Software Update

Published in Coding Edge – April 2010

Without Version 5010, ICD-10 implementation can’t happen at your practice.


In February’s Roadmap to ICD-10, we focused on ICD-10’s impact on your practice or facility and how to get ready. Now, let’s focus on the impact of Version 5010 implementation.

Version 5010 of the electronic data interchange (EDI) must be implemented no later than Jan. 1, 2012. Lately, you might see a focus on getting ready for 5010 implementation. This is an important first step to ICD-10 implementation success.

Know 5010’s Importance

If you are unfamiliar with Version 5010, here is its background. The Health Care Insurance Portability and Accountability Act (HIPAA) requires the Office of the Secretary, U.S. Department of Health and Human Services (HHS) to adopt standards for all covered entities to use when conducting certain health care administrative transactions electronically. These include claims, remittance, eligibility, and claims status requests and responses. The current transaction standard is x12 Version 4010A. This version is outdated and will not work with ICD-10. Version 5010 is marked for improvement. According to HHS proposed rule (Federal Register, Vol. 73, No. 164, Aug. 22, 2008), “operational and technical gaps still exist in Version 4010A. In addition, it has been more than 5 years since implementation of the original standards, and business needs have evolved during this time.” To migrate to ICD-10, Version 5010 implementation is necessary as Version 4010A cannot accommodate the expanded code sets of ICD-10-CM and ICD-10-PCS.

Benefits of Transitioning to 5010

The switch to Version 5010 EDI architecture allows for transaction differentiation between ICD-9-CM and ICD-10-CM/PCS. Many of Version 5010’s changes will correct deficiencies in Version 4010A.

Version 5010 has four basic changes from 4010A:

  • Front matter – identifies the purpose and business information related to transactions.
  • Technical – assures that transmitted data is more understandable.
  • Structural – modifies the physical components of the transaction. For example, the name segment which includes a first, middle, last name, and name prefix and suffix.
  • Data content improvement – allows for ICD-10-CM/PCS code sets support.

Version 5010:

  • Improves clarity in provider loops (or fields);
  • Supports ICD-10-CM/PCS;
  • Clarifies National Provider Identifier (NPI) instructions;
  • Requires guarantor/dependent information on eligibility responses;
  • Improves coordination of benefit (COB) transactions by telling payers which transactions are primary versus secondary, enabling correct provider payment during the initial submission;
  • Reduces “syntax error” related denials;
  • Improves tracking;
  • Allows for multiple identifiers;
  • Limits responses to the claims where an inquiry is made;
  • Introduces 45 new service type codes; and
  • Provides improved usability for eligibility transactions (specifically the 270 and 271 eligibility responses).

Electronic transaction code sets are used in the physical transmission of health care data. ICD-10-CM will be the code set used to identify specific diagnoses in submission of claims, related transactions, and clinical reporting. Because Version 4010A cannot accommodate the seven digits of specificity that exists in ICD-10 (versus the five digits in ICD-9), Version 5010 is a prerequisite to ICD-10-CM and ICD-10-PCS implementation.

Version 5010 also promises to decrease the time staff currently spend looking up information and making phones calls to verify eligibility, claim denials, and appeals.

Ensure Readiness

Version 5010 is more than a software update. Many organizations will require practice management and electronic health record (EHR) system upgrades. The American Recovery and Reinvestment Act of 2009 (ARRA) financial incentives for physicians who adopt an EHR make this a great time to do it. As a bonus, the conversion will drive automation and increase reporting of quality performance measures. This is something to think about considering administrative and clinical data may be required for quality measures in the future. Clinical data could be the driving factor for payment of claims and performance bonuses.

If you think your vendor will contact you with the upgrade, you are wrong. You must contact your vendor and find out its progress. Ask your vendors for guidance, “What do I need to do to get ready?” Again, this is not a simple software upgrade. If you don’t implement 5010 by the deadline, your claims will not be processed and this will affect the financial health of your organization.

Important: DO NOT expect regulatory delays for Version 5010 or ICD-10 implementation—CMS begins testing 5010 this spring. Non-compliance of this HIPAA mandate is punishable by fines, which are a minimum of $100 per transaction, up to $50,000 a year annually, per transaction. Get on your vendor’s schedule for guidance, implementation, testing, and training.

For Version 5010 and ICD-10 implementation industry milestones, see Table A.

Table A: Timeline for Version 5010 and ICD-10 Implementation

Target Date Milestone
January 2009 Begin level 1 activities (gap analysis, design, and development).
January 2010 Begin internal testing for version 5010.Begin initial ICD-10 implementation and compliance activities.
December 2010 Achieve level 1 compliance (covered entities have completed internal testing and send and receive compliant transactions; includes software vendors, providers, and clearinghouses).
January 2011 Begin level 2 testing activities (external testing with trading partners and move into production: dual 4010A1/5010 processing mode).
Jan. 1, 2012 Full compliance with 5010. Transition must be complete.
Oct. 1, 2013 Full compliance with ICD-10. Compliance must be complete.ICD-9-CM codes will not be accepted for service dates on or after Oct. 1, 2013.


Typically, these activities are performed by your vendors. If your organization employs information technology (IT) staff, who either have built or customized your system(s), it is important to understand what activities must occur. If you are using vendors for your systems, including practice management, financial, EHR, etc., it is important to have an idea where they are in the process toward compliance.

Level 1 activities include:

  • Timeline development
  • Gap analysis
  • Project charters, budgets, and work plans
  • System design specification
  • Development and internal testing
  • Software delivery
  • Internal testing (provider)
  • Transaction certification in preparation for level II activities
  • Begin ICD-10 implementation activities

Level 2 activities include:

  • External testing between trading partners (provider, clearinghouse, and payers)
  • Migration to production following successful testing with each payer
  • Begin ICD-10 implementation activities
  • Full Compliance

Organization-wide training is crucial after implementation and testing, not only for the vendors but for anyone involved in the billing process for new content usage. To assure individuals can properly handle the transactions after Jan. 1, 2012, train them well in advance.

Version 5010 Implementation Tips:

Start early Begin the process now
Perform a gap analysis (This is CRITICAL.). Identify new content applicable to your organization.Identify deleted content—how does it impact your organization?

Identify changed content.

Identify business issues and determine their impacts.

Engage your vendors early. Identifying issues early provides the vendor with time to react to the problems or issues at hand.Vendors may view a guide requirement or situation differently than the provider.

Be persistent with your requirements and interpretation.

Communication Communicate and coordinate with your trading partners early and often.Contact all your vendors for their timeline and roll-out plan. Push them for timely delivery of HIPAA compliant solutions.

Contact trading partners to determine readiness and testing.

Collaborate with vendor to resolve issues.

Join your vendor user-group meetings—this also will help with ICD-10 implementation issues.

Resolve business issues early and communicate solution to your trading partners.

Many business problems can be averted if identified early.

Testing Early testing with trading partners is critical.It is important to understand testing timelines to coordinate with the organization.

Determine if you need new contract agreements.

Review payer specifications outlining their expectations.

Make necessary adjustments and resolve problems with payers.

Address other technical or business-related issues.

Implementation Start with your highest volume payer and test with production data.Resolve all problems and differences and move into production.

As payers become ready, repeat the process with each payer.

Monitor progress to ensure you have all payers into production by January 2012—this might take many months.

Test again with several payers closer to the compliance date.


Time to Assess Vendors

Engage your vendors now for 5010 implementation. If a vendor says they will not be ready or do not have a timeline established, think about changing vendors. Find out if your vendors are providing this update at “no charge” or if there is a fee for the update.


Remember: It is YOUR responsibility to ensure HIPAA compliance, not the vendor. Get ready. Get set. Implement!

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