An extended period of testing for compliance with electronic healthcare claims standards already is affecting the business results of claims-processing companies that had geared up for higher transaction volumes assuming an Oct. 16 deadline. WebMD Corp. announced lower-than-expected preliminary results for the third quarter ended Sept. 30, blaming the shortfall partly on lower revenues and higher costs associated with preparing its transaction division and healthcare customers for standard transaction formats required by the Health Insurance Portability and Accountability Act of 1996. The Elmwood Park, N.J.-based healthcare information company said it expected revenues of about $250 million for the third quarter, about $7 million short of a Wall Street consensus, and earnings per share of 9 cents per share, 2 cents short of analyst estimates. The CMS signaled in July that it would not hold commercial payers to a strict requirement in HIPAA regulations that they receive claims only in compliant formats as of Oct. 16. The federal agency agreed in September to continue to accept noncompliant Medicare claims past the deadline and sanctioned the same latitude for commercial payers for an undetermined period.
WebMD also revised financial estimates for the fourth quarter based on lowered expectations for revenue in the transaction services division due to the lengthening of the transition to HIPAA-standard transactions. In a statement, CEO Roger Holstein said WebMD supported the government action, adding that "a gradual implementation will achieve the objectives of not disrupting current electronic transaction flow" during the HIPAA rollout. "However, in the short term, it makes it challenging to predict when additional volumes resulting from a complete rollout of the HIPAA transaction standards will begin." The company will report final results after the stock market closes on Nov. 6. -- by John Morrissey