DEPARTMENT OF HEALTH AND HUMAN SERVICES 
OFFICE OF 
INSPECTOR GENERAL 
HIPAA Readiness: 
Administrative Simplification 
for Medicare Part B Providers 
Inspector General 
June 2003 
OEI-09-02-00422  O I G
FFICE OF  NSPECTOR  ENERAL

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, 
is to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as 
the health and welfare of beneficiaries served by those programs.  This statutory mission is carried out 
through a nationwide network of audits, investigations, and inspections conducted by the following 
operating components: 
Office of Audit Services 
The OIG's Office of Audit Services (OAS) provides all auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits examine the 
performance of HHS programs and/or its grantees and contractors in carrying out their respective 
responsibilities and are intended to provide independent assessments of HHS programs and operations in 
order to reduce waste, abuse, and mismanagement and to promote economy and efficiency throughout the 
Department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management and program 
evaluations (called inspections) that focus on issues of concern to the Department, the Congress, and the 
public.  The findings and recommendations contained in the inspections reports generate rapid, accurate, 
and up-to-date information on the efficiency, vulnerability, and effectiveness of departmental programs. 
Office of Investigations 
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative investigations of 
allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment by 
providers.  The investigative efforts of OI lead to criminal convictions, administrative sanctions, or civil 
monetary penalties.  The OI also oversees State Medicaid fraud control units which investigate and 
prosecute fraud and patient abuse in the Medicaid program. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 
advice and opinions on HHS programs and operations and providing all legal support in OIGs internal 
operations.  The OCIG imposes program exclusions and civil monetary penalties on health care providers 
and litigates those actions within the Department.  The OCIG also represents OIG in the global settlement 
of cases arising under the Civil False Claims Act, develops and monitors corporate integrity agreements, 
develops model compliance plans, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.  E X E C U T I V E   S U M M A R Y  
OBJECTIVE 
To determine if Medicare Part B providers expect to comply with the electronic data 
transaction standards and code sets mandated by the Health Insurance Portability and 
Accountability Act (HIPAA) by October 2003. 
BACKGROUND 
The purpose of Title II of HIPAA is to improve the efficiency of the health care system by 
establishing standards to facilitate the electronic transmission of data between providers and 
payers.  Electronic data interchange can eliminate the inefficiencies associated with handling 
paper documents. It reduces administrative costs and improves overall data quality for 
transactions, such as health care payments and coordination of benefits.1 
In accordance with the provisions of Title II of HIPAA, the Secretary of Health and Human 
Services has promulgated regulations mandating the use of specific standards for eight different 
types of electronic transactions and medical code sets. Covered entities that filed an extension 
must implement the standards by October 16, 2003. 
This report is based on the results of a mail survey of a stratified random sample of Medicare 
Part B providers, which includes, among others, physicians, durable medical equipment 
suppliers, and independently-practicing therapists that submitted claims to Medicare carriers 
between July 1, 2001, and June 30, 2002. 
1
65 FR 50312 (August 17, 2000) 
i 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422 FINDINGS 
Ninety-four percent of Medicare Part B providers expect to be in compliance with 
HIPAA standards by October 2003 
According to respondents, Medicare Part B providers are making significant progress in 
meeting the HIPAA deadline. Ninety-four percent of Medicare Part B providers indicated a 
moderate to high level of satisfaction that they will meet the October deadline.  Approximately 
half of the providers are developing contingency plans in the event their system is not in 
compliance by October 2003. 
External barriers may affect compliance 
Approximately 47 percent of the respondents who listed potential barriers to compliance 
expressed concerns that vendors and trading partners could affect their ability to meet the 
compliance deadline. 
CONCLUSION 
According to respondents, Medicare Part B providers are making progress toward meeting the 
compliance target of October 16, 2003, for implementing the HIPAA electronic transaction 
standards and code sets.  Ninety percent or more of the providers have developed 
implementation schedules and internal and external testing strategies, and are working with 
system vendors to implement the electronic standards.  Furthermore, more than 85 percent are 
relying on their professional associations to assist them in developing implementation strategies. 
When asked about barriers to achieving compliance, respondents expressed concern that 
vendors and trading partners may affect their ability to meet the compliance date. 
ii 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  T A B L E   O F   C O N T E N T S  
PAGE

EXECUTIVE SUMMARY ...................................................... i

INTRODUCTION ............................................................. 1

FINDINGS  .................................................................. 5

Anticipated compliance  ....................................................5

External barriers .......................................................... 7

CONCLUSION  .............................................................. 8

APPENDIX A:  Glossary of selected HIPAA-related terms and acronyms  ..................  9

APPENDIX B:  Confidence intervals for key survey questions ..........................  10

APPENDIX C:  Nonrespondent analysis  ..........................................  13

ACKNOWLEDGMENTS ..................................................... 15

iii 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  I N T R O D U C T I O N  
OBJECTIVE 
To determine if Medicare Part B providers expect to comply with the electronic data 
transaction standards and code sets mandated by the Health Insurance Portability and 
Accountability Act (HIPAA) by October 2003. 
BACKGROUND 
Congress instituted significant reforms to the health care industry with the passage of HIPAA. 
Title I of HIPAA ensures the availability and portability of health care insurance coverage, while 
Title II creates a regulatory framework to improve the efficiency of the health care system by 
establishing standards that will facilitate the electronic transmission of data between providers 
and payers.  (See Appendix A for a glossary of HIPAA-related terms and acronyms.)  The 
goal is to create a seamless transfer of data with limited manual intervention. 
Administrative Simplification 
Under Title II, Subtitle F (Administrative Simplification), the Secretary of Health and Human 
Services has the authority to: (1) mandate the use of standards for the electronic exchange of 
health care data, (2) specify what medical and administrative code sets should be used, (3) 
require the use of national identification systems, and (4) specify the types of measures required 
to protect the security and privacy of personally-identified health care information. 
Electronic Transactions and Code Sets 
Electronic data interchange (EDI) is the electronic transfer of information in a standard format 
between trading partners. Compared to paper transactions, EDI substantially reduces handling 
and processing time by reducing the administrative burden, lowering operating costs, and 
improving overall data quality.2 
Transactions are the exchange of information between two parties to carry out financial or 
administrative activities related to health care.  The standards for electronic transmission of each 
of the transactions are codified in the Code of Federal Regulations 
2
65 FR 50312 (August 17, 2000) 
1 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422 (45 CFR Parts 160 and 162).  The rule provides standards for eight types of electronic 
transactions: 
1.  Health care claims or equivalent encounter information 
2.  Health care payment and remittance advice 
3.  Coordination of benefits 
4.  Health care claim status 
5.  Enrollment and disenrollment in a health plan 
6.  Eligibility for a health plan 
7.  Health plan premium payments 
8.  Referral certification and authorization 
The rule also contains requirements concerning the use of standardized code sets, such as 
medical diagnostic codes and medical procedure codes to encode data elements in the 
transactions.  The following code sets have been adopted.3 
<  International Classification of Diseases, 9th Edition, Clinical Modification 
(ICD-9-CM), Volumes 1 and 2 
<  International Classification of Diseases, 9th Edition, Clinical Modification, Volume 3 
Procedures 
<  National Drug Codes (NDC) for retail pharmacy transactions 
<  Code on Dental Procedures and Nomenclature 
<  Combination of Health Care Financing Administration Common Procedure Coding 
System (HCPCS) and Current Procedural Terminology, Fourth Edition (CPT- 4) for 
physician services and other health care services 
<  Health Care Financing Administration Common Procedure Coding System (HCPCS) 
for all other substances, equipment, supplies, or other items used in health care services 
Covered entities, defined as clearinghouses, health plans, and providers that use the electronic 
exchange of health information as part of their business, will be required to adopt these 
standards. The compliance date for this rule (45 CFR Parts 160 and 162) was originally 
October 16, 2002.  The Administrative Simplification Compliance Act, signed into law on 
December 27, 2001, extends the compliance date by 1 year to October 16, 2003. The 
extension applies only to those covered entities that filed an extension with the Centers for 
Medicare & Medicaid Services (CMS) by October 16, 2002. For these entities, October 16, 
2003, is the compliance date. Since the implementation date is several months away, CMS has 
not yet developed standards to measure compliance. 
3
45 CFR  160.1002 
2 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422 METHODOLOGY 
This is one in a series of HIPAA readiness surveys. We used a mail survey as the primary tool 
to conduct this evaluation. We mailed surveys during the week of December 2, 2002. We 
conducted two follow-up mail requests during the weeks of January 13, 2003, and January 27, 
2003.  We tracked those providers for which we could not find a current address or phone 
number through state licensing boards, the Unique Physician Identification Number registry, 
Medicare carriers, hospitals, and billing services. We continued to mail surveys and obtain 
survey responses through fax and telephone interviews until April 4, 2003. 
We selected a stratified random sample of 150 Medicare Part B providers who submitted 
claims to Medicare carriers between July 1, 2001, and June 30, 2002. Stratification allowed us 
to test for differences in compliance strategies, contingencies, and barriers among providers, 
based on the number of claims they submitted to Medicare.  We divided the providers into 
three strata: 
Number 
Number of  Size of  Sample  Percent of 
Stratum  of 
Claims  Population  Size  responses 
responses 
1 to 500 
1  1,607,207  50  40  80.0% 
claims 
501 to 5,000 
2   324,847  50  45  90.0% 
claims
5,001 claims 
3   13,325  50  43  86.0% 
or more
TOTAL  1,945,379  150  128  85.3% 
We randomly ordered the population of providers within each stratum. We then selected the 
first 50 providers in each stratum that were covered by HIPAA, were still in business, and were 
not under investigation by the Office of Inspector Generals Office of Investigations. 
Our unweighted response rate was 85.3 percent. We had an 81.9 percent weighted response. 
Of the 128 respondents, 107 were physicians, 12 were durable medical equipment suppliers, 
and the rest were independently-practicing therapists, chiropractors, clinical social workers, 
nurse anesthetists, clinical laboratory, or portable x-ray suppliers. Practice administrators, 
business owners, billing services managers, financial officers, compliance officers, and clinic 
managers, who identified themselves as the person 
3 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  responsible for coordinating the HIPAA Simplification Regulations, completed the surveys. 
For weighted estimates of key survey questions along with their corresponding confidence 
intervals, see Appendix B.  We also tested for differences among the three strata for six of the 
questions (see Appendix B).  We performed a nonrespondent analysis by strata and type of 
provider.  In addition, we tested for differences between early and late responders.  Our 
nonrespondent analysis did not detect a bias with respect to those factors (see Appendix C). 
The estimates given in this report are based on the portion of the sample who responded to our 
survey. 
We surveyed the providers about their level of readiness in four broad areas: 
1.  Assessment and awareness activities 
2.  Barriers that have impeded or are current obstacles to achieving compliance 
3.  Compliance strategies, such as sequencing and testing plans 
4.  Contingency planning 
We did not independently verify the accuracy of the responses. 
The inspection was conducted in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency. 
4 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  F I N D I N G S  
We conducted a mail survey of a stratified random sample of Medicare Part B providers. Our

response rate was 85.3 percent.  Overall, according to respondents, Medicare Part B

providers are making progress toward meeting the compliance deadline of 

October 16, 2003, for implementing the HIPAA electronic transaction standards and code

sets. Ninety-four percent expect to be in compliance by the deadline.

Ninety-four percent of Medicare Part B providers expect to be 
in compliance with HIPAA standards by October 2003 
Almost all Medicare Part B providers submitted a compliance extension form.  As a result, they 
have until October 16, 2003, to implement the electronic transaction standards and code sets. 
Ninety-four percent4 (representing 96 percent of the Part B claims) of Medicare Part B 
providers indicated a moderate to high level of satisfaction that they expected to meet the 
HIPAA compliance deadline. At the time of our survey, 88 percent of the providers expressed 
a moderate to high level of satisfaction that they were ready to implement the HIPAA electronic 
standards. 
Providers have developed internal and external testing strategies 
Approximately 90 percent of the Part B providers said that they either have or intend to 
develop a testing strategy that includes internal and external data interfaces.  Overall, 
46 percent have begun some level of testing.  Slightly more than half of the providers said that 
they had received notices from carriers regarding coordination of transaction testing. 
Providers are developing implementation strategies to achieve compliance 
Part B providers indicated that they are developing plans to meet the compliance date.  Ninety-
six percent of the providers plan to, are in the process of, or have completed an implementation 
schedule.  Approximately 95 percent of the providers said they plan to or  are currently 
working with systems vendors to implement the standards. More than 80 percent of the 
providers are using a clearinghouse.  Of those, more than 90 percent will continue to do so. 
Since the majority of providers indicated they were using clearinghouses and working with 
vendors to integrate compliant systems, most of the implementation strategies include a 
combination of the following: 
4
This 94 percent is based on survey respondents. As a weighted percent of the entire sample of 
150 providers, 18.1 percent did not respond to the survey, 77.2 percent indicated that they had moderate to high 
expectations that they would be compliant, and the remaining 4.7 percent indicated that they had low expectations 
that they would be compliant. See Appendix C for our nonrespondent analysis. 
5 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  1.  Using internal staff to plan, develop, and implement the standards 
2.	 Hiring a technical systems consultant or vendor to take full responsibility for planning, 
developing, and implementing the new standards 
3.	 Purchasing components of a new system or additions to the current system from a 
vendor to meet the standards 
According to respondents, providers are using expert resources outside their organization to 
help implement the HIPAA standards and code sets.  More than 85 percent stated that they 
have used or plan to use their professional associations for information to assist them in 
developing implementation strategies. 
Sixty-eight percent of the respondents indicated that they plan to purchase or already have 
purchased new system components as part of their implementation strategy. However, only 27 
percent said that they or their contract vendors had conducted any cost-benefit analysis. 
Although 94 percent of the providers expressed a moderate or higher level of satisfaction that 
they will be compliant, more than 50 percent indicated that they were developing contingency 
plans in the event their system is not compliant by October 2003. 
Implementation strategies vary according to providers claims volume 
As part of our analysis, we reviewed the responses from six questions regarding implementation 
strategies among the survey strata. We found a significant variation in responses to the 
question, Does your organization have a sequencing (prioritization) strategy for implementing 
the HIPAA electronic transactions? We found that providers that file between 1 and 5,000 
claims (strata 1 and 2) are less likely to use a sequencing strategy. This may be attributed to 
the systems these providers are using currently to transact their claims. For example, billing 
services may be purchasing ready to use software with all of the new transactions 
implemented simultaneously. The point estimates and the chi-square test information regarding 
the relationships are included in Appendix B. 
6 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  External barriers may affect compliance 
When asked to list as many as three barriers to compliance, 47 percent of the respondents 
listed one or more.  The most common were: 
<  Vendors may not meet the implementation date. 

<  Third party payers, trading partners, and carriers may not be compliant.

<  Implementation is costly.

The majority of the respondents who cited barriers expressed concerns that external entities, 
over which they have no control, may affect their ability to transmit and receive HIPAA 
compliant transactions. 
7 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  C O N C L U S I O N  
According to respondents, Medicare Part B providers are making progress toward meeting the 
compliance target of October 16, 2003, for implementing the HIPAA electronic transaction 
standards and code sets.  Ninety percent or more of the providers have developed 
implementation schedules and internal and external testing strategies, and are working with 
system vendors to implement the electronic standards.  Furthermore,  more than 85 percent are 
relying on their professional associations to assist them in developing implementation strategies. 
When asked about barriers to achieving compliance, respondents expressed concern that 
vendors and trading partners may affect their ability to meet the compliance date. 
8 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  A P P E N D I X  A 
Glossary of Selected HIPAA-related Terms and Acronyms

Administrative Simplification:  the use of mandated standards for the electronic exchange of health 
care data and specific measures to protect the security and privacy of personally identifiable health care 
information. 
Clearinghouse:  an entity that processes information received from one entity in a nonstandard format 
into a standard transaction, or receives a standard transaction and converts it to a nonstandard format for 
a receiving entity. 
Code Set:  the tables of terms, medical concepts, diagnostic codes, or procedure codes and descriptions 
used to encode information in a transaction. 
Contingency Plan:  a plan developed by covered entities to provide an alternative for submitting or 
receiving HIPAA electronic transactions after October 2003, in the event that the covered entitys system 
conversion fails or is incomplete. 
Covered Entity:  any health plan, health care clearinghouse, or a health care provider who transmits any 
health information in electronic form in connection with a transaction covered by the HIPAA standards. 
Electronic Data Interchange (EDI):  any electronic exchange of formatted data. 
EDI Translator:  a software tool for accepting an EDI transmission and converting the data into another 
format, or for converting a non-EDI file into an EDI format for transmission. 
Medicare Part B Provider:  includes physicians, durable medical equipment providers, diagnostic 
laboratories, radiology services, chiropractic services, nurse practitioners, and physician assistants. 
Sequencing:  a process plan developed by a covered entity to implement each of the transaction 
standards in a logical sequence. 
Standard Transactions:  the exchange of information between two parties that complies with the 
requirements established under HIPAA. 
Trading Partner:  an external entity, such as a customer, with whom the covered entity does business. 
A trading partner can be so designated for some purposes and considered a business associate for other 
purposes. 
Translator: see EDI translator. 
Vendor:  software and/or hardware entities that provide HIPAA compliant services, consulting, and/or 
products to covered entities.  Vendors may be business associates or trading partners. 
9 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  A P P E N D I X  B 
Confidence Intervals for Key Survey Questions 
The following tables show the point estimates and 95 percent confidence intervals for selected statistics. 
These statistics are based on an 85 percent response rate to our survey. 
Compliance/Testing 
Point  95 Percent 
Survey Question  Response 
Estimate  Confidence Interval 
Has your organization submitted a  All respondents who 
compliance extension form under the  answered yes 
95.5%  89.9% - 100.0% 
Administrative Simplification 
Compliance Act? 
How ready do you believe your  All respondents who 
organization is, at this point, to  answered 5, 4, or 3 on 
87.5%  79.7% - 95.3% 
implement the HIPAA electronic  a scale of 1 to 5 (for levels 
transaction standards?  of satisfaction) 
How confident are you that your  All respondents who 
organization will meet the October 2003,  answered 5, 4, or 3 on 
94.2%  88.6% - 99.9% 
target for implementing the electronic  a scale of 1 to 5 (for levels 
transactions?  of satisfaction) 
Has the organization begun any testing  All respondents who 
of its applications of the HIPAA  answered yes  45.8%  33.1% - 58.4% 
electronic transactions? 
Does your organization have an overall  All respondents who 
strategy for testing its HIPAA  answered completed,  96.1%  91.9% - 100.0% 
compliant data systems?  underway, or plan to 
Does the testing strategy include  All respondents who 
internal and external data interfaces?  answered completed,  89.9%  83.0 - 96.9% 
underway, or plan to 
Has your organization received any  All respondents who 
notices from the fiscal intermediaries or  answered yes 
carriers regarding coordination of  56.3%  43.7% - 69.0% 
testing of HIPAA electronic 
transactions? 
10 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  Strategies/Contingency Planning 
Point  95 Percent 
Survey Question  Response 
Estimate  Confidence Interval 
Is your organization currently using  All respondents who 
clearinghouse(s) or other organizations  answered yes 
81.7%  72.0% - 91.5% 
to process any part of its HIPAA 
electronic transactions? 
Is your organization currently working  All respondents who 
with a systems vendor(s) to implement  answered completed,  94.9%  89.2% - 100.0% 
the HIPAA electronic standards?  underway, or plan to 
Has your organization used its  All respondents who 
professional association(s) for  answered "completed, 
85.8%  77.0% - 94.6% 
information to assist you in developing  underway, or plan to 
a transaction compliance strategy? 
Has your organization created a  All respondents who 
schedule to implement the changes in its  answered completed, 
data system to comply with the HIPAA  underway, or plan to  96.6%  92.5% - 100.0% 
electronic transaction standards 
deadline? 
Has your organization purchased new  All respondents who 
software, hardware, or system  answered completed, 
68.1%  56.1% - 80.1% 
component(s) to meet transaction  underway, or plan to 
compliance requirements 
Have you, your contracted vendor(s), or  All respondents who 
any consultants conducted a  answered yes 
cost/benefit analysis for implementing  27.4%  14.9% - 39.8% 
the HIPAA electronic transaction 
standards? 
Has your organization developed a  All respondents who 
contingency plan in the event its system  answered completed,  56.8%  43.9% - 69.8% 
is not compliant by October 2003?  underway, or plan to 
Barriers 
Point  95 Percent 
Survey Question  Response 
Estimate  Confidence Interval 
How satisfied are you with the resources  All respondents who 
your organization is committing to meet  answered 5, 4, or 3 on 
92.4%  85.5% - 99.3% 
the HIPAA electronic transaction  a scale of 1 to 5 (for levels 
standards?  of satisfaction) 
11 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  We compared responses among the three strata of providers: stratum1 (less than 
501 claims), stratum 2 (501 to 5,000 claims), and stratum 3 (more than 5,000 claims) for six 
questions, which we thought might show significant differences among strata. Only one 
question is statistically significant at the 95 percent confidence level.  Using the Bonferroni 
method for multiple comparisons, a comparison was statistically significant if the p-value was 
less than 0.05 divided by 6 or approximately 0.008. 
Compliance/Testing 
Chi-Square Test 
Point 
Survey Question  Measurement  Degrees of 
Estimate  P-value 
Freedom 
How confident are you that your  All respondents who 
organization will meet the October  answered 5, 4, or  95.0 stratum 1 
2003, target for implementing the  3 on a scale of 1  91.1 stratum 2  2  0.390 
electronic transactions?  to 5 (for levels of  97.7 stratum 3 
satisfaction) 
Has your organization begun any  All respondents who  50.0 stratum 1 
testing of its applications of HIPAA  answered yes  28.9 stratum 2  2  0.023 
electronic transactions?  55.8 stratum 3 
Strategies/Contingency planning 
Chi-Square Test 
Point 
Survey Question  Measurement  Degrees of 
Estimate  P-value 
Freedom 
Is your organization currently using  All respondents who  82.5 stratum 1 
clearinghouse(s) or other  answered yes  79.1 stratum 2 
2  0.524 
organizations to process any part of  72.1 stratum 3 
its HIPAA electronic transactions? 
Has your organization identified the  All respondents who 
100.0 stratum 1 
steps necessary to implement the  answered completed, 
95.6 stratum 2 
HIPAA electronic standards?  underway, or plan  2  0.221 
97.6 stratum 3 
to 
Does your organization have a  All respondents who  45.9 stratum1 
sequencing (prioritization) strategy  answered yes  54.5 stratum 2 
2  0.007* 
for implementing the HIPAA  78.0 stratum 3 
electronic transactions? 
Has your organization developed a  All respondents who 
58.3 stratum 1 
contingency plan in the event the  answered completed, 
51.1 stratum 2  2  0.264 
system is not compliant by October  underway, or plan 
68.3 stratum 3 
2003?  to 
* Statistically significant at the 95 percent confidence level. Additionally, 47.8 percent of providers who submitted 
up to and including 5,000 claims (strata 1 and 2) have a sequencing strategy, compared with 78.0 percent of providers 
who submitted more than 5,000 claims (stratum 3). This difference is significant at the 95 percent confidence level (p
value of 0.002). 
12 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  A P P E N D I X  C 
Nonrespondent Analysis 
To evaluate the effect of nonrespondents on the results of the survey, we performed three 
chi-square tests.  The differences in response rate among the strata were not statistically 
significant at the 95 percent confidence level. 
Chi-Square Test 
Stratum  Number of Claims  Response Rate 
Degrees of 
P-value 
freedom 
1  1 to 500 claims  80.0% 
2  501 to 5,000 claims  90.0%  2  0.376
3  5,001 claims or more  86.0% 
The difference in response rate between durable medical equipment (DME) suppliers and all 
other providers was significant at the 95 percent confidence level.  We evaluated the possible 
effect of this difference on our estimate that 94.2 percent of Medicare Part B providers have 
moderate to high expectations that they will be compliant with HIPAA standards by October 
2003. Assuming that the non-respondents (none of whom were DME providers) had 
responded to the question, How confident are you that your organization will meet the 
October 2003 target for implementing the electronic transactions? using the weighted 
proportion for respondents who were not DME providers, then the estimate change is 
negligible, from 94.2 percent to 94.1 percent. 
Chi-Square Test 
Type of Provider  Response Rate (Weighted) 
Degree of 
P-value 
Freedom 
DME provider  100.0% 
1  0.027 
All other providers  80.2 % 
13 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  Analysis by Time of Response 
As an additional guard against biased results, surveys may be reviewed for differences which 
exist between early and late respondents. The rationale is that late respondents and 
nonrespondents may share certain tendencies.  For example, when compared to early 
respondents, late respondents and nonrespondents could have similar characteristics with 
respect to HIPAA readiness. 
We compared the proportion of Part B providers who had moderate to high expectations that 
they will be in compliance between providers who responded on or before March 1, 2003, 
(68.0 percent of the respondents) and providers who responded after that date. The difference 
was not significant at the 95 percent confidence level. 
Proportion who  Chi-Square Test 
Date of  Number of 
expected to be 
Response  respondents 
Degree of 
compliant (weighted) 
P-value 
Freedom 
On or before 
87  95.1% 
March 1, 2003 
1  0.682 
After 
41  92.3% 
March 1, 2003 
14 
HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422  A C K N O W L E D G M E N T S  
This report was prepared under the direction of Paul A. Gottlober, Regional Inspector General 
for Evaluation and Inspections, and Deborah W. Harvey, Assistant Regional Inspector General 
for Evaluation and Inspections, in San Francisco.  Other principal Office of Evaluation and 
Inspections staff who contributed include: 
Timothy Brady, Project Leader  Linda Frisch, Program Specialist

Silvia Chin, Program Analyst

Robert Gibbons, Program Analyst

Cheryl Dotts, Program Assistant

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HIPAA Readiness: Medicare Part B Providers  OEI-09-02-00422