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HIPAA requires the use of specific national standards for the electronic transmission of
health care claims. The compliance deadline for the electronic transactions regulation was
October 16, 2003. NovaSys Health is implementing a contingency plan as permitted by
Centers for Medicare and Medicaid Services (CMS) to help ensure that claim payments
remain uninterrupted to our providers.

Upon receiving a significant number of inquiries expressing concern over the health care
industry’s state of readiness CMS issued official guidance on July 24, 2003, regarding
compliance with the transaction rule (www.cms.hhs.gov/hipaa/hipaa2). CMS would like
to avoid claims payment delays caused by providers reverting to paper submissions.

Per CMS’s official guidance, payers may choose to deploy contingency plans to maintain
the flow of claim payments during the period immediately following October 16, 2003.

Providers who are making a "good-faith" effort to become HIPAA-compliant may
continue submitting nonstandard electronic claims for a limited time, until they are able
to become compliant with the transactions rule. If your organization is testing claims
submission in the HIPAA format and have made reasonable and diligent efforts to
become compliant, NovaSys Health will continue to accept your NSF claims after the
compliance deadline.

Providers may use a clearinghouse to convert their nonstandard electronic claims to
standard before transmitting that data to the appropriate payer. WebMD and Gateway
EDI are HIPAA clearinghouses that providers may use to submit claims to NovaSys
Health. If you are ready to test HIPAA-compliant claims directly, through a third party,
or wish to select one of the above vendors as your clearinghouse, please contact EDI
Services at 501-219-4451 or toll free at 800-294-3557 ext. 451.

NovaSys Health plans to continue to accept your non-compliant claims for approximately
six months to avoid disruption of your cash flow during this transition to HIPAA
standards. During this interim period, we will continue to accommodate providers in
"good-faith" testing.

We do, however, reserve the right to decline to accept non-compliant claims at our
discretion on a case-by-case basis. If you have questions or need assistance regarding
HIPAA compliance, please contact our HIPAA Office at 501-219-4603.

P.O. Box 25230
Little Rock, AR 72221

501.954.6100
800.294.3557
Fax: 877.658.0306

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