Software Update Costs Catch Some FPs by Surprise

Some family physicians are running into unanticipated software upgrade costs as they scramble to ensure their practice management computer systems will accept National Provider Identifier, or NPI, numbers.

The NPI, which was instituted as part of the Health Insurance Portability and Accountability Act of 1996, is a 10-digit, numeric identifier administered by CMS. It is designed to give each health care provider a single, unique identifying number that doesn't change or expire. According to CMS, every physician must begin using his or her NPI number on payment claims by May 23 or face delays and, possibly, claim rejections.

A few members have told the Academy that they are facing expenses of $3,000 or more to upgrade their software to accept NPI numbers. One FP reported he'd have to spend an additional $7,000 to buy new hardware before he could even run the updated software from his vendor.

Steven Waldren, M.D., director of AAFP's Center for Health Information Technology, or CHiT, empathizes with physicians who have been caught off guard and need to change their software. "Unfortunately, in the health information technology world, updates are inevitable," said Waldren. "With any software purchase, upgrades will be a necessary cost for the acquisition of new features and capabilities. The NPI is no exception."

Upgrades, explained Waldren, are major changes usually involving a new version of existing software. Updates, on the other hand, are small tweaks applied to fix specific software problems.

Waldren said that within the past year, practice management software vendors have shifted to a new business model. "Many software vendors realized that upgrades and updates were going to be very common in the future, and they established support contracts as a way to streamline the provision of those (upgrades and updates) to customers," said Waldren. These support contracts also provide a steady stream of revenue for software vendors, he added.

Unfortunately, members now experiencing software "sticker shock" probably bought their practice management software more than a year ago, before such contracts became the industry standard, said Waldren. In addition, some physicians may have mistakenly overlooked the necessity of purchasing regular upgrades, or skipped them as a cost-saving measure.

"Now some members need an upgrade for the NPI, and they may have a software version that is four or five versions back; that situation makes upgrades even more expensive," said Waldren. He encouraged members to plan for updates and upgrades in their budgeting process.

Waldren also asked that members contact CHiT with vendor-specific concerns. "If physician costs associated with implementing the NPI are occurring industry-wide, there's not much the Academy can do," said Waldren. However, if a physician has kept up with regular upgrades and has evidence that a specific vendor is charging an amount that is out of line with the industry average for the NPI upgrade, CHiT wants to know about it, he said.

"If 10 vendors are charging $3,000 and one is charging $10,000 for the same thing, someone from CHiT will contact that vendor and have a discussion about following industry standards," said Waldren.

Even with a service contract, FP Dean Havron, M.D., of Winchester, Va., spent several thousand dollars upgrading his hardware -- specifically, adding server memory -- and enlisting outside technical support to work alongside support staff from his software provider to get ready for the NPI.

It was money well spent, said Havron. "I don't regret it, as the functionality of patient records is better," he said.

Havron credits his office manager, Diana Forney, with spearheading the upgrade effort late in 2006 to give the practice plenty of testing time before the official NPI implementation date in May. "She wanted to make sure that … we'd be able to submit our payments and not have significant delays," said Havron.

"This is our testing time right now," said Forney. "Everyone (all physician practices) should be running their regular (unique physician identification numbers, or UPINs) and NPIs right now on all their claims -- electronically and on paper -- just to see if they're going to work."

Havron's solo practice -- Family Practice of Winchester -- willingly invests in a support contract every year with its software vendor because the agreement includes those all-important upgrades and updates as well as technical support when the inevitable software glitches occur. Experience has taught Forney that regular maintenance is to be expected with a practice management software system. "You can't install a system and then ignore it; you have to continue to grow with it," she said.

William Rogers, M.D., medical officer of CMS' Office of the Administrator and director of physicians' regulatory issues, was surprised to hear that physicians are incurring costs associated with NPI implementation. "Frankly, I haven't had anybody complain about upgrading to the NPI," he said. "I had hoped that the software companies would see this as something they would have to adapt to and it would be their expense rather than the physicians'."

A practicing physician himself, Rogers stressed that the NPI will make life easier for physicians. "Even in the short run, it's actually going to save time and money," he said. Rogers -- who currently juggles a collection of seven UPINs -- looks forward to having one NPI that will be good for all payers.

According to Rogers, physicians who have significant problems related to implementing the NPI can contact CMS at or call (202) 260-7153.

Rogers said his office isn't adequately staffed to handle everyday phone calls from physicians about the NPI. "But if this NPI is presenting problems for them that seem to require a national fix, those are the kinds of things that we really need to hear about," he said.

Here are some tips CHiT offers members on upgrading software.