Standardizing Health Insurance Data
The U.S. Department of Health and Human Services (HHS) recently released an interim final rule (Rule) for public comment that addresses the need for health data standardization and the improved efficiency of health information flows. The proposed regulation, the first in a series intended to simplify administrative processes, establishes operating rules for the electronic verification of patient eligibility for a health plan, the processing of health insurance claims, and the verification of insurance claim status.
Effective January 1, 2013, the Rule requires that all health care providers, facilities, claims processors/payers and health insurance claims clearing houses must comply.
A copy of the proposed Rule is available by clicking here.
What are some of the anticipated benefits of the proposed Rule?
If this Rule is adopted and successful, the new regulation should help decrease administrative costs and make several key health care transactions more efficient. The Rule also will free up more time for health care providers to spend with patients instead of processing paperwork. If HHS is successful in cutting down the number of health care claims that are hung up in the system or incorrectly paid, brokers will spend less time interceding on behalf of their clients trying to clear up these types of problems with insurance carriers. Generally speaking, standardizing health care claims should pay dividends to everyone.
Under what authority was this interim final Rule released?
The Rule was issued pursuant to section 1104(b)(2) of the Patient Protection and Affordable Care Act (PPACA). Congress required the adoption of operating rules for the health care industry and directed by the HHS secretary to ‘‘adopt a single set of operating rules for each transaction with the goal of creating as much uniformity in the implementation of the electronic standards as possible.’’
What does the Rule specifically target?
The Rule focuses on two Health Insurance Portability and Accountability Act of 1996 (HIPAA) transactions: 1) eligibility for a health plan; and 2) health care claim status. The proposed regulations also define the term ‘‘operating rules’’ and promotes key workflows to improve the targeted electronic transactions.
In general, transaction standards adopted under HIPAA enable electronic data interchange through a common interchange structure, thus minimizing the industry’s reliance on multiple formats. Operating rules, in turn, attempt to define the rights and responsibilities of all parties, security requirements, transmission formats, response times, liabilities, exception processing, error resolution and more, in order to facilitate successful interoperability between data systems of different entities.1
What is the background of this interim final Rule?
HHS functionally adopted the recommendations of the Council for Affordable Quality Healthcare's (CAQH) Committee on Operating Rules for Information Exchange. This Committee promulgated a series of recommendations that was built on existing standards to make electronic transactions more predictable and consistent, regardless of the technology. By addressing the rights and responsibilities of all parties, security, transmission standards and formats, response time standards, liabilities, exception processing, error resolution and more, operating rules facilitate interoperability among parties who exchange health care data.2
Where can I learn more about HHS’ prior regulations on electronic health care transactions?
For further information about electronic data interchange, the complete statutory background, and the regulatory history, see Health Insurance Reform; Modifications to the Health Insurance Portability and Accountability Act (HIPAA) Electronic Transaction Standards, published in the Federal Register on August 22, 2008 (73 FR 49742).
Why is standardization of the claims payment process so important?
The current matrix of systems used in the U.S. health care industry to bill payers and pay providers for health care claims has created significant amounts of complexity, inefficiency and unnecessary expense. The new operating rules will provide greater uniformity of information, transmission formats and information flows. For example, physicians and other health care providers can use one type of information request for all insurers rather than multiple systems. This commonality will extend to health care providers, facilities and payers of health care claims.
“Doctors and health insurance companies waste thousands of hours and billions of dollars filling out forms and processing paperwork,” HHS Secretary Kathleen Sebelius commented recently. “The Affordable Care Act is helping doctors operate more efficiently and spend their time treating patients, not filling out papers”.3
What are some of the benefits if the proposed Rule is fully implemented?
Although the HIPAA law adopted several years ago helped standardize key electronic transactions, the proposed Rule takes this a step further. If the Rule is successfully implemented, HHS predicts the following:4
- Health plans will be able to pay providers, authorize services, certify referrals, and coordinate benefits using a standard electronic format for each transaction. Providers also will be able to use a standard format to determine eligibility for insurance coverage, ask the status of a claim, request authorizations for services or specialist referrals, and receive electronic remittance to post receivables.
- Employers who provide health insurance to their workers and their dependents also will be able to use a standard electronic format to enroll or disenroll employees and to submit premium payments to any health plan they contract with.
- The regulation also includes new standards for other common transactions and coding standards for reporting diagnoses and procedures in the transactions.
- The regulation outlines a process for maintaining the format and content of the standard transactions system. National health care standard organizations and data content committees will accept and review requests for changes to the standards.
How will HHS accomplish the “standardization” and “efficiency” goals in practice?
HHS has adopted the CAQH’s Operating Rules and converted them into a federal rule format. The Rule specifically addresses “transaction standards adopted under HIPAA enable electronic data interchange using a common interchange structure, thus minimizing the industry’s reliance on multiple formats.” While the existing HIPAA standards significantly decrease administrative burden on covered entities by creating greater uniformity in data exchange and reduce the amount of paper forms needed for transmitting data, gaps created by the flexibility in the standards permit each health plan to use the transactions in very different ways. This flexibility created significant obstacles to achieving greater administrative simplification. The proposed Rule intends to fill in these gaps by addressing the following:5
- Performance and system availability. Because the standards permit the flexibility to conduct the transactions in batch mode or real-time, in order to minimize the number of different implementations, some submitters have resorted to contracting with clearinghouses for transaction exchanges that require batch submissions, and simultaneously are utilizing internal resources for real-time submissions. Some batch submissions are only conducted overnight. Typically, batch submissions can be substantially slower than real-time transmissions, and systems may be available only at certain times for conducting certain transactions.
- Connectivity and transportation of information. In traditional trading partner agreements, health plans specify their connectivity options for conducting the standard transactions. These options can vary from plan to plan. For example, some payers only conduct the transactions through a contracted clearinghouse. Others offer a direct connection to their system. Still others use both—contract with a clearinghouse for some transactions, and offer direct connect solutions for other transactions. Also, there are some plans that offer a number of options, and negotiate a choice with each trading partner, including providers.
- Security and authentication. Currently, security standards do not prescribe requirements for levels of security and authentication when conducting the standard transactions and accessing protected health information. A covered entity’s level of security and authentication requirements is determined by the individual entity’s periodic assessments for security risk and vulnerabilities. Organizations have latitude to determine and document the number and types of security safeguards that they implement. Although this flexibility supports the implementation of security safeguards that are consistent with the uniqueness of various organizations, it also limits standardization for security compliance.
- Business scenarios and expected responses. The standards do not define methods by which trading partners, including providers, establish electronic communication links, or types of hardware and software to exchange EDI data. Each trading partner, including providers, separately provides specific requirements, such as the number of transactions submitted in a file. Transaction processing in each entity’s system will vary from one trading partner, including providers, to another. The responses to compliantly implement these various transaction processing systems are identified by trading partners, including providers, in documentation supplementing the adopted implementation guides. These types of documented business requirements can vary in terms of number and complexity.
- Data content refinements. In accordance with trading partner agreements, plans can ignore certain submitted data that is not needed to conduct the transaction. Plans also can refine certain data elements and require their submission. Trading partner agreements and other documentation that plans develop allow them to define specific types of data, as well as clarify the specific data required for successful completion of a transaction. Although the standards limit the number of data elements that can be defined or optionally submitted, a plan’s individual business flow and operations may impose specific data definition and submission requirements.
How much will the new Rule cost to implement? How much will the new regulations save?
HHS estimates the implementation costs to providers could approach $800 million over the next 10 years.6 Doctors spend about 12% of every dollar they receive from patients to cover the costs of excessive administrative complexity, according to a May 2010 study in Health Affairs. The study found that simplifying these systems could save four hours of professional time per doctor and five hours of support staff time every week.7
The AMA just released its 2011 National Health Insurer Report Card, which found that claims processing errors had climbed to nearly 20% for commercial health insurers.8
HHS estimates the health care industry could save about $12 billion by the next decade due to reduced transaction costs and denied claims if this proposed Rule is implemented.9
How can I file comments on this interim final Rule?
You may submit comments in one of four ways:
- Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov.
Follow the ‘‘Submit a comment’’ instructions.
- By regular mail. You may mail written comments to the following address ONLY:
Centers for Medicare & Medicaid Services,
Department of Health and Human Services,
Attention: CMS–0032–IFC, P.O. Box 8013,
Baltimore, MD 21244–8013.
Please allow sufficient time for mailed comments to be received before the close of the comment period.
- By express or overnight mail. You may send written comments to the following address ONLY:
Centers for Medicare & Medicaid Services
Department of Health and Human Services,
Attention: CMS–0032–IFC, Mail Stop C4–26–05,
7500 Security Boulevard, Baltimore, MD 21244–1850.
What is the deadline for public comments?
The deadline for public comments is 5:00 p.m. EST on September 6, 2011. Please remember that all comments are available for public inspection.
What can we expect in terms of further rulemaking on HIPAA transactions (i.e., Section 1104 of PPACA)?
The HHS press release states, “HHS will take additional steps later this year, issuing further regulations under HIPAA authority to improve the processing of health care transactions. These regulations will establish national identification numbers for employers and health care providers to speed claims processing and lower costs. In addition, HHS will lay out steps to make electronic health data secure, and protect the privacy of patients' medical and health insurance records. This will be done without the need for a unique personal identifier for individual patients.”10
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1. 40458 Federal Register / Vol. 76, No. 131 / Friday, July 8, 2011 / Rules and Regulations
2.
http://www.caqh.org/CORE_faq.php
3.
http://www.physicianspractice.com/blog/content/article/1462168/1902162
4.
http://aspe.hhs.gov/admnsimp/final/press1.htm
5. 40458 Federal Register / Vol. 76, No. 131 / Friday, July 8, 2011 / Rules and Regulations P40459
6.
http://content.healthaffairs.org/content/early/2010/04/29/hlthaff.2009.0075.abstract
7.
http://ifawebnews.com/2011/07/17/hhs-standardizes-health-care-transactions-saves-time-and-12-billion/
8. http://www.physicianspractice.com/blog/content/article/1462168/1902162
9. http://content.healthaffairs.org/content/early/2010/04/29/hlthaff.2009.0075.abstract
10. http://aspe.hhs.gov/admnsimp/final/press1.htm