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Understanding the Administrative

Simplification Provisions of the PPACA Annie Boynton BS, RHIT, CPCO, CCS, CPC, CCS-P, CPC-H, CPC-P, CPC-I

Director Communications, Adoption&Training

Regulatory Implementation Office

UnitedHealth Group

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700 Billion annually in wasteful spending…

What is Administrative Simplification?

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Defining Administrative Simplification

• Patient Protection and Affordability Act (PPACA) –H.R. 3590 – now referred to as Affordable Care Act (ACA)

• Administrative Provisions identified in two sections of health care reform bill ▫ Section 1104 – Administrative Simplification ▫ Section 10109 – Development of Standards for financial

and Administrative Transactions

• Significant changes to the HIPAA requirements • Allows for adoption of standards and operating

rules via Interim Final Rules, eliminating the need for NPRMS

Administrative Simplification – What is it? Affordable Care Act *

The Administrative Simplification provisions of the Affordable Care

Act of 2010 (ACA), build on the Health Insurance Portability and

Accountability Act of 1996 (HIPAA) with several new, expanded, or

revised provisions, including requirements for:

• Operating rules for each of the HIPAA transactions

• Enumeration of a unique, standard Health Plan Identifier (HPID)

• New standards for electronic funds transfer and electronic

health care claims attachments

• Health plans to certify compliance with the standards and

operating rules

• Penalties for health plans that fail to comply or to certify their

compliance with applicable standards and operating rules.

* Source: CMS.gov web site

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• All HIPAA-covered entities would be affected

including:

▫ All health benefit plans

▫ Health care clearinghouses and vendors

▫ Physicians, facilities and health care

professionals

▫ Software vendors

• Any other business associates providing

transaction-related services, such as billing

support and third party administrators.

Who is impacted?

▫ Simplify!

▫ Make it more efficient!

▫ Make it more convenient!

▫ Spend less time on paperwork more time with patients!

▫ Applies to all areas of healthcare: – Billing

– Coding

– Providers

– Health Plans

– Vendors

No Really – What does it mean?

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In order to get there, US Healthcare needs a few

changes….

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CAQH* Initiatives *Council of Affordable Quality Health Care

CAQH CORE – The Rule Makers

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What are Operating Rules?

Goals of Administrative Simplification

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Jan. 1, 2013 Eligibility and claim status operating

rules compliance date.

May 6, 2013 National Provider Identifier compliance

date.

Jan. 1, 2014 Electronic funds transfer and electronic

remittance advice compliance date.

Nov. 5, 2014

Health Plan Identifier compliance date.

For small health plans, the date is Nov.

5, 2015.

At least Oct. 1, 2015 ICD-10 new compliance date.

Timing

Scope of Administrative Simplification

Administrative Simplification

EFT/ERA CORE

Operating Rules

HPID

Next set of Operating

Rules

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To date, the CORE Rules tend to fall

into one of two categories:

• 1. Infrastructure rules which promote

interoperability and exchange of information to

support business processes.

• 2. Enhanced data content to the information

exchange, usually building beyond the

requirements of the HIPAA X12 standards by

requiring the use of specific data elements that

are specified as “situational” in the standard.

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EFT & ERA CORE Operating Rules

CORE 360

Operating Rules

CORE 370

Operating Rules

CORE 350

Operating Rules

CORE 380 Operating Rules

CORE 382 Operating Rules

• Some health care providers may choose not to conduct transactions electronically.

• But they are required to use these operating rules for HIPAA transactions that they do conduct electronically.

• In practice, health plans will only have to use the health care EFT standards if the provider wants to receive claim payments via EFT through the Automated Clearinghouse Network (ACH)Network.

What if providers do not submit

transactions electronically?

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• The EFT standards are the implementation specifications for the electronic format that a health plan is required to use.

• The standards do not impact how a provider's

financial institution transmits the TRN segment to the provider.

• There will be no direct systems costs to physician practices and hospitals to implement the new EFT standards.

What do providers need to do to

prepare for conducting transactions

electronically?

• Physician practices and hospitals drive overall

adoption and usage of EFT.

• Most health plans give physician practices and

hospitals a choice of payment between paper

checks (sometimes accompanied by paper

remittance advice) or EFT.

What if a provider chooses not to

accept electronic funds transfers?

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• HHS estimates that it will cost health plans, on

average, $4,000 to $6,000 to implement the EFT

standards.

• This is a one-time cost to health plans.

• HHS assumes that many commercial health plans

will have minimal to no costs; for example:

▫ Health plans that must simply update their vendor

contracts to accommodate this change without any

additional operational costs.

What if a health plan does not

transmit payment electronically?

• The Interim Final Rule cited a 2009

UnitedHealth Group working paper that

reported: $108 billion could be saved

industry wide over the course of 10 years

if electronic health care claim payments

were required.

What are the financial benefits of EFT

for the health care industry?

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Health Plan Identification (HPID) • The Health Plan Identifier (HPID) and Other Entity Identifier (OEID)

were the result of the Simplification and Affordability Care Acts,

which require the adoption of a standard for a unique health plan

identifier to be used in HIPAA standard transactions, according to

the Federal Registry/ Final Rule announced by the Department of

Health and Human Services (HHS)

• Currently, health plans and other entities are identified in standard

transactions using multiple identifiers that differ in length and

format. Health care providers are frustrated by the lack of a

standard identifier for health plans and other entities in use of

standard transactions

• The adoption of the HPID and the OEID will increase

standardization within HIPAA standard transactions and allow for a

higher level of automation for health care provider offices and

billing processes

Health Plan ID (HPID) • Why Health Plan ID?

“Adoption will allow for a higher level of automation for health care

provider offices, particularly for provider processing of billing and

insurance related tasks, eligibility responses from health plans, and

remittance advice that describes health care claim payments.”1

• The Health Insurance Portability and Accountability Act of 1996 (HIPAA)

requires the Secretary to adopt unique identifiers for each of the following:

• Individuals(status: Congress delayed indefinitely)

• Employers (status: EIN adopted)

• Health plans (status: HPID adopted)

• Health care providers (status: NPI adopted)

• Structure

• 10-digit, all-numeric identifier with a Luhn check-digit as the 10th digit.

• Intelligence- free identifier except for 1st digit

1Federal Register / Vol. 77, No. 172 / Wednesday, September 5, 2012 / Rules and Regulations, 54664

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Health Plan Identification (HPID) Timeline

Entity Type Compliance Date Full Implementation Date for Use in Standard Transactions

Health Plans (excluding Small Health Plans)

November 5, 2014 November 7, 2016

Small Health Plans

November 5, 2015 November 7, 2016

SHPs Not required to obtain HPID

Not required but can use in standard transactions as of November 7, 2016

Other Entities Not required to obtain OEID

TBD (upon enumeration?)

Health Plan ID (HPID) – Definitions

• Definitions

– Controlling Health Plan (CHP) means a health plan that

(1) Controls its own business activities, actions, or policies; or

(2)(i) Is controlled by an entity that is not a health plan; and

(ii) If it has a subhealth plan(s), exercises

sufficient control over the subhealth plan(s) to direct its/their

business activities, actions, or policies.

– Subhealth Plan (SHP) means a health plan whose business activities,

actions, or policies are directed by a controlling health plan.

– Other Entity ID (OEID) An entity may obtain an OEID to identify itself if the

entity meets all of the following:

– Needs to be identified in a transaction for which the Secretary has

adopted a standard

– Is not eligible to obtain an HPID

– Is not eligible to obtain an NPI

– Is not an individual (defined as “the person who is the subject of

protected health information”)

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Administrative Simplification Key Dates

Next Set of Operating Rules

• Includes the following transactions as scope:

• Health Claims or equivalent health encounter

information

• Claim attachments

• Enrollment and disenrollment in a health plan

• Health plan premium payments

• Referral certification and authorization

• CAQH has not published draft rules to date

• Expecting CAQH to publish by end of year 2014

• Comment period after draft publication

• Finalized rules not expected until 2015

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Does Healthcare Need Simplifying?

• “Over the past decade, premiums for Americans who get their insurance

at work have more than doubled,” says Jessica Santillo, a Spokeswoman

at the Department of Health and Human Services.

• Employers already are passing on a bigger share of their healthcare costs

to employees than they have over the previous decade, according to data

from the Kaiser Family Foundation. The Menlo Park, California-based

nonprofit found this year that family premiums went up 3 percent in

2010, but worker’s share of those costs rose by 14 percent.

• But some companies, citing the new mandates, say costs are rising too

fast: In a survey of more than 1,000 employers, Mercer, a human-

resources consulting firm, found that corporate healthcare costs would

rise by 10 percent next year if firms made no changes to their plans.

Many are finding that they have little choice but to switch a greater

share of costs to employees.

What’s Happening to Your Payer?

Source: Wall Street Journal, October 9, 2010

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• Refuse to transact with paper – Go Green

• Adopt the new standards!

• Appoint someone form your practice/organization to

spearhead adoption efforts

• Providers – work with your payers

• Payers – work with your providers

• Vendors – bridge the gap between payer and providers

• Look for vendors and payers who can guarantee their

compliance

Act Now – Get Involved

“If you build it they will come.” May work in baseball, but not the case here…

CORE Certified

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• Most industry stakeholders agree that electronic

payment/transactions will become the industry standard.

• Getting there will require industry wide cooperation:

▫ Providers – need better IT capability

▫ Payers – need to assist with more options

▫ Banks – need to develop better tools

▫ Clearinghouses – need to focus on process improvement

between payers and providers

All will depend on how fast and how well we can work

together.

We will ALL need to work together

to get there…

Speaker Contact

• Annie Boynton BS, RHIT, CPCO, CCS, CPC, CCS-P, CPC-H, CPC-P, CPC-I

Director Communications, Adoption & Training

Regulatory Implementation Office

UnitedHealth Group

annieboynton@gmail.com