Health Insurance Reform: Modifications to Standards for Electronic Transactions and Code Sets, Proposed Rule (67 Federal Register 38044) May 31, 2002
Liberty Place, Suite 700
325 Seventh Street, NW
Washington, DC 20004-2802
(202) 638-1100 Phone
Monday, July 1st 2002
The Honorable Tommy Thompson
Department of Health and Human Services
Post Office Box 8010
Baltimore, MD 21244-8010
Attention: CMS-0003-P CMS-0005-P
RE: Health Insurance Reform: Modifications to Transactions and Code Set Standards for Electronic Transactions, Proposed Rule (67 Federal Register 38050) May 31, 2002
Dear Secretary Thompson:
On behalf of our nearly 5,000 member hospitals, health systems, networks and other providers of care, the American Hospital Association (AHA) welcomes the opportunity to comment on the Department of Health and Human Services’ (HHS) proposed rules to make certain modifications and technical corrections to the standards for electronic transactions and code sets adopted previously under the authority of the Health Insurance Portability and Accountability Act (HIPAA). Despite the significant investment of financial and staff resources needed to implement the HIPAA transactions and code sets requirements, hospitals strongly support the use of the standard transactions and are committed to seeing them implemented successfully and without delay. Realizing standardization’s promises of operational and cost efficiencies and improvements in the timeliness of claims payment, and resulting reductions in the administrative costs of health care will benefit both providers and the patients they serve.
Included in our comments are recommendations related to two areas. First, as we have done on numerous previous occasions, we call to HHS’ attention a number of issues that should be addressed either in the regulations or in related business rules because they are a critical adjunct to the transactions and code sets standard. Again, we urge HHS to consider regulation or guidance under the authority granted the Department by HIPAA to adopt a set of business rules for the use of the standard transactions. Without these "business rules," administrative efficiencies and cost savings expected to result from the implementation of the standard transactions may not be fully realized.
Second, we have recommendations on several of the proposed changes in the two Notices of Proposed Rulemaking (NPRMs) published in the May 31 Federal Register. Although they affect many technical details in the implementation guides, most of the proposed changes better define the application of the standards and should improve the ability of all covered entities, including hospitals, health plans and clearinghouses, to implement the standards.
Specifically, we support the repeal of the requirement to use the National Drug Code (NDC) for transactions other than retail pharmacy along with other proposed changes, including use of UB-92 Condition and Value Codes and the recommendations from the Designated Standards Maintenance Organizations (DSMOs) for handling requests for additional code sets. We also urge HHS to consider further changes that would eliminate existing additional obstacles to providers’ implementation of the standards by eliminating the reporting of provider taxonomy codes for institutional claims and clarifying when Healthcare’s Common Procedure Classification System (HCPCS) codes must be reported for outpatient claims. Below, we combine our comments and recommendations related to both NPRMs.
Achieving Administrative Simplification
We urge HHS to make over time additional improvements to the implementation guides beyond those identified in the two May 31 NPRMs, especially in relation to the situational usage notes found throughout the guides. The lack of clarity related to many of the situational elements simply generates a multiplicity of inconsistent and confusing interpretations of the elements by health plans and ultimately encourages the proliferation of individual health plan companion guides to the implementation standards. Such results, we believe, only diminish the benefits that providers and others can expect to see from the adoption of standard transactions.
Currently, hospitals incur significant financial losses from the delay in processing claims or the rejection of claims as “incomplete” on initial submission. In order for a provider to submit a complete transaction in standard form, however, the health plan to which it is sending the transaction must specify which of the optional “situational” elements for the transaction are necessary to process the transaction. (The total possible pool of situational elements for each transaction is specified in the Implementation Guide.) The transactions and code sets regulation, however, does not require health plans to inform providers which of these optional situational elements will be necessary for a standard transaction. Under the regulation, it is unclear whether a health plan can arbitrarily change its specifications regarding which situational elements are necessary for processing a claim of a particular type, thus delaying payment even further. The regulation merely tells plans that they cannot agree to circumvent the standards or use elements that exceed the maximum data set in a trading partner agreement.
Congress’ clear intent in establishing the "administrative simplification" requirements of HIPAA was to recognize the fact that standard formats and code sets make it possible for a provider to efficiently submit complete claims to all health plans, thereby offering the possibility of eliminating the waste of resources from the administrative rejection, resubmission, and delay in processing claims. After significant investments to reprogram information systems to use these new standards, providers still will be faced with payment delays, frivolous rejections of claims, and the need for wasteful re-submissions and reconciliation because health plans remain free to be somewhat arbitrary with respect to which situational elements are necessary for processing a given transaction.
It is clear that the regulation anticipates that each health plan will promptly inform providers of any special situational elements the plan may require for prompt processing of a standard transaction, and that these selections should be relatively predictable. Otherwise, it would make no sense to pretend that the regulation has established a “standard” form for the transaction. Accordingly, we once again call upon HHS to promulgate guidance that more clearly explains the role of the trading partner agreement in ensuring that hospitals' adoption of the HIPAA standard formats and code sets ensures acceptance and prompt processing and payment of these standardized claims by all payers. Under the regulation, a trading partner agreement is the primary vehicle by which a health plan specifies which of the situational elements permissible for a standard transaction will be needed for prompt processing of the transaction under the health benefits plan. These are now often referred to as “companion guides” to the implementation standards.
We refer HHS to the attached document similar to that we previously provided to the Department. The document describes the type of guidance that we believe is necessary to address the failure of health plans to promptly process and pay claims submitted to them. Although this concept was described in the AHA’s original proposal exclusively in terms of a “clean claim” we have modified that language to better reflect our intent and the improvement in simplification and efficiency we are seeking to achieve for hospitals. We learned subsequent to presentation of our proposed guidance that CMS’ interpretation of its definition of “clean claim” went somewhat beyond what the AHA intended to achieve and, hence, we modified the language in our guidance to eliminate confusion. The guidance now specifically defines a HIPAA-compliant claim as one that is ready for processing and adjudication by multiple health plans and clarifies that health plans must accept a HIPAA-compliant claim as a "clean claim" for purposes of contractual provisions with other covered entities under HIPAA, and for state and federal prompt pay requirements.
The goals of administrative simplification also are undermined by the frequent rejection by health plans of claims of certain types that do not include an attachment. We have repeatedly urged expedited release of a proposed rule on claims attachments that specifically addresses providers’ major concerns. Providers need to know the specific circumstances that might require the reporting of additional information as an attachment to a claim so that when these events present themselves providers know in advance what information they need to collect and report. We have never suggested that the need for claims attachments can be completely avoided; only that the need for such additional paperwork can be rationalized in a way that protects the integrity of the process and more closely fulfills the goals of administrative simplification, which is what we believe Congress intended. To that end, we renew our request here because, without a clear articulation of these circumstances, the claims attachment transactions standard will simply be another means for health plans to delay processing of claims. Moreover, such delays are exacerbated when claims attachments are submitted in response to an inquiry from the health plan rather than simultaneous with the claims to which they relate.
In addition, unless health plans’ requests for additional information in claims attachments are restricted and permissible only under extraordinary circumstances, claims attachments may undermine or completely erode the HIPAA medical privacy rule’s minimum necessary standard. We have already urged that health plans not be permitted to request additional information as a claims attachment if that data is already included on the claim or can be derived from information contained in the claim. An example would be a health plan’s request for a diagnosis related group (DRG) assignment, which can be derived from diagnosis and procedure codes already included in the claim. Neither, however, can health plans be allowed open-ended access to a patient’s medical record through the creation of a claims attachment process that allows each health plan to determine independently and after the submission of a claim whatever “additional information, such as medical records, accident reports, or other treatment episodes, may be necessary in order to reach a claims payment determination.” If certain data elements are necessary and needed on a frequent basis in order to pay claims, the standards maintenance organizations should consider recommending that such data elements be added to the 837 health care claim transaction as well-defined "situational" data elements to be provided when certain clearly articulated courses of events occur.
Leading insurers have publicly stated that HIPAA should be thought of as a “business process.” The AHA and its member hospitals certainly agree that business processes are a necessary adjunct to the transactions and code sets regulation. The clear articulation of standards related to the business process will ensure efficiencies and improvements in the timeliness of claims processing and payment, and thus fulfilling of Congress' objective in enacting HIPAA of reducing the administrative costs of health care.
NPRM: Changes That HHS Should Adopt
Repeal NDC requirement for transactions other than retail pharmacy. We support the proposal in the NPRM published in the Federal Register at 38044 (CMS-0003-P; Health Insurance Reform: Modifications to Standards for Electronic Transactions and Code Sets, Proposed Rule) to repeal adoption of the National Drug Code (NDC) for reporting drugs and biologics in all transaction standards, other than retail pharmacy.
We agree with the reasons outlined by the National Uniform Billing Committee (NUBC), as mentioned in the preamble to the NPRM published at 38044 in the Federal Register, for seeking this repeal. The failure to adopt the repeal of the NDC would impose enormous cost burdens to hospitals’ operations. At the same time, it is important to ensure some certainty by using an established standard. Consequently, we support amending § 162.1002 (f) to adopt Healthcare’s Common Procedure Classification System (HCPCS) coding system for reporting drugs and biologics in non-retail pharmacy transactions and § 162.1002 (c) to reflect the adoption of NDC as the standard medical code set for reporting drugs and biologics in standard transactions for retail pharmacy only. We also urge HHS to remove any references to NDC in all implementation guides, except for retail pharmacy.
Because no drug coding system in existence today meets all of the needs of the health care industry, we urge the Department to explore development of another drug coding system that can be used efficiently for drug inventory, pharmacy transactions, patient care, billing, and ensuring patient safety.
Use UB-92 Condition and Value Codes. We also support adoption of the proposals published in the Federal Register at 38050 (CMS-0005-P; Health Insurance Reform: Modifications to Transactions and Code Set Standards for Electronic Transactions, Proposed Rule) to use existing UB-92 Condition Codes for the reporting of Special Program Indicators as well as UB-92 Value Codes to report newborn birth weights as previously recommended by the NUBC. These changes would eliminate the differences in the way that this information is handled for electronic and paper submission of the claim. It is important wherever possible to follow the same data development paths for both paper and electronic submission in order to simplify the capture and reporting of billing information.
Adopt DSMO recommendations for handling requests for additional code sets. We also support the recommendations made by the DSMOs for handling requests to consider the addition of other clinical code sets for use within the transactions standards. Maintaining a manageable number of code sets for use within the transaction standards is consistent with the goals of administrative simplification. Requiring any organization seeking to add another clinical code set, therefore, to first approach one of the named code sets maintainers about the need for additional clinical codes ensures the realization of these goals. The existing code set maintainer can apply rigorous, well-established standards for reviewing the request and deciding whether to establish additional clinical codes by incorporating the requested or similar codes within its existing code set structure.
NPRM: Requirements that HHS Should Reject
Reject the requirement to use provider taxonomy codes for institutional claims. Requirements in the institutional guide call for the reporting of provider taxonomy codes at both the individual service line and claim levels, and, at the individual service line level, other associated provider identification. While some payers, largely Medicaid agencies, want to differentiate facility charges based on the caregiver who rendered the service, we believe such differentiation is unnecessary. Although billing for the professional component of the service may require the reporting of provider taxonomy codes, billing for the institutional component does not. Moreover, hospitals often have many caregivers involved in the delivery of a particular service and it is, therefore, impractical or impossible in many instances to report a single provider taxonomy code or other associated provider identification at the line level. To require such reporting would force hospitals to implement massive new system changes to track which caregivers were responsible for providing each individual service and to incur costs that would never be recouped through the payment differentials payers would assign to the service. HHS should follow the recommendation of the NUBC to delete all references to the use of provider taxonomy codes from the institutional guide. This would ensure that charges reported in the institutional transaction standard reflect only the facility portion associated with the service, not the professional component of that service.
Should HHS decide not to follow this recommendation, it is important that the usage note in the institutional implementation guide that requires the reporting of provider taxonomy codes and other associated provider identification when they “impact” claims adjudication be clarified. The usage note as currently written is extremely problematic since it not does establish clear operational rules that would help the provider to understand the surrounding circumstances or events that would trigger the reporting of provider taxonomy codes. Furthermore, this usage note provides no basis for testing and certification organizations to evaluate providers’ compliance with the standard. HHS should revise the usage note to limit the reporting of provider taxonomy codes to those circumstances where the institution differentiates charges or pricing for the service based on the type of provider rendering it.
Other Clarifications Needed
Clarify usage note related to reporting of HCPCS for outpatient claims. Although not addressed in the Addenda to the institutional implementation guide, the use and reporting of HCPCS codes on outpatient claims is confusing and requires some additional clarification. The institutional guide for the claim transaction standard contains a usage note in segment SV2 that specifically states that SV202 “is required for all Outpatient claims.” Because not all outpatient services have a HCPCS code assigned, this statement warrants additional clarification. We suggest that the note read as follows: “HCPCS, which are only for Outpatient Claims, are only reported for services when a HCPCS code exists for that particular service.” We would urge HHS to consider adding this clarification when issuing the final rule.
We look forward to working with HHS to make sure the administrative simplification provisions of HIPAA do indeed achieve the operational efficiencies and cost savings that Congress envisioned in enacting the law and, ultimately, expected to be of significant benefit to patients and hospitals alike. If you have any questions about these remarks, please contact me, or feel free to call Melinda Hatton, vice president and chief Washington counsel at (202) 626-2336; George Arges, senior director, health data management group at (312) 422-3398; or Lawrence Hughes, director, member relations at (312) 422-3328.
Executive Vice President
In establishing the requirement for standard formats and code sets for electronic transactions, Congress stated that it intended the standards to achieve “the goals of improving the operation of the health care system and reducing administrative costs.” However, there are ambiguities in the transactions and code sets regulations that, without clarification from HHS, threaten to make it impossible for these standards to achieve their fundamental purpose. More precisely, the statute says the standards are fixed and in effect for a full year; but, without further guidance, every health plan selectively may modify what is regarded as a complete, standard transaction at any time and the plan can do so as many times in a plan year as it chooses. Following is a brief explanation of the ambiguities in the regulation that create this problem and a proposal for guidance that would resolve the ambiguities and ensure that Congress' intent is implemented and its goals achieved.
Ambiguities in Transactions and Code Sets Rule and Obstacles to Prompt Claims Processing and Payment
Despite the significant investment of financial and staff resources that will be needed to implement the requirements of the transactions and code sets regulation, hospitals generally support standardization. It is their hope that once formats are standardized, it will be possible to accurately submit claims that payers can process promptly. Hospitals currently incur significant financial losses from the delay in processing claims or the rejection of claims as “incomplete” on initial submission. Congress established the "administrative simplification" requirements of HIPAA in recognition of the fact that standard formats and code sets offer the possibility of eliminating the waste of resources from the administrative rejection, resubmission, and delay in processing claims by making it possible for a provider to efficiently submit complete claims. We propose to define a complete claim as one that is ready for processing and adjudication by multiple health plans.
HHS attempted to achieve Congress’ goals by promulgating the new standards and establishing the following new regulation: “A health plan may not reject a standard transaction on the basis that it contains data elements not needed or used by the health plan (for example, coordination of benefits information).” 45 C.F.R. §162.925(a)(3). This rule will help eliminate frivolous claim rejections that result from the intolerance of information processing programs. For each of eight national transactions specified by Congress in the HIPAA statute, the transactions and code sets regulations define a “standard” transaction as:
Using the right electronic format; Using the right medical code sets, including all of the “required” elements for the particular transaction; and Including no elements that are not specified in the Implementation Guide as permissible “situational” elements for the particular transaction.
In order for a provider to submit a complete transaction in standard form, however, the health plan to which it is sending the transaction must specify which of the optional “situational” elements for the transaction is necessary to process the transaction. (The total possible pool of situational elements for each transaction is specified in the Implementation Guide.)
There is ambiguity in the regulation because it does not require health plans to inform providers which of the optional situational elements will be necessary for a standard transaction. Instead, the regulation merely tells plans that they cannot agree to circumvent the standards or use elements that exceed the maximum data set in a trading partner agreement. The regulation specifically prohibits covered entities from participating in certain kinds of arrangements that would circumvent Congress’ intent that there be clear, standard formats for common administrative transactions, 45 C.F.R. §162.915. The rule explicitly states:
“A covered entity must not enter into a trading partner agreement that would do any of the following:
Change the definition, data condition, or use of a data element or segment in a standard.
Add any data elements or segments to the maximum defined data set.
Use any code or data elements that are either marked ‘not used’ in the standard’s implementation specification or are not in the standard’s implementation specification(s).
Change the meaning or intent of the standard’s implementation specification(s).”
The regulation is unclear as to whether a health plan can arbitrarily change its specifications regarding which situational elements are necessary for processing a claim of a particular type, thus further delaying payment.
Under the privacy regulation, the provider is required to send only the minimum information necessary for the purpose, but the provider cannot anticipate what is required if the health plan has not specified which situational elements it deems necessary, 45 C.F.R. §164.514(d). In effect, without specification from the health plan, providers — after significant investments to reprogram information systems to use the new standards — are in the same position as before. If health plans are free to be somewhat arbitrary with respect to which situational elements are necessary for processing a given transaction, or to reject claims of certain types if they do not routinely include an attachment, providers still will be faced with payment delays, frivolous rejections of claims, and the need for wasteful re-submissions and reconciliation. This is not consistent with Congress’ intent. Moreover, it seems clear from the rule that HHS did not intend this result.
It is clear that the regulation anticipates that each health plan will promptly inform providers of any special situational elements the plan may require for prompt processing of a standard transaction, and that these selections should be relatively predictable. Otherwise, it would make no sense to pretend that the regulation has established a “standard” form for the transaction. Accordingly, HHS should promulgate guidance that more clearly explains the role of the trading partner agreement in ensuring that the industry’s expenditures to adopt the formats and code sets actually achieves Congress’ objectives. Following is a suggestion of the type of guidance necessary to address the current ambiguity.
“Trading Partner Agreement” 45 C.F.R. § 160.103.
A trading partner agreement is the primary vehicle by which a health plan specifies which of the situational elements permissible for a standard transaction will be needed for prompt processing of the transaction under the health benefits plan. These are often referred to as “companion guides” to the implementation standards. At the option of the health plan, a trading partner agreement may be uniform for all health benefits programs administered by that health plan.
A health plan may modify a trading partner agreement to further clarify the usage of data elements as contained in the specifications for a standard transaction but only to accommodate (i) a duly promulgated change in the standard, or (ii) a lawful modification of a health benefits plan available to enrollees and/or beneficiaries.
With respect to a health plan that fails to promulgate a trading partner agreement that includes a corresponding companion guide applicable to a health benefits package, a transaction is deemed to meet the requirements of this part if it includes the maximum defined data set for a standard transaction.