Fact Sheets

HHS PROPOSES HIPAA STANDARD FOR A UNIQUE HEALTH PLAN IDENTIFIER

Action

A proposed rule announced today by the Department of Health and Human Services (HHS) would establish a unique health plan identifier (HPID) under Health Insurance Portability and Accountability Act of 1996 (HIPAA) standards for electronic health care transactions.  Further, the rule would adopt a data element that will serve as an “other entity” identifier (OEID) for entities that are not health plans, health care providers, or individuals, but that need to be identified in standard transactions.   The rule proposes an addition to the National Provider Identifier (NPI) requirements.   Finally, the proposed rule would delay by one year, until Oct. 1, 2014, the date by which covered entities must comply with International Classification of Diseases, 10^th Edition diagnosis and procedure codes (ICD-10).

The proposed rule was developed by the Office of E-Health Standards and Services (OESS) as part of its ongoing role, delegated by HHS, to adopt standards for electronic health care transactions under HIPAA.  OESS is part of the Centers for Medicare & Medicaid Services (CMS).  The proposed HPID rule would implement an administrative simplification provision of the Affordable Care Act.

Section 1104 of the Affordable Care Act requires HHS to issue a series of regulations over five years that are designed to streamline health care administrative transactions, encourage greater use of standards by health care providers, and make existing standards work more efficiently.   On July 8, 2011, HHS published the first regulation in the series, an interim final rule with comment(IFC) that adopted operating rules for two electronic health care transactions to make it easier for health care providers to determine whether a patient is eligible for coverage and the status of a health care claim submitted to a health insurer.   On January 10, 2012, HHS published the second regulation, an IFC that adopted standards for the health care electronic funds transfers (EFT) and remittance advice transaction between health plans and health care providers.

The proposed rule announced today is the third in the series. Future administrative simplification rules will address adoption of:

1. operating rules for the health care electronic funds transfers (EFT) and remittance advice transaction;
2. a standard for claims attachments; and
3. requirements for certification of health plans’ compliance with all HIPAA standards and operating rules.

Background

Congress addressed the need for a consistent framework for electronic health care transactions and other administrative simplification issues through HIPAA, enacted on August 21, 1996.   HIPAA amended the Social Security Act (the Act) by adding Part C—Administrative Simplification—to Title XI of the Act, requiring HHS to adopt standards for certain transactions to enable health information to be exchanged more efficiently and to achieve greater uniformity in the transmission of health information.

This proposed rule implements section 1173(b) (1) of the Act (as amended by section 1104(c) of the Affordable Care Act), which requires the adoption of a standard for a unique health plan identifier (HPID).

HPID and OEID

Currently, health plans are identified in standard transactions using multiple identifiers that differ in length and format.   Health care providers are frustrated by the following problems associated with the lack of a standard identifier: the routing of transactions, rejected transactions due to insurance identification errors, and difficulty determining patient eligibility.

On July 19, 2010, the National Committee on Vital and Health Statistics (NCVHS) Subcommittee on Standards held a hearing on the health plan identifier to gather information for developing a recommendation to the Secretary. Participants represented a cross-section of the health care industry. On September 30, 2010, the NCVHS sent the Secretary its recommendations for adoption of a standard establishing a unique health plan identifier. Another recommendation addressed the need for an identifier for entities such as health care clearinghouses, third party administrators (TPAs), and repricers, that are not health plans but that perform certain health plan functions. These entities are currently identified in the standard transactions in the same fields and using the same types of identifiers as health plans, but are not health plans and so cannot obtain a health plan identifier.  Based on the NCVHS recommendations, HHS is proposing to adopt an “other entity” identifier (OEID).

The primary purpose of the HPID and the OEID is for use in the HIPAA standard transactions.   The most significant benefit of the HPID and the OEID is that they will increase standardization within the HIPAA standard transactions.

NPI

In January 2004, HHS published a final rule in which the Secretary adopted the National Provider Identifier (NPI) as the standard unique health care provider identifier and adopted requirements for obtaining and using the NPI.   Since that time, pharmacies have encountered situations where the NPI of a prescribing health care provider needs to be included in the pharmacy claim, but the prescribing health care provider does not have an NPI or has not disclosed it.  This situation has become notably problematic in the Medicare Part D program. HHS’ proposed addition to the NPI requirements seeks to address this issue.  This proposed rule specifies the circumstances under which an organization covered health care provider must require certain noncovered individual health care providers who are prescribers to obtain and disclose an NPI.

Provisions of the NPRM announced today

HHS proposes adoption of a standard for a unique health plan identifier (HPID), a data element that will serve as an “other entity” identifier (OEID), and an addition to the National Provider Identifier (NPI) requirements.   HHS also proposes to delay by one-year, the date by which covered entities must comply with International Classification of Diseases, 10^th Edition diagnosis and procedure codes (ICD-10).

Costs/Benefits

HPID

The HPID is expected to benefit providers, while health plans will bear most of the costs. Costs to all commercial and government health plans together (Medicare and Medicaid, Indian Health Service, Veterans Health Administration) are estimated to be approximately $650 million to $1.3 billion.  However, commercial and government health plans are expected to make up those costs in savings.

Providers can expect savings from two indirect consequences of implementation of the HPID: the cost avoidance of a decrease in administrative time spent by physician practices interacting with health plans, and a material cost savings through automation of processes for every transaction that moves from a manual transaction to an electronic transaction.

Return on investment of HPID over ten years for entire health care industry is approximately $700 million to $4.6 billion.

NPI

HHS estimates that the addition to the NPI requirements will have little impact on health care providers and on the health industry at large because there are few health care providers who do not already have an NPI. In addition, for those health care providers who do not already have an NPI, obtaining one is not a burdensome endeavor, as it is free of charge and takes little time to obtain.

Regulation effective date and compliance date

When made final, the effective date of this regulation would be October 1, 2012.

Under the Affordable Care Act, covered entities, excluding small health plans, would be required to be in compliance with the HPID on October 1, 2014. Small health plans would be required to be in compliance with the HPID on October 1, 2015.

HHS also proposes that covered entities have 180 days from the October 1, 2012 effective date of the final rule to comply with the additional NPI requirement.

The proposed rule, CMS-0040-P, may be viewed at www.ofr.gov/inspection.aspx.

A fact sheet on the proposed delay in the ICD-10 compliance date may be viewed at http://www.cms.gov/apps/media/fact_sheets.asp.

A news release on the proposed rule may be viewed at http://www.hhs.gov/news

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