CMS offers respite for HIPAA transaction standards

By Anthony Brino
12:04 PM

While most American insurers, physicians and hospitals are probably always ready for more administrative simplification, the Centers for Medicare and Medicaid Services (CMS) is giving HIPAA-covered entities until March before it enforces new transaction standards governing eligibility and claims status.

“Industry feedback suggests that HIPAA covered entities have not reached a threshold whereby a majority of covered entities would be able to be in compliance with the operating rules by January 1, 2013,” said CMS’s Office of E-Health Standards and Services, which is implementing the Affordable Care Act’s administrative simplification provisions.

Officials said checking compliance with the rules wouldn’t begin until March 31. But the agency still is encouraging health organizations that are ready to use the new transaction rules to do so, or if not to “expeditiously become compliant” before March.

A lack of data identification standards, combined with sensitive health information, has typically made eligibility and claims administration costly for health organizations, in some ways mirroring health information exchange and EHR problems with interoperability. The ACA tries to address that problem of “red tape” by incentivizing electronic claims administration and business transactions, with HHS estimating that the transaction and related HIPAA simplification rules could save $9 billion over the next decade.

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The new standards were developed over the past few years by Council for Affordable Quality Healthcare’s Committee on Operation Rules for Information Exchange (CORE), along with federal advisory groups, including the National Institute of Standards and Technology.

The ACA gives HHS some timeline flexibility in carrying out several federal standardization mandates, including health plan identifiers, but the goal is to have more administrative efficiency by 2020. In April 2014, CMS will start assessing penalties on health plans that fail to certify compliance with CAQH CORE eligibility and claim status operating rules, with fines equaling $1 per covered life until certification is complete.

While much of the country was mired in the political and legal debate over the ACA during the past two years, groups like CAQH have been busy trying to fix what has become a manageable but costly chronic condition for health businesses and organizations.

As HHS secretary Kathleen Sebelius said in August: “the average physician spends three weeks a year on billing and insurance related tasks, and, in a physician’s office, two-thirds of a full-time employee per physician is necessary to conduct these tasks. Many physician practices and hospitals receive and deposit paper checks, and manually post and reconcile the health care claim payments in their accounting systems.”

Sunny Singh, a supply chain and integration management expert and the CEO of the Bellevue, Washington-based software firm Edifecs, says that if the U.S. healthcare industry could be half as administratively efficient as the retail sector, “there are billions of dollars in savings to be had – savings that could be redirected toward other healthcare priorities.”

Indeed, the need for administrative simplification has led to a number of tech companies offering software to insurers, third party administrators, physicians, hospitals and employers — with some firms having business lines in both software and a certain healthcare sector, like San Francisco start up SeeChange Health, a hybrid insurer and software provider focused on wellness plans. 


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