[Federal Register Volume 74, Number 11 (Friday, January 16, 2009)]
[Rules and Regulations]
[Pages 3296-3328]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-740]
[[Page 3295]]
-----------------------------------------------------------------------
Part VI
Department of Health and Human Services
-----------------------------------------------------------------------
45 CFR Part 162
Health Insurance Reform; Modifications to the Health Insurance
Portability and Accountability Act (HIPAA); Final Rules
Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Rules
and Regulations
[[Page 3296]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of the Secretary
45 CFR Part 162
[CMS-0009-F]
RIN 0938-AM50
Health Insurance Reform; Modifications to the Health Insurance
Portability and Accountability Act (HIPAA) Electronic Transaction
Standards
AGENCY: Office of the Secretary, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule adopts updated versions of the standards for
electronic transactions originally adopted under the Administrative
Simplification subtitle of the Health Insurance Portability and
Accountability Act of 1996 (HIPAA). This final rule also adopts a
transaction standard for Medicaid pharmacy subrogation. In addition,
this final rule adopts two standards for billing retail pharmacy
supplies and professional services, and clarifies who the ``senders''
and ``receivers'' are in the descriptions of certain transactions.
DATES: Effective Dates: These regulations are effective March 17, 2009
except for the provisions of 45 CFR part 162 Subpart S, which are
effective January 1, 2010. The incorporation by reference of certain
publications listed in the regulations is approved by the Director of
the Federal Register as of March 17, 2009.
Compliance Dates: Compliance with the provisions of Sec. Sec.
162.1102(c), 162.1202(c), 162.1302(c), 162.1402(c), 162.1502(c),
162.1602(c), 162.1702(c), and 162.1802(c) is required on January 1,
2012. Compliance with the provisions of Sec. 162.1902 is required on
January 1, 2013.
FOR FURTHER INFORMATION CONTACT: Lorraine Tunis Doo, (410) 786-6597.
I. Background
HIPAA mandated the adoption of standards for electronically
conducting certain health care administrative transactions between
certain entities. Through subtitle F of title II of HIPAA, the Congress
added to title XI of the Social Security Act (the Act) a new Part C,
entitled ``Administrative Simplification.'' Part C of title XI of the
Act now consists of sections 1171 through 1180. These sections define
various terms and impose several requirements on HHS, health plans,
health care clearinghouses, and certain health care providers
concerning the electronic transmission of health information. On August
17, 2000, we published a final rule entitled, ``Health Insurance
Reform: Standards for Electronic Transactions'' in the Federal Register
(65 FR 50312) (hereinafter referred to as the Transactions and Code
Sets rule). That rule implemented some of the HIPAA Administrative
Simplification requirements by adopting standards for eight electronic
transactions and for code sets to be used in those transactions. Those
transactions were: Health care claims or equivalent encounter
information; health care payment and remittance advice; coordination of
benefits; eligibility for a health plan; health care claim status;
enrollment and disenrollment in a health plan; referral certification
and authorization; and health plan premium payments. We defined these
transactions and specified the adopted standards at 45 CFR part 162,
subparts I and K through R.
Since the time of compliance with the first set of HIPAA standards,
a number of technical issues with the standards, including issues
resulting from new business needs, have been identified. Industry
stakeholders submitted hundreds of change requests to the standards
maintenance organizations, with recommendations for improvements to the
standards. These requests were considered, and many were accepted,
resulting in the development and approval of newer versions of the
standards for electronic transactions. However, covered entities are
not permitted to use those newer versions until the Secretary of Health
and Human Services (HHS) adopts them by regulation for HIPAA
transactions.
In addition to technical issues and business developments
necessitating consideration of the new versions of the standards, there
remain a number of unresolved policy issues that were identified by the
industry early in the implementation period for the first set of
standards, and those issues were never addressed through regulation.
This final rule addresses those outstanding issues.
We refer readers to review the following regulations for a more
detailed discussion of the changes to the standards for electronic
transactions; the Transactions and Code Sets rule; the Modifications to
Electronic Data Transaction Standards and Code Sets rule (68 FR 8381),
published in the Federal Register on February 20, 2003 (hereinafter the
Modifications rule); Standards for Privacy of Individually Identifiable
Health Information (65 FR 82462), published in the Federal Register on
December 28, 2000; Standards for Privacy of Individually Identifiable
Health Information; Final Rule (67 FR 53182) published in the Federal
Register on August 14, 2002; and the Modifications to the Health
Insurance Portability and Accountability Act (HIPAA) Electronic
Transaction Standards proposed rule (73 FR 49796), published in the
Federal Register on August 22, 2008 (hereinafter the August 22, 2008
proposed rule) for further information about electronic data
interchange, the statutory background and the regulatory history.
In the August 22, 2008 proposed rule, we included a table that
shows the full set of HIPAA transaction standards adopted in the
Transactions and Code Sets rule, as we proposed to modify them in the
August 22, 2008 proposed rule (73 FR 49744), and adopt in this final
rule. The list is reproduced here in Table 1:
Table 1--HIPAA Standard and Transactions
------------------------------------------------------------------------
Standard Transaction
------------------------------------------------------------------------
ASC X12 837 D.................................. Health care claims--
Dental.
ASC X12 837 P.................................. Health care claims--
Professional.
ASC X12 837 I.................................. Health care claims--
Institutional.
NCPDP D.0...................................... Health care claims--
Retail pharmacy drug.
ASC X12 837 P and NCPDP D.0.................... Health care claims--
Retail pharmacy
supplies and
professional services.
NCPDP D.0...................................... Coordination of
Benefits--Retail
pharmacy drug.
ASC X12 837 D.................................. Coordination of
Benefits--Dental.
ASC X12 837 P.................................. Coordination of
Benefits--Professional
.
ASC X12 837 I.................................. Coordination of
Benefits--Institutiona
l.
ASC X12 270/271................................ Eligibility for a
health plan (request
and response)--dental,
professional and
institutional.
[[Page 3297]]
NCPDP D.0...................................... Eligibility for a
health plan (request
and response)--Retail
pharmacy drugs.
ASC X12 276/277................................ Health care claim
status (request and
response).
ASC X12 834.................................... Enrollment and
disenrollment in a
health plan.
ASC X12 835.................................... Health care payment and
remittance advice.
ASC X12 820.................................... Health plan premium
payment.
ASC X12 278.................................... Referral certification
and authorization
(request and
response).
NCPDP D.0...................................... Referral certification
and authorization
(request and
response)--Retail
pharmacy drugs.
NCPDP 5.1 and NCPDP D.0........................ Retail pharmacy drug
claims
(telecommunication and
batch standards).
NCPDP 3.0...................................... Medicaid pharmacy
subrogation (batch
standard).
------------------------------------------------------------------------
II. Provisions of the Proposed Regulations and Responses to Comments
On August 22, 2008 we proposed to adopt updated standards for the
eight adopted electronic transactions standards. We proposed to revise
Sec. 162.1102, Sec. 162.1202, Sec. 162.1302, Sec. 162.1402, Sec.
162.1502, Sec. 162.1602, Sec. 162.1702, and Sec. 162.1802 to adopt
the ASC X12 Technical Reports Type 3 (TR3), Version 005010 (hereinafter
referred to as Version 5010) as a modification of the current X12
Version 4010 standards (hereinafter referred to as Version 4010/4010A)
for the HIPAA transactions. In some cases, the Technical Reports Type 3
have been modified by Type 1 Errata, and these Errata were also
included in our proposal. The full discussion of our proposal to revise
each of the above-referenced provisions can be found in the August 22,
2008 proposed rule (73 FR 49745-49750).
We proposed to revise Sec. 162.1102, Sec. 162.1202, Sec.
162.1302, and Sec. 162.1802 by adding new paragraphs (c)(1) to each of
those sections to adopt the NCPDP Telecommunication Standard
Implementation Guide, Version D, Release 0 (Version D.0) and equivalent
NCPDP Batch Standard Implementation Guide, Version 1, Release 2
(Version 1.2) (hereinafter collectively referred to as Version D.0) in
place of the NCPDP Telecommunication Standard Implementation Guide,
Version 5, Release 1 and equivalent NCPDP Batch Standard Implementation
Guide, Version 1, Release 1 (hereinafter collectively referred to as
Version 5.1), for the following retail pharmacy drug transactions:
Health care claims or equivalent encounter information; eligibility for
a health plan; referral certification and authorization; and
coordination of benefits. The full discussion of our proposal to revise
each of the above-referenced provisions can be found in the August 22,
2008 proposed rule (73 FR 49751).
We proposed to add a new subpart S to 45 CFR part 162 to adopt a
standard for the subrogation of pharmacy claims paid by Medicaid. The
transaction is the Medicaid pharmacy subrogation transaction, defined
at proposed Sec. 162.1901, and the new standard is the NCPDP Batch
Standard Medicaid Subrogation Implementation Guide, Version 3, Release
0 (Version 3.0), July 2007 (hereinafter referred to as Version 3.0) at
proposed Sec. 162.1902. The standard would be applicable to Medicaid
agencies in their role as health plans, as well as to other health
plans that are covered entities under HIPAA, but not to providers
because this transaction is not utilized by them. For a complete
discussion of the Medicaid pharmacy subrogation transaction and the
proposed adoption of Version 3.0, see the August 22, 2008 proposed rule
(73 FR 49751-49752).
We proposed to revise Sec. 162.1102 to adopt both Version D.0 and
the 837 Health Care Claim: Professional ASC X12 Technical Report Type 3
for billing retail pharmacy supplies and professional services. We
proposed that the use of either standard would be determined by trading
partner agreements. The full discussion of the proposed change can be
found in the August 22, 2008 proposed rule (73 FR 49752-49754).
We proposed to revise the descriptions of the transactions at Sec.
162.1301, Sec. 162.1401, and Sec. 162.1501 to more clearly specify
the senders and receivers of those transactions. See the August 22,
2008 proposed rule for a full discussion of this proposal (73 FR
49754). For Versions 5010 and D.0, we proposed a compliance date of
April 1, 2010 for all covered entities. For Version 3.0, we proposed a
compliance date 24 months after the effective date of the final rule,
except for small health plans, which would have to be in compliance 36
months after the effective date of the final rule. Finally, we proposed
to revise Sec. 162.923 to resolve the problem of different compliance
dates for different entities, such that the requirement for covered
entities to use the standards applies only when the covered entity
conducts transactions with another entity that is also required to
comply with the transaction standards.
In response to the August 22, 2008 proposed rule, we received 192
timely public comments from all segments of the health care industry,
including providers, physician practices, hospitals, pharmacies, other
health care professionals, health plans, clearinghouses, vendors,
standards development organizations, professional associations,
consultants, and State and Federal government agencies. We reviewed
each submission, and grouped similar or related comments together to
address in this final rule, which also enabled us to identify the areas
of the proposed rule that required review in terms of policy,
consistency or clarity.
In the following sections, we present comments and responses
generally in the order in which the topics were presented in the August
22, 2008 proposed rule. There were a number of comments on topics that
were not addressed in the proposed rule, and our responses to those
comments are provided at the end of this section. Some comments we
considered out of scope of the August 22, 2008 proposed rule, and we
list several of them at the end of this section as well.
A. Adoption of X12 Version 5010 Technical Reports Type 3 for HIPAA
Transactions
In the August 22, 2008 proposed rule, we proposed to revise Sec.
162.1102, Sec. 162.1202, Sec. 162.1302, Sec. 162.1402, Sec.
162.1502, Sec. 162.1602, Sec. 162.1702, and Sec. 162.1802 to adopt
Version 5010. In some cases, the version was modified by Type 1 Errata,
and these Errata were also proposed for adoption. In general,
deficiencies inherent in the current standards continue to cause
industry-wide difficulties to such a degree that much of the industry
rely on ``companion guides'' and proprietary ``work-arounds.'' The four
types of changes in Version 5010 are structural, front matter,
technical improvements
[[Page 3298]]
and data content changes. The complete discussion of this proposal can
be found in the August 22, 2008 proposed rule (73 FR 49745-49749).
Comment: Commenters overwhelmingly supported our proposal to adopt
Version 5010 because of the technical and business improvements made to
the standards. With respect to the specific changes made to Version
5010, commenters expressed their appreciation for the tightened, clear
situational rules which will reduce analysis time for everyone, and
minimize the need for companion guides. Commenters said that the
improved eligibility responses and better search options will improve
efficiency for providers and reduce phone calls for both providers and
health plans. Commenters also said that the detailed clarifications of
commonly misunderstood areas such as corrections and reversals, refund
processing, and recoupments should result in a consistent
implementation of the X12 835 (remittance advice), which is not the
case today. They noted that incorrect implementations of the X12 835
have prevented providers from implementing electronic posting, or
automating the data entry of reimbursement information, as widely as
they might otherwise. Correct implementation of the X12 835 will reduce
phone calls to health plans, reduce appeals due to incomplete
information, eliminate unnecessary customer support, and reduce the
cost of sending and processing paper remittance advices. Commenters
also noted that the greatly improved X12 278 for referrals and
authorizations could encourage wider implementation and save labor
costs. Commenters noted that the new claims transaction standard
contained in Version 5010 significantly improves the reporting of
clinical data, enabling the reporting of ICD-10-CM diagnosis codes and
ICD-10-PCS procedure codes, and distinguishes between principal
diagnosis, admitting diagnosis, external cause of injury and patient
reason for visit codes. Commenters noted that these distinctions will
improve the understanding of clinical data and enable better monitoring
of mortality rates for certain illnesses, outcomes for specific
treatment options, and hospital length of stay for certain conditions,
as well as the clinical reasons for why the patient sought hospital
care. Commenters also noted that another improvement in the updated
claims standard is the ability to handle identification of the
``Present on Admission'' (POA) indicator to the diagnoses.
Response: We appreciate the overwhelming support of commenters for
the adoption of Version 5010.
Comment: We received a few comments urging X12 to publish an all-
inclusive list of changes made to the standards. Commenters said that a
change log is issued after each year's changes are approved. Since
Version 5010 incorporates multiple years of changes, users would be
required to consolidate multiple change logs. A cumulative change log
that includes changes from each interim year should be provided so that
all of the changes are contained in one document.
Response: We agree that it would be helpful to have a comprehensive
list of the changes made to a current version of the standards, and
that it would make it easier for covered entities to identify all of
the changes that have occurred since the last version of the standard
was adopted. We have made this recommendation to the X12 work group as
well as the Designated Standards Maintenance Organizations (DSMO).
Many commenters submitted technical comments relating to Version
5010. The comments included highly technical issues and suggested
structural changes to the standards, definitional issues requiring
clarification, and interpretational issues regarding routine usage of
the standards. In total, there were over 470 technical comments. We
provided all of the technical comments to X12, which had convened a
committee of subject matter experts to review the technical comments
and provide us with technical input. The workgroup reviewed each
comment and categorized them into several groups as follows: (1) The
committee agrees with the comment and the change will be made in the
next version of the TR3s (212 comments); (2) the committee does not
agree with the comment and believes that a change is not appropriate
(156 comments); (3) the functionality already exists elsewhere in the
TR3s; commenter requires explanation and references (5 comments); and
(4) the comment is a request for interpretation and/or training, and
not a request for a change in the TR3s (43 comments). There were 29
comments that were not requests for action, but rather statements of
opinion about Version 5010. Of the 212 comments falling into the first
category, most were clarifications that would improve usability of the
TR3s, but would not adversely affect business processes. Therefore, we
will not request that X12 accommodate these changes in Version 5010,
but rather would address them in the course of developing later
versions of the standards.
After publication of the final rule, all of the technical comments
reviewed by the X12 workgroup, with the dispositions, will be posted on
the CMS Web site at http://www.cms.hhs.gov, in the Regulations and
Guidance section, as well as on the X12 portal at http://www.x12.org.
Where education and/or additional communication are needed about the
functionality of the transactions, X12 will provide that in future
programs, in collaboration with appropriate industry groups. These
Standards Development Organizations (SDO)-sponsored efforts will
specifically address the third category of comments in which the
committee stated that the functionality exists elsewhere in the TR3s,
or the fourth category of comments where the commenter specifically
requested additional interpretation guidance.
During the comment review process, X12 provided input to HHS, and
we selected several comments to include in this final rule as examples
of the types of technical issues that were submitted during the public
comment period. In general, suggested corrections, clarifications, and
definitional changes to Version 5010 transaction standards will be
reserved for future versions of the standards. Any suggested changes to
the structure of the standard will need to be evaluated through the
standards development process and considered for future versions of the
standard. All comments submitted during the comment period for the
August 22, 2008 proposed rule will automatically be included in the X12
process for considering change requests. Submitters will not need to
re-submit those comments.
Comment: We received a few comments requesting clarification of a
statement in the August 22, 2008 proposed rule regarding the field size
issue in Version 4010/4010A to accommodate ICD-10. In the August 22,
2008 proposed rule, we said that Version 4010/4010A does not provide a
means for identifying ICD-10 procedure or diagnosis codes on an
institutional claim, and that Version 5010 anticipates the eventual use
of ICD-10 procedure and diagnosis codes by adding a qualifier as well
as the space needed to report the number of characters that would
permit reporting of ICD-10 procedure and diagnosis codes on
institutional health care claims. Commenters pointed out that the more
accurate explanation for why Version 4010/4010A cannot accommodate ICD-
10 is because of the lack of a qualifier
[[Page 3299]]
or indicator for the code set name rather than the size of the field
for the codes.
Response: We note the correction.
Comment: One commenter recommended a correction to Version 5010,
specific to the claims transactions, to enable it to support the
creation of a proposed National Joint Replacement Registry.
Response: Because of the technical nature of this comment, we
consulted with the X12 work group to better understand the context of
the comment and the stated concern. Based on our current understanding
of the comment, we agreed with the X12 workgroup on this recommendation
for the next version of its TR3s, once the registry is finalized. This
means that Version 5010 will not have changes made to it for this
purpose at this time, but that the next version of the standards will
likely have addressed and resolved this issue.
Comment: We received several comments regarding the external code
sets used in the standards, such as claims adjustment reason codes.
Several commenters wrote about the X12 835 remittance advice code
mapping requirements, stating that providers continue to struggle with
implementation of the X12 835 as many health plans struggle to provide
quality mapping from proprietary to standard codes in the health care
payment and remittance advice transaction. Commenters requested that
guidelines for mapping be provided.
Response: During our consideration of these comments, which we
believe apply to the technical standards maintenance process, and which
we feel are outside of the scope of this rule, we consulted with the
WEDI 835 special work group (SWG) to confirm that the stated concerns
were being addressed in its standards revision process. The WEDI 835
SWG indicated that it is developing a recommended set of mapping
instructions and information for the industry. In addition, the WEDI
835 SWG has adopted recommendations that will assist in facilitating a
more standard implementation of the X12 835.
Comment: We received a comment from a large specialty association
representing anesthesiology. This group responded to a discussion in
the August 22, 2008 proposed rule in which we indicate that
efficiencies are gained by allowing only the reporting of minutes for
anesthesia time in Version 5010, whereas Version 4010/4010A allows for
reporting of anesthesia time in either units or minutes. The commenter
stated that this change to Version 5010 will not add efficiency and/or
cost savings to the submission and processing of claims for anesthesia
care, and requested that units continue to be permitted, or
alternatively, that additional time be allowed to implement this change
because of its impact on business processes and contracts.
Response: Due to the nature of this comment, which addresses
potential efficiencies resulting from a technical provision in the
Version 5010 implementation guide, we consulted with the X12 workgroup.
Based on our discussion with the X12 workgroup, we think that the
appropriate course for the commenter to follow would be to submit a
change request to the workgroup because the X12 development cycle is
ongoing, and change requests will continue to be accepted and reviewed
for consideration for the next version of the standards. Given the
change in this final rule in the compliance date for Version 5010, we
believe the commenter's request for more time to implement the data
requirement is addressed.
Comment: Several commenters suggested changes to the situational
rule for the health care diagnosis codes segment on the X12 837D for
dental claims. The situational rule requires inclusion of diagnosis
codes only under circumstances involving oral surgery or anesthesia.
Commenters suggested that today's dental health plans are offering
benefit plans that provide additional coverage for dental services when
certain medical conditions exist. The commenter suggested that the
situational rule be expanded to allow for dental providers to include
diagnosis codes in cases where specific dental procedures may minimize
the risks associated with the connection between the patient's oral and
systemic health conditions.
Response: We do not feel that these comments are within the scope
of the proposed rule, but instead pertain to certain technical aspects
of the X12 Technical Reports. As such, we shared the comments with the
X12 expert committee, which agreed with this recommendation and
committed to incorporating this change into future versions of X12
Technical Reports Type 3. As stated earlier, X12 will provide guidance
on how to accommodate the functionality in Version 5010.
Comment: A few comments focused on the ability of dental providers
to report tooth numbers on the X12 837P claim. According to commenters,
there is a need for all dental providers to be able to report tooth
numbers on medical claims. There were two specific issues raised in
this regard. First, even though a field for the tooth number has been
designated temporarily, to accommodate claims from oral surgeons and
other practitioners, a permanent data element is needed. The second
issue pertains to the use of either a national or international tooth
numbering system. These commenters stated that both numbering systems
should be accommodated in the X12 837 Dental and Professional Guides.
Currently, only the Universal National Tooth Designation System is
accommodated in Version 5010.
Response: Once again, we believe these comments pertain more
directly to the technical provisions of the relevant implementation
guides. We therefore consulted with the X12 expert committee, which
agreed with the first issue regarding the ability of dental providers
to report tooth number beyond oral surgery, and committed to allowing
this level of reporting in future versions of the X12 standards.
Regarding the issue of which tooth numbering system should be
accommodated in Version 5010, the X12 committee encourages the
commenters to initiate the discussion through the DSMO process with
additional business justification for future consideration. The X12
portal has several HIPAA Implementation Guide Requests (HIRs) available
which explain how to use the claims transaction for dental services in
the interim (http://www.X12.org).
Overall, the technical comments received on Version 5010 did not
represent issues that would prevent this version of the standard from
being adopted as currently proposed. However, enhancements will either
be implemented in future versions or further vetted for inclusion in
future versions.
B. Adoption of NCPDP Telecommunication Standard Implementation Guide
Version D Release 0 (D.0) and Equivalent Batch Standard Implementation
Guide, Version 1, Release 2 (1.2) for Retail Pharmacy Transactions
We proposed to revise Sec. 162.1102, Sec. 162.1202, Sec.
162.1302, and Sec. 162.1802 by adding new paragraphs (c)(1) to each of
those sections to adopt the NCPDP Telecommunication Standard
Implementation Guide, Version D, Release 0 (Version D.0) and equivalent
NCPDP Batch Standard Implementation Guide, Version 1, Release 2
(Version 1.2) in place of the NCPDP Telecommunication Standard
Implementation Guide, Version 5, Release 1 (Version 5.1) and equivalent
NCPDP Batch Standard Implementation Guide, Version 1, Release 1
(Version 1.1), for the following retail pharmacy drug transactions:
health care claims or
[[Page 3300]]
equivalent encounter information; eligibility for a health plan;
referral certification and authorization; and coordination of benefits.
Since the time that Version 5.1 was adopted as a transaction
standard in the Transactions and Code Sets rule, the industry has
submitted requests for modifications to Version 5.1 to NCPDP. Some of
these modification requests were necessary for reasons similar to those
for the X12 standards--changing business needs--many of which were
necessitated by the requirements of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (MMA). The complete
discussion of our proposal and reasons for the proposal can be found in
the August 22, 2008 proposed rule (73 FR 49751).
Comment: Commenters unanimously supported the adoption of Version
D.0, agreeing that Version D.0 is needed so that transactions for the
Medicare Part D pharmacy benefit can be conducted. We did not receive
any technical comments on Version D.0.
Response: We agree that Version D.0 is needed to enhance retail
pharmacy transactions, as well as to better support Medicare Part D
requirements. We are adopting Version D.0 as proposed.
C. Adoption of a Standard for Medicaid Pharmacy Subrogation: NCPDP
Medicaid Subrogation Implementation Guide, Version 3.0 for Pharmacy
Claims
We proposed adding a new subpart S to 45 CFR part 162 to adopt a
standard for the subrogation of pharmacy claims paid by Medicaid. We
proposed that the transaction would be the Medicaid pharmacy
subrogation transaction, defined at proposed Sec. 162.1901, and that
the standard for that transaction would be the NCPDP Batch Standard
Medicaid Subrogation Implementation Guide, Version 3, Release 0
(Version 3.0), July 2007 (hereinafter referred to as Version 3.0) at
proposed Sec. 162.1902. The complete discussion of our proposal and
reasons for the proposal can be found in the August 22, 2008 proposed
rule (73 FR 49751-49752).
Comment: Commenters unanimously supported the adoption of Version
3.0 for Medicaid pharmacy subrogation, and we did not receive any
comments in opposition. We also did not receive any technical comments
on Version 3.0.
Response: We are adopting Version 3.0 as the HIPAA standard at
Sec. 162.1902, for the Medicaid pharmacy subrogation transaction, as
described at Sec. 162.1901.
Comment: Several commenters requested that standards for Medicaid
subrogation also be adopted for other claims types in addition to
pharmacy claims. The commenters pointed out that the ASC X12 837 claim
standards used for processing institutional, professional and dental
claims already include the ability to perform Medicaid subrogation and
that these standards have also gone through the DSMO approval process.
Response: We appreciate the suggestion that we adopt standards for
conducting Medicaid subrogation for both pharmacy and medical claims.
However, since we did not propose the adoption of Version 5010 for
Medicaid subrogation of non-pharmacy claims, we cannot adopt it in this
final rule. HHS will consider whether to adopt the X12 standard for
non-pharmacy Medicaid subrogation transactions. If we pursue that
option, we would propose it in an NPRM and take industry comments into
consideration before we would adopt a standard.
We note that, although we are not adopting a standard for Medicaid
subrogation for non-pharmacy related claims in this rule, those
standards are available for use. Covered entities are not prohibited
from using Version 5010 for non-pharmacy Medicaid subrogation
transactions between willing trading partners. Some Medicaid agencies
have already been successfully using this approach with commercial
health plans.
Comment: We received comments recommending that HHS clarify that
State Medicaid agencies would not be prohibited from continuing to bill
using paper claims when necessary.
Response: We recognize that there may be situations where it is not
cost-effective for State Medicaid agencies and certain plans to use an
electronic format for pharmacy claims. For example, while a particular
plan may process a large volume of claims, the same plan may have only
a small number of Medicaid pharmacy subrogation claims. In addition,
States continue to make advancements in identifying other liable
payers. This enables States to avoid payment by returning claims to
providers and instructing them to bill the other payers. This will
result in a decrease in the volume of subrogation claims for Medicaid.
Health plans do not always have to conduct electronic transactions for
which a standard has been adopted, but if they do, the standard must be
used. Section 162.923, however, places additional requirements on
health plans so that if a covered entity wanted to conduct the
transaction electronically with the Medicaid agency, the agency could
not refuse to do so. Medicaid agencies could continue to bill on paper
as long as both parties to the transaction agree to conduct the paper
transaction. However, Medicaid agencies will still be required to have
the capacity to transmit and receive the Medicaid pharmacy subrogation
transaction electronically, in standard format, which the Medicaid
agency could choose to do through its own system or through a health
care clearinghouse.
Comment: We received a comment from a pharmacy that supports the
adoption of Version 3.0. The pharmacy requested that HHS enforce the
use of the standard and eliminate the practice used by some States of
recouping money from the pharmacy instead of the third party, which
puts additional burden on the pharmacy to bill the third party and in
some instances re-bill Medicaid.
Response: It is not in the purview of this regulation to eliminate
the practice of recoupment from providers. The adoption of the Medicaid
pharmacy subrogation standard will not restrict States that choose to
recoup from providers in lieu of seeking reimbursement from the third
party directly. Once a claim is paid to a pharmacy, the State has the
option to seek recovery directly from liable third party payers, or to
seek recovery as an overpayment from the provider. We believe that the
adoption of the Medicaid pharmacy subrogation standard will greatly
improve the efficiency and effectiveness of the health care system
which should result in more direct billing of third parties in States
that routinely recoup from providers.
D. Adoption of the NCPDP Telecommunication Standard Implementation
Guide Version D Release 0 (D.0) and the Health Care Claim: Professional
ASC X12 Technical Report Type 3 for Billing Retail Pharmacy Supplies
and Services
We proposed to revise Sec. 162.1102 to adopt both Version D.0 and
the 837 Health Care Claim: Professional ASC X12 Technical Report Type 3
for billing retail pharmacy supplies and professional services. The use
of either standard would be determined by trading partner agreements.
The complete discussion of our proposal and the reasons for the
proposal can be found in the August 22, 2008 proposed rule (73 FR
49752-49754).
Comment: We received several comments in support of the proposal to
allow the use of either standard for this purpose. Commenters agreed
that the NCPDP Telecommunication and Batch Standard supports the
billing of the various code sets needed to bill retail pharmacy
supplies and professional services (for example, Medication Therapy
Management (MTM), vaccine
[[Page 3301]]
administration), and that they can use this NCPDP standard for most of
their transactions. The commenters said that workflow will be less
disrupted when pharmacies can bill for services and supplies using the
same NCPDP standard as that used for pharmacy drug claims. Commenters
said that the ability to use the NCPDP standard will improve customer
service and lower administrative costs. These commenters said that in
some cases the X12 standard was appropriate, and that they preferred to
have the option of using it on a case-by-case basis.
Response: We are adopting our proposal to allow the use of either
Version D.0 or Version 5010 for billing retail pharmacy supplies and
professional services.
Comment: A few commenters noted their support of the proposal,
particularly as it relates to improving interoperability of claims
processing and adjudication, and suggested that we clarify how our
proposal would be implemented with respect to trading partner
agreements. Another commenter was cautiously supportive, and said that
it agreed with the use of either standard, but that we should emphasize
the requirement that trading partner agreements be voluntary, and that
a health plan could not create a mandate to use one standard over the
other.
Response: We reiterate that, by adopting both standards for the one
transaction, we are supporting current industry practices with respect
to the use of these standards for billing supplies and services that
are commonly dispensed or conducted via the retail pharmacy channel.
With the exception of the requirements set forth in Sec. 162.915,
regarding certain particulars that may not be included in trading
partner agreements, we do not dictate the terms of trading partner
agreements but expect that health plans and providers will continue to
collaborate on the processes for these claim types.
In addition to revising the regulation text at Sec. 162.1102 to
allow for the use of either the X12 or the NCPDP standard for billing
retail pharmacy supplies and professional services, we are also making
a conforming change to the definition of ``standard transaction'' at
Sec. 162.103. We indicate that a standard transaction means a
transaction that complies with ``an'' applicable standard adopted under
this part, rather than ``the'' applicable standard adopted under this
part.
Comment: One commenter said that if we are adopting standards for
retail pharmacy supplies and services, that we should clearly state
that both adopted standards apply to Medication Therapy Management
(MTM) services. The commenter stated that MTM is a service designed to
ensure that Part D drugs prescribed to targeted beneficiaries are
appropriately used to optimize therapeutic outcomes through improved
medication.
Response: In the August 22, 2008 proposed rule, we address MTM
services, noting that the MMA provides coverage for MTM, which is a
distinct set of services that encompasses a broad range of professional
activities and responsibilities. We noted that some pharmacies believe
it is appropriate to use the NCPDP standard for MTM services because
the services are part of the prescription. Other industry segments,
however, believe it is appropriate to use the X12 standard for billing
MTM services because they interpret ``professional services'' to
require the use of a professional claim (837P) (73 FR 49753). We agree
with the commenter and affirm that MTM is included as a service to
which both standards apply.
E. Modifications to the Descriptions of Transactions
We proposed to revise the descriptions of the transactions at Sec.
162.1301, Sec. 162.1401, and Sec. 162.1501 to clearly specify the
senders and receivers of those transactions. We proposed to revise the
descriptions for the following transactions: (1) Enrollment and
Disenrollment in a Health Plan; (2) Referral Certification and
Authorization; and (3) Health Care Claim Status.
Comment: The majority of commenters expressed their support for the
revised transaction descriptions.
Response: We are adopting the revisions to the regulation text as
proposed.
Comment: Several pharmacies and a national pharmacy chain noted
that real-time pharmacy claim transaction statuses are given using the
NCPDP standard in real time, whereas Version 4010/4010A is a batch
standard. A commenter requested that our definition of the health care
claim status transaction specify that Version 5010 (ASC X12 276/277) is
used to provide status on X12 transactions for medical claims only,
because the commenter wanted clear differentiation between pharmacy and
non-pharmacy claims.
Response: We are not making a change in our regulation text because
we do not think it is appropriate. In Sec. 162.1401, the description
of the health care claim status transaction only describes the actions
and specifies the senders and receivers of the transaction, whereas
Sec. 162.1402 clearly identifies the standard that is adopted for the
function described in Sec. 162.1401.
Comment: We received a comment requesting a technical clarification
to the enrollment and disenrollment in a health plan transaction (Sec.
162.1501). The commenter stated that there has always been a concern as
to when the enrollment/disenrollment (834) transaction was required.
This commenter believed that the definition of a group health plan
could be applied to the plan sponsor role of a self-funded employer
group, which would require the plan sponsor to use the enrollment
transaction. The commenter recommended that the final rule include
wording to further clarify this requirement, by adding to Sec.
162.1501 the following: For the purpose of enrollment and disenrollment
in their health plan, the term sponsor shall include self-funded
employer groups that transmit electronic information to their Third
Party Administrator (TPA) to establish or terminate insurance coverage
for their member.
Response: We proposed to describe this transaction as being ``the
transmission of subscriber enrollment information from the sponsor of
the insurance coverage, benefits, or policy, to a health plan to
establish or terminate insurance coverage.'' We provided in the August
22, 2008 proposed rule that a sponsor is an employer that provides
benefits to its employees, members, or beneficiaries through contracted
services. We further noted that numerous entity types act as sponsors
in providing benefits, including, for example, unions, government
agencies, and associations (73 FR 49754). We do not think it is
appropriate to further revise the definition of the enrollment and
disenrollment in a health plan transaction to specify that a sponsor
includes any one particular type of entity, as the commenter suggests.
We reiterate here that it is not mandatory for a sponsor that is not
otherwise a covered entity to use the transaction standard because, as
a non-covered entity, HIPAA does not apply to it.
F. Compliance and Effective Dates
Versions 5010 and D.0: We proposed to adopt a date of April 1, 2010
for all covered entities to be in compliance with Versions 5010 and
D.0. In the August 22, 2008 proposed rule, we discussed our reasons for
proposing the compliance timeframe we did. We justified the proposed
date based on assumptions that the industry had sufficient expertise in
using the X12 and NCPDP standards, and that the system and business
changes could therefore be
[[Page 3302]]
efficiently coordinated, requiring less time than the original
standards for implementation. We also discussed at length an
alternative we considered, but did not propose--a staggered compliance
timeframe for Versions 5010 and D.0 (72 FR 49754-49757). We received
more than 100 comments on compliance dates, with virtually all
indicating that the proposed compliance date was not feasible given the
extensive changes in Versions 5010 and D.0 from the current standards,
and the need for a coordinated implementation and testing schedule. As
stated at the beginning of the preamble, this rule is effective March
17, 2009. We note that the effective date is the date that the policies
set forth in this final rule take effect, and new policies are
considered to be officially adopted. The compliance dates, which are
different than the effective dates, are the dates on which entities are
required to have implemented the policies adopted in this rule. The
compliance dates we now adopt for this regulation are as follows:
Versions 5010 and D.0--January 1, 2012.
Version 3.0 for all covered entities except small health
plans--January 1, 2012.
Version 3.0 for small health plans--January 1, 2013.
Comment: The majority of commenters opposed the proposed compliance
date for Versions 5010 and D.0 and requested additional time for
implementation. Most commenters stated that the proposed date did not
provide sufficient time to adequately execute a gap analysis for all of
the transactions, build programs, train staff, and conduct outreach and
testing with trading partners. These commenters stressed the need to
avoid compliance extensions or contingency periods because they
complicate implementations and increase costs. Health plans and
providers expressed concern that the proposed compliance date was
unrealistic because large segments of the industry have not been able
to meet any of the deadlines for the HIPAA standards to date, including
Medicare and many State Medicaid agencies.
The majority of commenters who opposed the April 2010 compliance
date suggested a thirty-six month compliance period instead. These
commenters said that this amount of time is needed for full
implementation because the same programmers, developers and operations
staff who must re-design technical and business infrastructure
activities to accommodate Versions 5010 and D.0 will also be needed to
do similar work to implement ICD-10. In fact, some commenters suggested
that the impact of ICD-10 is so significant, that there might not be
sufficient industry resources to address Versions 5010 and D.0 because
of competing resource needs. A number of health plans stated that,
based on their own impact assessments, not only would record layouts
and mapping changes be required, but also changes to edits, business
procedures and system capabilities. They stated that there are nearly
850 changes between Version 4010/4010A and Version 5010 to be analyzed
and potentially implemented. One example is the X12 270/271 eligibility
transaction, which will require a more detailed response with less
information supplied. Plans will have to determine where the data can
be accessed and whether it exists within the current software; in many
cases, it will not be a case of moving a few extra fields, and
databases may have to be modified or created. These commenters said the
complexity of the Technical Reports Type 3 requires in-depth analysis,
which will have to be conducted through formal procedures (impact
analysis, requirements definition) before design, build, and testing
can take place. Similar comments were received regarding the compliance
date for Version D.0.
All entities that submitted comments agreed with the proposed
adoption of that standard, but did not think enough time was given for
implementation. Commenters stated that the transition from Version 5.1
to Version D.0 has functional complexity that will require
standardization of practices, new fields, new situational rules for
each data element, as well as education, testing and training. These
commenters pointed out that, although there have been 22 version
releases of the NCPDP standard since Version 5.1, the majority of the
industry was reluctant to develop software for any version that was not
adopted under HIPAA. These commenters suggested a 36-month
implementation schedule for Version D.0.
Response: Based on the comments and our analysis of those comments,
we are adopting a compliance date later than the date we proposed for
all covered entities for Version 5010 and Version D.0. We are requiring
that all covered entities be in compliance with Versions 5010 and D.0
on January 1, 2012.
We believe that it is crucial for covered entities to meet certain
milestones during the compliance period in order to ensure full,
successful, and timely compliance. The NCVHS recommended a framework
for compliance that we believe will be very effective for these
purposes. Therefore, we describe below the NCVHS recommendation and the
schedule to which we expect covered entities to adhere during the
compliance period.
A letter from the NCVHS to Secretary of HHS Michael Leavitt dated
September 26, 2007 (http://www.ncvhs.hhs.gov) summarized the
Committee's Standards and Security Subcommittee's HIPAA transaction
hearings of July 2007, noting that ``the timing of standards
implementation is critical to success.'' The NCVHS weighed the industry
testimony presented at that hearing and noted that HHS should consider
establishing two different levels of compliance for the implementation
of Version 5010. Level 1 compliance, as interpreted by the NCVHS, means
that the HIPAA covered entity could demonstrate that it could create
and receive Version 5010 compliant transactions. Level 2 compliance was
interpreted by the NCVHS to mean that HIPAA covered entities had
completed end-to-end testing with all of their partners and were ready
to move into full production with the new version. The NCVHS letter
stated that: ``it is critical that the industry is afforded the
opportunity to test and verify Version 5010 up to two years prior to
the adoption of Version 5010.'' The letter's Recommendation 2.2 states
that ``HHS should take under consideration testifier feedback
indicating that for Version 5010, two years will be needed to achieve
Level 1 compliance.''
Accordingly, our expectations are as follows. The Level 1 testing
period is the period during which covered entities perform all of their
internal readiness activities in preparation for testing the new
versions of the standards with their trading partners. When we refer to
compliance with Level 1, we mean that a covered entity can demonstrably
create and receive compliant transactions, resulting from the
completion of all design/build activities and internal testing. When a
covered entity has attained Level 1 compliance, it has completed all
internal readiness activities and is fully prepared to initiate testing
of the new versions in a test or production environment, pursuant to
its standard protocols for testing and implementing new software or
data exchanges. The Level 2 testing period is the period during which
covered entities are preparing to reach full production readiness with
all trading partners. When a covered entity is in compliance with Level
2, it has completed end-to-end testing with each of its trading
[[Page 3303]]
partners, and is able to operate in production mode with the new
versions of the standards by the end of that period. By ``production
mode,'' we mean that covered entities can successfully exchange (accept
and/or send) standard transactions and as appropriate, be able to
process them successfully.
During the Level 1 and Level 2 testing periods, either version of
the standards may be used in production mode--Version 4010/4010A and/or
Version 5010, as well as Version 5.1 and/or Version D.0--as agreed to
by trading partners. Covered entities should be prepared to meet Level
1 compliance by December 31, 2010, and Level 2 compliance by December
31, 2011. After December 31, 2011, covered entities may not use
Versions 4010/4010A and 5.1. On January 1, 2012, all covered entities
will have reached Level 2 compliance, and must be fully compliant in
using Versions 5010 and D.0 exclusively.
The final compliance date provides an implementation period of 36
months, or three years, as requested by the majority of the commenters.
Given this revised implementation period that accommodates NCVHS and
industry concerns, we expect that covered entities will be able to meet
the compliance date. We anticipate that, since there was support for a
phased-in schedule, health plans and clearinghouses will make every
effort to be fully compliant on January 1, 2012. Covered entities are
urged to begin preparations now, to incorporate effective planning,
collaboration and testing in their implementation strategies, and to
identify and mitigate any barriers long before the deadline. While we
have authorized contingency plans in the past, we do not intend to do
so in this case, as such an action would likely adversely impact ICD-10
implementation activities. HIPAA gives us authority to invoke civil
money penalties against covered entities who do not comply with the
standards, and we have been encouraged by industry to use our authority
on a wider scale. We refer readers to the HIPAA Enforcement Final Rule
(71 FR 8390), published in the Federal Register on February 16, 2006,
for our regulations implementing that HIPAA authority.
Compliance Date for Version 3.0
For implementation of Version 3.0 for the Medicaid pharmacy
subrogation transaction, we proposed to revise Sec. 162.900 to adopt a
compliance date of 24 months after the effective date of the final rule
for all covered entities, except for small health plans, which would
have 36 months. We also proposed to revise Sec. 162.923, entitled
``Requirements for covered entities'' to make paragraph (a) applicable
only to covered entities that conduct transactions with other entities
that are required to comply with a transaction standard. We proposed
this change in order to address the situation where transactions
require the participation of two covered entities, where one entity is
under a different set of compliance requirements. We expect that the
change we proposed to Sec. 162.923 would resolve the problem of a
State Medicaid agency attempting to transmit a transaction using
Version 3.0 to a small health plan before the small health plan is
required to be compliant and could, therefore, reject the transaction
on the basis that it is in the standard format (73 FR 49754-49755).
Comment: We received one comment explaining that Version 3.0 had to
be implemented either at the same time as Version D.0, or after,
because certain data elements present in D.0, but not in Version 5.1,
were needed in order to use Version 3.0. The commenter also believed
that willing trading partners would be able to agree to use the
Medicaid pharmacy subrogation standard voluntarily at any time after
the effective date and before the compliance date.
Response: We agree that Versions D.0 and 3.0 are tied together by
certain data elements necessitating their concomitant or sequential
implementation respectively. To accommodate these technical needs, we
are making the effective date of Version 3.0 later than the effective
date for the other parts of this rule. We are making the effective date
for the portion of the rule concerning the adoption of Version 3.0
January 1, 2010, which means that covered entities, except small health
plans, must be in compliance with Version 3.0 no later than January 1,
2012. Small health plans must be in compliance no later than January 1,
2013. This gives States and health plans a two-year planning,
implementation and testing window, in contrast to the three years being
provided for Versions 5010 and D.0. States and plans are encouraged to
do as much planning in the year before the effective date (calendar
year 2009) as possible, to take advantage of that window and the work
already under way for Version D.0, since Versions D.0 and 3.0 are tied
together. In other words, States may use calendar year 2009 to conduct
a preliminary analysis of Version 3.0 changes, in concert with their
analysis of Version D.0 changes. States should also prepare and submit
their budget requests to secure funding for design, development and
implementation in 2010 and 2011, which would leave time to conduct
testing with trading partners between January 2011 and January 2012.
Comment: We received a number of comments from providers and health
plans supporting the proposed revision to Sec. 162.923(a).
Response: We are adopting the revision to Sec. 162.923(a), as
proposed in the August 22, 2008 proposed rule.
Timeline
In the proposed rule, we provided a timeline for implementation and
compliance of ICD-10 and Versions 5010 and D.0. We included the
timeline to enable the industry to conduct preliminary planning (73 FR
49757), and indicated that the proposed timeline represented our best
estimate for industry implementation at the time. We also indicated
that the timeline was subject to revision as updated information became
available. We provide the revised timeline here.
Timeline for Implementing Versions 5010/D.0, Version 3.0 and ICD-10
------------------------------------------------------------------------
Version 5010/D.0 and Version 3.0 ICD-10
------------------------------------------------------------------------
01/09: Publish final rule.............. 01/09: Publish Final Rule.
01/09: Begin Level 1 testing period
activities (gap analysis, design,
development, internal testing) for
Versions 5010 and D.0.
01/10: Begin internal testing for
Versions 5010 and D.0.
12/10: Achieve Level 1 compliance
(Covered entities have completed
internal testing and can send and
receive compliant transactions) for
Versions 5010 and D.0.
01/11: Begin Level 2 testing period 01/11: Begin initial compliance
activities (external testing with activities (gap analysis,
trading partners and move into design, development, internal
production; dual processing mode) for testing).
Versions 5010 and D.0.
[[Page 3304]]
01/12: Achieve Level 2 compliance;
Compliance date for all covered
entities. This is also the compliance
date for Version 3.0 for all covered
entities except small health plans *.
01/13: Compliance date for Version 3.0
for small health plans.
10/13: Compliance date for all
covered entities (subject to
the final compliance date in
any rule published for the
adoption of ICD-10).
------------------------------------------------------------------------
* Note: Level 1 and Level 2 compliance requirements only apply to
Versions 5010 and D.0
Other Comments Pertaining to the Compliance Date Specific to Versions
5010 and D.0
Comment: We received a few comments from Medicaid agencies
explaining why the compliance dates were problematic from a funding
perspective. Commenters explained that the State budget environment
requires more lead time to obtain project authority and resources on
the scale necessary to implement Versions 5010, D.0, and 3.0. One State
said that it could not begin any substantial required documentation
activities until there is a final rule. Finally, a number of States
said that they are facing fairly significant budget shortages.
Commenters said that, even with 90 percent federal matching rates,
resource requests based on a proposed rule would be unlikely to receive
approval from legislatures.
Response: The comments from the States were compelling with respect
to funding and planning issues, and were helpful in our reconsideration
of the proposed compliance dates. We acknowledge the need to work with
States to coordinate their budget requests and implementation
activities with legacy system replacement.
Comment: Another State agency recommended that the final rule
contain a waiver provision to permit covered entities to seek a waiver
for implementation of Version 5010 in any existing legacy system that
is scheduled for replacement.
Response: Waivers cannot be accommodated. Neither the statute nor
the regulations provide for waivers for meeting the standards set forth
under HIPAA.
Comment: A few commenters favored the proposed compliance dates for
Versions 5010 and D.0, citing their eagerness to begin benefiting from
the updated standards as soon as possible, particularly because it has
been so long between adoption of Versions 4010/4010A1 and 5.1, and the
updated versions of those standards.
Response: We believed the proposed compliance dates were reasonable
for the reasons provided in the proposed rule (73 FR 49754-49757).
Based on the comments however, we acknowledge that many significant
actions would have to take place very quickly (for example, budget
requests, hiring and recruitment of subject matter experts, design
work, schedule of programming installations, etc.) in order to meet an
April 2010 compliance date, and as stated above, have adopted a later
date for both standards.
Comment: The majority of commenters agreed that small health plans
should not have additional time (for example, an additional year as in
past regulations) to become compliant with Versions 5010 and D.0
because these entities are, or should be, already using Version 4010/
4010A and Version 5.1 through clearinghouses or their own systems.
Small health plans should be at the same stage of implementation as any
other covered entity, meaning that their organizations, business
associates and trading partners are now well-versed in the technology
and requirements for using Version 4010/4010A and Version 5.1, and
should not require additional time to accommodate the new versions. All
covered entities are essentially at the same point with respect to
having implemented the standards, identified and resolved business
process issues, trained staff, and incorporated the use of standards
process into their existing infrastructure.
Response: We agree with commenters regarding the compliance dates
for small health plans, and are requiring all covered entities,
including small health plans, to be in compliance on the same date.
Comment: We received several comments supporting a different
schedule which involved staggering compliance based on either covered
entity type or transaction type over the course of 3 years. In the
first scenario, all health plans and clearinghouses would be required
to be compliant one year before covered health care providers in order
to ensure that providers could begin testing with all trading partners
the following year. For example, under a 36-month compliance scenario,
health plans and clearinghouses would have to be in compliance 24
months after the effective date, and prepared to conduct testing with
trading partners over the next 12 months. We also received a few
comments that suggested a staggered implementation schedule by
transaction type. For example, the updated standards for health care
claims and related transactions could be implemented first, followed by
updated standards for eligibility transactions, claims status
transactions, etc. However, the majority of commenters who had opinions
about a staggered implementation schedule based on transaction type
believe that assigning different compliance dates to different
transactions would not have the intended effect of ensuring compliance
by the deadline, nor would it facilitate the testing process. These
commenters explained that the use of certain transactions, particularly
auxiliary transactions (for example, authorizations and referrals), is
so inconsistent across the industry, there would be no effective means
by which to stagger their implementation. The use of the auxiliary
transactions is uneven--many entities do not use the claims status
transactions because they have on-line access to their billing files;
many do not use the eligibility transaction because, historically, it
has not provided useful information. Thus, entities actually have very
little experience with these transactions, and may continue to use them
minimally. They do not wish to expend limited resources on a
transaction that will not have a return on investment in the early
years.
Response: We believe that different compliance dates for different
types of covered entities could significantly complicate trading
partner testing, particularly for those entities that function as both
health plans and health care providers, as well as for other entity
types that perform in multiple roles. It is likely that different
compliance dates for different entity types could be confusing to the
industry, and could actually delay some implementations while entities
waited for trading partner compliance. For
[[Page 3305]]
example, this approach presumes that providers and their software
vendors will be making system and operational changes at the same time
as the health plans and clearinghouses in order to be ready for
testing.
Comment: We received a number of comments about our assumption in
the August 22, 2008 proposed rule that staggered implementation dates
for health plans and clearinghouses would not be feasible because of
robust trading partner tracking systems that might be needed so that
entities could know which providers were testing Versions 5010 and/or
D.0, which were using Versions 4010/4010A and/or 5.1, and which had
fully converted to Versions 5010 and/or D.0. This would be very
complicated to build and manage between the thousands of providers,
health plans, vendors and clearinghouses. Commenters also expressed
concern about the impact on coordination of benefits with secondary
health plans, since each health plan would be implementing Version 5010
at different times. One commenter said that the reality is that all
covered entities would need robust trading partner tracking systems for
any implementation plan, and that coordination of benefits would be
disrupted with any implementation plan because not all covered entities
would be ready on the same date to send and receive the updated HIPAA
standards. Commenters said that covered entities would have to support
the dual use of Version 4010/4010A and Version 5010 until the
compliance date in any scenario. They explained that all covered
entities would need to test at different times during the
implementation process, and that a complex scheduling process would
need to exist between health plans, clearinghouses and providers
testing and migrating to the updated transactions at different times.
Response: We agree with the commenters' points regarding the
complexity of programming, testing and coordinating all implementation
efforts, regardless of the timeline, if we were to adopt a staggered
implementation schedule by entity type or transaction type.
Comment: Some commenters said that all health plans, including
State Medicaid agencies, must be held to the same compliance dates, and
that compliance with prior HIPAA implementations varies between non-
government health plans and State Medicaid agencies. Since Medicaid
agencies have lagged behind and not met implementation deadlines,
hospitals and providers have had to maintain a dual submission strategy
which incurs significant additional costs to the providers. We received
a number of comments expressing particular concern about Medicare
mandating full compliance prior to the compliance date adopted by the
final rule. The commenters specifically referenced written
communication they had received from Medicare stating that it
(Medicare) would have an early compliance date for Version 5010 for the
coordination of benefits transaction. The commenters stated that, if
Medicare requires covered entities to be ready to shift to dual
processing several months before the adopted compliance date, there
will be significant implementation problems for many providers and
other health plans. The commenters also stated that, if Medicare
mandates use of Version 5010 for coordination of benefits, before any
of the other transactions were mandated for use, other health plans
would have to run separate processing systems for just the one
transaction. Other commenters stated that health plans do not maintain
separate processing systems for each additional health plan with which
they conduct COB transactions. Commenters stated that, if Medicare is
allowed to mandate early compliance, it would exacerbate an already
difficult situation, and reiterated that no entity should be allowed to
require their trading partners to implement the standards in a
production environment, prior to the HHS compliance date, if the
trading partner did not agree. These commenters feel that such a
prohibition would help ease the implementation as solutions are
deployed across all entities, over a defined period of time.
Response: We agree that no covered entity, including State Medicaid
agencies or Medicare, should be allowed to require compliance earlier
than the compliance date we are adopting in this final rule. If
entities were allowed to require earlier compliance, this would cause
undue financial and operational burdens on other segments of the
industry. For example, one State chose to implement the NPI before the
compliance deadline, which caused significant difficulties and expenses
for providers because, in some cases, they were not ready to comply,
and therefore had to revert to paper. In many cases, the State's other
trading partners, namely other commercial health plans and the Federal
Medicare program, were not prepared to accept the NPI, which meant that
providers (and their vendors and clearinghouses) in that State had to
support a complex infrastructure in which the NPI was included on some
claims, but not on others. HHS will ensure that appropriate agencies
and departments work together to monitor Medicaid implementation work
plans, testing and readiness on a regular basis throughout the
implementation period.
We are adopting a revision to Sec. 162.925, by adding a new
paragraph (a)(6), to specify that a health plan is not permitted to
delay, reject, or attempt to adversely affect the other entity or the
transaction on the basis that the transaction does not comply with
another adopted standard during the period from the effective date of
the final rule until the compliance date. With respect to coordination
of benefits, this means, for example, that Medicare will not be able to
require of trading partners that they be in full compliance with
Version 5010 prior to January 1, 2012, unless willing trading partners
agree to do so. Health plans that participate in Medicare's
Coordination of Benefits program will be able to work with Medicare to
arrange a mutually agreeable testing schedule in order to expedite this
transaction, but they are not required to do so, and may revert to
receiving claims directly from providers if they choose to do so.
Comment: Commenters said that a key component of any implementation
schedule is testing, and a large number of commenters stressed the
importance of both internal testing as well as external testing with
trading partners. Many commenters stated that testing often occurs at
or near the end of the compliance period, and that such last-minute
testing causes scheduling problems and creates uncertainty about
whether changes were applied correctly. Commenters said that, in many
cases, hospitals and other providers must wait for vendors and health
plans to schedule testing. Many commenters said that health plans do
not provide sufficient advance communication about their testing
efforts or their readiness to implement the standards, and providers
have indicated that it is difficult to obtain the name of the
individual or department within the health plan with whom they should
coordinate. One commenter explained that testing is done in three
parts: Testing of the standards themselves for workability; conformance
testing of products and applications that send and/or receive the
transactions; and end-to-end testing to ensure interoperability among
trading partners. All three levels of testing are critical to the
successful implementation of Versions 5010, D.0 and 3.0, and efforts to
execute all three levels of testing will minimize delays and avoid many
of the
[[Page 3306]]
complications afflicting previous implementations.
Response: We agree that testing is absolutely crucial to resolving
problems before the implementation date to ensure that there are no
payment delays or service disruptions. In the August 22, 2008 proposed
rule, we discussed and emphasized the importance of testing to a
successful and timely implementation (73 FR 49755-49756). Based on the
industry's experience in previous implementations, it is clear to us
that testing is core to resolving issues early and effectively. We have
revised the regulation text that identifies the adopted standard for
each transaction, in every instance, to enable testing to occur during
the period from the effective date of the final rule until the
compliance date for Versions 5010 and D.0. Our revised regulations
permit the dual use of standards during that timeframe, so that either
Version 4010/41010A1 or Version 5010, and either Version 5.1 or Version
D.0, may be used for the period prior to the compliance date. We note
that the adoption of two standards for one transaction during the
period prior to compliance does not mean that covered entities must use
both standards, but, rather, that the use of either standard is
permitted.
Comment: Another commenter said that the importance of vendor
compliance cannot be underestimated, as practice management system
vendors are critical to provider compliance. Any delays in vendor
implementation of compliant products will delay end-to-end testing, so
providing sufficient time for the vendors to design, build and test,
will only facilitate the process. A large software vendor explained
that, to enable compliance with Versions 5010 and D.0, users must
continue to use their current software while testing new software
updates to accommodate the changes. The commenter explained that there
are often several stages of software revisions, and this necessity may
add additional time to the development and implementation process.
Finally, testing and certification activities on each version must take
place to ensure compatibility and stability of software. This process
almost always takes longer than expected.
Response: While we do not have the authority to regulate vendors,
as they are not covered entities, we agree about the critical
importance of vendor testing, and that, in particular, accurate,
quality software development and testing are critical to the successful
implementation of the updated versions. We also agree that appropriate
time is necessary for installation, user training and coordination of
testing with trading partners. By adopting a later compliance date, we
hope to ensure that software development vendors have sufficient time
to conduct the appropriate internal and external testing such that the
software they provide to their covered entity clients is compliant with
the standards, capable of facilitating the transmission and receipt of
the new versions of the standards.
G. Miscellaneous/General Other Comments
This section includes comments and responses to other issues raised
during the public comment period.
Claims Attachments
Comment: We received several comments requesting that HHS not adopt
standards for electronic health care claims attachments at this time
because implementation of Versions 5010, D.0, and 3.0, and ICD-10 would
make it impossible to also implement standards for claims attachments.
One commenter stressed that, since claims attachments included another
new standard--the HL7 Attachment Specifications--the industry would not
be able to accommodate the additional work needed to implement the
claims attachment standard if Versions 5010, D.0, and 3.0, and ICD-10
also had to be implemented in that same time period.
Response: We appreciate and will consider the commenters' concerns
for not wanting to have to implement the electronic health care claims
attachment standards at the same time as Versions 5010, D.0 and 3.0,
and ICD-10.
Standards Adoption and Modifications
In the August 22, 2008 proposed rule, we provided an explanation of
the procedures for maintaining existing standards and for adopting new
standards and modifications to existing standards (73 FR 49744-49755).
That section of the proposed rule describes how Sec. 162.910 sets out
the standards maintenance process and defines the role of SDOs and the
DSMOs. For additional information about the DSMO process and
procedures, refer to the Web site at http://www.hipaa-dsmo.org/Main.asp. We also described the process for adopting modifications to
standards under Sec. 162.910, which is discussed in detail in the
Transactions and Code Sets rule (65 FR 50312), and implemented at Sec.
162.910.
The proposed modifications and the new transaction standards were
developed through the process that conforms with Sec. 162.910. We
received many technical comments specific to the Version 5010
standards, indicating that there are still opportunities for
improvement in that version. We did not receive any technical comments
specific to Version D.0.
Comment: A few commenters stated that greater industry involvement
in the X12 standards development and balloting process would be helpful
to their industry segment, e.g., health care providers, hospitals,
health plans, health care clearinghouses and vendors.
Response: We have suggested to the X12 SDO that it consider the
following: (1) Expanding the current outreach efforts to industry to
obtain more diverse representation from all covered entity types. This
would take place during the development of new versions as well as
during the balloting process; and (2) securing industry volunteers to
test the balloted standards before they are proposed to NCVHS. That
way, when the suggested modifications are submitted to NCVHS for
consideration, even greater industry support can be expected.
Comment: We received a few comments suggesting that HHS streamline
the standards adoption process. Commenters said that the marketplace is
evolving at a rapid pace, creating new products, new technologies and
new methods of conducting business. They stressed that, even though X12
continues to improve the standards each year, the industry has not had
the opportunity to benefit from necessary and helpful changes because
too much time elapses between the adoption of versions. Others
reiterated that there is a need for the updated standards to be
available for use by the industry as they are tested and balloted. For
example, one entity found that the industry needs information about tax
advantaged payment mechanisms (for example, Medical Savings Accounts,
Health Savings Accounts, Health Reimbursement Accounts, etc.) that are
now commonly in place to support the movement to consumer-directed
health care. Version 5010 does not contain the information needed by
patients or providers to determine the financial impacts and flows.
Commenters said that the industry cannot wait another eight years to be
able to exchange this type of crucial information for critical market
needs. They suggest that a more streamlined way to develop, implement
and adopt updated standards must be found. Commenters suggested that
HHS work with industry stakeholders to identify and implement a way to
increase the predictability and timeliness of adopting updated
standards, including a means by which the rulemaking process might not
be
[[Page 3307]]
necessary to allow the industry to use updated versions of the
standards.
Response: HHS has considered similar concerns in the past, and
continues to assess potential alternatives within the context of HIPAA
and the Administrative Procedures Act (APA). HHS will continue to work
with industry to identify a means by which updated standards can be
used on a timelier basis, consistent with the law.
Comment: One commenter recommended that HHS adopt the X12 standard
transaction formats in the final rule, but not the specific versions of
the X12 standards or Technical Reports Type 3 (TR3s). The commenter
stated that it has been eight years since publication of the
Transactions and Code Sets rule adopting the Version 4010/4010A
implementation guides. The long passage of time since the initial
adoption has resulted in widespread workarounds in the industry to
address Version 4010/4010A's deficiencies. The commenter suggests that
HHS could designate the DSMO coordinating committee to biannually
determine whether a change makes sense for the industry, and which
updated TR3s would be implemented. The DSMO committee would still
provide open public access to the standards development process, but
this approach would eliminate the time-consuming NPRM steps and enable
smaller iterative version updates to take place. The commenter noted
that the ongoing maintenance of the adopted code sets is already
handled outside of the NPRM process. Under this recommendation, new
standards, as opposed to updates or modifications to the standards,
would continue to be adopted by HHS utilizing the regulatory process.
Response: HHS has evaluated options for streamlining the process of
adopting new versions of the standards, and agrees with commenters that
alternate, more expedient methods are necessary, consistent with HIPAA
and the APA. We are committed to working with industry and the
standards organizations to develop a process that can be proposed in
the near future, consistent with the law. With respect to the
commenter's reference to the ongoing maintenance of the adopted code
sets, HHS notes that there is specific statutory authority in HIPAA
which permits the routine maintenance, testing, enhancement and
expansion of code sets outside of the rulemaking process; modifications
to adopted code sets, however, are adopted by means of the rulemaking
process.
Outreach, Education and Training
In the proposed rule, at 73 FR 49756, we stated that HHS would
begin preparations for, and execution of, outreach and education
activities, and the engagement of industry leaders and stakeholder
organizations to provide a variety of educational and communication
programs for various constituencies.
Comment: Many commenters advised HHS to establish a network of
training and outreach partners to work collaboratively to educate the
industry, and outlined the education and outreach strategies that will
be needed. Commenters stated there were needs for: National
associations to collaborate on education efforts; a consistent set of
messages and/or materials from authoritative sources; recognition that
different audiences may need different levels of training; and in-
person training to supplement Internet training and printed documents.
Several commenters recommended that HHS develop a consistent standard
set of training materials for distribution to industry groups as soon
as possible. The commenter suggested that key professional associations
should be the source for common educational materials. One commenter
suggested that HHS collaborate with other organizations to publish a
``lessons learned'' guidance document. A number of commenters
recommended that HHS begin outreach activities as quickly as possible,
and to clearly differentiate between HHS Policy guidance (for the
industry at large) and Medicare guidance (specifically for Medicare
providers). Other commenters agreed, indicating that this was important
because Medicare policies do not often apply to other covered entities'
policies, and information is confusing to providers when it is not
clearly differentiated. Another commenter provided a summarized list of
requested technical assistance which included migration tools that
automatically translate Version 4010/4010A to Version 5010, and Version
5010 to Version 4010/4010A.
Response: We agree that it is important that consistent and
accurate messages and/or materials be developed by authoritative
sources, and will work closely with industry to put together a
comprehensive, diverse plan that addresses Medicare-specific policies,
as well as industry-wide policies and implementation issues.
We agree that different audiences may need different levels of
training. Our current plan is to develop and disseminate high-level
materials, and we anticipate that the industry will continue to offer
the more in-depth materials that specific stakeholder groups may need.
HHS already dedicates a section of its Web site to the HIPAA
regulations, including guidance papers, FAQs, and links to external Web
sites and to other useful resources. The Web site is http://www.cms.hhs.gov.
Comment: We received a number of comments suggesting that HHS
ensure better coordination of the communication of, by, and between,
Medicare and Medicaid.
Response: We agree that all segments of the industry should
collaborate and communicate on implementation to avoid misunderstanding
and to coordinate testing schedules. We will work with State Medicaid
agencies to support their development of communication and outreach
initiatives as we develop the overarching implementation strategy for
education. We will also help to ensure that there are regular
opportunities for Medicare and Medicaid to collaborate on
implementation strategies.
Companion Guides
In the August 22, 2008 proposed rule, we discussed the deficiencies
in Version 4010/4010A and Version 5.1, and the fact that the industry
has come to rely upon health plan-specific companion guides to address
the ambiguities in the implementation guides for each of the standards
(73 FR 49746). It is possible that the reliance on companion guides has
minimized some of the potential benefits offered by the standards.
Based on testimony from the standards organizations and other industry
representatives to NCVHS, the improvements to Version 5010 should
minimize dependence on companion guides. Some of those improvements
include clarifications of the standard requirements, and consistency in
requirements across all of the transactions. In the August 22, 2008
proposed rule, we said that companion guides could potentially be
eliminated if the updated versions of the standards were adopted.
Comment: We received a number of comments from the industry on this
subject, offering support for the elimination of companion guides
because of the complexities they create in implementing the standards.
Health plans were less supportive of a complete elimination of
companion guides, but did, in general, comment that the use of
companion guides could be reduced, and that their content could be less
complex. A few commenters requested that HHS prohibit the use of
companion guides. They justified this
[[Page 3308]]
recommendation based on the use of these guides continuing to undermine
the potential of standards. A few of the clearinghouse commenters
suggested that companion guides be limited to providing supplemental
information and instruction, but that they could not be used to mandate
the use of certain situational fields. Other commenters felt that the
next version of the standard should do away with nearly all situational
data elements, and only leave a bare minimum of fields eligible to be
situational, thus further reducing the need for companion guides. A few
of the commenters who supported the use of companion guides said that
these would always be necessary because health plans would always have
unique business rules, and that sometimes these rules or practices were
to the advantage of the provider.
Response: We acknowledge the issues presented by companion guides,
but note that we do not have the authority to expressly prohibit the
use of these guides. However, based on our review of many such
documents, and the ongoing efforts of the industry to collaborate, we
strongly discourage health plans from having companion guides unless
they are focused significantly on the basics for connectivity, trading
partner arrangements, and use of situational data elements. We
encourage X12 to evaluate, and address as appropriate, industry
comments specific to situational data elements, so that the minimum
number of fields remain situational. This will enhance standardization
and further reduce the need for companion guides. We also note that we
have already published FAQs clarifying that, if companion guides
contradict the implementation guides, the transaction will not be
compliant. Covered entities may use the existing enforcement process to
submit official complaints to HHS. Once an investigation is opened, HHS
will review the companion guide at issue and a determination will be
made as to its compliance with the standard(s).
Standardization of Data Content
Comment: We received a few comments requesting that HHS support the
work of some industry groups, such as the Coalition for Affordable and
Quality Healthcare (CAQH), that are attempting to standardize the use
of data content to maximize the benefits of transaction standards--in
other words, some industry representatives are trying to build
consensus on the data elements that everyone will request and provide,
to make implementation more consistent throughout the industry. A few
commenters said that one group has been working on standard content for
the eligibility standard, so that the transaction provides more robust
and useful information above and beyond what is currently a ``yes/no''
requirement in response to a request for information about an
individual's eligibility for health plan benefits. One commenter
requested that HHS support the CAQH certification process for the use
of the eligibility transaction, in which organizations voluntarily
agree to have their programming reviewed and approved by CAQH, and
those organizations agree to use all of the same data elements as
others who are participating in the certification program.
Response: We do support the work of individuals and organizations
in efforts to make the standard transactions more useful to the
industry as a whole. While HHS cannot mandate participation in any
certification programs, we do support any efforts towards improved
compliance with the standards, as well as efforts towards maximizing
the usefulness and usability of the standards. We also reiterate that
we have published FAQs clarifying how a covered entity may file a
complaint against another entity who it believes may not be in
compliance with the implementation guides.
Definition of Compliance
Comment: We received a few comments suggesting that we adopt a
definition of the term ``compliance,'' using the text from the TR3
guides, which provides that compliance indicates the receiver of a
standard transaction does not have to reject a transaction that is not
in compliance with all of the rules within the standard. According to
commenters, the TR3 guides have a definition of compliance that states
a covered entity is out of compliance if it receives and accepts a
transaction that is a non-standard transaction. These commenters
believe this statement conflicts with an HHS FAQ which states that a
receiver may not accept a non-compliant transaction. The commenter
suggests that the sender of the transactions is responsible for the
compliance of the transaction, and HHS should not consider the receiver
to be out of compliance if it accepts a non-compliant transaction.
Another commenter said that HHS should encourage an ``ignore, don't
reject'' approach to implementation, which would mean that, if a
transaction is submitted conforming to the standard, but it contains
more information than is necessary for an entity to process that
transaction, the additional information should be ignored by the
receiver, and the transaction not rejected.
Response: The definitions in the TR3 reports are not specific to
the compliance of the transaction with the HIPAA rules, so the way
``compliance'' is defined by the TR3 reports does not apply to
compliance under HIPAA. We believe our regulations sufficiently address
the requirements for compliance. Our regulations at Sec. 162.923
address the requirements for a covered entity to conduct a standard
transaction when it conducts a HIPAA transaction using electronic
media, and we define ``standard transaction,'' as revised in this rule,
as ``a transaction that complies with an applicable standard adopted
under this part.'' Regarding the commenter's suggestion of an ``ignore,
don't reject'' policy, we point out that Sec. 162.925(a)(3) provides
that 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.
Finally, we do have an enforcement program through which covered
entities may file complaints, and we continue to encourage the industry
to utilize this program when faced with conflicts about the compliance
of a transaction.
Pilots
Comment: We received a number of comments suggesting that standards
should be pilot tested before adoption. These commenters said that
pilot testing the standards is needed long before a standard is
proposed for adoption because such testing identifies potential pit-
falls and could identify and correct unanticipated issues with a
particular standard before it is officially adopted. A few commenters
noted the lack of a pilot testing process and suggested that HHS, with
industry input, define a pilot testing process for future standards.
Another commenter recommended that pilot testing proceed in a certain
sequence, beginning with internal unit testing, and followed by system
testing and integration testing, and ultimately ending with trading
partner testing. One commenter stated that, without workability
testing, the government, X12 and the industry would be repeating
implementation mistakes that were made with Version 4010/4010A. That
same commenter recommended that the provisions for permitting
exceptions from the requirements to comply with the standards in order
to test proposed modifications (Sec. 162.940) be suspended until the
current version of a standard was no longer in use, in other words,
that some date certain would be set to ``retire'' or sunset a
particular version of a standard. The
[[Page 3309]]
commenter said that such a suspension would represent cost and
administrative savings to all parties because it would simplify the
process of accommodating new versions of the standards. We also
received a comment suggesting that HHS fund pilot testing and allow an
additional twelve months for the testing before the compliance date of
a final rule, implying future final rules. No commenters suggested that
Version 5010 be tested prior to adoption; rather, recommendations were
for the future review and adoption of new versions of the standards.
Response: We recognize the value of pilot testing and its
importance in the standards implementation process, and intend to work
with the industry to define parameters for pilot testing in the future.
We also encourage industry stakeholders and the standards organizations
to take the lead for initiating pilot tests and monitoring the success
of such tests.
Acknowledgements
Version 5010 accommodates the acknowledgement transaction, for the
data receiver to communicate any errors or transmission problems back
to the sender. Many health plans and clearinghouses use acknowledgement
transactions, and they are free to do so using the standards they
choose for that transaction. We did not propose to adopt a standard for
the acknowledgement transaction in the proposed rule, so we will not
adopt one here.
Comment: We received several comments on this subject, with most
commenters indicating that acknowledgements improve the process of
receiving and correcting an error and resubmitting the correction back
to the receiver. These commenters suggested that HHS adopt Version 5010
for the acknowledgement transaction. Commenters said that migration to
standard acknowledgement transactions would offer significant business
benefits by ensuring that transactions are received and front-end
errors reported on a timely and consistent basis. In spite of the
support for adopting an acknowledgement transaction standard,
commenters also mentioned that they did not wish in any way to delay
overall implementation of Version 5010 by waiting until an
acknowledgement transaction standard is proposed and adopted. In other
words, if the choice was to wait to adopt Version 5010 until the NCVHS
advises the Secretary to also adopt Version 5010 as the standard for
the acknowledgement transaction, the commenters did not want to see
their suggestion go forward.
Response: Before we would adopt an acknowledgement transaction
standard, such standard would have to have been vetted through the
standards adoption process that includes approval of a DSMO change
request, recommendation by the DSMOs to the NCVHS, and recommendation
by the NCVHS to the Secretary. Even though the chair of the X12
standards workgroup testified to the NCVHS in July 2007, and
recommended adoption of an acknowledgement transaction standard for
inclusion with NCVHS' recommendation for the adoption of Version 5010,
NCVHS did not include an acknowledgement transaction standard in its
recommendations. Nonetheless, the fact that we have not adopted an
acknowledgement standard does not preclude the industry from using
Version 5010 to conduct the transaction between willing trading
partners. We will consider the adoption of a standard for the
acknowledgement transaction at the time we receive a recommendation
from NCVHS.
Real-Time Eligibility
Comment: A few commenters stated that there was a business need for
a real-time eligibility transaction standard for all participants in
healthcare delivery. They stated that, without a national standard,
varying approaches to real-time eligibility will be detrimental to
providers and plans that do business on a national basis. The
commenters identified a number of organizations such as WEDI, CAQH and
Blue Cross Blue Shield of North Carolina that support real-time
eligibility transactions.
Response: Similar to a standard for the acknowledgement
transaction, adopting a standard for real-time eligibility transactions
would have to be vetted through the standards adoption process
described above. NCVHS did not include a real-time eligibility
transaction standard in its recommendations, and we are unable to adopt
one at this time.
HHS Funding the Purchase of TR3 Reports
When the Transactions and Code Sets rule was published, HHS
negotiated a contract with the publisher of the Version 4010/4010A
implementation guide to enable the industry to download the guides at
no cost. This practice ended in 2006. At that time, very few downloads
or copies were being ordered, and we had no complaints about individual
providers, plans or clearinghouses paying the fee. HHS did not have a
similar arrangement with NCPDP, so the industry has always paid for
guides for those standards.
Comment: A few commenters suggested that HHS should pay for the
industry to access copies of Version 5010. These commenters stated that
small providers could not afford to buy the set of guides, which
currently cost approximately $800 for the set, or $175 for each guide.
Several other commenters expressed concern about the cost of the X12
TR3s and a new requirement that covered entities purchase these guides.
Commenters noted that HHS underwrote the Version 4010/4010A guides on
behalf of covered entities through that implementation effort and
believe that it is the most beneficial way for covered entities to
access and implement new versions.
Response: It is not uncommon for standards organizations to charge
a fee for copies of their standards. NCPDP charges such a fee for their
standards, which HHS has never covered for the industry. We do not
agree that the price for the guides will negatively impact small
providers because we think it is unlikely that small providers will
find them useful in implementing Version 5010. We understand that small
providers usually rely on software vendors to make their systems
compliant, and that it is the vendors who will require the guides for
programming. We expect that, as in the past, vendors and professional
associations will provide necessary education and training for the
provider staff on the system changes that will require operational
changes. Software vendors typically have multiple clients, and we
expect that they will only need to purchase one, or at most, just a few
sets of the standards to program for all of their clients. Such
multiple usages should defray the modest expense.
HIPAA Enforcement
At present, most formal compliance and enforcement activities for
HIPAA are complaint-driven and complaint-based. Enforcement efforts are
focused on investigating complaints to determine if a covered entity is
in compliance.
Comment: We received a few comments recommending that HHS increase
its enforcement efforts related to HIPAA transactions to ensure that
health plans are adhering to the requirements of the X12 transactions.
We received another comment suggesting stronger enforcement of the
adoption of all of the standard transactions by all covered entities.
One commenter said that, to date, only a subset of HIPAA-mandated
transaction standards that facilitate EDI have been
[[Page 3310]]
implemented as required, which significantly decreases the benefits of
standardization to the industry.
Response: Our complaint-driven enforcement process has been
successful in obtaining compliance on a case-by-case basis, and we
encourage covered entities to utilize the process. We understand that
some of the standards have not been implemented because of their
limited usefulness, or because of issues with implementation. We
believe that, because the standards have been significantly improved,
the standards we adopt here are more useful, and therefore will result
in greater industry implementation. We have the authority to conduct
compliance reviews at our discretion to evaluate compliance with any of
the HIPAA requirements, and have done so already with respect to the
security standards. We plan to expand our compliance review program in
the future to include random reviews of compliance with the transaction
standards as well.
Certification
Comment: We received several comments suggesting that HHS consider
petitioning the Certification Commission for Healthcare Information
Technology (CCHIT) to include Versions 5010 or D.0 in all products that
would be expected to carry the upgraded standards in order to
facilitate compliance with the final rule. Commenters believe this will
be especially important for small covered entities in the process of
purchasing software until the compliance date. They believe that, if
purchasers are aware of the need to buy products that are certified to
meet the incoming HIPAA requirements, conversion might be smoother and
less expensive.
Response: Generally, CCHIT does not certify products for
administrative transactions, and therefore we will not pursue this
suggestion. Furthermore, HHS does not recognize certification of any
systems or software for purposes of HIPAA compliance.
H. Comments Considered Out of Scope
We received a number of comments on subjects that were outside the
scope of the proposed rule. We do not directly respond to those types
of comments because we consider them to be outside the scope of this
rule, but we wish to acknowledge them. We have summarized them in the
following list:
One commenter stated the final rule should clarify the
relationship between HIPAA and the Family Educational Rights and
Privacy Act (FERPA). The commenter stated that there are entities that
are bound by both HIPAA and FERPA, and suggested that clarification is
needed for situations where there are inconsistencies between the two
laws.
One commenter stated that HHS should agree to accept and
utilize all diagnosis codes associated with an admission or an
encounter, not just those accommodated within the limits first set by
paper forms. The current practice of truncating numbers for diagnoses
and procedures so that they are equal to what a paper claim supports
causes problems for providers when they are trying to meet the
``Present on Admission'' (POA) requirement of providing adequate
information about a patient's condition.
One commenter recommended that HHS add a definition for
real-time adjudication with regard to the 837 claim, 835 remittance
advice and the 277 health care claim status transactions in this final
rule. The commenter referenced the collaborative efforts between WEDI
and X12 to provide a standard way to conduct real-time adjudication.
One commenter requested that we address expectations
related to Sec. 162.925 regarding health plan incentives to health
care providers for using direct data entry (DDE) transactions. The
commenter said there are instances where health plans offer more
information about eligibility and benefit information on Web sites than
they do through the standard X12 270/271 transactions, which the
commenter believes is an incentive for a provider to conduct a
transaction using some means other than the standard transaction. The
commenter requested clarification regarding the offer of more
information through a non-standard transaction than in the standard
transaction, even though the standard transaction contains the required
amount of information. Since we did not address this issue in the
proposed rule, we do not respond here, but may provide additional
direction in a future Frequently Asked Question on the CMS Web site.
III. Provisions of the Final Rule
This final rule incorporates the provisions of the proposed rule,
with the following exceptions and changes: We proposed to adopt a
compliance date for Versions 5010 and D.0 of April 1, 2010 for all
covered entities. In this final rule, we adopt a compliance date of
January 1, 2012 for Versions 5010 and D.0 for all covered entities. We
revise Sec. 162.1102, Sec. 162.1202, Sec. 162.1302, Sec. 162.1402,
Sec. 162.1502, Sec. 162.1602, Sec. 162.1702, and Sec. 162.1802
accordingly.
We proposed a compliance date of 24 months after the effective date
of the final rule for the Medicaid pharmacy subrogation standard
(Version 3.0) with an additional 12 months for small health plans. In
this final rule, we indicate an effective date of January 1, 2010 for
the provisions of 45 CFR Subpart S. This means that covered entities
other than small health plans must be in compliance on January 1, 2012,
while small health plans, which have an additional 12 months, must be
in compliance on January 1, 2013.
In Sec. 162.925, we add paragraph (a)(6) that precludes health
plans from requiring an earlier compliance date than those adopted. Use
of Versions 5010 and D.0 in advance of the mandatory compliance date is
permissible, based upon mutual agreement by trading partners.
We adopt revisions to Sec. 162.1102, Sec. 162.1202, Sec.
162.1302, Sec. 162.1402, Sec. 162.1502, Sec. 162.1602, Sec.
162.1702, and Sec. 162.1802 to enable covered entities to engage in
Level 2 testing by allowing for the use of both the old standard and
the updated standard.
We allow covered entities to use either Version 4010/4010A, 5010,
5.1 or D.0 for billing retail pharmacy supplies and services, and
reflect that policy in revisions to Sec. 162.1102. We also revise the
definition of ``standard transaction'' in accordance with our policy to
allow for the dual use of standards, by replacing ``the applicable
standard'' with ``an applicable standard'' at Sec. 162.103
We proposed to clarify the descriptions for three standards:
Enrollment and disenrollment, referral certification and authorization,
and health care claims status and request. In the final rule we do so,
by specifying the senders and receivers of those transactions in Sec.
162.1301, Sec. 162.1401 and Sec. 162.1501.
In the proposed rule, at Sec. 162.900, we stated that ASC X12N
implementation specifications and the ASCX12 Standard for Electronic
Data interchange Technical Report Type 3 were available from the
Washington Publishing Company. In the final rule, we provide the
correct address and Web site for obtaining the Version 5010 guides,
from X12. Version 4010/4010A specifications may still be obtained from
the Washington Publishing Company.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and
[[Page 3311]]
approval. In order to fairly evaluate whether an information collection
should be approved by OMB, section 350(c)(2)(A) of the Paperwork
Reduction Act of 1995 requires that we solicit comment on the following
issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In this rule, we are finalizing the revisions to the information
collection requirements that were announced in the proposed rule that
was published on August 22, 2008 (73 FR 49742). Specifically, we are
revising the currently approved information collection requirements
contained in Sec. 162.1102, Sec. 162.1202, Sec. 162.1301, Sec.
162.1302, Sec. 162.1401, Sec. 162.1402, Sec. 162.1501, Sec.
162.1502, Sec. 162.1602, Sec. 162.1702, and Sec. 162.1802 of this
document. We believe that the revisions will have an impact on the
burden (both hour burden and cost burden) associated with the
aforementioned affected sections that are currently approved under OCN
0938-0866 with an expiration date of 7/31/2011. In addition to
announcing the revisions in the proposed rule, we published a 60-day
Federal Register notice on October 10, 2008 (73 FR 60296) that
solicited public comments on the proposed revisions. No comments were
received. Accordingly, we have submitted a revised information
collection request to OMB for its review and approval of the revised
information collection requirements. These requirements are not
effective until approved by OMB.
If you wish to comment on these information collection and
recordkeeping requirements, please fax your comments to 202-395-6974 or
email your comments to [email protected]. Please mark
comments to the attention of the desk officer for CMS and indicate that
they are in relation to OMB control number 0938-0866.
V. Regulatory Impact Analysis
A. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), as
amended by Executive Order 13258 (February 26, 2002) and further
amended by Executive Order 13422 (January 18, 2007), the Regulatory
Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section
1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of
1995 (Pub. L. 104-4), Executive Order 13132 on Federalism, and the
Congressional Review Act (5 U.S.C. 804(2)).
Executive Order 12866 (as further amended) directs agencies to
assess all costs and benefits of available regulatory alternatives and,
if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
Because we estimate that this rule will have economically significant
effects, we prepared an RIA. We anticipate that the adoption of the new
versions of the standards and the adoption of Version 3.0 would result
in benefits that will outweigh the costs. Accordingly, we prepared a
Regulatory Impact Analysis in the August 22, 2008 proposed rule that,
to the best of our ability, presented the costs and benefits of the
proposals. We did not receive any comments on the Regulatory
Flexibility Analysis, and therefore provide a summary here. For
details, we refer readers to the August 22, 2008 proposed rule at 73 FR
49757.
B. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA) of 1980, Public Law 96-354,
requires agencies to describe and analyze the impact of the rule on
small entities unless the Secretary can certify that the regulation
will not have a significant impact on a substantial number of small
entities. In the health care sector, a small entity is one with between
$6.5 million and $31.5 million in annual revenues or is a nonprofit
organization. For the purposes of this analysis (pursuant to the RFA),
nonprofit organizations are considered small entities; however,
individuals and States are not included in the definition of a small
entity. We attempted to estimate the number of small entities and
provided a general discussion of the effects of the proposed
regulation, and where we had difficulty, or were unable to find
information, we solicited industry comment. We stated our belief that
the conversion to Versions 5010 and D.0 would have an impact on
virtually every health care entity. We did not receive any comments in
response to our solicitation for comments.
In our analysis, we combined Versions 5010 and D.0 because these
two standards will be implemented at the same time, and in some cases
are dependent on each other. We provided examples in the August 22,
2008 proposed rule (73 FR 49758).
The summary table in this final rule includes the final cost
estimates for Versions 5010, D.0 and 3.0 on all entities we anticipated
would be affected by the rule. The data in that table were used in this
analysis to provide cost information.
Because most health care providers are either nonprofit or meet the
Small Business Administration's (SBA) size standard for small business,
we treated all health care providers as small entities. For providers,
we predicted that the changes would be minimal involving software
upgrades for practice management and billing systems. We included
pharmacies in the analysis, and considered some of them to be small
businesses. We considered some health plans small businesses, but were
unable to identify data for these entities, nor was any information
submitted in response to our solicitation. We addressed clearinghouses
and Pharmacy Benefit Managers (PBMs) in our discussion, though we did
not believe that there were a significant number of clearinghouses that
would be considered small entities. This was confirmed by a number of
associations, including the Maryland Commission for Health Care. PBMs
were excluded from the analysis because we had no data to indicate that
they would qualify as a small entity. State Medicaid agencies were
excluded from the analysis because States are not considered small
entities in any Regulatory Flexibility Analysis.
Final Regulatory Flexibility Analysis (FRFA)
1. Number of Small Entities
In total, we estimated that there are more than 300,000 health care
organizations that may be considered small entities either because of
their nonprofit status or because of their revenues. The Business
Census data shows that there are 4,786 firms considered as health plans
and/or payers (NAICS code 5415) responsible for conducting transactions
with health care providers. In the proposed rule's impact analysis, we
used a smaller figure based on a report from AHIP. But for purposes of
the RFA, we did not identify a subset of small plans, and instead
solicited industry comment as to the percentage of plans that would be
considered small entities. We identified
[[Page 3312]]
the top 78 clearinghouses/vendors in the Faulkner and Gray health data
directory from 2000--the last year this document was produced. Health
care clearinghouses provide transaction processing and translation
services to both providers and health plans.
We identified nearly 60,000 pharmacies, using the National
Association of Chain Drug Stores Industry Profile (2007) (http://www.nacds.org), and for the purposes of the initial regulatory
flexibility analysis we are treating all independent pharmacies
reported in the Industry Profile as ``small entities.'' The number of
independent pharmacies reported for 2006 is approximately 17,000
entities. We specifically invited comments on the number of small
pharmacies, but received none.
Based on Figure 2 of the Industry Profile, independent pharmacy
prescription drug sales accounted for 17.4 percent of total pharmacy
drug sales of $249 billion sales for 2006. Allocating the Versions 5010
and D.0 costs based on the share of prescription drug revenues to
independent pharmacies (the small businesses), implementation costs are
expected to range between $6.4 million and $13 million or 0.02 and 0.03
percent of revenues. These figures indicate that there is minimal
impact, and the effect falls well below the HHS threshold of 3 to 5
percent specified in the HHS guidance on treatment of small entities
(see: ``Guidance on Proper Consideration of Small Entities in
Rulemakings of the U.S. Department of Health and Human Services''
http://www.hhs.gov/execsec/smallbus.pdf.pdf).
2. Costs for Small Entities
To determine the impact on health care providers we used Business
Census data on the number of establishments for hospitals and firms for
the classes of providers and revenue data reported in the Survey of
Annual Services for each NAICS code. For other providers, we assumed
that the costs to implement Version 5010 would be accounted for at the
level of firms rather than at the individual establishments. Since we
treated all health care providers as small entities for the purpose of
the initial regulatory flexibility analysis, we allocated 100 percent
of the implementation costs reported in the impact analysis for
provider type. Table 2 shows the impact of the Version 5010
implementation costs as a percent of the provider revenues. For
example, dentists, with reported 2005 revenues of $87.4 billion and
costs ranging from $299 million to $598 million have the largest impact
on their revenues of between 0.11 percent and 0.21 percent. We
solicited comments specifically on the number of providers affected by
the proposed rule, but received none.
We did not include an analysis of the impact on small health plans,
because we were not able to determine the number of plans that meet the
SBA size standard of $6.5 million in annual receipts.
In evaluating whether there were any clearinghouses that could be
considered small entities, we consulted with three national
associations (EHNAC, HIMSS and the Cooperative Exchange), as well as
the Maryland Commission for Health Care, and determined that the number
of clearinghouses that would be considered small entities was
negligible. We identified the top 78 clearinghouses, and determined
that they are typically part of large electronic health networks, such
as Siemens, RxHub, Availity, GE Healthcare etc., none of which fit into
the category of small entity. As referenced earlier, in a report by
Faulkner and Gray in 2000, the top 51 entities were listed, and the
range of monthly transactions was 2,500 to 4 million, with transaction
fees of $0.25 per transaction to $2.50 per transaction. We determined
that even based on these data, few of the entities would fall into the
small entity category, and we did not count them in the analysis.
With respect to Version 3.0, we point out that, while we do not
know how many health plans/payers will exchange the pharmacy
subrogation standard with Medicaid agencies, those entities would be
counted in the health plan category and addressed under the analysis
for Versions 5010 and D.0. We did not provide a separate analysis in
this section.
In sum, we assumed that the financial burden would be equal to or
less than three percent of revenues. Based on the results of this
analysis, we remain reasonably confident that the rule will not have a
significant impact on a substantial number of small entities. As stated
throughout this section, in spite of our request for comments on this
analysis, we received none.
Table 2 below summarizes the impact of the rule on the health care
industry.
Table 2--Analysis of Implementation of the Burden of Versions 5010, D.0 and 3.0 on Small Covered Entities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small
entity %
Revenue % Small Version share of Implementation
Total no. Small or entity 5010/D.0 version cost revenue-
NAICS Entities of entities receipts receipts annual 5010/D.0 receipts
entities ($ of total costs (in costs (in (costs/
millions) receipts millions) millions receipts)
$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
6221..................................... General Acute Care 5,386 5,386 612,245 100 292-583 ......... .05-.10
Hospitals (establishments).
6211..................................... Physicians (firms)......... 189,562 189,562 330,889 100 136-272 ......... .04-.08
6212..................................... Dentists (firms)........... 118,163 118,163 87,405 100 94-187 ......... .11-.21
44611.................................... Pharmacies (includes 5010 56,946 17,482 249,000 17.4 37-75 6.4-13 .02-.03
and D.0). (42,330 @
17%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
In column 1 we display the NAICS code for class of entity. Column 3
shows the number of entities that are reported in the Business Census
for 2006 or ``Chain Pharmacy Industry Profile.''
Column 4 shows the number of small entities that were computed
based on the Business Census and Survey of Annual Service when the data
was available. All health care providers were assumed to be small. We
assumed that all independent pharmacies reported in Table 2 of the
Industry profile are small entities.
Column 5 shows revenues that were reported for 2005 in the Survey
of Annual Services, or in the case of pharmacies, in Figure 2 of the
Industry profile. In the case of health plans and third party
administrators, we used the consumer payments reported for private
health insurance in 2006 in the National Health Expenditure accounts.
Column 6 shows the percent of small entity revenues.
Column 7 shows the implementation costs for Versions 5010, D.0 and
3.0
[[Page 3313]]
taken from Table 14a of the impact analysis and annualized.
Column 8 shows the costs allocated to the small entities based on
the percent of small entity revenues to total revenues.
Column 9 presents the percent of the small entity share of
implementation costs as a percent of the small entity revenues. As
stated in the guidance cited earlier in this section, HHS has
established a baseline threshold of 3 percent of revenues that would be
considered a significant economic impact on affected entities. None of
the entities exceeded or came close to this threshold.
We note that the impact in our scenarios is consistently under the
estimated impact of 3 percent for all of the entities listed above,
which is below the threshold the Department considers as a significant
economic impact. As expressed in the Department guidance on conducting
regulatory flexibility analyses, the threshold for an economic impact
to be considered significant is 3 percent to 5 percent of either
receipts or costs. As is clear from the analysis, the impact does not
come close to the threshold. Thus, based on the foregoing analysis, we
conclude that some health care providers may encounter significant
burdens in the course of converting to the modified Versions 5010 and
D.0. However, we are of the opinion that, for most providers, health
plans, and clearinghouses the costs will not be significant.
3. Alternatives Considered
As stated in the August 22, 2008 proposed rule, we considered
various policy alternatives to adopting Versions 5010, D.0 and 3.0,
including not adopting the modifications, using staggered
implementation schedules, allowing implementation delays for small
entities, and waiting to adopt a later version of the X12 and/or NCPDP
standards. We rejected all of these alternatives, resulting in the
adoption of the standards, as proposed, with an alternate compliance
date.
4. Conclusion
As stated in the HHS guidance cited earlier in this section, HHS
uses a baseline threshold of 3 percent of revenues to determine if a
rule would have a significant economic impact on affected entities.
None of the entities exceeded or came close to this threshold. Based on
the foregoing analysis, the Secretary certifies that this final rule
will not have a significant economic impact on a substantial number of
small entities.
Section 1102(b) of the Act requires us to prepare a regulatory
impact analysis if a rule would have a significant impact on the
operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. This final rule will
affect the operations of a substantial number of small rural hospitals
because they are considered covered entities under HIPAA, however, we
do not believe the rule will have a significant impact on those
entities, for the reasons stated above in reference to small entities.
Therefore, the Secretary has determined that this final rule will not
have a significant impact on the operations of a substantial number of
small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates would require spending, in any 1 year,
$100 million in 1995 dollars, updated annually for inflation. In 2008,
that threshold is approximately $130 million. This final rule contains
mandates that will impose spending costs on State, local, or tribal
governments in the aggregate, or by the private sector, in excess of
the current threshold. The impact analysis in the proposed rule
addressed those impacts both qualitatively and quantitatively. In
general, each State Medicaid Agency and other government entity that is
considered a covered entity will be required to invest in software,
testing and training to accommodate the adoption of the updated
versions of the standards, and Version 3.0. UMRA does not address the
total cost of a rule. Rather, it focuses on certain categories of cost,
mainly those ``Federal mandate'' costs resulting from (A) imposing
enforceable duties on State, local, or tribal governments, or on the
private sector, or (B) increasing the stringency of conditions in, or
decreasing the funding of, State, local, or tribal governments under
entitlement programs.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. This final rule will have a substantial direct effect on
State or local governments, could preempt State law, or otherwise have
a Federalism implication because, even though State Medicaid agencies
will be converting to a modified version of an existing standard
(Version 4010/4010A to Version 5010 and NCPCP 5.1 to NCPDP D.0) with
which they are familiar, there are expenses for implementation and
widescale testing. State Medicaid agencies are currently required to
conduct pharmacy subrogation, and in accordance with this final rule,
will be able either to use the new Medicaid pharmacy subrogation
transaction standard or contract with trading partners and/or
contractors who specialize in this field to fulfill its subrogation
requirement. With respect to subrogation for pharmacy claims, we note
that this final rule does not add a new business requirement for
States, but rather mandates a standard to use for this purpose which
will be used consistently by all States. There will also be
expenditures for States as they convert from Version 5.1 to D.0 for
other pharmacy transactions, and this transition will have
implementation and testing costs as well, meaning there will be
additional fiscal impacts on States based on this rule.
C. Anticipated Effects
The objective of this regulatory impact analysis was to summarize
the costs and benefits of the following proposals:
Migrating from Version 4010/4010A to Version 5010 in the
context of the current health care environment;
Migrating from Version 5.1 to Version D.0; and
Adopting a new standard for the Medicaid subrogation
transaction.
The following are the key issues that we believe necessitate the
adoption of these modified standards and of a standard for Medicaid
pharmacy subrogation:
The current X12 and NCPDP standards were adopted in 2000
and do not reflect the numerous business changes that have emerged
during that time.
The current standards do not accommodate the use of ICD-10
codes.
The standard for Medicaid pharmacy subrogation will
significantly improve the efficiency of this process.
The remainder of this section provides details supporting the cost
benefit analysis for each of the three above-referenced proposals.
In the August 22, 2008 proposed rule (73 FR 49761), we described
the research conducted for us by Gartner, Incorporated (Gartner) to
assess the costs and benefits associated with the
[[Page 3314]]
adoption of Version 5010. Details about Gartner's methodology were
provided in the August 22, 2008 proposed rule, and a summary of the
calculations and methodology is available on the CMS Web site at:
http://www.cms.hhs.gov/TransactionCodeSetsStands/Downloads/5010RegulatoryImpactAnalysisSupplement.pdf.
In this section of the final rule, we summarize the key assumptions
from the August 22, 2008 proposed rule, and discuss those with which
commenters did not agree. In cases where we agreed with commenters, and
changed our assumptions, we provide both the original and revised
amounts, unadjusted for present value. The last section of the impact
analysis contains the summary detailed tables with all of the costs and
benefits recalculated to reflect the changes to the estimates for each
of the standards and adjusted for present value. The analysis contained
herein is presented at a high level. For a complete description of the
analysis, see the Economic Impact Analysis in the docket of this final
rule.
Additionally, although many commenters mentioned that we
underestimated the costs, or overestimated the benefits of
transitioning to the new versions, no substantive data or additional
information was provided to counter our analysis, and therefore, though
some changes have been made, they are not substantial, particularly for
the benefits that are detailed in this final rule. However, based on
the information we did receive, there are three items that changed,
which affected some of the figures in the impact analysis: (1) The cost
estimate was increased from between 20 percent and 40 percent of the
Version 4010/4010A costs to between 25 percent and 50 percent; (2) the
salary for provider billing specialist was reduced from $60 thousand
per year to $50 thousand per year; (3) the timing for adoption of the
auxiliary standards was changed to begin in calendar year 2013 instead
of calendar year 2012; These three items represent cost and benefit
changes that are reflected in this revised impact analysis, and we have
updated the tables for each industry sector accordingly. One of the
benefit categories, Cost savings or savings due to new users of claims
standards, is not impacted by the aforementioned items. We do not
repeat this entire explanation in each section, but rather refer the
reader back to this introduction.
As noted in the preamble, the compliance date for Version 5010 has
been changed to January 1, 2012, and the cost allocations have been
updated in accordance with the new timeline. We assumed transition
costs would occur in the fourth year of implementation (monitoring,
maintaining, and adjusting the upgraded systems and related processes)
and continue until all parties reach a ``steady state.''
While significant efforts were taken to ensure that the cost and
benefits captured for this rule were accurate, there are a few key
uncertainty factors that should be considered in reviewing the
regulatory impact analysis:
As detailed in the next section (Assumptions for Version
5010 Impact Analysis), the primary driver for all of the cost estimates
was the expected range of costs for all covered entities relative to
those same costs for implementation and transition to Version 4010.
As detailed in the next section (Assumptions for Version
5010 Impact Analysis), one of the key drivers for all of the benefit
estimates was increased use in electronic transactions. In all cases,
HHS evaluated the industry feedback and used the conservative estimates
for expected uptake in the electronic transactions so as to not inflate
the benefits.
As explained in the section on Version D.0, there is
uncertainty as to the complexity and the number of systems that will be
affected, and industry experts made their best estimates on the
possible impacts to their constituents.
Assumptions for Version 5010 Impact Analysis
In calculating the costs and benefits, Gartner made a number of
assumptions, based on interview data and secondary research. We
outlined the key assumptions used to support Version 5010 impact
analysis in the August 22, 2008 proposed rule (73 FR 49762).
Gartner projected the annual increase in the number of claims at
four percent, and used these figures to calculate the provider
benefits. We outlined annual claim volume projections in the August 22,
2008 proposed rule (73 FR 49762), and did not receive any comments on
those figures.
Gartner estimated the current adoption rate for each of the HIPAA
standards, and the projected rate of adoption for each of the modified
versions of the standards over the planning horizon. We outlined those
rates in the August 22, 2008 proposed rule (73 FR 49763). These figures
were used to calculate the benefits for healthcare industry.
Comment: We received a few comments disagreeing with our
assumptions about the increased use of auxiliary transactions. They
stated that there will not be an automatic increase in the usage/volume
of the auxiliary transactions, because the industry is still
establishing a clear business need for these less widely used
transactions (which are required for plans, but voluntary for
providers). Auxiliary transactions are those that supplement or support
claims information, including eligibility, enrollment and
disenrollment, referral requests and authorizations and premium
payments. Commenters also stated that, because these transactions were
not useful in Version 4010/4010A, there is still some hesitancy to use
Version 5010 until the transactions can be evaluated. Because efforts
will be focused on implementing the claims and eligibility transactions
for Version 5010, commenters stated that it may take industry longer to
schedule testing for the auxiliary transactions.
Response: Gartner conducted additional discussions with industry
experts regarding the original assumptions in the August 22, 2008
proposed rule. These experts acknowledged that providers that do not
now use these transactions will be focusing all their initial efforts
on implementing the key claims transactions--claims and remittance
advice--and that they would likely focus on implementing the auxiliary
transactions later. Accordingly, we changed the benefits realization
assumption for auxiliary transactions to start in year 2013 instead of
2012. We do not agree with the few commenters who stated there would be
no increase in the use of auxiliary transactions. In fact, the Gartner
interviewees did not veer from their original statements that the
auxiliary transactions would be used by more providers, albeit after
initial implementation of the core transactions for claims and
remittance advice. An association for physicians, in its comments,
stated that these transactions would be increasingly used because of
the improvements in the standards themselves and increased streamlining
of various administrative processes.
The total benefits (low) across the industry declined from $18,635
million to $15,896 million.
Comment: We received a comment from a government health program
stating that it did not agree with our savings/benefits assumption of
reduced phone calls. The commenter explained that the salary savings/
benefit has historically been found to be false savings unless
personnel positions were actually eliminated.
[[Page 3315]]
Response: We disagree with the comment. Although personnel
positions may not be eliminated, these personnel can be assigned to
other tasks; in this case, the benefit is cost avoidance. Our estimates
are based on cost avoidance, not personnel reductions.
General Assumptions for the Cost-Benefit Analysis for Providers and
Health Plans
We outlined the key assumptions used to develop the cost benefit
analysis for each of the provider segments--hospitals, physicians,
pharmacies, and dentists as well as the health plans in the August 22,
2008 proposed rule (73 FR 49763).
Explanation of Cost Calculations
To determine the costs for each subsegment (that is, providers and
health plans), we established an estimate for what the total
approximate Version 4010/4010A costs were for an individual entity
within that subsegment (based on the interviews and other data
available through research--see 73 FR 49761) and then applied an
estimated range of 20 to 40 percent of those costs to come up with
estimated low and high costs for Version 5010. Additional information
about the cost calculations and Gartner methodology are available in
our supplemental document on the CMS Web site at: http://www.cms.hhs.gov/TransactionCodeSetsStands/Downloads/5010RegulatoryImpactAnalysisSupplement.pdf.
Comment: As stated above, a number of commenters disagreed with our
assumptions concerning the level of effort necessary to migrate to
Version 5010, in comparison with the initial implementation costs for
Version 4010/4010A, and believed the costs to be significantly higher
than our projections. Although no commenters actually provided a cost
figure, a small number of commenters wrote that it would take 50 to 75
percent of the initial implementation effort to migrate to the new
versions. The rationale provided was that:
(1) Organizations will have to operate dual systems through both
testing and implementation phases as different trading partners migrate
at different times.
(2) Additional considerations in the salary cost assumptions such
as real estate, utilities, phone, computer systems, infrastructure,
etc., to represent total cost of employee should be taken into
consideration.
Other commenters supported our assumptions regarding costs of
operating dual systems through both testing and implementation phases.
These commenters explained that there may be additional hardware costs
to upgrade existing equipment to manage the dual use period, or
enhanced functionality necessary when upgrading to new versions of
software ready to handle the new versions. Another commenter disagreed
with our statement that little or no transmission costs would be
required to comply with the new regulation. The commenter said that new
transmission costs will be created with new trading partners and new or
increased number of transactions. Another commenter stated that, while
there would be a number of one-time costs to implement Version 5010
(for business flow changes, software procurement or customized software
development, etc.), they did not agree that the system testing costs
would account for 60 to 70 percent of all costs, but did not provide
any additional detail for their dissension. In sum, while we received a
variety of comments, none provided specific cost or implementation data
to support their statements.
Response: We agree that the industry will need to operate dual
systems to process both versions of the standards, and that
transmission costs will increase. The implementation of Version 4010/
4010A required extensive remediation of applications; development of
external support capability to deal with expanded code lengths;
different handling of coordination of benefits; and a variety of other
business changes. It further involved the first implementation of X12
transaction formats for many providers, health plans and
clearinghouses. In addition, many providers switched from paper to
electronic transmission concurrent with this change. The changes going
from Version 4010/4010A to Version 5010 are far less extensive on the
whole, even though there are a host of content and format changes.
While we acknowledge the need to support both formats, the time spent
dealing with errors and reworking business flows should not be nearly
as great as the experience of implementing Version 4010/4010A. This
difference in the scope of the changes between implementation of
Version 4010/4010A and Version 5010 was one of the key bases for the
original estimates that we obtained when surveying industry segments in
preparing the August 22, 2008 proposed rule.
With regard to the comments regarding dual hardware, many
transaction mapping products are capable of supporting more than one
variant of the transaction format using the same hardware and
communications channels. Although some additional transaction volume
will be required for testing and parallel operations, HHS has concluded
that there will be an incremental need for added hardware and
communications capacity to support submitting all transactions in both
formats during the conversion period.
With regard to the comment regarding additional salary cost
assumptions, all cost estimates provided in the analysis presented in
the proposed rule (73 FR 49762) included the full set of overhead and
added personnel costs including real estate, utilities, phone, computer
systems, infrastructure, etc. These items are considered to be part of
the fully loaded costs to implement and maintain the Version 5010
transactions and would also be considered to be costs avoided in the
benefit period once all parties have implemented the new version.
While most commenters did not provide specific data regarding
additional costs, we nonetheless acknowledge that commenters generally
believed our estimates to be too low, and did note specific areas of
concern. Accounting for all of the new cost considerations, we have
adjusted our assumption to a range of 25 to 50 percent of the Version
4010/4010A implementation costs to move to Version 5010. The total
costs (low estimate) incurred by the whole industry increased from
$5,656 million to $7,717 million, unadjusted for present value.
In the August 22, 2008 proposed rule (73 FR 49764), we show
Gartner's estimates of the percent of the total costs allocated to each
cost category (for example, testing and training) for the provider and
plan segments. As discussed above, we used industry comments to revise
the estimates for hardware and transmission costs. Table 3 reflects the
new allocations of the percent of the total costs to each cost
category.
[[Page 3316]]
Table 3--Percentage and Total Amounts for Cost Items Used for Version
5010 Calculations--Providers and Health Plans
------------------------------------------------------------------------
Percent of total costs
-------------------------
Cost item Health
Providers plans
(percent) (percent)
------------------------------------------------------------------------
Hardware Procurement.......................... 10 10
Software Costs................................ 10 7.5
Transmission Costs............................ 2.5 2.5
New Data Collection........................... 0 0
Customized software development............... 5 2.5
Testing Cost.................................. 60 65
Training Costs................................ 2.5 2.5
Transition Costs.............................. 10 10
-------------------------
Totals.................................... 100 100
------------------------------------------------------------------------
Original source: Gartner interviews and secondary research.
Explanation of Benefits and Savings Calculations
In our analysis, we assumed that benefits would accrue in three
categories which were described and explained in detail in the August
22, 2008 proposed rule (73 FR 49764). For ease of reference, they were
labeled: (1) Better standards or savings due to improved claims
standards; (2) Cost savings or savings due to new users of claims
standards; and (3) Operational savings or savings due to increased
auxiliary standards usage.
For ease of reference, we repeat the explanation of the three
savings categories:
(1) Better standards or savings due to improved claims standards:
The improvements in Version 5010 that would reduce manual intervention
to resolve issues related to the claim or remittance advice, due to
ambiguity in the standards;
(2) Cost savings or savings due to new users of claims standards:
Increased use of electronic transactions for claims and remittance
advice that would accrue to parties who had previously avoided the
electronic transactions because of their deficits and shortcomings; and
(3) Operational savings or savings due to increased auxiliary
standards usage: Increase use of auxiliary transactions through EDI
that would result from a decrease in manual intervention to resolve
issues with the data (handled through phone calls or correspondence).
The August 22, 2008 proposed rule (73 FR 49765) details the
business activities, such as manual interventions and phone calls, that
make up the calculations for two of the categories of projected
savings: Better standards or savings due to improved claims standards
and Operational savings or savings due to increased auxiliary standards
usage. As stated, only two of the three benefit categories are impacted
by the revised assumptions.
Comment: We received one comment disagreeing with our assumption
that provider billing specialist yearly costs are $60,000. The
commenter stated that the billing specialist yearly cost, on average
across the country, is not higher than $50,000.
Response: We agree with the comment after performing additional
research regarding this assumption, and as a result, have changed our
estimate regarding yearly costs for a provider billing specialist from
$60,000 to $50,000. Based on this change, the total benefits (low
estimate) across the industry declined from $18,635 million to $15,896
million, unadjusted for present value.
The benefits category, ``Cost savings, or savings due to new users
of claims standards,'' does not change as a result of our revised
calculations. The revised provider billing specialist salary assumption
only affects the benefit calculations for benefit category, ``Better
standards or savings due to improved claims standards'' and the revised
benefits realization assumption for auxiliary transactions only changes
the benefit calculation for benefits category, ``Operational savings or
savings due to increased auxiliary standards usage''. However, the
entire benefit projection changes because of the revised compliance
date.
1. Health Care Providers
In the August 22, 2008 proposed rule (73 FR 49765), we reiterated
that providers are not required by HIPAA to conduct HIPAA transactions
electronically, but if they do, they must use the standards adopted by
the Secretary. Providers that conduct these transactions electronically
would be required to implement Version 5010 of those transactions.
Hospitals
In the August 22, 2008 proposed rule, we calculated that the total
cost for all hospitals to implement Version 5010 would be within a
range of $932 million to $1,864 million (73 FR 49767). Based on the
revised cost assumptions outlined earlier (increased rate of 25 to 50
percent), the new estimate of total costs for all hospitals to
implement Version 5010 will be within a range of $1,165 million to
$2,331 million, unadjusted for present value.
Hospitals would realize savings and benefits in the same three
categories we identified in the August 22, 2008 proposed rule (73 FR
49766). In the proposed rule, we calculated that the savings due to
better standards were estimated to be a low of $403 million. Cost
savings due to an increase in use of the electronic claims transactions
(837 and 835) were estimated at a low of $66 million. Operational
savings due to an increase in the use of auxiliary transactions were
estimated at $1,314 million.
Based on the revised benefit assumptions outlined earlier, the new
estimate for minimum savings due to better standards is $348 million
and operational savings due to increase in the use of auxiliary claim
transactions are $1,132 million, unadjusted for present value. The cost
savings benefit category is not impacted by the revised benefit
assumptions.
Physicians and Other Providers
We outlined the key assumptions used to develop the cost benefit
analysis for physicians and other providers segment in the August 22,
2008 proposed rule (73 FR 49767), and calculated that the total cost
for all physicians and other providers segment to implement Version
5010 would be within a range of $435 million to $870 million. Based on
the revised cost
[[Page 3317]]
assumption outlined earlier, the new estimate of total cost for
physicians and other providers segment to implement Version 5010 is
between $544 million to $1,088 million, unadjusted for present value.
In the proposed rule, we calculated that the savings due to better
standards was estimated to be a low of $1,612 million. Cost savings due
to an increase in use of the electronic claims transactions (837 and
835) were estimated at a low of $270 million. Operational savings due
to an increase in the use of auxiliary transactions were estimated at
$5,251 million.
Based on the revised benefit assumptions outlined earlier (change
in salary and later adoption of auxiliary transactions), the new
estimate for physician savings due to better standards is $1,392
million and operational savings due to increase in the use of auxiliary
claim transactions are $4,443 million, unadjusted for present value. As
mentioned earlier, the benefit category cost savings is not impacted by
the revised benefit assumptions.
Dentists
In the August 22, 2008 proposed rule, we acknowledged that the
dental community has not yet widely adopted the HIPAA standards, in
large part because the standards did not meet their practical business
needs, particularly for claims and remittance advice. We assumed that
the costs for implementing Version 5010 would largely fall on vendors
as a cost of doing business, as they support the majority of dentists.
We outlined the key assumptions used to develop the cost benefit
analysis for dentists segment in the August 22, 2008 proposed rule (73
FR 49768). We received a few general comments from the dental community
regarding our estimates of the dental profession. We did not receive
any actual cost data from any organization or practitioner.
Comment: We received one comment clarifying a figure in Table 18 in
the supplement document posted on the CMS Web site in October 2008. The
clarification is that the number of dentist practices (outlined in
Table 18) does not include a one-to-one relationship between dentists
and their office, so the calculation assumes too large a number. The
commenter did not provide a figure however.
Response: We agree with the clarification and distinction, and have
updated the table in the supplement to indicate the numbers were for
individual dentists. However, in HHS's opinion, the current cost
estimates are not overstated. We derived the cost per dentist based on
input provided by the industry, which reflected office costs, in
keeping with the other portions of the analysis.
Comment: We received one comment clarifying another data point--in
Table 19 in the supplement document posted on the CMS Web site in
October 2008. The clarification is that the size of most dental
practices is less than 5. In Table 19, the practice size categories
were too large (``50-100 physicians'' and ``100 + physicians,'') for
dentistry, and should have reflected a smaller number at the lower end.
Response: We agree with the clarification, and have updated the
table to represent the data collected from the industry. However, the
calculation of the costs and benefits are not affected by this comment.
In the August 22, 2008 proposed rule (73 FR 49768), we calculated
that the total cost for dentists to implement Version 5010 would be
within a range of $299 million to $598 million. Based on revised cost
assumption outlined earlier, the new revised estimate of total costs
for the dentist segment to implement Version 5010 is within a range of
$373 million to $747 million, unadjusted for present value.
Based on the revised benefit assumptions outlined earlier, the new
estimate for savings due to better standards is $236 million and
operational savings due to increase in the use of auxiliary claim
transactions are $753 million, unadjusted for present value. As
mentioned earlier, the benefit category cost savings is not impacted by
the revised benefit assumptions.
Pharmacies
Pharmacies will transition to greater use of Version 5010 when the
final rule becomes effective, specifically for the 835 transaction
(remittance advice). For retail pharmacy claims, pharmacies primarily
use the NCPDP standard, Version 5.1. Since we are replacing Version 5.1
with Version D.0 in this regulation, and many of the system changes,
costs and benefits for implementing both Version 5010 and Version D.0
will result from related efforts, we combined the impact analysis for
Version 5010 and Version D.0. That analysis is detailed later in this
analysis.
Comment: We received a comment from a pharmacy chain that
identified a pharmacy segment that was not considered in the regulatory
impact analysis. The commenter stated that there are retail pharmacies
that are not considered a chain store, and would not fall under the
category of independent pharmacies. In addition, the commenter provided
representative costs incurred by a typical retail pharmacy in this
segment. This commenter said that the cost of implementation of both
the standards (Versions D.0 and 5010) would be approximately $250,000,
with 90 percent of the cost associated with the upgrade from Version
4010/4010A to Version 5010.
Response: Although the commenter had identified representative
costs, it did not provide additional information regarding the number
of retail chains that fall in this segment. We were, therefore, not
able to re-model the impact analysis based on the additional
information provided by the commenter. Furthermore, the impact analysis
for pharmacies is handled in the section for Version D.0 and we believe
those figures are representative of the segment overall.
Health Plans
In the August 22, 2008 proposed rule (73 FR 49769), we outlined the
key assumptions used to develop the cost benefit analysis for the
health plans segment. We calculated that the total cost for health
plans to implement Version 5010 would be within a range of $3,604
million to $7,209 million. Based on the revised cost assumption
outlined earlier, the new estimate of total cost for health plans to
implement Version 5010 is to be within a range of $4,505 million to
$9,011 million, unadjusted for present value.
In the August 22, 2008 proposed rule (73 FR 49769), we calculated
that the savings due to better standards were estimated at a low of
$1,283 million. Cost savings due to an increase in use of the
electronic claims transactions (837 and 835) were estimated at a low of
$111 million. Operational savings due to an increase in the use of
auxiliary transactions were estimated at $4,386 million. We outlined
the Version 5010 cost benefit summary for health plans segment (73 FR
49769).
Based on the revised benefit assumptions outlined earlier, the new
estimate for savings due to better standards is $1,093 million, and
operational savings due to increase in the use of auxiliary claim
transactions are $3,711 million, unadjusted for present value. As
mentioned earlier, the benefit category cost savings is not impacted by
the revised benefit assumptions.
Government Plans
We outlined the key assumptions used to develop the cost benefit
analysis for government plans segment in the August 22, 2008 proposed
rule (73 FR 49770), and calculated that the total
[[Page 3318]]
costs for government plans segment to implement Version 5010 would be
within a range of $252 million to $481 million. Based on the revised
cost assumption outlined earlier, the new estimate of total costs for
the government plans segment to implement Version 5010 is within a
range of $314 million to $601 million, unadjusted for present value.
In the August 22, 2008 proposed rule, we estimated that savings due
to better standards would be a low of $279 million. Cost savings due to
an increase in use of the electronic claims transactions (837 and 835)
were estimated to be a low of $24 million. Operational savings due to
an increase in the use of auxiliary transactions were estimated at $953
million. We outlined the Version 5010 cost benefit summary for
government plans segment (73 FR 49770).
Based on the revised benefit assumptions outlined earlier, the new
estimate for savings due to better standards is $238 million and
operational savings due to increase in the use of auxiliary claim
transactions are $807 million, unadjusted for present value. As
mentioned earlier, the benefit category cost savings is not impacted by
the revised benefit assumptions.
Clearinghouses and Vendors
We outlined the key assumptions used to develop the cost benefit
analysis for clearinghouses and vendors segment in the August 22, 2008
proposed rule (73 FR 49770), and calculated that the total costs for
clearinghouses to implement Version 5010 would be within a range of $37
million to $45 million.
Comment: We received a comment from a large clearinghouse stating
that our cost assumptions were significantly understated, and that
their costs to implement Version 5010 would be at least $3.5 million,
and would be affected specifically by the amount of testing that would
be required with trading partners--both providers and health plans.
Response: We agree with the comment based on several additional
interviews with large and medium clearinghouse representatives. In
preparing the final rule, we did some additional analysis on a larger
sample of the 162 clearinghouses that we included in our estimate. In
this analysis we found that the cost per clearinghouse would be driven
primarily by the number of trading partners with whom the
clearinghouses would need to test Version 5010 transactions. The number
varied greatly between the smaller clearinghouses and the larger ones
and, therefore, created a range of costs for implementation and
transition to Version 5010 based on this variable. Using this analysis,
we increased our estimates and came up with an average implementation
cost for each clearinghouse of $1 million (low) and $1.21 million
(high) (up from a range of $0.23 million to $0.28 million). The total
costs (low) for the clearinghouse segment increased from $37 million to
$160 million.
Based on the comments, we revised our estimate of the total costs
for the clearinghouse segment to implement Version 5010 to be within a
range of $160 million to $196 million, unadjusted for present value.
In the August 22, 2008 proposed rule (73 FR 49771), we stated our
assumption that there would be no benefits for clearinghouses. We did
not receive any comments on this assumption, but feedback from industry
interviews supports our belief that other than business stability,
there are no other benefits for clearinghouses.
Other Comments Pertaining to Cost Estimates
Comment: We received a few comments requesting that HHS review the
WEDI Cost Benefit Analysis (CBA) documents prepared in CY2007 and
consider the industry projections of Version 5010 implementation costs
from that analysis.
Response: We reviewed all of the CBA documents forwarded by WEDI.
We were able to make some qualitative inferences based on the CBA
survey responses and used those to solicit additional feedback from
industry leaders regarding the CBA findings and to better augment the
regulatory impact analysis. The input from this analysis helped inform
the changes we have outlined in the final rule. However, we did not
take the CBA estimates in their current form because:
The CBA does not capture a breakdown of costs by
healthcare sub segment but rather at the aggregate. Although the CBA
summarizes the survey responses, it does not include analysis based on
the survey responses. For example, the CBA captures the survey
responses regarding participant details and the cost details. It does
not tie the cost by survey participant as to establish a clear basis
for comparison across organizations of similar size and type.
It is difficult to develop Version 5010 costs based on the
WEDI CBA because each analysis was conducted by transaction. For
example, there are three analyses, one for each transaction: 835, 837
and 276/277. The costs outlined in the CBA have a high potential for
overlap. In addition, participants are different for each survey. For
example: 837 survey participants include four long term care health
plans while 835 survey participants did not include any health plans.
The survey results were not from a controlled sample. The
depth of the survey respondent's understanding of the impact of Version
5010 was unclear. The lack of attribution and ability to contextualize
survey responses makes it difficult to use the WEDI CBA directly; the
utility of the data is extremely limited because of the small number of
respondents, the uncertainty of the responses (over \1/3\ of the payer,
provider and vendor responders answered ``not sure'' when asked to
estimate the costs for new software, upgrading of existing software,
and custom solutions), and the lack of consistency of respondents
across surveys.
As a result of these factors, this final rule is informed by the
qualitative input from the WEDI CBA, but relies on the specific cost
benefit study performed by Gartner to prepare the regulatory impact
analysis for the August 22, 2008 proposed rule to adopt Version 5010.
Comment: One commenter stated that costs estimated to implement
Version 5010 were 150 percent of the costs incurred during NPI
implementation.
Response: We understand the context of the comment, although the
commenter did not provide any data on which we could conduct any
analysis or comparison. Since the commenter did not provide baseline
data, a specific analysis could not be done to help us consider
revising our cost estimates further.
Comment: We received a few comments requesting that HHS use the
actual Version 4010/4010A implementation costs incurred by Medicare and
Medicaid to estimate the truer costs to implement Version 5010.
Response: We acknowledge the comment, but do not provide a specific
number for the Version 4010/4010A implementation costs incurred by
Medicare and Medicaid. The budgetary process used by Medicare and
Medicaid allocates funds for all approved Health Information Technology
initiatives, and those estimates were used in our analysis, as was
other data obtained from the industry at large. With respect to
Medicare expenditures specifically, funds are allocated to the
contractors for purposes of all updates and releases each year.
Medicaid agencies do not report on a specific implementation, but
rather track all system changes for purposes of federal cost sharing.
[[Page 3319]]
Comment: We received one comment requesting that HHS examine the
costs for providers who must submit electronic information to HIPAA-
exempt payers such as auto insurance, workers' compensation, property
and casualty insurers who are not required to accept the HIPAA standard
transactions. These providers must operate separate systems to support
the requirements of covered and non-covered entities.
Response: This is consistent with current practice. These
referenced entities have never been covered under HIPAA; there are
already processes and systems being used to submit claims to different
payer types. The commenter did not submit any data with respect to
claims volumes or costs to help support the statement that these costs
are unique and need to be examined.
Version D.0 (and Version 5010 for pharmacies)
In this section of the impact analysis, we summarize the key
assumptions from the August 22, 2008 proposed rule, and discuss those
with which the commenters disagreed. In cases where we agreed with the
commenters and changed our estimates, revised tables are provided. In
cases where we did not change our assumptions or estimates, the table
from the August 22, 2008 proposed rule is not repeated. The last
section of the impact analysis contains the summary detailed tables
with all of the costs and benefits recalculated to reflect the changes.
In general, pharmacy chains, health plans and PBMs believed that our
cost estimates were too low, and provided modest justification for
their position, but no entity provided actual data that could be used
to adjust our estimates with precision. Based on the comments, we made
some changes to our original assumptions and estimates for the cost of
implementing Versions D.0 for pharmacy benefit managers.
As stated in the preamble, there was consensus that we should adopt
Version D.0 to replace Version 5.1. No commenters disagreed with our
estimates of the number of organizations and professionals affected by
this rule, and there was also no disagreement about the estimate of
more than 2.3 billion prescriptions annually.
Costs
a. Chain Pharmacies
The retail pharmacy industry would be the most impacted by the
transition from Version 5.1. to Version D.0. In the August 22, 2008
proposed rule, we reported that one large national pharmacy chain
estimated that it spent approximately $10 million when it converted to
Version 5.1. In comparison, this chain estimated that corporate-wide
costs for the conversion to Version D.0, including programming, system
testing and personnel training, would be around $2 million per chain.
Another large national pharmacy chain estimated its migration costs
from Version 5.1 to Version D.0 would be $1.5 million. We solicited
industry input in preparation for the proposed impact analysis, and the
overall initial industry input for conversion to D.0 ranged from
$100,000 for a small pharmacy chain to $1 million for large national
pharmacy chains. Based on this information, we estimated implementation
costs to be $20 million for large national pharmacy chains, and $18
million for small chains, for a total of $38 million.
Comment: We received a few comments disagreeing with our original
cost estimates. One large chain estimated their cost at $4.9 million
over two years but did not provide specifics. Another commenter
estimated implementation costs of $2 million for small chains with
costs increasing based on the size of the chain, but indicated that
this estimate included both Version D.0 and Version 5010 costs.
Response: The few comments we received on this topic did not
provide enough detail to permit us to assess them, and in one case the
estimate did not distinguish between Version D.0 and Version 5010
costs. We retain our original estimates of $100,000 per small pharmacy
chain and $1 million per large pharmacy chain company, unadjusted for
present value. We estimate that these costs would be spread over the
first two years of implementation of Version D.0.
b. Independent Pharmacies
In the August 22, 2008 proposed rule, we stated that independent
pharmacies would incur costs resulting from software upgrades to
accommodate Version D.0. We stated that we believed that maintenance
fees would increase slightly, as vendors pass along their cost of the
upgrade to the pharmacy. Based on industry input, we estimated that the
average monthly maintenance contract between a pharmacy and a vendor
amounts to a range of $400 to $800 per month per pharmacy with an
additional percent for maintenance fee increases attributable to the
conversion to Version D.0. Our original estimate per pharmacy was a
range of $540,000 to $1,080,000 based on 18,000 independent pharmacies.
We did not receive any comments from any independent pharmacist or
from any of their associations; therefore we stand by our original
assumptions. We have modified the dates for those costs, in accordance
with the revised compliance schedule.
c. Health Plans and PBMs
In the August 22, 2008 proposed rule (73 FR 49773), we stated that
health plans should see minimal changes in their operations and
workflows between Version 5.1 and Version D.0. We estimated the cost
for large PBMs to migrate to Version D.0 to be approximately $1 million
to $1.5 million per large national PBM, and approximately $100,000 for
specialty PBMs. Our total estimated costs for health plans and PBMs
ranged between $3.6 and $10.6 million per plan based on the size of the
PBM.
Comment: We received a few comments suggesting that we understated
the cost for health plans and PBMs to transition to Version D.0. While
commenters agreed with our assessment of the consolidation of the PBM
industry nationwide, they claimed that we did not account for the
effect on a large PBM. Commenters explained that maintenance of
multiple platforms results in increased complexities of operations and
upgrades. One commenter estimated that costs for their upgrades would
be $11 million, and, unlike the upgrades to the retail systems, they
stated that few if any benefits will result from the costs.
Another commenter expanded on the cost issues, stating that the
business requirements for commercial and Medicare Part D clients have
required significant changes to the claim standard. They stated that
the requirements affect all of the logic associated with the new fields
which must be accommodated. They explained that even the customer
service screens will require revision and that the representatives will
require training on the new fields and the benefit changes so that they
can answer beneficiaries' questions correctly. They estimate their
total cost to be in excess of $10 million dollars.
Another commenter challenged our assumption that health plans and
PBMs should see minimal changes in their operations and workflows
between Version 5.1 and Version D.0., stating that Version D.0 requires
additional data reporting related to the eligibility or subrogation/
secondary plan aspects of the transaction, and that this represents a
significant workload.
Response: When we prepared our original cost estimates, we treated
the large PBMs the same as a large chain pharmacy. We did not
completely
[[Page 3320]]
account for the complexity that the systems changes would present to
large PBMs. At the time, we allowed for changes to be made on only one
operating platform, while commenters pointed out that as many as seven
platforms might need to be updated. We agree with commenters that large
PBMs have complex systems that often include more than one platform,
and that such comprehensive system upgrades can be more costly. Based
on the comments, we have revised our cost projections. We amend our
estimates from $2 million to $10.5 million for each large PBM company.
Since we did not receive any comments from the smaller specialty PBMs,
we leave our original assumption as stated in the August 22, 2008
proposed rule. Thus, our cost estimates have increased to $42 million
for the large PBMs, and $3.6 million for the remaining small chains,
for a total of $45.6 million, unadjusted for present value. We estimate
that these costs would be incurred during the first two years of
implementation.
d. Vendors
In the August 22, 2008 proposed rule (73 FR 49772), we solicited
industry and stakeholder comment on the assumptions that vendor costs
will be passed on to the customer over time, and solicited feedback on
actual costs for vendor software upgrades and impact on covered
entities, including the conversion of historical data. We received no
comments from vendors related to their costs to upgrade to Version D.0
and therefore make no changes to this section. The figures from the
proposed rule will be included in the summary table at the end of the
impact analysis.
Benefits
In the August 22, 2008 proposed rule (73 FR 49742), we assumed that
the benefits of converting to Version D.0 would accrue over several
years, beginning in 2012. For a full overview of the benefit
assumptions, refer to the discussion in the August 22, 2008 proposed
rule at 73 FR 49773-49778.
a. Pharmacies
In the August 22, 2008 proposed rule (73 FR 49742), we said
pharmacies need Version D.0 to process Medicare Part D claims more
efficiently, and with fewer workarounds, particularly with respect to
processing coordination of benefits claims.
Comment: We received a few comments on our benefit assumptions. One
large pharmacy chain commented that, while they do not disagree that
there will be benefits and savings following complete implementation of
Version D.0, they are concerned that HHS has overstated those savings.
The commenter recognized that the use of Version D.0 will decrease
audit risks, however the savings assumption by HHS failed to recognize
other gaps that will continue to exist in the outpatient health care
system, specifically relative to the coordination of benefits.
Another commenter said that some of the savings numbers are so
small (for example, the 1.1 percent of time of a pharmacist being spent
on benefit issues), that they become hard to validate. Commenters did
not provide any alternative data to show what the benefits to the
pharmacies would be in their view.
Response: As we stated in the August 22, 2008 proposed rule (73 FR
79744), we based our assumptions on a study funded by the National
Association of Chain Drug Stores (NACDS), ``Pharmacy Activity Cost and
Productivity Study'' (http://www.nacds.org/user-assets/PDF_files/
arthur_andersen.PDF ). In projecting the growth in the number of
pharmacies over the next 9 years, we used data from the NACDS,
``Community Retail Pharmacy Outlets by Type of Store, 1996-2006''
(http://www.nacds.org/userseets/pdfs/facts_resources/2006/Retail_Outlets2006.pdf ). Since we did not get any new data on the benefits,
we stand by our assumptions and make no changes to the benefit data.
Health Plans and PBMs
We assumed that if pharmacists and technicians realize productivity
savings as a result of the use of Version D.0, then conversely, health
plans and PBMs would realize commensurate savings though a reduction in
pharmacist and technician calls to customer service representatives at
health care plans and PBMs. For a more detailed discussion of these
savings through reductions in pharmacist and technician calls to
customer service representatives at health plans and PBMs, please refer
to the August 22, 2008 proposed rule (73 FR 49778).
Comment: One commenter stated that they felt that there are few if
any benefits that will result from the cost of upgrading their system
to Version D.0, however they did not expand on this statement or offer
any alternative information.
Response: When estimating the benefits accrued to dispensers, we
solicited industry and stakeholder comments on our assumptions.
Although we received one comment stating that there were few, if any
benefits to upgrading to Version D.0, the commenter did not provide us
with any other data to refute what we originally proposed. Since most
commenters did not dispute our assumptions, we do not make changes in
the final rule.
Version 3.0 (Medicaid Pharmacy Subrogation)
As stated in the impact analysis for Version 5010 and Version D.0
above, in this section, we summarize the cost and benefit assumptions
from the August 22, 2008 proposed rule, and discuss those with which
the commenters disagreed. In cases where we agreed with the commenters
and changed our estimates, revised tables are provided. The last
section of the impact analysis contains the summary detailed tables
with all of the costs and benefits recalculated to reflect the changes.
There was consensus that we should adopt Version 3.0, and we
received no comments opposing our cost or benefit assumptions or
estimates. However, to accommodate the change in effective and
compliance dates for Version 3.0, we have made modifications to each of
the tables presented in the proposed rule, and re-published them below.
In the August 22, 2008 proposed rule (73 FR 49779), we said that
approximately 37 States were already billing a major portion of their
Medicaid pharmacy subrogation claims electronically. Of those 37
States, 33 of them were using a contingency fee contractor to bill
their (electronic) claims. The other four (out of 37) States were
billing electronically without the use of a contractor. The remaining
14 States were still billing most of their Medicaid pharmacy
subrogation claims on paper.
A detailed analysis of the impact on Medicaid agencies and health
plans can be found in the proposed rule (73 FR 49779-49781).
In the August 22, 2008 proposed rule (73 FR 49779), we said that
the costs for States that currently bill electronically to upgrade
their systems to Version 3.0, and to transition from paper Medicaid
subrogation claims to using Version 3.0, would be outweighed by the
benefits. We did not receive any comments on this conclusion.
1. Impact on States That Use a Contingency Fee Contractor
In the August 22, 2008 proposed rule (73 FR 49779), we said that,
for the 33 States that contract out their Medicaid pharmacy subrogation
billing processes, there would be no direct costs, and that
reimbursement to States would increase proportionally to a projected
increase in the volume of electronic claims. The contractors supporting
these States
[[Page 3321]]
would recover their cost on the back-end, as they would be recouping
additional contingency fees based on the volumes. We received no
comments on this assumption.
2. Impact on States Converting From Paper
a. Cost of Development
In the August 22, 2008 proposed rule (73 FR 49780), we described
the costs that would be incurred by the 14 States converting from a
paper process to an electronic process, using Version 3.0, including
the cost of development for gap analysis, requirements documentation,
training, translator mapping, legacy system changes, acceptance testing
and external, end-to-end testing. We said that infrastructure costs
would be relatively small, in the range of $50,000 to $150,000 per
State, unadjusted for present value. The State would be responsible for
10 percent of those sums, and the Federal government would reimburse
the State 90 percent of the design, development, and installation costs
related to changes in their Medicaid Management Information Systems
(MMIS). We projected that seven States would incur development costs in
order to conduct their own billing and the other seven would hire a
contingency fee contractor to conduct their billing. We received no
comments on these estimates or assumptions.
b. Costs of Adopting and Implementing Trading Partner Agreements (TPAs)
With Third Party Payers
In the proposed rule, (73 FR 49780), we said that States would
enter into Trading Partner Agreements with other payers in order to
conduct subrogation electronically. We projected that approximately
forty (40) third party payers, primarily PBMs and claims processors, as
well as a few large health plans that process claims in-house, would
participate. We stated that trading partner agreements would cost
approximately $14,000 to $20,000--with a range of $5,000 to $15,000 for
each agreement. We assumed that each State would enter into a trading
partner agreement with an average of 15 payers, and that the
anticipated costs per State would range from $75,000 to $225,000. As
stated in the previous section, we projected that half of the 14 States
would hire a contractor, and half would adopt trading partner
agreements. Therefore, the agreements with 15 plans would range from
$525,000 to $1.6 million, unadjusted for present value. The State would
be responsible for 50 percent of the cost since the Federal government
reimburses States 50 percent of their administrative costs. We did not
receive any comments on this section of the analysis.
3. Impact on States That Bill Electronically (Without a Contractor)
a. Cost of Development
In the August 22, 2008 proposed rule (73 FR 49780), we said that
changes for States that bill electronically would be minimal and the
cost impact would be much less than for the States that currently bill
paper to convert to Version 3.0. We did not receive any comments on
this section of the analysis.
b. Costs of Adopting and Implementing Trading Partner Agreements With
Third Party Payers
In the August 22, 2008 proposed rule (73 FR 49780), we suggested
that the cost to execute and implement trading partner agreements would
be approximately $5,000 to $15,000 per agreement, and that four States
would establish trading partner agreements with an additional 12 health
plans/payers, for a total cost ranging from $20,000 to $60,000,
unadjusted for present value. We did not receive any comments on this
section of the analysis.
Medicaid Savings
In the August 22, 2008 proposed rule, 73 FR 49780, we stated that
the accrued savings to States would outweigh the costs because Medicaid
agencies would no longer have to keep track of and use various
electronic formats for different payers. We estimated the total number
of paper Medicaid pharmacy subrogation claims to be between 2.5 and 3.4
million annually. We cited a study by Milliman in 2006, which was also
referenced by the American Medical Association (AMA), which stated that
electronic claims can save an average of $3.73 per clean claim. Based
on this study, we estimated that the Medicaid program could save an
estimated $12.7 million annually unadjusted for present value, once
Version 3.0 is fully implemented. We said that the savings represents
both State agencies and the Federal government, as the Federal
government would share 50 percent of any administrative savings. We did
not receive any comments on this section of the analysis.
Impact on Medicaid Pharmacy Providers
In situations where Medicaid has been unable to successfully bill
third parties, due to the current challenges of having to use various
formats to meet the needs of different payers, States sometimes recoup
the subrogation monies from pharmacy providers. We do not believe this
practice is widespread and, therefore, did not account for it in the
impact analysis. We did not receive any comments on this section of the
analysis.
Impact on Third Party Payers (Includes Plan Sponsors, Pharmacy Benefit
Managers (PBMs), Prescription Drug Plans (PDPs) and Claims Processors)
1. Impact on Plan Sponsors That Use a PBM or Claim Processor
In the August 22, 2008 proposed rule (73 FR 49781), we stated that
the four large PBMs handle about 75 percent of all prescription orders
dispensed annually in the United States, and that many of these
organizations already accept Version 2.0 subrogation transactions. We
said that, for the majority of plan sponsors that contract out their
claims adjudication, the costs of implementing Version 3.0 and
establishing trading partner agreements would be minimal. We received
no comments on this portion of the analysis.
2. Impact on Plan Sponsors That Do Not Use a PBM or Claim Processor
We did not estimate any costs for this sector, as we believe there
are few large payers that administer their own claims adjudication. We
continue to assume that these payers have already made the necessary
investments in developing electronic capabilities to meet HIPAA
mandates, and that they will be upgrading their systems in order to
accommodate Version D.0, to meet the requirements of this final rule.
Since Version 3.0 utilizes a number of the data elements found in
Version D.0, we expect additional infrastructure costs to be small. We
did not receive any comments on this assumption.
a. Cost of Development
In the August 22, 2008 proposed rule (73 FR 49781), we estimated
the development costs to individual health plans that would need to
implement Version 3.0 to be similar to the cost for State Medicaid
programs, or approximately $50,000 to $150,000. We estimate that there
are about 20 payers that do not contract with a PBM and that they would
need to upgrade their systems for a total cost of $1 to $3 million,
unadjusted for present value. We solicited comments on this subject but
received none.
[[Page 3322]]
b. Costs of Adopting and Implementing Trading Partner Agreements With
States
In the proposed rule (73 FR 49781), we estimated the plan sponsor's
costs of adopting and implementing trading partner agreements with
States would be similar to the cost estimated for State Medicaid
programs, which would range from $5,000 to $15,000 per agreement. We
also anticipated that approximately 40 States would utilize a
contingency fee contractor, setting up trading partner agreements. We
estimated the cost per plan sponsor to range from $60,000 to $180,000,
unadjusted for present value, and received no comments on this
assumption.
3. Savings Impact
We assumed that 50 percent of all subrogation claims currently
require manual review, and that the savings of converting 3.4 million
paper claims to electronic transmission would be $3.3 million,
unadjusted for present value. We did not receive any comments in the
section on savings.
In summary, we did not receive any public comments on the impact
analysis for Version 3.0. However, we did receive comments, as
described earlier, requesting additional time to implement the
standards and expressing the need to implement Version 3.0 either at
the same time as, or after, implementation of Version D.0 because of
the interdependency of the two standards. The compliance date has been
changed to allow for additional implementation time, and to ensure that
the Version 3.0 transactions can be used in concert with Version D.0.
Based on the adopted effective and compliance dates, we have revised
the tables to coincide with the new dates.
Summary of Costs and Benefits for This Final Rule
The final tables, 4a and 4b, which replace tables 14a and 14b from
the proposed rule, are the compilation of the total low and high costs
and benefits for all of the standards being adopted in this final rule.
In the proposed rule, we did not adjust for present value. In order to
assure readers a valid comparison, we also did not adjust for present
value in the final rule in the main text of the document. However, for
the reader's edification, in Tables 4a and 4b, we show the costs and
benefits discounted by 7% and 3% to reflect present value.
Table 4a--Estimated Low and High Costs--in Millions*--for Years 2009 Through 2019 for Implementation of Versions
5010, D.0 and 3.0
----------------------------------------------------------------------------------------------------------------
Unadjusted
Cost type Industry for present @ 3% @ 7%
value Discount Discount
----------------------------------------------------------------------------------------------------------------
5010--Imp costs........................... Hospitals--low............... $792 $762 $727
Hospitals--high.............. 1,584 1,525 1,453
Physicians--low.............. 370 356 339
Physicians--high............. 740 712 679
Dentists--low................ 254 245 233
Dentists--high............... 508 489 466
pharmacy--low................ 57 55 52
pharmacy--high............... 114 110 105
private hp--low.............. 3,063 2,949 2,810
private hp--high............. 6,127 5,898 5,621
govt hp--low................. 213 205 195
govt hp--high................ 410 395 376
CH--low...................... 137 132 126
CH--high..................... 167 161 153
5010 Transition costs..................... Hospitals--low............... 373 338 298
Hospitals--high.............. 746 677 597
Physicians--low.............. 174 158 139
Physicians--high............. 348 316 279
Dentists--low................ 120 109 96
Dentists--high............... 239 217 191
pharmacy--low................ 27 24 22
pharmacy--high............... 54 49 43
private hp--low.............. 1,442 1,308 1,154
private hp--high............. 2,883 2,615 2,307
govt hp--low................. 100 91 80
govt hp--high................ 193 175 154
CH--low...................... 24 22 19
CH--high..................... 30 27 24
Medicaid subrogation development.......... federal--low................. .32 .29 .27
federal--high................ .94 .87 .79
state--low................... .040 .037 .034
state--high.................. .1 .093 .084
payers--low.................. 1 .93 .844
payers--high................. 3 2.78 2.53
Medicaid subrogation--Trading Partner federal--low................. .38 .35 .32
agreements.
federal--high................ 1.16 1.07 .98
state--low................... .38 .35 .32
state--high.................. 1.16 1.07 .98
payers--low.................. 2.4 2.2 2
payers--high................. 7 7 6
D.0--pharmacy chain systems implementation pharmacy--low................ 18 17 16
pharmacy--high............... 38 36 34
Independent pharmacy maintenance fees..... pharmacy--low................ .54 .51 .48
pharmacy--high............... 1.08 1.03 .97
[[Page 3323]]
PBM programming........................... PBM--low..................... 8 8 7
PBM--high.................... 10 9.5 9
---------------------------------------------------------------------
Total Costs........................... LOW.......................... 7,177 6,783 6,319
---------------------------------------------------------------------
Total Costs........................... HIGH......................... 14,206 13,425 12,505
----------------------------------------------------------------------------------------------------------------
Table 4b--Estimated Low and High Benefits--in Millions*--for Years 2009 Through 2019 for Implementation of
Versions 5010, D.0 and 3.0
----------------------------------------------------------------------------------------------------------------
Unadjusted
Savings type Industry for present @ 3% @ 7%
value Discount Discount
----------------------------------------------------------------------------------------------------------------
5010 operational savings.................. Hospitals--low............... $348 $286 $224
Hospitals--high.............. 952 783 612
Physicians--low.............. 1,392 1,144 895
Physicians--high............. 3,802 3,126 2,445
Dentists--low................ 237 195 153
Dentists--high............... 605 497 389
pharmacy--low................ 16 13 10
pharmacy--high............... 23 19 15
private and govt hp--low..... 1,330 1,093 855
private and govt hp--high.... 3,577 2,941 2,300
CH--low...................... 0 0 0
CH--high..................... 0 0 0
5010 cost savings increase in transactions Hospitals--low............... 66 53 40
Hospitals--high.............. 219 176 133
Physicians--low.............. 270 217 164
Physicians--high............. 874 702 532
Dentists--low................ 45 36 27
Dentists--high............... 56 45 34
pharmacy--low................ 0 0 0
pharmacy--high............... 0 0 0
private and govt hp--low..... 135 110 86
private and govt hp--high.... 338 276 214
CH--low...................... 0 0 0
CH--high..................... 0 0 0
5010 operational savings--increase in Hospitals--low............... 1,131 897 669
auxiliary claim transaction.
Hospitals--high.............. 2,890 2,288 1,700
Physicians--low.............. 4,442 3,517 2,612
Physicians--high............. 11,553 9,147 6,795
Dentists--low................ 752 595 442
Dentists--high............... 1,839 1,456 1,082
pharmacy--low................ 0 0 0
pharmacy--high............... 0 0 0
private and govt hp--low..... 4,519 3,578 2,658
private and govt hp--high.... 11,749 9,302 6,910
CH--low...................... 0 0 0
CH--high..................... 0 0 0
Medicaid subrogation...................... fed--low..................... 13 11 10
fed--high.................... 18 16 13
state--low................... 13 11 10
state--high.................. 18 16 13
payer--low................... 7 6 5
payer--high.................. 9 8 7
Version D.0............................... Pharmacist productivity--low. 951 779 607
Pharmacist productivity--high 1,921 1,574 1,225
Version D.0............................... Pharmacy technician 77 63 49
productivity--low.
Pharmacy technician 160 132 103
productivity--high.
Version D.0............................... Avoided audits--low.......... 152 126 99
Avoided audits--high......... 304 251 198
---------------------------------------------------------------------
Total Benefits........................ LOW.......................... 15,896 12,732 9,615
----------------------------------------------------------------------------------------------------------------
Total Benefits........................ HIGH......................... 40,906 32,753 24,719
----------------------------------------------------------------------------------------------------------------
[[Page 3324]]
Accounting Statement and Table
Whenever a rule is considered a significant rule under Executive
Order 12866, we are required to develop an Accounting Statement. This
statement must state that we have prepared an accounting statement
showing the classification of the expenditures associated with the
provisions of this final rule. Monetary annualized Benefits and non-
budgetary costs are presented as discounted flows using three percent
and seven percent factors.
Table 5--Accounting Statement
[Accounting statement: classification of estimated expenditures, from FY2009 to FY2019 (in millions)]
----------------------------------------------------------------------------------------------------------------
Source
Minimum Maximum citation
Category Primary estimate (millions) estimate estimate (RIA,
(millions) (millions) preamble,
etc.)
----------------------------------------------------------------------------------------------------------------
BENEFITS:
Annualized Monetized benefits:
7% Discount........................... 2,142.4...................... 1,203.7 3,081.1 RIA
3% Discount........................... 2,389.5...................... 1,314.8 3,437.2 RIA
Qualitative (un-quantified) benefits...... Wider adoption of standards
due to decrease in use of
companion guides; increased
productivity due to decrease
in manual intervention
requirements.
----------------------------------------------------------------------------------------------------------------
Benefits generated from plans to providers and pharmacies, providers to plans and pharmacies, and pharmacies to
beneficiaries.
----------------------------------------------------------------------------------------------------------------
COSTS:
Annualized Monetized costs:
7% Discount........................... 1,144.0...................... 787.5 1,500.5 RIA
3% Discount........................... 1,034.8...................... 711.7 1,357.8 RIA
Qualitative (un-quantified) costs......... None......................... None None
----------------------------------------------------------------------------------------------------------------
Cost will be paid by health plans to contractors, programming consultants, IT staff and other outsourced
entities; providers will pay costs to software vendors, trainers and other consultants. Clearinghouses will pay
costs to IT staff/contractors and software developers; pharmacies will pay costs to contractors, software
vendors and trainers, and government plans will pay costs to consultants, vendors and staff.
----------------------------------------------------------------------------------------------------------------
TRANSFERS:
Annualized monetized transfers: ``on N/A.......................... N/A N/A
budget''.
From whom to whom?........................ N/A.......................... N/A N/A
Annualized monetized transfers: ``off- N/A.......................... N/A N/A
budget''.
From whom to whom?........................ N/A.......................... N/A N/A
----------------------------------------------------------------------------------------------------------------
In accordance with the provisions of Executive Order 12866, as
amended, this regulation was reviewed by the Office of Management and
Budget.
List of Subjects in 45 CFR Part 162
Administrative practice and procedure, Electronic transactions,
Health facilities, Health insurance, Hospitals, Incorporation by
reference, Medicare, Medicaid, Reporting and recordkeeping
requirements.
0
For the reasons set forth in the preamble, the Department of Health and
Human Services amends 45 CFR Part 162 as set forth below:
PART 162--ADMINISTRATIVE REQUIREMENTS
0
1. The authority citation for part 162 is revised to read as follows:
Authority: Secs. 1171 through 1180 of the Social Security Act
(42 U.S.C.1320d-1320d-9), as added by sec. 262 of Pub. L. 104-191,
110 Stat. 2021-2031, and sec. 105 of Public Law 110-233, 122 Stat.
881-922, and sec. 264 of Pub. L. 104-191, 110 Stat. 2033-2034 (42
U.S.C. 1320d-2 (note)).
Subpart A--General Provisions
0
2. Amend Sec. 162.103 by revising the definition of ``standard
transaction'' to read as follows:
Sec. 162.103 Definitions.
* * * * *
Standard transaction means a transaction that complies with an
applicable standard adopted under this part.
Subpart I--General Provisions for Transactions
Sec. 162.900 [Removed and Reserved]
0
3. Remove and reserve Sec. 162.900.
0
4. Amend Sec. 162.920 as follows:
0
A. Revise introductory text and paragraph (a) introductory text.
0
B. Add paragraphs (a)(10) through (a)(18).
0
C. Revise paragraph (b) introductory text.
0
D. Add paragraphs (b)(4) through (b)(6).
The revisions and additions read as follows:
Sec. 162.920 Availability of implementation specifications.
A person or an organization may directly request copies of the
implementation specifications and the Technical Reports Type 3
described in subparts I through S of this part from the publishers
listed in this section. The Director of the Federal Register approves
the implementation specifications, which include the Technical Reports
Type 3 described in this section, for incorporation by reference in
subparts I through S of this part in accordance with 5 U.S.C. 552(a)
and 1 CFR part 51. The implementation specifications and Technical
Reports Type 3 described in this section are also available for
inspection by the public at the Centers for Medicare & Medicaid
Services (CMS), 7500 Security Boulevard, Baltimore, Maryland 21244. For
more information on the availability on the materials at CMS, call
(410) 786-6597. The implementation specifications and Technical Reports
Type 3 are also available at the National Archives and Records
Administration (NARA). For information on the
[[Page 3325]]
availability of this material at NARA, call (202) 714-6030, or go to:
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html. Implementation specifications are
available for the following transactions.
(a) ASC X12N specifications and the ASC X12 Standards for
Electronic Data Interchange Technical Report Type 3. The implementation
specifications for the ASC X12N and the ASC X12 Standards for
Electronic Data Interchange Technical Report Type 3 (and accompanying
Errata or Type 1 Errata) may be obtained from the ASC X12, 7600
Leesburg Pike, Suite 430, Falls Church, VA 22043; Telephone (703) 970-
4480; and FAX (703) 970-4488. They are also available through the
internet at http://www.X12.org. A fee is charged for all implementation
specifications, including Technical Reports Type 3. Charging for such
publications is consistent with the policies of other publishers of
standards. The transaction implementation specifications are as
follows:
* * * * *
(10) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Health Care Claim: Dental (837), May 2006, ASC
X12N/005010X224, and Type 1 Errata to Health Care Claim Dental (837),
ASC X12 Standards for Electronic Data Interchange Technical Report Type
3, October 2007, ASC X12N/005010X224A1, as referenced in Sec. 162.1102
and Sec. 162.1802.
(11) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Health Care Claim: Professional (837), May
2006, ASC X12, 005010X222, as referenced in Sec. 162.1102 and Sec.
162.1802.
(12) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Health Care Claim: Institutional (837), May
2006, ASC X12/N005010X223, and Type 1 Errata to Health Care Claim:
Institutional (837), ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3, October 2007, ASC X12N/005010X223A1, as
referenced in Sec. 162.1102 and Sec. 162.1802.
(13) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Health Care Claim Payment/Advice (835), April
2006, ASC X12N/005010X221, as referenced in Sec. 162.1602.
(14) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Benefit Enrollment and Maintenance (834),
August 2006, ASC X12N/005010X220, as referenced in Sec. 162.1502.
(15) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Payroll Deducted and Other Group Premium
Payment for Insurance Products (820), February 2007, ASC X12N/
005010X218, as referenced in Sec. 162.1702.
(16) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Health Care Services Review--Request for
Review and Response (278), May 2006, ASC X12N/005010X217, and Errata to
Health Care Services Review--Request for Review and Response (278), ASC
X12 Standards for Electronic Data Interchange Technical Report Type 3,
April 2008, ASC X12N/005010X217E1, as referenced in Sec. 162.1302.
(17) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Health Care Claim Status Request and Response
(276/277), August 2006, ASC X12N/005010X212, and Errata to Health Care
Claim Status Request and Response (276/277), ASC X12 Standards for
Electronic Data Interchange Technical Report Type 3, April 2008, ASC
X12N/005010X212E1, as referenced in Sec. 162.1402.
(18) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Health Care Eligibility Benefit Inquiry and
Response (270/271), April 2008, ASC X12N/005010X279, as referenced in
Sec. 162.1202.
(b) Retail pharmacy specifications and Medicaid subrogation
implementation guides. The implementation specifications for the retail
pharmacy standards and the implementation specifications for the batch
standard for the Medicaid pharmacy subrogation transaction may be
obtained from the National Council for Prescription Drug Programs, 9240
East Raintree Drive, Scottsdale, AZ 85260. Telephone (480) 477-1000;
FAX (480) 767-1042. They are also available through the Internet at
http://www.ncpdp.org. A fee is charged for all NCPDP Implementation
Guides. Charging for such publications is consistent with the policies
of other publishers of standards. The transaction implementation
specifications are as follows:
* * * * *
(4) The Telecommunication Standard Implementation Guide, Version D,
Release 0 (Version D.0), August 2007, National Council for Prescription
Drug Programs, as referenced in Sec. 162.1102, Sec. 162.1202, Sec.
162.1302, and Sec. 162.1802.
(5) The Batch Standard Implementation Guide, Version 1, Release 2
(Version 1.2), January 2006, National Council for Prescription Drug
Programs, as referenced in Sec. 162.1102, Sec. 162.1202, Sec.
162.1302, and Sec. 162.1802.
(6) The Batch Standard Medicaid Subrogation Implementation Guide,
Version 3, Release 0 (Version 3.0), July 2007, National Council for
Prescription Drug Programs, as referenced in Sec. 162.1902.
0
5. Revise Sec. 162.923 paragraph (a) to read as follows:
Sec. 162.923 Requirements for covered entities.
(a) General rule. Except as otherwise provided in this part, if a
covered entity conducts, with another covered entity that is required
to comply with a transaction standard adopted under this part (or
within the same covered entity), using electronic media, a transaction
for which the Secretary has adopted a standard under this part, the
covered entity must conduct the transaction as a standard transaction.
* * * * *
0
6. Section 162.925 is amended by adding a new paragraph (a)(6) to read
as follows:
Sec. 162.925 Additional requirements for health plans.
(a) * * *
(6) During the period from March 17, 2009 through December 31,
2011, a health plan may not delay or reject a standard transaction, or
attempt to adversely affect the other entity or the transaction, on the
basis that it does not comply with another adopted standard for the
same period.
* * * * *
Subpart K--Health Care Claims or Equivalent Encounter Information
0
7. Amend Sec. 162.1102 by--
0
A. Removing paragraph (a).
0
B. Redesignating existing paragraph (b) as paragraph (a).
0
C. Revising the introductory text of newly redesignated paragraph (a).
0
D. Adding new paragraphs (b) and (c).
The revisions and additions read as follows:
Sec. 162.1102 Standards for health care claims or equivalent
encounter information transaction.
* * * * *
(a) For the period from October 16, 2003 through March 16, 2009:
* * * * *
(b) For the period from March 17, 2009 through December 31, 2011,
both:
(1)(i) The standards identified in paragraph (a) of this section;
and
(ii) For retail pharmacy supplies and professional services claims,
the
[[Page 3326]]
following: The ASC X12N 837--Health Care Claim: Professional, Volumes 1
and 2, Version 4010, May 2000, Washington Publishing Company,
004010X096, October 2002 (Incorporated by reference in Sec. 162.920);
and
(2)(i) Retail pharmacy drug claims. The Telecommunication Standard
Implementation Guide, Version D, Release 0 (Version D.0), August 2007
and equivalent Batch Standard Implementation Guide, Version 1, Release
2 (Version 1.2), National Council for Prescription Drug Programs.
(Incorporated by reference in Sec. 162.920.)
(ii) Dental health care claims. The ASC X12 Standards for
Electronic Data Interchange Technical Report Type 3-- Health Care
Claim: Dental (837), May 2006, ASC X12N/005010X224, and Type 1 Errata
to Health Care Claim: Dental (837) ASC X12 Standards for Electronic
Date Interchange Technical Report Type 3, October 2007, ASC X12N/
005010X224A1. (Incorporated by reference in Sec. 162.920.)
(iii) Professional health care claims. The ASC X12 Standards for
Electronic Data Interchange Technical Report Type 3--Health Care Claim:
Professional (837), May 2006, ASC X12N/005010X222. (Incorporated by
reference in Sec. 162.920.)
(iv) Institutional health care claims. The ASC X12 Standards for
Electronic Data Interchange Technical Report Type 3--Health Care Claim:
Institutional (837), May 2006, ASC X12N/005010X223, and Type 1 Errata
to Health Care Claim: Institutional (837) ASC X12 Standards for
Electronic Data Interchange Technical Report Type 3, October 2007, ASC
X12N/005010X223A1. (Incorporated by reference in Sec. 162.920.)
(v) Retail pharmacy supplies and professional services claims. (A)
The Telecommunication Standard, Implementation Guide Version 5, Release
1, September 1999. (Incorporated by reference in Sec. 162.920.)
(B) The Telecommunication Standard Implementation Guide, Version D,
Release 0 (Version D.0), August 2007, and equivalent Batch Standard
Implementation Guide, Version 1, Release 2 (Version 1.2), National
Council for Prescription Drug Programs (Incorporated by reference in
Sec. 162.920); and
(C) The ASC X12 Standards for Electronic Data Interchange Technical
Report Type 3--Health Care Claim: Professional (837), May 2006, ASC
X12N/005010X222. (Incorporated by reference in Sec. 162.920.)
(c) For the period on and after the January 1, 2012, the standards
identified in paragraph (b)(2) of this section, except the standard
identified in paragraph (b)(2)(v)(A) of this section.
Subpart L--Eligibility for a Health Plan
0
8. Section 162.1202 is amended by--
0
A. Removing paragraph (a).
0
B. Redesignating existing paragraph (b) as paragraph (a).
0
C. Revising the introductory text of newly redesignated paragraph (a).
0
D. Adding new paragraphs (b) and (c).
The revisions and additions read as follows:
Sec. 162.1202 Standards for eligibility for a health plan
transaction.
* * * * *
(a) For the period from October 16, 2003 through March 16, 2009:
* * * * *
(b) For the period from March 17, 2009 through December 31, 2011
both:
(1) The standards identified in paragraph (a) of this section; and
(2) (i) Retail pharmacy drugs. The Telecommunication Standard
Implementation Guide Version D, Release 0 (Version D.0), August 2007,
and equivalent Batch Standard Implementation Guide, Version 1, Release
2 (Version 1.2), National Council for Prescription Drug Programs.
(Incorporated by reference in Sec. 162.920.)
(ii) Dental, professional, and institutional health care
eligibility benefit inquiry and response. The ASC X12 Standards for
Electronic Data Interchange Technical Report Type 3--Health Care
Eligibility Benefit Inquiry and Response (270/271), April 2008, ASC
X12N/005010X279. (Incorporated by reference in Sec. 162.920.)
(c) For the period on and after January 1, 2012, the standards
identified in paragraph (b)(2) of this section.
Subpart M--Referral Certification and Authorization
0
9. Revise Sec. 162.1301 to read as follows:
Sec. 162.1301 Referral certification and authorization transaction.
The referral certification and authorization transaction is any of
the following transmissions:
(a) A request from a health care provider to a health plan for the
review of health care to obtain an authorization for the health care.
(b) A request from a health care provider to a health plan to
obtain authorization for referring an individual to another health care
provider.
(c) A response from a health plan to a health care provider to a
request described in paragraph (a) or paragraph (b) of this section.
0
10. Section 162.1302 is amended by--
0
A. Removing paragraph (a).
0
B. Redesignating existing paragraph (b) as paragraph (a).
0
C. Revising the introductory text of newly redesignated paragraph (a).
0
D. Adding new paragraphs (b) and (c).
The revisions and additions read as follows:
Sec. 162.1302 Standards for referral certification and authorization
transaction.
* * * * *
(a) For the period from October 16, 2003 through March 16, 2009:
* * * * *
(b) For the period from March 17, 2009 through December 31, 2011
both--
(1) The standards identified in paragraph (a) of this section; and
(2)(i) Retail pharmacy drugs. The Telecommunication Standard
Implementation Guide Version D, Release 0 (Version D.0), August 2007,
and equivalent Batch Standard Implementation Guide, Version 1, Release
2 (Version 1.2), National Council for Prescription Drug Programs.
(Incorporated by reference in Sec. 162.920.)
(ii) Dental, professional, and institutional request for review and
response. The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Health Care Services Review--Request for
Review and Response (278), May 2006, ASC X12N/005010X217, and Errata to
Health Care Services Review---Request for Review and Response (278),
ASC X12 Standards for Electronic Data Interchange Technical Report Type
3, April 2008, ASC X12N/005010X217E1. (Incorporated by reference in
Sec. 162.920.)
(c) For the period on and after January 1, 2012, the standards
identified in paragraph (b)(2) of this section.
Subpart N--Health Care Claim Status
0
11. Revise Sec. 162.1401 to read as follows:
Sec. 162.1401 Health care claim status transaction.
The health care claim status transaction is the transmission of
either of the following:
(a) An inquiry from a health care provider to a health plan to
determine the status of a health care claim.
(b) A response from a health plan to a health care provider about
the status of a health care claim.
0
12. Section 162.1402 is revised to read as follows:
Sec. 162.1402 Standards for health care claim status transaction.
The Secretary adopts the following standards for the health care
claim status transaction:
[[Page 3327]]
(a) For the period from October 16, 2003 through March 16, 2009:
The ASC X12N-276/277 Health Care Claim Status Request and Response,
Version 4010, May 2000, Washington Publishing Company, 004010X093 and
Addenda to Health Care Claim Status Request and Response, Version 4010,
October 2002, Washington Publishing Company, 004010X093A1.
(Incorporated by reference in Sec. 162.920.)
(b) For the period from March 17, 2009 through December 31, 2011,
both:
(1) The standard identified in paragraph (a) of this section; and
(2) The ASC X12 Standards for Electronic Data Interchange Technical
Report Type 3--Health Care Claim Status Request and Response (276/277),
August 2006, ASC X12N/005010X212, and Errata to Health Care Claim
Status Request and Response (276/277), ASC X12 Standards for Electronic
Data Interchange Technical Report Type 3, April 2008, ASC X12N/
005010X212E1. (Incorporated by reference in Sec. 162.920.)
(c) For the period on and after January 1, 2012, the standard
identified in paragraph (b)(2) of this section.
Subpart O--Enrollment and Disenrollment in a Health Plan
13. Revise Sec. 162.1501 to read as follows:
Sec. 162.1501 Enrollment and disenrollment in a health plan
transaction.
The enrollment and disenrollment in a health plan transaction is
the transmission of subscriber enrollment information from the sponsor
of the insurance coverage, benefits, or policy, to a health plan to
establish or terminate insurance coverage.
0
14. Section 162.1502 is revised to read as follows:
Sec. 162.1502 Standards for enrollment and disenrollment in a health
plan transaction.
The Secretary adopts the following standards for enrollment and
disenrollment in a health plan transaction.
(a) For the period from October 16, 2003 through March 16, 2009:
ASC X12N 834--Benefit Enrollment and Maintenance, Version 4010, May
2000, Washington Publishing Company, 004010X095 and Addenda to Benefit
Enrollment and Maintenance, Version 4010, October 2002, Washington
Publishing Company, 004010X095A1. (Incorporated by reference in Sec.
162.920.)
(b) For the period from March 17, 2009 through December 31, 2011,
both:
(1) The standard identified in paragraph (a) of this section; and
(2) The ASC X12 Standards for Electronic Data Interchange Technical
Report Type 3--Benefit Enrollment and Maintenance (834), August 2006,
ASC X12N/005010X220 (Incorporated by reference in Sec. 162.920)
(c) For the period on and after January 1, 2012, the standard
identified in paragraph (b)(2) of this section.
Subpart P--Health Care Payment and Remittance Advice
0
15. Section 162.1602 is revised to read as follows:
Sec. 162.1602 Standards for health care payment and remittance advice
transaction:
The Secretary adopts the following standards for the health care
payment and remittance advice transaction:
(a) For the period from October 16, 2003 through March 16, 2009:
Health care claims and remittance advice. The ASC X12N 835--Health Care
Claim Payment/Advice, Version 4010, May 2000, Washington Publishing
Company, 004010X091, and Addenda to Health Care Claim Payment/Advice,
Version 4010, October 2002, Washington Publishing Company,
004010X091A1. (Incorporated by reference in Sec. 162.920.)
(b) For the period from March 17, 2009 through December 31, 2011,
both:
(1) The standard identified in paragraph (a) of this section; and
(2) The ASC X12 Standards for Electronic Data Interchange Technical
Report Type 3--Health Care Claim Payment/Advice (835), April 2006, ASC
X12N/005010X221. (Incorporated by reference in Sec. 162.920.)
(c) For the period on and after January 1, 2012, the standard
identified in paragraph (b)(2) of this section.
Subpart Q--Health Plan Premium Payments
0
16. Section 162.1702 is revised to read as follows:
Sec. 162.1702 Standards for health plan premium payments transaction.
The Secretary adopts the following standards for the health plan
premium payments transaction:
(a) For the period from October 16, 2003 through March 16, 2009:
The ASC X12N 820--Payroll Deducted and Other Group Premium Payment for
Insurance Products, Version 4010, May 2000, Washington Publishing
Company, 004010X061, and Addenda to Payroll Deducted and Other Group
Premium Payment for Insurance Products, Version 4010, October 2002,
Washington Publishing Company, 004010X061A1. (Incorporated by reference
in Sec. 162.920.)
(b) For the period from March 17, 2009 through December 31, 2011,
both:
(1) The standard identified in paragraph (a) of this section, and
(2) The ASC X12 Standards for Electronic Data Interchange Technical
Report Type 3--Payroll Deducted and Other Group Premium Payment for
Insurance Products (820), February 2007, ASC X12N/005010X218.
(Incorporated by reference in Sec. 162.920.)
(c) For the period on and after January 1, 2012, the standard
identified in paragraph (b)(2) of this section.
Subpart R--Coordination of Benefits
0
17. Section 162.1802 is amended by--
0
A. Removing paragraph (a).
0
B. Redesignating existing paragraph (b) as paragraph (a).
0
C. Revising the introductory text of newly redesignated paragraph (a).
0
D. Adding new paragraphs (b) and (c).
The additions and revisions read as follows:
Sec. 162.1802 Standards for coordination of benefits information
transaction.
* * * * *
(a) For the period from October 16, 2003 through March 16, 2009:
* * * * *
(b) For the period from March 17, 2009 through December 31, 2011,
both:
(1) The standards identified in paragraph (a) of this section; and
(2)(i) Retail pharmacy drug claims. The Telecommunication Standard
Implementation Guide, Version D, Release 0 (Version D.0), August 2007,
and equivalent Batch Standard Implementation Guide, Version 1, Release
2 (Version 1.2), National Council for Prescription Drug Programs.
(Incorporated by reference in Sec. 162.920.)
(ii) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Health Care Claim: Dental (837), May 2006, ASC
X12N/005010X224, and Type 1 Errata to Health Care Claim: Dental (837),
ASC X12 Standards for Electronic Date Interchange Technical Report Type
3, October 2007, ASC X12N/005010X224A1. (Incorporated by reference in
Sec. 162.920.)
(iii) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Health Care Claim: Professional (837), May
2006, ASC X12N/005010X222. (Incorporated by reference in Sec.
162.920.)
(iv) The ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3--Health Care Claim: Institutional (837), May
2006, ASC X12N/005010X223, and Type 1 Errata to Health Care Claim:
Institutional (837), ASC X12 Standards for Electronic Data Interchange
Technical Report Type 3,
[[Page 3328]]
October 2007, ASC X12N/005010X223A1. (Incorporated by reference in
Sec. 162.920.)
(c) For the period on and after January 1, 2012, the standards
identified in paragraph (b)(2) of this section.
0
18. Add a new Subpart S to read as follows:
Subpart S--Medicaid Pharmacy Subrogation
Sec.
162.1901 Medicaid pharmacy subrogation transaction.
162.1902 Standard for Medicaid pharmacy subrogation transaction.
Sec. 162.1901 Medicaid pharmacy subrogation transaction.
The Medicaid pharmacy subrogation transaction is the transmission
of a claim from a Medicaid agency to a payer for the purpose of seeking
reimbursement from the responsible health plan for a pharmacy claim the
State has paid on behalf of a Medicaid recipient.
Sec. 162.1902 Standard for Medicaid pharmacy subrogation transaction.
The Secretary adopts the Batch Standard Medicaid Subrogation
Implementation Guide, Version 3, Release 0 (Version 3.0), July 2007,
National Council for Prescription Drug Programs, as referenced in Sec.
162.1902 (Incorporated by reference at Sec. 162.920):
(a) For the period on and after January 1, 2012, for covered
entities that are not small health plans;
(b) For the period on and after January 1, 2013 for small health
plans.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program) (Catalog of Federal Domestic Assistance Program
No. 93.773, Medicare--Hospital Insurance; and Program No. 93.774,
Medicare--Supplementary Medical Insurance Program)
Approved: December 11, 2008.
Michael O. Leavitt,
Secretary.
[FR Doc. E9-740 Filed 1-15-09; 8:45 am]
BILLING CODE 4150-28-P