Good morning, my name is Lisa Doyle. I am a Medicaid information specialist for the Wisconsin Department of Health and Family Services and chair the National Medicaid EDI HIPAA workgroup. I am here today on behalf of the National Association of State Medicaid Directors to present to the subcommittee some thoughts about potential tools and processes that could lead to a solution of the local codes issue. This is a critical issue that needs to be addressed in order for state Medicaid agencies to continue to be able to conduct their business. We welcome this opportunity to be involved in the discussion.
First, I will provide you of an overview of the efforts being undertaken by the National Medicaid EDI HIPAA (NMEH) workgroup. Second, I will discuss the difficulties with the current procedure code review and approval process in accommodating the needs of state agencies and possible areas for improvement. Finally, I will present some recommendations that address the problems created by the elimination of the local codes under HIPAA.
In November 1999, the National Medicaid EDI HIPAA workgroup was formed by NASMD to give states a forum to assess the impact of HIPAA Administrative Simplification on Medicaid systems. Today, approximately 40 states actively participate in the workgroup. We conduct national conference calls twice each month. Because HIPAA Administrative Simplification has so many components that effect state Medicaid systems, we have identified several subgroups. One of the subgroups is tasked with identifying and categorizing local procedure codes and procedure code modifiers.
The New York State Medicaid agency leads the local code subgroup and receives local code templates from the NMEH participants. The criteria for local code research prior to submission is as follows:
a) Find all local codes. To accomplish this, look beyond the range per coding section and look at the deleted codes to see if some were retained beyond the HCPCS deletion date.
b) Determine if there is an existing national code that would meet your business needs.
c) Eliminate any codes from the list that were not billed in calendar years 1999 and 2000.
These submissions will form the basis of a national local code database. In order to be included, states must submit this information by July 31, 2000.
Once the local procedure code and procedure code modifiers have been received, they will be prioritized by volume per category. We will then submit, in priority order, all procedure and procedure code modifiers to HCFA for inclusion in the appropriate national coding structure.
As it was discussed on the previous panel, state Medicaid agencies rely heavily on local codes to meet our unique business needs. Since its inception in the mid-1980s, the HCFA Common Procedure Coding System (HCPCS) has been reflective of the services and products available under the Medicare program. If all of the Medicaid procedures currently being supported by local codes must be included in the level II HCPCS the demand on the HCFA HCPCS workgroup will be immense. We question whether the existing quarterly review process and HCFA resources will be adequate to meet this demand. We are concerned that unless there is adequate staffing for the review each quarter, states will have no alternative but to use local codes beyond the date that HIPAA compliance is mandatory.
In addition, the process of adding new procedure codes has not been developed to accommodate the numerous, rapid turn-around requests that states will have. Currently, any requests for new codes are accepted once a year. The HCFA HCPCS workgroup then meets quarterly to review these requests and sends their recommendations on to the Alpha-Numeric Editorial Panel for final decision. This means that state Medicaid agencies will not be able to implement any expansion of services within a short timeframe simply because the necessary procedure codes may not be available. This is unacceptable for a program that is continually evolving in its efforts to provide a myriad of services to vulnerable populations.
Local codes are integral to the business of Medicaid and reflective of the unique products and services we offer. Many of them support "closed-loop transactions" for which Medicaid is the only source of payment for specialized services. While the goal of standardization is logical in today's electronic world, it may not make sense in all situations. We believe there is little value in imposing national standards on the closed-loop businesses of Medicaid. However, in the absence of any final rules, assuming that all local codes are eliminated, we offer several recommendations. These are based on the premise that Medicaid will create the greatest demand both initially and on-going for new Level II HCPCS codes.
Once again, I would like to thank you for the opportunity to testify before the subcommittee today. The elimination of local codes under HIPAA presents a challenge of huge proportions. It will take a great deal of collaboration between not only HCFA and the state Medicaid programs but also with the entire health care industry. We look forward to being an active player as Administrative Simplification moves forward.