Mr. Chairman and members of the Subcommittee, the Medical Group Management Association (MGMA) is pleased to submit our testimony to the National Committee on Vital and Health Statistics (NCVHS) Subcommittee on Standards and Security. My name is Robert Tennant and I am the Government Affairs Manager at MGMA where I lead the association’s HIPAA implementation efforts. I serve on the boards of directors of the Workgroup for Electronic Data Interchange (WEDI) and the National Uniform Claim Committee (NUCC). In addition, I also co-chair WEDI’s Strategic National Implementation Process, better known as SNIP.
MGMA is the nation's oldest and largest medical group practice organization representing more than 6,000 health care organizations in which over 176,000 physicians practice medicine. MGMA's membership reflects the full diversity of physician organizational structures today, including world-renowned integrated delivery systems, multi-specialty clinics, small single specialty practices, hospital-based clinics, academic practice plans, management service organizations, and physician practice management companies.
We are pleased that the NCVHS has invited MGMA to participate on an industry panel to discuss one of the most important topics in medicine today, the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996, or HIPAA. This hearing could not be more timely in light of recent legislative activity and its potential impact on HIPAA implementation. HIPAA has the capability to streamline administrative procedures, assist researchers in assembling information from multiple data sources--paving the way for improved clinical decision-making--and ensure the protection of personal health information. However, before the health care world can reap the many benefits stemming from this standardization process, these regulations must be effectively implemented.
In the group practice setting, full implementation of HIPAA will result in more efficient office administration, consistent reporting, improved coordination of benefits, a simplified referral system, improved security of health information, faster reimbursement, and, most importantly, improved patient care. Similarly, HIPAA standardization will encourage e-health, which encompasses improved benchmarking capabilities, enhanced communication between heath care participants, accurate identification, and reduction in medical errors.
In my testimony today, I will focus on general readiness issues revolving primarily around the Transactions and Code Sets standards. In addition, I will outline some of the implementation issues, concerns, and expectations that medical group practices have concerning this promising new direction in health care. Of critical importance is the issue of setting the timetable for implementation of the Transactions and Code Sets. It is critical that this dialogue take place, and, if possible, a consensus position reached that allows the health care industry to move forward with administrative simplification.
Implementation Timeframes -- While twenty-four months for implementation of the Transactions and Code Sets standard may appear to be an ample timeframe, for many group practices, this period of time may not be sufficient to bring practices into compliance. It is likely that for medical practices currently engaged in e-health, with existing vendor contracts and sufficient budgets, HIPAA compliance within the two-year time frame should be reachable. However, for those medical practices that have limited resources or those that do not begin updating and testing of their electronic claims system in the near future, there may not be enough time to meet the deadline.
Some organizations within the heath care industry, primarily on the health plan side, have expressed concern that there is insufficient time to fully implement and test the Transaction and Code set standards. Should there be no delay in the implementation of the Transactions and Code Sets, they argue, there is the possibility that the health plans (and potentially even Medicare and Medicaid) will not be prepared to accept the standard transactions. However, while MGMA supports providing additional time for compliance, it is our contention that a delay with no fixed compliance date is counterproductive to the overall goal of administrative simplification.
Industry Uncertainty -- One of reasons why MGMA supports additional time for implementation is that there has been uncertainty regarding when the Transactions and Code Sets regulations will be finalized, and when group practices will be required to submit their electronic claims using the standard format. As an example, while the final rule on Transactions and Code Sets was published in August 2000, the preamble of the rule stated clearly that “If the privacy standards are substantially delayed, or if Congress fails to adopt comprehensive and effective privacy standards that supercede the standards we are developing, we would seriously consider suspending the application of the transaction standards or taking action to withdraw this rule”. This statement sent mixed messages to the health care community. On one hand, compliance with the regulation was required in twenty-four months, while on the other, the government was suggesting that the Transaction and Code Sets rule could be withdrawn. Many medical practice administrators, tasked with developing organizational budgets, adopted a “wait and see” attitude, not confident that they should be moving forward with adopting the HIPAA standards. The confusion which this situation created is now used by some as evidence that the provider community will not be compliant by October 2002.
Environment of Constant Change -- The nature of the standards developing process dictates that there is never a fixed “starting line”, when all standards are in place and static for a lengthy period of time. Rather, the Transactions and Code Sets standards are constantly changing as codes are being added to describe new procedures or for procedures that previously did not have an adequate code or codes. The Designated Standards Maintenance Organizations (DSMO) process itself, involving the NUCC, the National Uniform Billing Committee, Health Level Seven, X12, the National Council for Prescription Drug Programs, and the American Dental Association, will produce hundreds of modifications over the next few months. Group practices do not expect the standards to remain static. Further, we believe that it is not necessary for the standards to be static in order to begin the process of upgrading practice management systems to handle the HIPAA standards.
Although MGMA supported synchronization of the release dates for the standards, the environment has altered somewhat since our comment letters were submitted in 1998. Most importantly, the Transactions and Code Sets final rule has been released prior to the release of the other rules. Implementation of the Transactions and Code Sets standards; the standards for electronic claim attachments; and identifiers for providers, employers, and health plans are expected to save group practices significant resources and greatly reduce administrative burdens. Consequently, an open-ended delay in the implementation of these standards would postpone the potential benefits for group practices.
Concern Regarding Early Adopters -- Typically, each health plan has proprietary code sets, identification numbers, and completion requirements. As set forth in the final transactions rule, health plans are not required to accept the standard claim until the compliance date (currently set as October 2002). MGMA is concerned that there is little incentive for group practices to expeditiously move toward upgrading their billing and patient record software to comply with the new HIPAA Transaction and Code set standards, since a health plan can refuse to accept and adjudicate a claim submitted using the standard HIPAA format until the compliance date.
In order to reduce the potential that health plans refuse to accept a HIPAA compliant claim, MGMA encourages all health plans to implement these new standards as quickly as possible. Similarly, MGMA is encouraging health plans to enter into trading partner agreements with their provider clients, establishing timetables indicating when health plans will be able to begin testing schedules and adjudicating claims sent with the new transaction standards.
Four Suggested Stages of Release Dates -- Anticipating that the HIPAA regulations would be released promptly and as a “package”, MGMA believed compliance for all the administrative simplification standards should not be required until all of the final rules had been published, testing of the standards completed, and significant implementation achieved. Since it is now apparent that the rules will be released in a staggered manner, MGMA suggests that implementation be structured in four stages.
Stage One would include full implementation of the standards for Transactions and Code Sets by October 2003, allowing an additional year for covered entities to prepare their systems to be able to accept the new standards.
Stage Two would include the release of health care identifiers for providers, health plans, and employers, with compliance occurring two years after the publication of each final rule. The third stage would see national standards for health data privacy and security fully implemented and synchronized two years after the publication of the security final rule. The final implementation stage would include the national standards for electronic claim attachments, enforcement, and all other outstanding provisions with full implementation two years after the publication of each final rule.
Cost to Transition to the New Standards -- Group practices are very concerned about the resources necessary to transition to the new HIPAA standards. There will be substantial costs to upgrade practice management/billing software, and those costs will vary depending on their size, complexity, and current level of technical sophistication of individual group practices.
Specific implementation costs will also be determined by the transaction standards a group practice selects. For example, to reduce or defray implementation expenses, group practices may opt to transition to the new standards in stages. Claim submission is likely to be one of the first standards that group practices move toward, since this will expedite the processing time of claims submissions and reduce accounts receivable. Some group practices may decide that migration to the remaining transactions standards can be deferred to a later date.
HIPAA Compliant Paper Forms -- Providers are also concerned that the implementation process for electronic transactions will move faster than the corresponding electronic and paper forms can be modified. For example, the current HCFA 1500 paper claim form does not accommodate the 11-digit National Drug Codes (NDC). The hope in the provider community is that “J” codes will either not be eliminated, or that NDC codes not be mandated until both the electronic and paper HCFA 1500 claim forms can accommodate them. The NUCC HCFA 1500 Subcommittee has developed various prototype forms capable of accommodating the new HIPAA standards, but as of yet, they have not completed an appropriate replacement.
Fines for Non-Compliance -- There is apprehension in the provider community that fines for non-compliance will be levied on providers prior to full implementation and testing of all electronic transaction standards. It is MGMA’s contention that HIPAA was not intended to deter those wishing to move their current administrative systems from paper to an electronic format. Furthermore, there is concern in the industry that some entities will revert back to paper claim filing in order to avoid compliance with the regulation. In an effort to avoid this situation, MGMA supports deferring enforcement until there is wide experience using the proposed standards, and that all future regulatory requirements subject to monetary penalties be explicitly identified.
Designated Standards Maintenance Organizations Process -- As we are well aware, the final rule for Transactions and Code Sets did not provide for a one-time definitive set of standards for the industry. Rather, the rule recognized that the development of industry standards would be incremental in nature, with a process in place to allow for the addition, deletion, and modification of the standards. From the prospective of the NUCC, the DSMO process has been working effectively, although this process is not without its problems. For the past several years, MGMA has been actively involved in the process updating these standards and we believe this process will allow the industry to most efficiently migrate to the new regulations.
MGMA sits on both the HCFA 1500 and Data Subcommittees of the NUCC and has witnessed first hand the efforts of representatives of the health care industry and those on the NUCC to improve the transaction standards and make the transition to HIPAA as seamless as possible. I would like to single out two examples of industry cooperation that are assisting the DSMO efforts to modify the standards. The HIPAA Provider Group, led by David Moertel from the Mayo Foundation and comprised of more than twenty provider organizations, including MGMA, has identified a large number of issues after reviewing the 837 Implementation Guides, including several dozen issues that the group considers “high priority”. These issues have been submitted through the DSMO process and it is expected that many of these concerns will be addressed favorably by the HHS Secretary.
In addition, the National Medicaid EDI HIPAA workgroup (NMEH)has been extremely successful in pulling together the divergent interests of state Medicaid organizations to identify both the thousands of local codes that must either be eliminated or replaced by national codes and provider taxonomy codes. These taxonomy codes, now maintained by the NUCC, are a critical feature of electronic transactions and are currently being reviewed by NMEH. This effort has led to the compilation of over 1,000 codes for adjudication by the NUCC.
The DSMO process comprises both the best and the worst of HIPAA implementation. On the positive side, the industry cooperation that has led to many standards groups working together with divergent sectors of the industry is a model of how HIPAA implementation can successfully be achieved. However, despite their active participation on the various DSMO groups, the federal government has failed to allocate resources necessary to assist in the creation or maintenance of the DSMO Website or to fully educate the industry. With no allocated federal assistance, and with the costs incurred by the hosting associations, this change request system has been slowed somewhat resulting in insufficient information dissemination to the public. For this change request system to be most effective, it is imperative that those with a vested interest in adding, deleting, or modifying standards have the opportunity to do so. In order to obtain more widespread provider feedback, HHS should engage in a comprehensive outreach program.
Workgroup for Electronic Data interchange Strategic National Implementation Process (WEDI SNIP) -- It is important to recognize that there is an industry group, co-chaired by MGMA, that is actively identifying HIPAA implementation concerns, and developing consensus-driven solutions to those concerns. Established as a forum to assess HIPAA industry readiness and to bring about the national coordination necessary for successful compliance, WEDI SNIP has been constructively working toward solutions for over a year. During that period, WEDI SNIP has created numerous workgroups and sub-workgroups, each mandated with specific tasks relating to implementing one or more of the HIPAA requirements. WEDI SNIP has included participation from hundreds of individuals representing every facet of the health care industry, with over 2,000 individuals currently receiving information on through its general listserv.
WEDI SNIP holds numerous weekly conference calls as well as quarterly face-to-face meetings. In November of this year, a major conference is planned in Orlando entitled “Working Toward Solutions”, where industry leaders will gather to discuss HIPAA implementation success stories and focus on compliance issues and resolutions. In addition, to paraphrase former House Speaker Tip O’Neill, “all HIPAA is local”. There are now 40+ regional or state-level SNIP groups operating throughout the nation. Many of these groups have been working actively with the national WEDI SNIP to develop their programs and outreach efforts.
Transactions are More Than Just Claims -- While standardization of the claim format will save group practices considerable time and resources, there are substantial additional benefits associated with several of the other transactions standards. These include standardized referrals, automated remittance advice, claim status, and health plan eligibility verification.
HIPAA as the Catalyst to for e-Health -- The move toward standardization of health data will provide benefits to the health care community far in excess of what was originally outlined in the 1996 legislation. Health care has lagged far behind other industries in developing standards that permit interoperability of data and systems. The health care industry in the United States currently spends in excess of 20 cents of every dollar on administration—more than double the costs incurred by the health systems found in Canada or Western Europe. HIPAA is the first step toward a comprehensive reconstruction of the administration of health care—a critical pathway to reduced cost and improved patient care. While HIPAA is an important first step, the government must continue to work with industry to further reduce public and private plan administrative costs and complexity.
HIPAA as the Catalyst for Broader Administrative Simplification -- On a daily basis, group practice administrators face an enormous number of administrative challenges. These include managing multiple claim formats (often from dozens of different health plans), completing numerous variations of lengthy physician credentialing forms, as well as complying with a multitude of government regulations involving paperwork requirements. While HIPAA does not specifically address all of these issues, there is hope in the provider community that HIPAA will act as the catalyst to springboard the industry toward increased standardization and reduced health care administration.
In conclusion, MGMA is highly supportive of the development and use of national standards for the health care industry. While MGMA is confident that HIPAA will ease administrative burdens and facilitate improved data interchange within the health care community, implementation issues exist that must be addressed before compliance can be achieved. We appreciate the Committee’s interest in this important topic and thank the Subcommittee for inviting us to present our views.