Louis Saccoccio
General Counsel
American Association of Health Plans
1129 Twentieth Street, NW, Suite 600
Washington, DC 20036-3421
(202) 778-3210
lsaccoccio@aahp.org
Good afternoon. My name is Louis Saccoccio and I am the General Counsel for the American Association of Health Plans (AAHP). I want to thank the National Committee on Vital and Health Statistics’ Subcommittee on Standards and Security for the opportunity to provide information regarding the readiness of AAHP’s members to meet the administrative simplification standards established pursuant to the Health Insurance Portability and Accountability Act (HIPAA).
AAHP is the principal national organization representing HMOs, PPOs and other network plans. Our member organizations provide or arrange health care services for over 150 million members nationwide. AAHP’s members are “covered entities” for purposes of the administrative simplification regulations that are being developed by the Department of Health and Human Services (HHS). Consequently, our member plans are directly affected by the contents and timing of those regulations.
Earlier this year AAHP’s Board of Directors approved a resolution recommending a 24-month extension of the deadline for implementing the requirements on electronic transaction standards and code sets. This period would commence upon the effective date of the last administrative simplification regulation to be adopted.
As you are aware, the HIPAA administrative simplification standards are set out in four distinct areas:
AAHP’s member plans are committed to implementing the electronic transaction standards and are taking the necessary steps to comply with the final rule. However,
AAHP is concerned about the difficulties health plans and other covered entities face in meeting the October 16, 2002 compliance deadline specified in the final regulation on electronic transaction standards. In a recent AAHP survey, a substantial majority of member plans suggested that the compliance date be delayed. The reasons cited most frequently for a delay were:
The most substantial concerns that AAHP’s member plans have with the timeframe for implementing the requirements for electronic transactions and code sets involve the potential cost of the regulation and the need to integrate the implementation schedule with other regulatory requirements (security, identifiers and health information privacy).
Cost: As member plans have assessed the changes required for implementation, it has become clear that the cost of compliance is far greater than HHS estimated in the impact statement that accompanies the regulation. HHS estimated that the average cost of compliance for an HMO or PPO would be only $250,000. Based on its discussions with member health plans, AAHP believes that estimate to be grossly underestimated. The immediate cost of compliance, especially when combined with the cost of complying with other administrative simplification regulations, is a very serious concern for AAHP members. In addition, under the current timeframe almost all of the costs occur in a short, two year period. Extending the compliance timeframe will allow all covered entities to spread these significant costs over a longer period of time.
Integration With Other HIPAA Requirements: As noted above, HIPAA administrative simplification consists of several pieces. The rules on security and electronic signatures and the regulations addressing employer and provider uniform identifiers have been issued only in proposed form. The regulation on health plan identifiers has yet to be released. It will be difficult for covered entities to comply effectively with any one piece of HIPAA until all of the regulations have been finalized and their impact can be assessed as a whole.
Covered entities also need to implement these requirements in conjunction with their efforts to establish systems to protect the privacy of protected health information. A realistic compliance date that meets the needs of the entire health care system should be established to give providers, health plans and health care clearinghouses sufficient time to deal with the requirements of the administrative simplifications standards and the health information privacy rules.
AAHP supports the principles of administrative simplification. As the health care system becomes more dependent on data automation, the need for clear, uniform standards is readily apparent. Today, the lack of standards for electronic transactions and code sets across health plans makes exchanging data both expensive and difficult. However, the implementation of the HIPAA administrative simplification requirements is a costly and complex undertaking for all covered entities. It is important that all of the entities that are impacted by these new requirements be given enough time to implement the changes set out in the transaction standards and code sets final rule as well as the other administrative simplification standards.