The American Clinical Laboratory Association ("ACLA") is pleased to submit this statement to the National Committee on Vital and Health Statistics Subcommittee on Standards and Security in connection with its meeting on HIPAA contingency planning. ACLA is an association representing independent clinical laboratories throughout the United States including local, regional and national laboratories. In the United States alone, clinical laboratories perform millions of tests each year for physicians and other health care professionals. Virtually all of the billing for this testing is done electronically. Thus, ACLA members are significantly affected by the implementation of the HIPAA Transaction and Code Set ("TCS") standards. More importantly, the difficulties clinical laboratories are facing as they implement the TCS standards will ultimately have a negative impact on patients, providers, and payers if they are not resolved.
Introduction
The TCS standards were created to improve the efficiency and effectiveness of the health care system. The goal of these national standards is to encourage electronic commerce in the health care industry and ultimately simplify the processes involved. Today, health care providers and health plans that conduct business electronically must use many different formats for electronic transactions. For example, over 400 different formats exist today for health care claims. It is hoped that the TCS standards will make electronic data interchange a viable and preferable alternative to paper processing for both providers and payers. However, the task of converting current systems and processes to comply with the TCS standards is an undertaking of incredible magnitude. Implementation of the TCS standards amounts to a complete overhaul of the payment system for the health care industry. As ACLA members have focused their resources on implementing the TCS standards, they have discovered a number of problems that are creating significant obstacles to their compliance with the standards.
Clinical laboratory testing is an important, cost-effective and life saving health care tool, which provides physicians with objective medical information about a patient's condition. Appropriate testing ultimately enhances health, saves lives and reduces health care costs. However, laboratory testing is unique among medical procedures, in that the entity furnishing the service often does not see, or have any direct contact with, the actual patient. In fact, the laboratory may be hundreds or thousands of miles away from the physician and the patient, and often is located in a different state. As a result, ACLA members are experiencing a number of unique difficulties as they attempt to develop and implement the systems and processes necessary to be compliant with the TCS standards by October 16, 2003.
General Readiness
The most serious concern at this point in the implementation efforts is that ACLA members have received communications from various payers indicating that they will not be prepared to accept standard transactions as of October 16th. Recent letters from the Workgroup for Electronic Data Interchange ("WEDI") and the state of New Jersey Department of Banking and Insurance ("New Jersey Department") indicate that this is an industry-wide problem. Indeed, the lack of industry readiness has been described as a "train wreck." Moreover, according to a March 2003 report by the Office of Inspector General, a number of Medicaid programs have indicated that they will not be ready in time to meet the October 16th deadline. Even those payers who are working toward compliance by the deadline are, in many cases, unwilling to perform appropriate testing with providers, indicating a lack of time. Given the challenges inherent in complying with the TCS standards, it is essential that providers have the opportunity to perform adequate testing with payers.
WEDI and the New Jersey Department have recommended that the Secretary of Health and Human Services ("Secretary") establish a compliance grace period to allow payers to continue to accept non-standard transactions after October 16, 2003 so long as the claims include all of the elements necessary for adjudication of the claim, as agreed upon between the payer and the provider. In particular, the New Jersey Department's HIPAA Implementation Task Force has adopted a Common Companion Guide for the use of the TCS standards, and payers, providers, clearinghouses, and other interested parties in the state have agreed not to reject claims that are submitted with certain missing data elements, so long as the claims are consistent with the Guide. According to the New Jersey Department's Office of the Commissioner, the federal government has accepted this approach. ACLA strongly urges the Secretary to adopt a similar approach and establish a grace period for all covered entities to comply with the TCS standards. If the Secretary does not intervene and take steps to remedy these issues before the compliance date, serious disruption of the health care system is likely to occur. Ultimately, patients, providers, and payers alike will suffer the consequences.
Clinical Laboratory-Specific Compliance Issues
In addition to these serious concerns regarding readiness, ACLA members are confronting other obstacles to compliance. The most significant issues facing clinical laboratories in this regard relate to the complexity of implementing the standards and the requirements for information that clinical laboratories typically do not have and face great difficulty in obtaining. The best example of this situation is the requirement in the ANSI ASC X12N 4010 Implementation Guide that providers include a diagnosis code on most claims submitted. The difficulty is that laboratories are generally not in a position to obtain this information. Accordingly, ACLA believes requiring these types of data elements on health care claims creates an unreasonable burden on clinical laboratories.
Clinical laboratories are in a unique position because they typically have no contact with the patient - they generally perform testing on a specimen they pick up from the physician and they report test results back to the same physician. In those cases in which laboratory personnel see the patient to collect the specimen, they are neither qualified nor permitted to diagnose the patient. Indeed, under federal fraud and abuse laws, laboratories may be sanctioned for using diagnosis codes (ICD-9 codes) that are not supplied by the physician or his or her staff. See Office of Inspector General Compliance Program Guidance for Clinical Laboratories, 63 Fed. Reg. 45076 (August 24, 1998). As a result, clinical laboratories must rely upon physicians to provide diagnosis information. However, because of other demands on their time and the time of their staffs, physicians often object to having to list ICD-9 codes for individual tests. Even when laboratories do request diagnosis information, physicians routinely fail to provide such information to the laboratory. Moreover, even when physicians do provide diagnosis information, it is often in the form of a narrative, rather than a code.
Requiring diagnosis codes on laboratory claims places the burden of obtaining the information on the party least likely to be able to obtain it. Physicians have little incentive to provide the laboratory with diagnosis codes because there are virtually no legal or financial consequences to the physician for transmitting incomplete information to the laboratory. It is impossible for a laboratory to know why a physician ordered a test unless the physician provides the information. The laboratory has no ability to force the physician to turn over this information if he or she fails to provide it in the form required to submit the claim or at all. As a practical matter, the laboratory cannot refuse to perform the testing ordered by a physician. Laboratory testing is a critical, and often time-sensitive, health care service. Most laboratories feel they are obligated to perform the testing that is ordered once they receive a specimen. Further, a laboratory could be held liable if the patient later suffered harm as a result of the laboratory's failure to perform testing ordered by a physician. Thus, if diagnosis information is required to electronically submit a claim, laboratories will be faced with filing paper claims or will end up doing testing for free when they cannot obtain the required information from the physician.
Furthermore, in most circumstances, diagnosis information has no bearing on the processing of the claim for payment. For instance, in the encounter setting - where the payer agrees to pay the laboratory a bundled or capitated amount per month for the testing provided - there is no need for such information, and consequently laboratories have no system in place to capture diagnosis information for testing reimbursed in this manner. In addition, if a laboratory has a large number of unpaid claims because the transactions it is submitting are not compliant, this could have an impact on future negotiations between the laboratory and payers. Since such negotiations are largely based on utilization of services by patients covered by the payer, the non-compliant transactions may create the potential for disagreement on this issue. Moreover, many third party payers do not require this information to adjudicate claims. ACLA believes that, in order to protect the patient's privacy and as required by the HIPAA Privacy Regulation's "minimum necessary" standard, such information should not be provided unless necessary for adjudication of the claim.
The Centers for Medicare and Medicaid Services ("CMS") has recognized and addressed the difficulties faced by laboratories with regard to diagnosis information. The Medicare program does not require diagnosis codes to be submitted with claims except in limited circumstances (e.g., testing that is covered by a national coverage determination or a local medical review policy). See Medicare Carriers Manual § 2010.2 (Item 21). In fact, during the negotiated rulemaking process to determine coverage and administrative policies for clinical diagnostic laboratories, at which physicians, laboratories, and CMS were all represented, the Negotiated Rulemaking Committee specifically discussed this issue and determined that requiring diagnosis information on all claims would "present significant burdens on some physicians" and laboratories. See 66 Fed. Reg. 58788, 58791 (Nov. 23, 2001). Similarly, the Department of Health and Human Services ("HHS") has recognized clinical laboratories' unique status by allowing such entities - termed "indirect treatment providers" - to be exempted from certain obligations under the HIPAA Privacy Regulation because they do not generally have contact with the patient.
The challenges faced by clinical laboratories and other indirect providers in securing all data elements required to submit a compliant standard transaction extend beyond diagnosis codes. ACLA members have similar problems with respect to subscriber information, such as address, city, state, zip code, country code, date of birth, and first and last name; patient information, such as address, city, state, zip code, country code, and date of birth; and referring provider identification. These data elements are not currently required by many payers for claims processing. For instance, with respect to Medicaid patients or capitated health plans, this information is not required because it is rarely used. Although these data elements may seem basic, because clinical laboratories do not generally see the patient, they have great difficulty obtaining this information. ACLA members are willing to provide the information where it is necessary to adjudicate the claim; however, this information should not always be necessary to adjudicate the claim. Accordingly, ACLA recommends that the TCS standards and applicable Implementation Guides be revised to require these data elements only where they provide detail necessary to adjudicate the claim and the same information does not appear elsewhere on the claim.
Technical Compliance Concerns
ACLA members are also experiencing certain technical difficulties in their compliance efforts. For instance, some payers do not appear to understand the true purpose of trading partner agreements. Payers are including privacy and security provisions in these optional documents and are demanding that they be executed as a condition precedent to commencement of systems testing, which is significantly delaying such testing. ACLA requests that the Secretary restate the guidelines regarding trading partner agreements and/or update the frequently asked questions on this topic to make clear the purpose and appropriate parameters of trading partners agreements.
Furthermore, payers are requiring a variety of formats for front-end rejections, since there is not a standard for the process. Similarly, many payers are using established transaction standards for a variety of different processes and exchanges of information, even though they were not intended to be used in this manner. Consequently, providers are being required to reprogram systems and alter processes other than those that are obviously affected by the TCS standards, which renders the entire compliance process more complex and time-consuming.
Some payers are also indicating an unwillingness to accept values that are permitted by the Implementation Guides for certain data elements. Instead, these payers are establishing of their own accord the values that will be accepted on claims from providers. Providers are required to acquiesce to these instructions in order to be permitted to test with the payers. Payers are also creating various customization requirements for certain data elements, which may go beyond what is required by the TCS standards and implementation guides. For instance, payers may require a provider to use the patient subscriber number and after the applicable prefixes, separate the digits with dashes. Or, payers may require providers to take the initials of the provider and add them to the provider's identification number. These requirements for variations on data element values add to the time and labor required to develop and implement the appropriate procedures and systems to comply with the TCS standards. Moreover, these types of requirements actually conflict with the stated goal of the TCS standards - to simplify and make more efficient the electronic exchange of health care information.
Conclusion
ACLA believes the TCS standards should similarly address the unique position of clinical laboratories and other indirect treatment providers by requiring these problematic data elements only where the provider and the payer have agreed that it is necessary for adjudication of the claim. There is growing support for eliminating data elements that are not necessary for adjudication. As discussed above, the letters from WEDI and the New Jersey Department recommend that the Secretary allow payers to continue to accept non-standard transactions after October 16, 2003 so long as the claims include all of the elements necessary for adjudication of the claim, as agreed upon between the payer and the provider. ACLA joins WEDI and the New Jersey Department in urging the Secretary to establish a grace period for compliance with the TCS standards, and recommends that the Secretary and his designees work with providers to craft permanent solutions to these obstacles to implementation.