RE: Perspectives on Implementation of Administrative Simplification Provisions of P.L. 104-191
January 21, 1997
My name is Mark J. Segal, PhD. I am Vice President of Strategic Market Programs at the American Medical Association (AMA). It is my pleasure to appear this afternoon before the Subcommittee on Health Data Needs, Standards, and Security of the National Committee on Vital and Health Statistics (NCVHS).
The AMA is and has been a strong supporter of administrative simplification and looks forward to working with the NCVHS to effect appropriate implementation of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996 (P.L.104-191). My brief statement is intended to answer the four questions posed in your letter of invitation, emphasizing the core issue posed by these questions and your letter: implementation of national standards for electronic administrative and financial health care transactions.
1. What are your organization's expectations for the results of the Administrative Simplification standards requirements in the Health Insurance Portability and Accountability Act of 1996?
In what ways will the outcome affect the members of your organization, both positively and negatively? Of all the features to be addressed by administrative simplification, which ones are of highest priority to your organization? What problems do they currently pose that make them important to address?
The AMA has high expectations for implementation of this legislation. It strikes a good balance between federal mandates and private market development. By increasing standardization and focusing on payor readiness to engage in standardized electronic transactions, the legislation will do much to spur substantial physician participation in electronic commerce.
We have long held that increased use of electronic financial and administrative transactions could increase the efficiency of physicians' practices as well as of the health care system overall. We, like others, have also identified a lack of national standards as a major bar to increased and cost-effective physician use of electronic data interchange (EDI) and other forms of electronic commerce. By specifying standards, and by "standardizing" these standards, this law will make EDI more attractive and useful to physicians, thereby accelerating the annual increases that we have seen in their use of EDI.
We also believe that increased specificity with respect to technological and legal aspects of privacy and confidentiality will play an important role in this growth. Critical provisions in this respect are those governing uses of and access to individually identifiable health information, uses of unique health identifiers, security standards, electronic signatures, and penalties for wrongful disclosure of individually identifiable health information. We will testify on privacy issues at a February 18 meeting of the Subcommittee on Privacy and Confidentiality.
Our major concerns with the administrative simplification legislation lie in the possibility that its implementation will overreach its core focus on administrative and financial transactions to seek premature standardization of clinical transactions and computer-based patient records (CPR). For example, we do not believe that coding issues that are most directly related to CPRs should drive the development of code standards for administrative simplification. Disrupting existing patterns of use of procedure and diagnosis codes, which are already well standardized, will only hinder administrative simplification. Similarly, there should be a recognition that standards for the nine specified transactions have already been completed by the American National Standards Institute (ANSI) Accredited Standards Committee (ASC) X12N standards development organization (SDO). At the same time, of course, we support efforts to ensure coordination of pertinent standards developed by other SDOs.
We are also concerned that implementation could, under some interpretations of the law, impose penalties under Section 1176 of the administrative simplification subtitle on payors and providers for mutually agreeable departures from specified standards in electronic transactions. We believe that a reasonable reading of the law, and one that is most consistent with its intent, is that the specified categories of payors must be willing and able to accept standard electronic transactions. This creates a proper expectation for physicians that, if they submit a specified electronic transaction that is standard with respect to EDI format and data content, it will be accepted and that, if they do not, it may be rejected. Our concern is that a stricter interpretation of the law (e.g., that physicians must submit only standard transactions to payors directly or through a clearinghouse and that payors can only accept standard transactions) goes beyond the intent of the law, interfering in private transactions to an unjustified extent. For example, we do not want physicians or payors subject to even a $100 fine if they choose not to report or require a particular data element contained in the standard claims transaction; a potential payor rejection of this claim is sufficient penalty for physicians.
Finally, we believe that specification of data content standards for non-institutional claims and encounters should adhere to the recommendations of the National Uniform Claim Committee (NUCC), which the AMA is pleased to chair and which testified before the NCVHS in November. It is essential to recognize that current data formats for electronic transmission of claims/encounters can best be viewed as messaging standards that serve as electronic envelopes into which appropriate data are placed. Those who develop these standards are best suited by membership and process to design the electronic envelopes. We believe strongly, however, that data content decisions should be made by groups like the NUCC.
We were pleased, therefore, that the NUCC, along with the National Uniform Billing Committee, the American Dental Association, and the Workgroup for Electronic Data Interchange (WEDI), was specified in P.L. 104-191 for a formal consultative role. In creating a process to achieve administrative simplification, the Congress recognized the long-standing and successful track record of these organizations in delineating data content and its application within the health care community. Each plays an essential role in the business process of standards development and seeks to complement the work of the ANSI-accredited standards organizations and of the Department.
2. Does your organization have any concerns about the process being undertaken by the Department of Health and Human Services to carry out the Administrative Simplification requirements of this law? If so, what are those concerns and what suggestions do you have for improvements?
We do not have concerns with how the Department is implementing administrative simplification. To date, we have been extremely impressed with the skill and professionalism of individuals in the Health Care Financing Administration (HCFA), the Office of the Assistant Secretary for Planning and Evaluation (ASPE), and the NCVHS.
3. What major problems are experienced by the members of your organization with the current transactions specified under the HIPAA? How readily available is the information that you need to provide for the transactions and how meaningful is that information from a clinical perspective?
P.L 104-191 specifies nine transactions for standardization:
To date, through resolutions in the AMA House of Delegates and through other means of communication, our members have expressed the greatest need for standardization in claims/encounters, attachments, and remittance advice.
With respect to claims/encounters, practicing physicians have indicated a great need for standard messaging standards and data content to ease their administrative burden and to reduce costs of software, programming, and transmission. Many physicians using EDI have also expressed concerns about transaction costs imposed by payors, networks, and clearinghouse. In response, AMA policy calls for many of these costs to be borne by the payors for whom the savings from EDI are so large and so certain. We also believe that the system ought to evolve to encourage more direct physician to payor transactions. Physician have also raised concerns about substandard quality of some of the available software and payor systems that can make using EDI a nightmare of complex system set-up and a frequent need to resubmit transactions.
Physicians have also expressed great concern with the burden of sending paper attachments associated with electronic claims and the extent to which continuing attachments requirements run counter to the push for automation. The NUCC, WEDI, and HCFA, among others, are all working on this issue. From the physicians' standpoint, it is essential to standardize what must be contained in a particular attachment, when that attachment must be sent, and how the attachment may be transmitted electronically rather than by paper. It is also, critical, however, to minimize the need for attachments altogether. In this regard, we do not believe that it was the intent of the Congress, in including attachments as one of the standard transactions, to open up wholesale inclusion of portions of the computer-based patient record along with claims and encounters. Indeed, we support efforts by the NUCC and others to look at using data elements on the claim/encounter data set to obviate the need for specific attachments (e.g., a check box or code set indicating that specific information is in the patients' record).
Standardization of payment and remittance advice and automation of claims status information are also a major need of practicing physicians. As recently as its December meeting, for example, the AMA House of Delegates called for greater standardization on explanations of benefits statements. Lack of consistent formats and information has been and continues to be a major source of frustration and cost for many physician practices.
With the growth of managed care in its various forms, most of the remaining transactions will also simplify life for physicians. Of note will be increased automation of information on eligibility for services and referral certification and authorization.
As providers of data, physicians face a mixed situation with respect to data availability. We share with the NCVHS an interest in collecting and maintaining data at the most appropriate site. Thus, for example, we would like to see reduced physician responsibility for collection of data elements that should be collected and maintained by employers and payors (e.g., non-clinical patient and insured person information). Reducing such data burdens for physicians may be especially essential if, as outlined above, strict interpretations of P.L.104-191 place an even greater responsibility on providers to collect and verify all elements of the standard data set.
With the availability of CPT and ICD coding systems, physicians do have the ability to convey to payors and others information on what was done for patients and why. At the same time, we believe that improvements need to be made to current paper and electronic data standards to allow for assignment, as deemed appropriate by the physician, of at least four diagnosis codes for a given service. In addition, it is essential that, as part of standards definition, it be made clear the obligation of payors and others to accept and use CPT modifiers that provide critical information on the service provided.
4. How can the goal of administrative simplification best be achieved while meeting the business needs of all stakeholders? Are their any constraints that you feel should be heeded in the process of addressing simplification, and what are they?
Appropriate implementation of administrative simplification requires careful consultation with all affected parties. From all appearances, the Department recognizes this fact and is proceeding accordingly.
In general, we believe that the ANSI ASC X12N process to develop electronic financial and administrative transaction standards is appropriate as a means of meeting the intent of P.L 104-191. The AMA is a member of X12N and, through WEDI and the NUCC, works closely with its members. We understand that the Department is considering the option of using X12N standards for all but the professional claims/encounters standard; for the latter transaction, if this option is chosen, the National Standard Format (NSF) would be used.
The AMA has no specific position on the relative merits at this time of either standard in its present form. Our policy is supportive of both and more generally, highly supportive of the use of X12N standards. If the decision is made, however, to use the NSF as the initial standard, based on careful assessment of readiness for implementation, we urge that a specific timetable be put in place for a move toward the applicable X12N standard (i.e., the 837) with any needed refinements. This latter point raises the need for some remaining flexibility in use of multiple standards among willing trading partners so that improvement of the 837 transaction could proceed during initial implementation of the NSF for the national standard claims/encounter transaction.
In addition, we do not believe that provisions in Section 1178 of the law that allow the Secretary to grant state exemptions for specific provision should become a major loophole allowing state government or private payors to side-step the requirements for standardization.
Finally, as the body that maintains the CPT code system, the AMA wishes to underscore its strong belief that, with respect to the reporting of professionals services in the context of the nine specified transactions, CPT can and will fully meet the intent of the law to "select code sets . . . from among those that have been developed by private and public entities", with "efficient and low-cost procedures for distribution." Given the requirement that any standard adopted by the Secretary "must be consistent with the objective of reducing the administrative costs of providing and paying for health care," we would emphasize the substantial costs that would be incurred by providers and payors if systems other than CPT (and ICD for diagnoses) were to be selected in the context of these standards.
Thank you for this opportunity to respond to present the views of the American Medical Association this afternoon. I would be pleased to respond to any questions that you might have.