STATEMENT TO THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES NATIONAL COMMITTEE ON VITAL AND HEALTH STATISTICS, SUBCOMMITTEE ON HEALTH DATA NEEDS, STANDARDS, AND SECURITY
Members of the subcommittee, my name is Marion Ramey, and I am the Chairman of the Association of Federal Health Organizations ("AFHO") as well as the Executive Director of the Special Agents Mutual Benefit Association ("SAMBA"). AFHO is an association of Federal Employee Health Benefits ("FEHB") fee-for-service plans sponsored by employee organization carriers, including SAMBA. Approximately 1,180,000 federal and postal employees and annuitants are enrolled in FEHB plans sponsored by AFHO member organizations. The FEHB program itself is the largest employer -- sponsored program in the United States. On behalf of the AFHO member organizations, I thank you for the invitation to make this statement regarding the administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA").
FEHB plans are established by federal government procurement contracts between the U.S. Office of Personnel Management ("OPM") and the sponsoring plan carrier. FEHB plans generally are regulated by the FEHB Act (5 U.S.C. 8901 et seq.) and implementing OPM regulations and directives. Among those directives is OPM's electronic claims filing initiative which mandates that FEHB plans use HCFA standard claims forms such as the HCFA 1500 and encourages FEHB plans to increase the volume of claims received electronically (Attachment A).
FEHB plans are hopeful that HIPAA's administrative simplification provisions will catalyze this fundamental process of converting to a paperless claims processing environment. You have requested that I respond to four questions that you have concerning the impact and goals of these administrative simplifications provisions. I am pleased to do so.
Your first question concerns our expectations for the results of HIPAA's administrative simplification provisions. Our organizations expect that those provisions will permit plans to receive and process electronically submitted benefit claims and related information, such as enrollment data, with minimal manual intervention. This paperless environment is anticipated to reduce health plan administrative expenses, expedite claims processing, enhance communication, and relieve plan members, health care providers and plans of a significant paperwork burden, thereby improving the health care financing system.
Your second question is process-oriented. Our initial impression of the HHS effort to implement HIPPA's administrative simplification provisions is favorable. We encourage HHS to continue to hold hearings regarding the administrative simplification provisions. It is important to maintain open communication to discuss the options and alternatives available to generators and users alike. In general, we would like to see as much involvement as possible by industry representatives who have successfully implemented EDI solutions.
In order for the administrative simplification provisions to be achieved while at the same time meeting business needs, AFHO recommends that HHS develop standards by focusing on "core" areas that represent a majority of current transaction types. HHS should develop a standard format for the following core areas: enrollment and disenrollment information, claims and explanation of benefit statements, coordination of benefit procedures, claim status, coverage information and benefit eligibility. Furthermore, once a standard is initially selected, organizations must be given an opportunity to test it. After this "trial period," HHS should then hold open hearings again to determine whether the standard can, in fact, be implemented efficiently and effectively.
In addition, we encourage HHS to avoid imposing "unfunded mandates." HHS and OPM therefore should allow federal health plans necessary freedom from expenditure caps and "prior approval" processes for activities related to simplifying, re-engineering or otherwise attempting to reduce transaction costs and complexity.
Your third question inquires about problems that we confront with current EDI transactions. Perhaps our greatest problem -- which we expect that HIPAA will address -- is the lack of a national health care provider number. Most plans rely on taxpayer identification numbers (TIN) because that information is captured on the HCFA 1500 form, for example, and is a prerequisite to the preparation of the IRS 1099 forms that health plans must send all health care providers. TINs however, are ineffective provider identification numbers principally because TINs can be changed with little effort. In our experience, physicians often change their TIN when a new practice starts or when one doctor moves from one group to another. Changing TINs are difficult for us to track. Without consistent universal provider identifiers, claim transactions are automated only to the point of receipt, foregoing even greater savings that would be realized if they were electronically adjudicated after receipt. The practice of changing TINs also hinders plan efforts to keep track of those providers who have been debarred by the federal government or who are known to submit suspicious claims. AFHO therefore recommends that once a provider number is assigned, the provider number should not change and a provider should use the same number for all transactions. Alternately, if HHS determines that a provider number may change in certain limited circumstances, then there should be an administrative process that a provider must follow which provides notice to all health plans. HHS also should ensure that (1) the identification numbers of individual providers are linked to the number of the medical group in which they practice and (2) the uniform EDI formats continue to capture the benefit payee's TIN on claims assigned to the heath care provider so that plans have the information necessary to complete the IRS Form 1099 reporting process.
Health plans also confront the problem of electronically transmitted information that is incomplete or inaccurate. For example, it often is difficult to obtain accurate data about the identity and physical location of the provider who actually rendered service, even though current standards provide for this data element. It seems that standards which are perceived by health care providers as burdensome invite either omission of the data altogether or "plugging" entries in a field to force claims through the system. Unscrupulous providers also have been known to deliberately obscure location of treatment information in order to increase reimbursement because allowable charges are often geographically based. HS should clearly articulate the health care provider's obligation to accurately complete required information and establish an appropriate and useful enforcement mechanism.
Unlike provider identifiers, health plans generally are able to track and maintain patient identifiers by using a patient's Social Security number. Social Security numbers now are assigned at birth and remain constant throughout a person's life. Social Security numbers currently are captured on the HCFA 1500, and other standard claim forms, as the patient identifier. Our member organizations therefore suggest that Social Security numbers should be adopted as the patient identifier with appropriate confidentiality safeguards.
Another problem that our member organizations experience occurs when trying to coordinate benefits with another plan. When another plan adjudicates a claim "primary" to an FEHB plan, the FEHB plan must know exactly how the "primary" plan adjudicated the claim in order to determine the proper benefit payment. Many FEHB plans have "crossover" contracts with Medicare intermediaries and carriers. These contracts allow the Medicare payer to transmit claims data to the FEHB plan for coordination of benefits. Historically, FEHB plans experienced data that was transmitted in almost thirty different formats which made the process inefficient. Although most of these format problems were corrected when the claim format standard was implemented, it evidences the need for national standards. Even though there is a standard for claims, payment data necessary for coordination of benefits should also be standardized.
Your fourth question concerns how to best achieve the goals of administrative simplification while meeting the business needs of all stakeholders. We are concerned that well-intentioned standard-setting efforts could be coupled with unrealistic implementation timetables, resulting in unnecessarily increased administrative costs for payors which then are passed on to health plan members. Consequently, we have several recommendations for your consideration:
a. 1. AFHO recommends that the committee adopt one organization for all sets of standards. For example, if the committee decides to implement a standard developed by ANSI, then all the remaining standards should also be ANSI standards to ensure consistency and uniformity with the standards methodology. Moreover, if there is a future transaction that is developed at a later time, the same organization that was chosen for these initial standards should also develop the new transaction.
2. AFHO also recommends that the transition period will be accelerated if initially adopted standards are "frozen" for an extended period of one to two years. Existing health care transaction sets, for example, the ANSI 837 claim, are extremely complex and the frequent version updates of the past few years have perplexed system developers.
3. Confidentiality issues tend to be one of the most publicized concerns about electronic interchange of individually identifiable medical data. We consider OPM's confidentiality of medical records provision to be a sensible approach that balances the business needs of carriers with the confidentiality rights of plan members. I have attached a copy of that provision to this testimony (Attachment B). We recommend that HHS use this provision as a model when drafting the confidentiality rules mandated by HIPAA. Furthermore, we urge HHS to give consideration to developing the safeguards necessary to preserve system security and prevent unauthorized system access that may become more prevalent with the implementation of HIPAA's provisions.
Thank you for your consideration of these comments. I welcome any questions that you may have for me.