March 12, 1997

Dr. Barbara Starfield
Chair, Subcommittee on Health Data Needs, Standards and Security
National Committee on Vital and Health Statistics
Department of Health and Human Services
200 Independence Avenue, S.W.
Washington, DC 20201

Dear Dr. Starfield:

Thank you for another opportunity to provide a perspective from the Blue Cross and Blue Shield Association (the "Association"), and the confederation of fifty-nine independent Blue Cross and Blue Shield Plans (the "Plans"), on the administrative simplification provisions contained in the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). During the subcommittee hearings held on January 21-22, 1997 additional questions were posed to those who gave testimony.

I have brought these questions to the Blue Cross and Blue Shield Association's special work group on national identifiers, and to members of the "Blue Caucus" that is convened at every ANSI ASC X12 Trimester and X12N Interim meeting. The answers to the questions posed represent the consensus of Plans represented at these two groups.

1.How will we know when the administrative process has been simplified, not just standardized; what are the measures that can be pointed to or that need to be developed?

Markers of a simplified administrative process vary, and will include:

• a reduction in paper flow and resources allocated to the process;
• the ability of one provider to interact with different payers as though they are one;
• consolidation of multiple transaction sets for the same business function; and,
• elimination of different codes and code structures that identify the same entity.

Such markers measure change as an ongoing process, and there is no single quantifiable ceiling at which full simplification is achieved.

Achievement of administrative simplification would be measured by growth from a baseline that should be established. Such a baseline cannot solely be related to claim submission as that business function, though significant, is not the only administrative process within health care. Components of the baseline should be both broad based and business transaction specific, so that change can be measured on the whole as well as on specific components of health care administration.

Broad based, overall measures of simplification include:

• an increase in the number of providers, payers and employers that are users of electronic transactions;
• increased use of standard electronic transactions between all trading partners;
• a reduction in provider, payer and employer FTEs required to support administration;
• an increase in the portion of a physician's time that is used for clinical, rather than administrative, activities;
• a reduction in customer service telephone calls;
• an increase in automated transmission to secondary (& tertiary) payers in coordination of benefits (COB) processing; and
• a reduction in the number of transaction formats being maintained by providers, payers and employers.

Measures of administrative simplification success can be established for specific business transactions, in the following manner:

• For claims --
• percentage growth of claims moving electronically
• number of payers to which a provider sends a standard claim
• number of different formats now and after HIPAA regulations are established
• number people (FTEs) devoted to claims processing at provider and payer sites before and after regulations are implemented
• number of claims adjudicated on the first pass, without phone call, re-submission, etc.
• For eligibility, and for claim status --
• reduction in the number phone calls are received
• frequency of provider telephone calls that duplicate electronic inquiry
• For enrollments --
• reduction in time required by a payer to install a group
• number of eligibility updates from employers that are daily or real time, instead of monthly
• number of persons certified as eligible who had already lost their eligibility

When addressing the measurement process, consideration must be given to existing methods that payers have for evaluating their administrative processes. The Blue Cross and Blue Shield confederation's National Management Information System (NMIS) is such a program. A measurement process that duplicates an existing program would be counterproductive.

For those payers, providers or employers that do not have such a program, the addition of a measurement program would add administrative overhead or siphon off resources from other value-adding activities. This result may be considered contrary to the implied cost control objective of HIPAA's administrative simplification provisions. In this situation a suggested remedy would be to use statistically valid sampling rather than full reporting, and to just measure improvement.

On the topic of costs, savings that accrue to health care are a byproduct of administrative simplification. As such cost savings are not necessarily the yardstick to measure the achievement of simplification. If cost information is desired, it may be possible to use statistical analysis to extrapolate dollar savings, rather than trying to measure savings directly.

Another factor to consider in assessing whether administrative simplification has been achieved is the continued shift to managed health care. Managed care is itself more complex than indemnity, and the information exchange requirements are greater. Immediate verification of eligibility, eligibility rosters for providers and use of referrals and pre-authorizations are some examples of business needs that increase administrative overhead. HIPAA's ability to establish and promote the use of standard transactions that automate these and related processes will be a measure of success and simplification.

2.If the content of a standard transaction set is not what a recipient receives now, would the content be accepted, or would the recipient seek additional information through attachments or other transactions outside the standard?

Deliberations over this question, sponsored by the Blue Cross and Blue Shield Association, has yielded the following commentary:

• Industry participation, by providers, payers and employers, is an integral part of the ANSI ASC X12N transaction set development. Consensus on content is a critical component of the implementation guide development process. ANSI ASC X12N implementation guides explain the context for each business purpose of a transaction set, and the guides list those data elements and code lists that would comprise the "normal" maximum data set.
• There will always be a need for special or additional information from a submitter that is available nowhere else, but we must be careful on how wide to open that door. Transaction standards should be comprehensive and should not include a requirement that providers, employers and financial institutions transmit data that is already available in the payer's in-house system.
• There is a need to allow requests for special, non-routine information that is only available from the submitter. On this point it was noted that the ANSI ASC X12 Health Care Claim Attachments (275) transaction set can be used for attachments such as these. However, the 275 should not be used routinely with all claims; it should be used on an exception basis.
• It was recognized that state insurance departments have a history of placing requirements that may not be compatible with federal regulations. On this point it is recommended that the Secretary, DHHS, even though empowered by HIPAA to grant state exceptions, not do so as this would be contrary to the concept of standardization.

3.Within a transaction set, how much content variability is necessary or acceptable?

This question is related to #2 above. As noted in therein, ANSI ASC X12N implementation guides explain the context for each business purpose of a transaction set, and the guides list those data elements and code lists that constitute the maximum data set. These guides are designed to address industry-wide business needs. For those submitters who wish to use a standard transaction, compliance with the guide will define the limits of content variability.

4.How many Plans are familiar with the NCVHS report on core data elements, and what are their reactions in terms of transaction standards and the possible decrease (or change) in data to be received?

The ANSI ASC X12N transaction set implementation guides noted in the responses to questions two and three above are seen as the tools for effective implementation of standard transactions within the health care community. Adoption of these guides by the Secretary, DHHS is recommended as part of the administrative simplification regulations to be promulgated under HIPAA. This position is in concert with other statements prepared by the Blue Cross and Blue Shield Association on behalf of the confederation of Plans.

ANSI ASC X12N implementation guides include instructions and examples of situations for use of fields and data elements that are conditional. Blue Cross and Blue Shield Plans have been well represented, and in several cases served as Chairs, of the work groups that created these implementation guides.

It would, therefore, be unwise for the federal standard to simply require the use of the NCVHS core data set as it does not fully support the administrative processing needs for claim transactions. The ANSI ASC X12N transaction sets and their associated implementation guides are designed to identify and include those data elements, and code lists, required to process a claim or encounter transaction, and do so for each type of service (e.g., professional, institutional) that has been provided.

5.What would providers and payers think of adding a limited number of small data elements that pertain to quality of care, to the claim or encounter transaction?

Further additions to the claim submission will make the transaction more complicated and be counterproductive to goals of simplification and encouragement of electronic submission. The claim transaction, in any format, already holds more data elements than are necessary for adjudication.

The claim transaction is not the place for adding more information. Should, however, consideration be given to adding data elements, the ramifications (e.g., processing changes, provider education) of such additions must be considered before any action is taken. Such ramifications would be particularly significant if data elements were only added to the electronic version of the transaction. Such a dichotomy may not be a problem for large submitters to accommodate, but may prove fatal to small submitters, prompting some to shift from electronic to paper submissions.

6.Is there a difference in information required for a payer in an insured situation, as opposed to a payer representing an employer?

Any differences in information would be driven by the employer's offered benefits or coverages. These are often much more varied in an Administrative Services Only (ASO) environment than they would be in a fully insured situation. There may be variations in the nature of covered procedures and providers that would not be available in a fully insured plan.

The primary effect would be on code lists applicable to the claim transaction, rather than a change in the transaction format. In addition, it must be noted that the business relationships in an ASO environment often include more entities (e.g., reinsurer) than in insured programs. This additional range of possible ASO coverages reinforces the fact that private insurance is very varied and very different from federal program coverages.

7.Are there existing security and confidentiality technologies that exist, and is there one or some that should be reflected in the regulations?

The nature and variety of security technologies that exist preclude a recommendation on one or more for inclusion in the regulations. In addition, this is an area that is continually evolving in response to technological advances and industry experience.

There is no one-size-fits-all solution. For the purposes of the regulations, the recommendation is to establish standards of performance and allow each entity in the health care community to select the technology that meets its needs and satisfies the performance standard. This position has been conveyed in other position papers prepared by the Blue Cross and Blue Shield Association on behalf of the confederation of Plans, where the preference for regulations that do not specify detailed structural or procedural requirements is clearly stated.

Federal regulations should embrace security and confidentiality standards that contain performance standards to ensure that there is no unauthorized access or use. In addition, such standards should also enable information to be accessed by health plans for business purposes that include the design and management of health benefit programs.

To Conclude

An underlying principle throughout this discussion of the seven questions posed is that HIPAA's intent, as stated in Section 1175, is to facilitate the health care community's move towards standardization in electronic commerce. The mandate to use national standard transactions would apply when a health plan is requested to do so by a provider, but does not supersede any voluntary agreement to conduct non-standard transactions. This last point is especially important to the Blue Cross and Blue Shield confederation of Plan's information infrastructure that facilitates electronic transactions between member Plans. Such a processing system should be beyond the scope of HIPAA as it is internal to the confederation of Plans, and does not preclude any provider from submitting a standard transaction to an individual Plan.

In a similar vein there is another comment of particular import to the confederation of Blue Cross and Blue Shield Plans. This relates to question #1 which addresses measures that would help assess achievement of HIPAA's administrative simplification objectives. Here it is necessary to acknowledge the success that Blue Cross and Blue Shield Plans have already achieved in the area of electronic commerce and especially claim submission. Today, over 72% of all claims received by Plans are submitted electronically. This indicates that a portion of the savings and simplification goals of HIPAA have been satisfied within the confederation of Plans. Any regulations that result in a standard that does not support the Blue Cross and Blue Shield confederation's current abilities, would diminish the success that has been achieved.

Let me close by thanking you, the Subcommittee and the NCVHS for the attention given to the information contained in this letter. The Blue Cross and Blue Shield Association, and confederation of Plans, stand ready to provide their views and experiences on administrative simplification matters. We share the goal of pursuing those actions that will facilitate effective and efficient administration of health care by all members of the health care community.

Sincerely,

Frank Pokorny
Manager, Electronic Commerce and National Standards