Presented by:
David Carlson
Executive Vice President
Enterprise Systems, Inc.
1400 South Wolf Road
Wheeling, IL 60090
dcarlson@esicorp.com
Re: Perspective on Implementation of the Administrative Simplification Provisions of P. L. 104-191
My name is Dave Carlson. I am Executive Vice President and co-founder of Enterprise Systems, Inc. Thank you for the opportunity to appear before this subcommittee to answer the four questions regarding the implementation of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act of 1996 (P. L. 104-191).
To help understand my perspectives on this topic I will first provide a short background on my company, myself and then answer the questions.
Founded in 1981, Enterprise Systems, Inc. is a public healthcare information services company that develops, markets and services an integrated suite of application software products that assist healthcare providers in managing their operations. These operational information systems, which are sold primarily to acute care hospitals, focus on cost containment and address a broad range of non-clinical management needs, including materials management, operating room logistics, financial management and patient scheduling. ESi's products operate on personal computer networks and make extensive use of electronic data interchange (EDI). In 1995 ESi did over $33 million in sales and ranks in the top twenty of healthcare information systems vendors.
Today ESi's products operate in over 1,000 healthcare organizations throughout the United States and Canada. Each of these installations has dozens of EDI interfaces for patient billing and electronic commerce (purchasing), using Health Level Seven (HL7), National Council for Prescription Drug Programs (NCPDP) and X12 standards.
As chief systems architect of ESi's products I have promoted the use of EDI standards as part of our software solution. In fact we were the first healthcare vendor to implement X12 Purchasing EDI in healthcare and I was personally one of the founders of the HL7 Standard. I have also served on HL7's Executive Committee for six years as Chair-Elect, Chair and currently as Past-Chair.
Response to the questions follows.
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 (HIPAA)? In what ways will the outcome affect the members of your organization, both positively and negatively?
The software systems we provide are but a few of the many healthcare organizations such as hospitals use to manage their business. These systems must integrate in order to eliminate duplicate data entry, as well as consolidate data for administrative and clinical purposes. EDI standards reduce the cost of this integration in terms of development, implementation and support. At this point in time, we believe there exist many useful healthcare EDI standards. More importantly, we believe there exists adequate standards developing organizations like HL7, NCPDP and X12.
As a vendor we have realized significant savings by using EDI standards and we pass this onto our customers. These savings are fully realized when all the vendors' systems use the same standards. Because each vendor is free to adopt standards according to their own timetable causes ESi to modify, or customize those interfaces. Ultimately this customization is paid by the healthcare organization.
By adopting existing industry standards and mandating their use within a specific timeframe the Secretary will eliminate this customization and its associated additional cost.
We expect that in the short run this will cost healthcare organizations a small investment to upgrade their existing systems with these standards, but the overall savings will far outweigh this cost. It should be noted that most organizations are planning for a much more significant upgrade to their financial and administrative systems to address "Year 2000" issues.
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?
ESi's main concern is we are unclear about the decision-making process used for choosing EDI standards. In some areas of the healthcare business, it is possible to use different standards to accomplish the same EDI objective. If one standard is mandated over another it could disenfranchise important healthcare constituencies. ESi suggests documenting the decision making process will help all groups understand the intent with the resolution.
3. What major problems are experienced by the members of your organization with the current transactions specified under the HIPAA? For generators of the data, how readily available is the information that you need to provide for the transactions and how meaningful is that information from a clinical perspective? For users of the data, are you receiving the information you need from the transactions to pay the bill, manage the care process, etc., and what is your perception of its quality?
Users of our systems generate data. As noted above, when integrating, we often encounter vendors that do not comply with EDI standards. For example, they could have proprietary data formats, missing data, proprietary codes and vocabulary, or perhaps customized syntax. In these situations we are forced to customize our standard interfaces, which means costly custom design, development, documentation, implementation and support. While this is better than developing a completely new interface, it would be much more cost effective to not change the standard interface at all.
4. How can the goal of administrative simplification best be achieved while meeting the business needs of the stakeholders?
There are three suggestions to help make the legislation a success. First, the selection of standards must be clear, unambiguous as to implementation date and with no "loopholes." That is it must apply equally to all healthcare groups, including the government in all areas of the United States.
Second, where no standards exist for specific transactions the Standards Developing Organization with the best domain experience should be encouraged to develop one.
Finally, from working with HL7 and other standards group shows that no one standard could possibly address all the EDI needs of healthcare. The American National Standards Institute has recognized this through its formation of the Healthcare Information Standards Board, (HISB). The main purpose of this board is to coordinate healthcare standards. Part of its work effort includes catalog and registration of standards. ESi suggests the Secretary use and support this group in order to promote EDI compliance through education, implementation examples, as well as arbitrating coordination issues.