[Federal Register Volume 77, Number 172 (Wednesday, September 5, 2012)]
[Rules and Regulations]
[Pages 54663-54720]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-21238]
[[Page 54663]]
Vol. 77
Wednesday,
No. 172
September 5, 2012
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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45 CFR Part 162
Administrative Simplification: Adoption of a Standard for a Unique
Health Plan Identifier; Addition to the National Provider Identifier
Requirements; and a Change to the Compliance Date for the International
Classification of Diseases, 10th Edition (ICD-10-CM and ICD-10-PCS)
Medical Data Code Sets; Final Rule
Federal Register / Vol. 77, No. 172 / Wednesday, September 5, 2012 /
Rules and Regulations
[[Page 54664]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
45 CFR Part 162
[CMS-0040-F]
RIN 0938-AQ13
Administrative Simplification: Adoption of a Standard for a
Unique Health Plan Identifier; Addition to the National Provider
Identifier Requirements; and a Change to the Compliance Date for the
International Classification of Diseases, 10th Edition (ICD-10-CM and
ICD-10-PCS) Medical Data Code Sets
AGENCY: Office of the Secretary, HHS.
ACTION: Final rule.
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SUMMARY: This final rule adopts the standard for a national unique
health plan identifier (HPID) and establishes requirements for the
implementation of the HPID. In addition, it adopts a data element that
will serve as an other entity identifier (OEID), or an identifier for
entities that are not health plans, health care providers, or
individuals, but that need to be identified in standard transactions.
This final rule also specifies the circumstances under which an
organization covered health care provider must require certain
noncovered individual health care providers who are prescribers to
obtain and disclose a National Provider Identifier (NPI). Lastly, this
final rule changes the compliance date for the International
Classification of Diseases, 10th Revision, Clinical Modification (ICD-
10-CM) for diagnosis coding, including the Official ICD-10-CM
Guidelines for Coding and Reporting, and the International
Classification of Diseases, 10th Revision, Procedure Coding System
(ICD-10-PCS) for inpatient hospital procedure coding, including the
Official ICD-10-PCS Guidelines for Coding and Reporting, from October
1, 2013 to October 1, 2014.
DATES: Effective date: These regulations are effective on November 5,
2012. Compliance dates: Health plans with the exception of small health
plans must obtain an HPID by November 5, 2014. Small health plans must
obtain an HPID by November 5, 2015. Covered entities must use HPIDs in
the standard transactions on or after November 7, 2016. An organization
covered health care provider must comply with the implementation
specifications in Sec. 162.410(b) by May 6, 2013.
FOR FURTHER INFORMATION CONTACT: Kari Gaare (410) 786-8612, Matthew
Albright (410) 786-2546, and Denise Buenning (410) 786-6711.
SUPPLEMENTARY INFORMATION:
I. Executive Summary and Background
A. Executive Summary for This Final Rule
1. Purpose
a. Need for the Regulatory Action
This rule adopts a standard unique health plan identifier (HPID)
and a data element that will serve as an other entity identifier
(OEID). This rule also adopts an addition to the National Provider
Identifier (NPI) requirements. Finally, this rule changes the
compliance date for the ICD-10-CM and ICD-10-PCS medical data code sets
(hereinafter ``code sets'') from October 1, 2013 to October 1, 2014.
(1) HPID
Currently, health plans and other entities that perform health plan
functions, such as third party administrators and clearinghouses, are
identified in Health Insurance Portability and Affordability Act of
1996 (HIPAA) standard transactions with multiple identifiers that
differ in length and format. Covered health care providers are
frustrated by various problems associated with the lack of a standard
identifier, such as: improper routing of transactions; rejected
transactions due to insurance identification errors; difficulty in
determining patient eligibility; and challenges resulting from errors
in identifying the correct health plan during claims processing.
The adoption of the HPID and the OEID will increase standardization
within HIPAA standard transactions and provide a platform for other
regulatory and industry initiatives. Their adoption will allow for a
higher level of automation for health care provider offices,
particularly for provider processing of billing and insurance related
tasks, eligibility responses from health plans, and remittance advice
that describes health care claim payments.
(2) NPI
In the January 23, 2004 Federal Register (69 FR 3434), the U.S.
Department of Health and Human Services (HHS) published a final rule
establishing the standard for a unique health identifier for health
care providers for use in the health care system and adopting the
National Provider Identifier (NPI) as that standard (``2004 NPI final
rule''). The rule also established the implementation specifications
for obtaining and using the NPI. Since that time, pharmacies have
encountered situations where they need to include the NPI of a
prescribing health care provider in a pharmacy claim, but where the
prescribing health care provider has been a noncovered health care
provider who did not have an NPI because he or she was not required to
obtain one. This situation has become particularly problematic in the
Medicare Part D program. The addition to the NPI requirements addresses
this issue.
(3) ICD-10-CM and ICD-10-PCS Code Sets
In the January 16, 2009 Federal Register (74 FR 3328), HHS
published a final rule in which the Secretary of HHS (the Secretary)
adopted the ICD-10-CM and ICD-10-PCS (ICD-10) code sets as the HIPAA
standards to replace the previously adopted International
Classification of Diseases, 9th Revision, Clinical Modification,
Volumes 1 and 2 (diagnoses), and 3 (procedures) including the Official
ICD-9-CM Guidelines for Coding and Reporting. The compliance date set
by the final rule was October 1, 2013.
Since that time, some provider groups have expressed strong concern
about their ability to meet the October 1, 2013 compliance date and the
serious claims payment issues that might ensue if they do not meet the
date. Some providers' concerns about being able to meet the ICD-10
compliance date are based, in part, on difficulties they had meeting
the compliance deadline for the adopted Associated Standard Committee's
(ASC) X12 Version 5010 standards (Version 5010) for electronic health
care transactions. Compliance with Version 5010 and ICD-10 by all
covered entities is essential to a smooth transition to the updated
medical data code sets, as the failure of any one industry segment to
achieve compliance would negatively affect all other industry segments
and result in returned claims and provider payment delays. We believe
the change in the compliance date for ICD-10 gives covered health care
providers and other covered entities more time to prepare and fully
test their systems to ensure a smooth and coordinated transition by all
covered entities.
b. Legal Authority for the Regulatory Action
(1) HPID
This final rule implements section 1104(c)(1) of the Affordable
Care Act and section 1173(b) of the Social
[[Page 54665]]
Security Act (the Act) which require the adoption of a standard unique
health plan identifier.
(2) NPI
This final rule imposes an additional requirement on organization
health care providers under the authority of sections 1173(b) and
1175(b) of the Act. It also accommodates the needs of certain types of
health care providers in the use of the covered transactions, as
required by section 1173(a)(3) of the Act.
(3) ICD-10-CM and ICD-10-PCS
This final rule sets a new compliance date for the ICD-10 code
sets, in accordance with section 1175(b)(2) of the Act, under which the
Secretary determines the date by which covered entities must comply
with modified standards and implementation specifications.
2. Summary of the Major Provisions
a. HPID
This rule adopts the HPID as the standard unique identifier for
health plans and defines the terms ``Controlling Health Plan'' (CHP)
and ``Subhealth Plan'' (SHP). The definitions of these two terms
differentiate health plan entities that are required to obtain an HPID,
and those that are eligible, but not required, to obtain an HPID. This
rule requires all covered entities to use an HPID whenever a covered
entity identifies a health plan in a covered transaction. Because
health plans today have many different business structures and
arrangements that affect how health plans are identified in standard
transactions, we established requirements for CHPs and SHPs in order to
enable health plans to obtain HPIDs to reflect different business
arrangements so they can be identified appropriately in standard
transactions.
This rule also adopts a data element to serve as an other entity
identifier. The OEID will function as an identifier for entities that
are not health plans, health care providers, or individuals (as defined
in 45 CFR 160.103), but that need to be identified in standard
transactions (including, for example, third party administrators,
transaction vendors, clearinghouses, and other payers). Under this
final rule, other entities are not required to obtain an OEID, but they
could obtain and use one if they need to be identified in covered
transactions. Because other entities are identified in standard
transactions in a similar manner as health plans, we believe that
establishing an identifier for other entities will increase efficiency
by facilitating the use of a uniform identifier.
b. NPI
This rule requires an organization covered health care provider to
require certain noncovered individual health care providers who are
prescribers to: (1) obtain NPIs; and (2) to the extent the prescribers
write prescriptions while acting within the scope of the prescribers'
relationship with the organization, disclose them to any entity that
needs the NPIs to identify the prescribers in standard transactions.
This addition to the NPI requirements would address the issue that
pharmacies are encountering when the NPI of a prescribing health care
provider needs to be included on a pharmacy claim, but the prescribing
health care provider does not have, or has not disclosed, an NPI.
c. ICD-10-CM and ICD-10-PCS
This rule changes the compliance date for ICD-10-CM and ICD-10-PCS
from October 1, 2013 to October 1, 2014. We believe this change will
give covered entities the additional time needed to synchronize system
and business process preparation and changeover to the updated medical
data code sets.
3. Summary of Costs and Benefits
a. HPID
The HPID is expected to yield the most benefit for providers, while
health plans will bear most of the costs. Costs to all commercial and
government health plans together (Medicare, Medicaid programs, Indian
Health Service (IHS), and Veterans Health Administration (VHA)) are
estimated to be $650 million to $1.3 billion. However, commercial and
government health plans are expected to make up those costs in savings.
Further, it is our understanding that the industry will not find the
HPID requirements to be overly burdensome. Many entities have indicated
that they have delayed regular system updates and maintenance, as well
as the issuance of new health plan identification cards, in order to
accommodate the adoption of the HPID.
Health care providers can expect savings from two indirect
consequences of HPID implementation: (1) The cost avoidance of
decreased administrative time spent by providers interacting with
health plans; and (2) a material cost savings through automation of
processes for every transaction that moves from manual to electronic
implementation. HPID's anticipated 10-year return on investment for the
entire health care industry is expected to be between $1.3 billion to
$6 billion. (This estimate includes savings resulting from the ongoing
effects of adopting the HPID rather than the immediate and direct
budgetary effects.)
b. NPI
The addition to the requirements for the NPI will have little
impact on health care providers and on the health industry at large
because few health care providers do not already have an NPI. In
addition, covered organization health care providers may comply by
various means. For example, a covered organization could use a simple
verbal directive to prescribers whom they employ or contract with to
meet the requirements. Alternately, a covered organization could update
employment or contracting agreements with the prescribers. For these
reasons, we believe the additional NPI requirements do not impose
spending costs on State government or the private sector in any 1 year
of $136 million or more, the threshold specified in the Unfunded
Mandates Reform Act (UMRA).
c. Change of Compliance Date of ICD-10
According to a recent survey conducted by the Centers for Medicare
& Medicaid Services (CMS), up to one quarter of health care providers
believe they will not be ready for an October 1, 2013 compliance
date.\1\ While the survey found no significant differences among
practice settings regarding the likelihood of achieving compliance
before the deadline, based on recent industry feedback we believe that
larger health care plans and providers generally are more prepared than
smaller entities. The uncertainty about provider readiness is confirmed
in another recent readiness survey in which nearly 50 percent of the
2,140 provider respondents did not know when they would complete their
impact assessment of the ICD-10 transition.\2\
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\1\ Version 5010 and ICD-10 Readiness Assessment: Conducted
among health Care providers, payers and Vendors for the Centers for
Medicare & Medicaid Services (CMS), December 2011 (OMB Approval No:
09938-1149). The assessment surveyed 404 providers, 101 payers, and
90 vendors, which represents 0.1% of all physician practices, 3% of
hospitals, and 5% of health plans.
\2\ An impact assessment for ICD-10 is performed by a covered
entity to determine business areas, policies, processes and systems,
and trading partners that will be affected by the transition to ICD-
10. An impact assessment is a tool to aid in planning for
implementation. ``Survey: ICD-10 Brief Progress,'' February 2012,
conducted by the Workgroup for Electronic Data Interchange (WEDI).
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By delaying the compliance date of ICD-10 from October 1, 2013 to
October 1, 2014, we are allowing more time for covered entities to
prepare for the transition to ICD-10 and to conduct
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thorough testing. By allowing more time to prepare, covered entities
may be able to avoid costly obstacles that would otherwise emerge while
in production.
Savings will come from the avoidance of costs that would occur as a
consequence of significant numbers of providers being unprepared for
the transition to ICD-10. In the Regulatory Impact Analysis (RIA) of
this final rule, we estimate that there would be a cost avoidance of
approximately $3.6 billion to nearly $8 billion in this regard. This
range of estimates reflects the avoidance of two costly consequences
that could occur should the compliance date remain October 1, 2013: (1)
both health care providers and health plans could have to process
health care claims manually in order for claims to be paid; and (2)
small health care providers could have to take out loans or apply for
lines of credit in order to continue to provide health care in the face
of delayed payments.
In terms of costs, commercial health plans, medium and large
hospitals, and large physician practices are far along in their ICD-10
implementation planning, and therefore have devoted funds, resources,
and staff to the effort. According to our estimates, a 1-year delay of
the ICD-10 compliance date would add 10 to 30 percent to the total cost
that these entities have already spent or budgeted for the transition--
an additional cost to commercial entities of approximately $1 billion
to $6.4 billion. Medicare and State Medicaid Agencies have also
reported estimates of costs of a change in the compliance date in
recent informal polls. Accordingly, the calculations in the RIA in this
final rule demonstrate that a 1-year delay in the compliance date of
ICD-10 would cost the entire health care industry approximately $1
billion to $6.6 billion.
We assume that the costs and cost avoidance calculated in the RIA
will be incurred roughly over a 6- to 12-month period, from October 1,
2013 to October 1, 2014. For simplicity sake, however, both the costs
and the cost avoidance that result from a change in the compliance date
of ICD-10 are calculated over the calendar year, 2014.
We solicited comments on our assumptions and conclusions in the
RIA.
B. Background
1. Legislative and Regulatory Overview
In the April 17, 2012 Federal Register (77 FR 22950), we published
a proposed rule titled ``Administrative Simplification: Adoption of a
Standard for a Unique Health Plan Identifier; Addition to the National
Provider Identifier Requirements; and a Change to the Compliance Date
for ICD-10-CM and ICD-10-PCS Medical Data Code Sets'' (hereinafter
referred to as the April 2012 proposed rule). The April 2012 proposed
rule provides an overview of the statutory provisions and regulations
that are relevant for purposes of the April 2012 proposed rule (77 FR
22952 through 22954) and this final rule. We refer readers to that
discussion.
C. The Unique Health Plan Identifier (HPID) and the Affordable Care Act
Section 1104(c)(1) of the Affordable Care Act directs the Secretary
to promulgate a final rule establishing a unique health plan identifier
that is based on the input of a Federal advisory committee, the
National Committee on Vital and Health Statistics (NCVHS). Congress
created the NCVHS to serve as an advisory body to the Secretary on
health data, statistics, and national health information policy.
Section 1104 of the Affordable Care Act authorizes the Secretary to
promulgate the rule on an interim final basis and indicates that such
rule shall be effective not later than October 1, 2012.
Health plans are currently identified for different purposes using
different identifiers that have different sources, formats, and
meaning. A health plan may have multiple identifiers, each assigned by
a different organization for a different purpose. The following
discussion focuses on the types of identifiers that currently may be
used to identify health plans in standard transactions. State
regulators, for instance, use the National Association of Insurance
Commissioners' (NAIC) Company code to identify health plans when a
health plan is licensed to sell or offer health insurance in a
particular State. The U.S. Department of Labor (DOL) and the Internal
Revenue Service (IRS) use the 9-digit Employer Identification Number
(EIN) and a 1-digit alphabetic or a 3-digit plan number to identify
health plans. Employers, sole proprietorships, corporations,
partnerships, non-profit associations, trusts, estates of decedents,
government agencies, certain individuals, and other business entities,
use EINs to identify health plans for a host of purposes and
transactions. The IRS uses the EIN to identify taxpayers that are
required to file various business tax returns. Health care
clearinghouses assign proprietary identifiers to health plans for use
in standard transactions. Multiple clearinghouses may identify the same
health plan using different proprietary identifiers in different
covered transactions. Health plans may use other identifiers, such as a
tax identification number (TIN) or an EIN, to identify themselves in
the standard transactions, to more easily integrate into existing
proprietary systems, or for use on health insurance cards that they
issue to health plan enrollees.
Not only are health plans identified using a variety of
identifiers, but these identifiers have different formats. For
instance, some identifiers are alphanumeric while other identifiers are
only numeric. Identifiers also differ in length; for example, NAIC
codes are typically five digits while an EIN is nine digits.
The current versions of the adopted standards (ASC X12N and NCPDP)
allow health plans to use these and other identifiers in standard
transactions. Therefore, for the covered transactions there is
currently no requirement for consistency in the use of identifiers for
health plans. The transaction standards implementation guides, though,
do provide for the use of the HPID once its use is mandated and during
a phase-in period. Prior to this rule, health care providers, health
plans, and health care clearinghouses consequently could use EINs,
TINs, NAIC numbers, or health care clearinghouse or health plan-
assigned proprietary numbers to identify health plans in standard
transactions. Industry stakeholders, especially health care providers,
have indicated that the lack of a standard unique health plan
identifier has resulted in increased costs and inefficiencies in the
health care system. Health care providers are frustrated by problems
with: the routing of transactions; rejected transactions due to
insurance identification errors; difficulty determining patient
eligibility; and challenges resolving errors identifying the health
plan during claims processing.
The Affordable Care Act specifically calls for the establishment of
a unique identifier for health plans. There are however, other entities
that are not health plans but that perform certain health plan
functions and are currently identified in the standard transactions in
the same fields using the same types of identifiers as health plans.
For example, health care clearinghouses, third party administrators
(TPAs), and repricers often contract with insurance companies, self-
funded group health plans, and provider- or hospital-run health plans
to perform claims administration, premium collection, enrollment, and
other administrative functions. As explained later in this final rule,
we are adopting a data element--an other entity identifier--to
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serve as an identifier for these other entities.
D. The National Committee on Vital and Health Statistics (NCVHS)
The NCVHS has been assigned a significant role in the Secretary's
adoption of all standards, code sets, and operating rules under HIPAA,
including the unique health plan identifier. In section 1104(c)(1) of
the Affordable Care Act, the Secretary is directed to conduct
rulemaking to establish a unique health plan identifier based on input
of the NCVHS.
The NCVHS Subcommittee on Standards fulfilled these duties by
conducting public hearings on the health plan identifier on July 19
through 21, 2010. Industry stakeholders, including representatives from
health plans, health care provider organizations, health care
clearinghouses, pharmacy industry representatives, standards
developers, professional associations, representatives of Federal and
State public programs, the Workgroup on Electronic Data Interchange
(WEDI), the National Uniform Billing Committee (NUBC), the National
Uniform Claim Committee (NUCC), and individuals with health plan
identifier proposals provided in-person and written testimony.
Stakeholder testimony at the hearings focused on the use and need for
an HPID to: facilitate the appropriate routing of transactions; reduce
the cost of managing financial and administrative information; improve
the accuracy and timeliness of claims payment; and reduce
dissatisfaction among health care providers and patients/members by
improving communications with health plans and their intermediaries.
Stakeholders provided suggestions on the types of entities that need to
be identified in standard transactions, those that should be eligible
to obtain an HPID, and the level of enumeration for each plan (for
example, the legal entity, product, benefit package etc.).
For a full discussion of the key topics and recommendations from
the July 19 through 21, 2010 NCVHS hearings, we refer the reader to the
April 2012 proposed rule (77 FR 22950). For the complete text of the
NCVHS' observations and recommendations, go to http://www.ncvhs.hhs.gov/100930lt1.pdf.
E. Definition of Health Plan
The regulatory definition of health plan at 45 CFR 160.103 was
initially adopted in the August 17, 2000 Standards for Electronic
Transactions final rule (65 FR 50312) (hereafter Transactions and Code
Sets final rule). The basis for the additions to, and clarifications
of, the definition of health plan is further discussed in the preamble
to the December 28, 2000 final rule (65 FR 82478 and 82576) titled
``Standards for Privacy of Individually Identifiable Health
Information'' (hereinafter referred to as the Privacy Rule). For
additional information on the definition of health plan, we refer
readers to these rules.
F. The April 2012 Proposed Rule and Analysis of and Responses to Public
Comments
In the April 2012 proposed rule, we proposed the following:
The adoption of the standard for a national unique HPID
for use in all transactions for which the Secretary has adopted a
standard (hereinafter referred to as standard transactions).
An OEID for use by entities that do not meet the
definition of a health plan, but that need to be identified in the
standard transactions.
Requirements and provisions for the implementation of both
the HPID and OEID.
Additions to the NPI requirements mandating that covered
health care providers require certain noncovered individual health care
providers who are prescribers to obtain NPIs.
To change the compliance date for ICD-10 code sets from
October 1, 2013 to October 1, 2014.
In the April 2012 proposed rule, we solicited public comments on a
number of proposals. In response to our solicitation, we received
approximately 536 timely pieces of correspondence. Summaries of the
public comments that are within the scope of the proposed rule and our
responses to those comments are set forth in the various sections of
this final rule under the corresponding headings.
II. Adopting a Standard for a Unique Health Plan Identifier (HPID)
A. The Health Plan Identifier
We proposed HPID as the standard unique identifier for health
plans. We also proposed: (1) Instructions and guidance concerning how
health plans may obtain an HPID; (2) the requirements that covered
entities will have to meet to use the HPID in standard transactions;
and (3) provisions for the HPID in a new subpart (subpart E) at 45 CFR
part 162.
1. Definition of ``Controlling Health Plan'' and ``Subhealth Plan''
Health plans today have many different business structures and
arrangements that affect how health plans are identified in standard
transactions. There is often a ``parent'' corporation that meets the
definition of health plan, which may be controlled by entities, such as
holding companies, that do not meet the definition of health plan. This
``parent'' health plan may own and operate several other entities and
organizations, which may also meet the definition of a health plan.
While these individual health plans that are owned by the same
``parent'' corporation may have their own EIN or NAIC number, they may
all use a single identifier in covered transactions because of data
processing arrangements. In these situations, some health plans may not
need to be identified separately in covered transactions, and may not
need their own health plan identifier. To differentiate between health
plan entities that would be required to obtain an HPID, and those that
would be eligible, but not required, to obtain an HPID, we proposed and
are adopting in this final rule, to categorize health plans as
controlling health plans (CHPs) and subhealth plans (SHPs).
The definitions of CHPs and SHPs are established in 45 CFR 162.103
as follows:
a. Controlling Health Plan (CHP)
A CHP means a health plan that--(1) controls its own business
activities, actions, or policies; or (2)(i) is controlled by an entity
that is not a health plan; and (ii) if it has a subhealth plan(s),
exercises sufficient control over the subhealth plan(s) to direct its/
their business activities, actions, or policies.
We suggested that the following considerations may be helpful in
determining if an entity is a CHP:
Does the entity itself meet the definition of health plan
at 45 CFR 160.103?
Does either the entity itself or a non health plan
organization control the business activities, actions, or policies of
the entity?
If the answer to both questions is ``yes,'' then the entity would
meet the definition of CHP. We proposed that an entity that meets the
definition of CHP would be required to obtain a health plan identifier.
b. Subhealth Plan (SHP)
We proposed that a SHP means a health plan whose business
activities, actions, or policies are directed by a controlling health
plan.
We suggested that the following considerations may be helpful in
determining whether an entity is a SHP:
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Does the entity meet the definition of health plan at
Sec. 160.103?
Does a CHP direct the business activities, actions, or
policies of the health plan entity?
If the answer to both questions is ``yes,'' then the entity meets
the definition of SHP. We proposed that a SHP would not be required to
obtain an HPID, but may choose to obtain an HPID, or its CHP may obtain
an HPID on its behalf.
Comment: We received a few comments on the proposed definitions of
CHP and SHP. Some commenters liked the proposed definitions, believing
they would aid health plans in determining the appropriate enumeration
level. A few commenters suggested alternatives to either broaden or
narrow the definition of CHP. Commenters that requested a broader
definition were generally concerned that the definition was not
sufficiently broad to encompass the legal structures utilized by
various third party payors. As a result, ambiguity in the standard
transactions occurs because of the numerous different ways in which
health plans functions are performed by different entities and the
numerous ways the term ``health plan'' is interpreted. These commenters
suggested that HHS expand the definition of CHP to encompass any and
all potential legal relationships between holding companies and their
subsidiaries that hold health insurance licenses. These commenters also
requested that after HHS broadens the definition of CHP, that the CHP
be required to obtain a separate HPID for each of the health plans'
subsidiaries involved in the healthcare delivery system, specifically
for the entities that are involved as fiduciaries with legal
responsibilities for paying claims, any administrator responsible for
administering any aspect of the benefits, and any holder of the
participation contract with the physicians or other health care
providers. These commenters suggested that HHS revisit the definition
of health plan at 45 CFR 160.103 to include each of the intermediaries
involved in the multitude of transactions that occur in administering
payment.
Response: HHS was tasked with creating a unique health plan
identifier. The term ``health plan'' is defined in section 1171(5) of
the Act and at 45 CFR 160.103 of the regulations. We do not believe
Congress intended to include in the definition of health plan entities
that solely perform the functions of third party administrators or
repricers. In addition, while we recognize that health plans and other
entities that perform health plan functions may be identified in
similar fields in the standard transactions, they are distinctly
different organizations with different purposes. Furthermore, we
proposed the adoption of a data element that will serve as the OEID
discussed in section II.B. of this final rule to meet industry's need
for a standard identifier for entities that do not meet the definition
of health plan, but that perform related functions.
Comment: A commenter suggested that HHS narrow the definition of a
CHP so that it means ``a health plan that--(1) controls its own
business activities, actions, and policies; or (2) (i) is controlled by
an entity that is not a health plan; and (ii) if it has a subhealth
plan(s) (as defined in this section), exercises sufficient control over
the subhealth plan(s) to direct its/their business activities, actions,
and policies.''
Response: We believe that a narrow definition of CHP would not
capture all of the ``parent'' organizations that should be required to
obtain HPIDs for themselves and be authorized to obtain HPIDs for their
subhealth plans, to accomplish the goals at this stage of
standardization. We distinguish between CHPs and SHPs because health
plans have different business structures and arrangements that
determine how they are identified in the standard transactions. We
recognize that different organizations may divide business
responsibilities in various ways. For example, a ``parent''
organization that meets the definition of health plan may dictate some
business activities, actions, or policies, but may not control all
business activities, actions, or policies of entities that they own or
operate that also meet the definition of health plan. Given the
variations in structures and relationships, we used the word ``or''
rather than ``and'' to provide more flexibility to health plans and
ensure that ``parent'' organizations are classified as CHPs and are
required to obtain HPIDs.
After consideration of the public comments received, we are
finalizing the definitions of CHP and SHP without modification.
2. Use of the HPID
In 45 CFR 162.510, we proposed that all covered entities would be
required to use an HPID where a covered entity identifies a health plan
in a covered transaction. We proposed further that, if a covered entity
uses a business associate to conduct standard transactions on its
behalf, the covered entity must require its business associate to use
an HPID to identify a health plan where the business associate
identifies a health plan in all covered transactions.
We proposed in Sec. 162.506 that the HPID could also be used for
any other lawful purpose, and provided some examples of permitted uses
including the following:
Health plans may use HPIDs in their internal files to
facilitate processing of health care transactions.
A health plan may use an HPID on a health insurance card.
The HPID may be used as a cross-reference in health care
fraud and abuse files and other program integrity files.
Health care clearinghouses may use HPIDs in their internal
files to create and process standard and nonstandard transactions and
in communications with health plans and health care providers.
HPIDs may be used in patient medical records to help
specify patients' health care benefit package(s).
HPIDs may be used to identify health plans in electronic
health records (EHRs).
HPIDs may be used to identify health plans in Health
Information Exchanges (HIEs).
HPIDs may be used to identify health plans in Federal and
State health insurance exchanges.
HPIDs may be used to identify health plans for public
health data reporting purposes.
Comment: Many commenters requested further clarification of the
purpose, intent, and use of the HPID, specifically if and how the HPID
should be used in the standard transactions. For instance, they
suggested more guidance on if and where the HPID should be used in the
standard transactions and on the ISA envelope.
Response: We direct these commenters to the adopted transaction
standards, the relevant implementation guides, and as appropriate,
adopted operating rules, for direction on if and when to use the HPID.
We note that the only required use of the HPID is that a covered entity
must use an HPID to identify a health plan that has an HPID in the
standard transactions where the covered entity is identifying a health
plan in the standard transaction. This final rule does not require that
health plans now be identified in the standard transactions if they
were not identified before this rule. For instance, if a covered entity
is currently identifying a health plan as the information source in the
eligibility response transaction (271), Loop 2100A, Segment NM1--
information source name, the covered entity will be required to use an
HPID to identify that health plan as the information source once the
HPID is
[[Page 54669]]
required. If a covered entity is currently identifying a third party
administrator as the information source, the covered entity can
continue to identify that third party administrator as the information
source using whatever identifier the third party administrator uses
after the adoption of the HPID. We anticipate we will provide
additional examples of how the HPID can be used in the standard
transactions outside of this final rule.
In their request for clarification, some of these commenters
appeared confused regarding the affirmative obligation in 45 CFR
162.510 for covered entities to use an HPID to identify a health plan
in standard transactions, when a SHP may not have its own HPID. In
those cases, covered entities would use the HPID that the SHP indicates
should be used to identify that SHP, which may be the HPID of its
controlling health plan. If an entity has in good faith sought to
identify the HPID that should be used for a SHP that has no HPID and
has been unsuccessful, then it obviously cannot use an HPID to identify
that SHP. However, we would anticipate that those circumstances would
be rare. Nevertheless, consistent with these commenters' request to
clarify the requirement, we have inserted ``that has an HPID''
immediately after ``health plan'' in Sec. 162.510(a) and (b). We
consider a health plan as ``having an HPID'' if that health plan
communicates with its trading partners that it consistently uses a
particular HPID, even if the HPID it uses is associated with another
health plan, such as its controlling health plan.
Comment: A few commenters stated that they saw the primary purpose
of the HPID as a way to eliminate the ambiguity that currently exists
in the covered transactions. They note that various nonhealth plans
perform certain administrative functions currently performed by health
plans.
Response: These comments imply that the Department should expand
the definition of ``health plan'' to include entities that are not
health plans as defined by statute and regulation. Previously, we
addressed why this rule does not expand the definition of health plan,
and further, why we take an incremental approach in the adoption of the
HPID and OEID. We seek to allow the industry time and flexibility for
implementing these unique identifiers. We created the other entity
identifier to provide standardization for these entities that do not
meet the definition of health plan, for instance. While the use of the
OEID is voluntary, its use can facilitate the standardization of
electronic administrative and financial transactions.
Comment: Some commenters expressed concern that the HPID
requirements and provisions are not clearly defined for industry
implementation. Commenters recommended that pilot testing occur prior
to the adoption of the HPID, to ensure proper and consistent
implementation. Some commenters suggested that the Department work with
the NCVHS to determine if operating rules for the use of HPID are
necessary to clarify any implementation issues that arise following
HPID implementation.
Response: We anticipate this rule serving as a first step in
standardizing the way health plans are identified in the standard
transactions. We note that the only required use of the HPID is to
identify a health plan that has an HPID where a health plan is
identified in the standard transactions. Health plans, except small
health plans, have until 2 years after the effective date of this rule
to obtain HPIDs. Small health plans have until 3 years after the
effective date of this rule to obtain HPIDs. Covered entities are not
required to use HPIDs in the standard transactions until 4 years after
the effective date of this rule. (For further discussion of the HPID
compliance date see section II.E. of this final rule.) The rule
provides ample time for covered entities to develop their own
implementation timelines, which we suggest could include pilot testing,
and milestones to ensure they meet the compliance dates.
As we explained in the April 2012 proposed rule, a health plan may
need to be identified in different fields in the transactions and these
fields may not always require the use of a health plan identifier. For
instance, the information source, in the eligibility response
transaction (271), Loop 2100A, Segment NM1, may be a health plan, or an
other entity that performs health plan functions, like a third party
administrator. So after the applicable compliance date of the HPID, if
a covered entity is identifying a health plan as the information source
in the eligibility response transaction (271), Loop 2100A, Segment NM1,
then the covered entity will be required to use an HPID to identify
that health plan in the standard transactions. However, if after the
adoption of the HPID, the covered entity is identifying a third party
administrator as the information source in the eligibility response
transaction (271), Loop 2100A, Segment NM1, the covered entity can use
whatever identifier it was using previously or an OEID to identify that
third party administrator. This final rule does not impose any new
requirement for when to identify a health plan that has an HPID in
standard transactions. It merely requires the use of the HPID where the
health plan is identified. We did provide an example of a use of the
HPID in transaction standards in the April 2012 proposed rule (77 FR
22961).
Comment: Some commenters question what the HPID will actually
accomplish.
Response: The establishment of the HPID and the requirement to use
it in the standard transactions to identify health plans is another
step towards standardization. In standard transactions, the HPID will
replace proprietary identifiers for health plans which have different
lengths and formats. In addition, it will provide public access to
information necessary to accurately identify health plans. This will
save providers time when verifying a health plan's identity.
Standardization of the health plan identifier is also expected to
ameliorate some electronic transaction routing problems. The HPID and
OEID will add consistency to identifiers, may provide for a higher
level of automation, particularly for provider processing of the X12
271 (eligibility response) and X12 835 (remittance advice). In the case
of the X12 835, the HPID and OEID may allow reconciliation of claims
with the claim payments to be automated at a higher level. While the
implementation of HPID, in and of itself, may not immediately provide
significant monetary savings for covered entities, it is expected to
provide significant time savings by immediately resolving certain
transaction routing problems.
Comment: Commenters raised issues about whether the early use of
the HPID in the standard transactions could result in denied or
misrouted claims with the potential to cause privacy or security
breaches.
Response: We believe the HPID will reduce denied and misrouted
claims once fully implemented, given that all HPIDs and information
related to HPIDs will be available in one database. While we recognize
that there is the potential for misrouted or denied claims during the
transition to the HPID, we believe that privacy or security breaches
can be avoided, particularly with prior implementation planning. We
believe there is more than adequate time between the compliance date
for when health plans obtain HPIDs and when covered entities are
required to use HPIDs in the standard transactions, which will allow
industry ample opportunity to make system changes and perform extensive
testing with trading partners. This additional time
[[Page 54670]]
and phased-in approach to compliance should reduce denied or misrouted
claims during the early use of the HPID.
Comment: Some commenters requested more specific guidance about how
the HPID should be used in business models, for instance in situations
where one health plan may be adjudicating the claim and a separate
health plan may hold the actual contract with the provider.
Response: The implementation of the HPID does not require a change
to health plans' business models. Changing a health plan's current
identifiers to an HPID does not change the structural organization and/
or its contractual relationships with other entities, or whether it is
identified in the standard transactions. For example, if the health
plan that adjudicates the claim needs to be identified in a standard
transaction, then the HPID of that health plan should be used. If the
health plan that holds the actual contract with the provider needs to
be identified in a standard transaction, then the HPID of that health
plan should be used.
Comment: Several commenters raised concerns about the use of the
HPID on health plan members' ID cards. Commenters were split between
making the use of the HPID on member ID cards mandatory or optional.
Others raised concerns that the cost of re-issuing all member ID cards
far outweighs any benefit.
Response: In this rule, we only require the use of the HPID in the
standard transactions. The HPID is permitted to be used for any other
lawful purpose and inclusion of the HPID on health plan members' ID
cards is just one example of an optional use of the HPID. While health
plans are permitted to put the HPID on member ID cards, we do not
require it, so the determination of whether to reissue cards, and the
associated costs, lie with the health plans.
Comment: Other commenters recommended that health plans be required
to comply with the health plan ID card standards set forth in the
Workgroup for Electronic Data Interchange (WEDI) Health ID Card
Implementation Guide, Version 1.0 (November 30, 2007).
Response: We did not address or propose the adoption of a standard
format for a health plan identification card. The goal of this rule was
to adopt a standard health plan identifier for use in the standard
transactions. While the use of the HPID on a health plan ID card is a
permitted use, we did not require it in this rule because further
analysis and industry feedback is needed on standard identification
cards after the implementation of the HPID.
After consideration of the public comments, we are finalizing the
required and permitted uses of the HPID with the minor clarifying
modifications to Sec. 162.510(a) and (b), adding ``that has an HPID''
immediately after ``health plan.''
3. Health Plan Identifier Requirements
a. Requirements and Options for Obtaining an HPID
This final rule discusses how CHPs and SHPs will obtain an HPID
from the Enumeration System. In 45 CFR 162.512, we proposed to require
a CHP to obtain an HPID for itself from the Enumeration System. In
addition, we proposed that a CHP may obtain an HPID from the
Enumeration System for its SHP, or direct a SHP to obtain an HPID from
the Enumeration System. We proposed that any SHP would be able to
obtain an HPID regardless of whether or not its CHP directed it to
obtain an HPID. While a CHP could only obtain one HPID for itself, a
CHP could use the HPID of its SHPs for any lawful purpose.
While a CHP would be required to obtain an HPID, there would be
different options available for the enumeration of SHPs based on a
CHP's organizational structure and business needs. The CHP would
analyze its organizational structure to determine if and which of its
SHPs need an HPID based on whether the SHP needs to be identified in
covered transactions. We encouraged CHPs and SHPs to coordinate their
HPID applications to prevent duplication and possible confusion. See
Table 1 for a comparison of requirements for obtaining an HPID.
Table 1--Enumeration Requirements and Options for CHPs and SHPs
------------------------------------------------------------------------
Enumeration
Entity requirements Enumeration options
------------------------------------------------------------------------
CHPs........................ Must obtain an HPID May obtain an
for itself. HPID(s) for its
SHP(s).
May direct its
SHP(s) to obtain an
HPID(s).
SHPs........................ Not required to May obtain an HPID
obtain an HPID. at the direction of
its CHP.
May obtain an HPID
on its own
initiative.
------------------------------------------------------------------------
For further illustrations and examples of enumeration options to
demonstrate the ways a CHP could choose to enumerate itself and its
SHPs, see the April 2012 proposed rule (77 FR 22957 through 22962).
In the proposed rule, we clarified that self-insured group health
plans are included in the definition of health plan in Sec. 160.103
and therefore will need to obtain a health plan identifier if they meet
the definition of a CHP. We specifically mentioned self-insured group
health plans as there was industry discussion about whether these
health plans should be required to obtain HPIDs because they do not
often need to be identified in the standard transactions. Some industry
stakeholders noted that many self-insured group health plans contract
with third party administrators or other entities to perform health
plan functions on their behalf and those entities, not the self-insured
group health plans, may be identified in the standard transactions.
Therefore, many in the industry suggested not requiring self-insured
group health plans to obtain HPIDs, while others recommended requiring
these plans to obtain HPIDs because they are typically the financially
responsible party. Given that self-insured group health plans are
included in the definition of health plan and potentially need to be
identified in the standard transactions, we proposed that they be
required to obtain an HPID if they meet the definition of a CHP. We
solicited comments on this issue.
b. Options for Enumeration of Health Plans
As discussed previously in this final rule, stakeholders at the
NCVHS hearings expressed differing viewpoints on the appropriate level
of health plan enumeration. Some industry stakeholders encouraged
health plan enumeration at a very high level (for example, at the level
of the health plan's legal entity), while other stakeholders supported
enumeration at the benefit package level. We analyzed and considered
these viewpoints when we developed the policies associated with HPID
adoption and implementation.
[[Page 54671]]
In the April 2012 proposed rule, we considered multiple uses for
the HPID. We determined that the primary purpose of the HPID was for
use in standard transactions in order to identify health plans in the
appropriate loops and segments and to provide a consistent standard
identifier for covered entities to use when identifying health plans in
standard transactions. We analyzed the transaction standards to
determine the existing segments and loops where a health plan may need
to be identified, what identifiers are currently used in those loops
and segments to identify health plans, and what information a loop or
segment conveys when a health plan is being identified. We also
carefully considered the information that industry stakeholders
reported was missing in covered transactions, such as information
related to patient financial responsibility.
We determined that much of the information testifiers wanted to
obtain from the HPID might already be available in other parts of the
transaction standards and associated operating rules. To illustrate
this point, in the proposed rule, we discussed the CAQH CORE 154
Eligibility and Benefits 270/271 Data Content Rule, which we adopted
through an interim final rule with comment period in the July 8, 2011
Federal Register (76 FR 40458). That operating rule is to be used with
the ASC X12 Version 5010 Standard for Electronic Data Interchange
Technical Report Type 3--Health Care Eligibility Benefit Inquiry and
Response (270/271) (hereinafter referred to as the Version 5010 270/271
eligibility inquiry/response standard. The operating rule requires
certain additional information to be included in the Version 5010 270/
271 eligibility inquiry/response transaction standard, including
information about a patient's health plan name, coinsurance, copayment,
and deductibles including in-network and out-of-network, as well as
remaining deductible amounts. Moreover, we believe that the transaction
standards themselves could more appropriately address many of the other
issues raised by stakeholders about the appropriate level of
enumeration. Therefore, HPID does not need to provide the level of
detail that some testifiers suggested.
We discussed in the April 2012 proposed rule how requiring health
plans to enumerate at a more granular level may prove burdensome to the
industry as benefit package information and offerings change frequently
and would require constant updates by health plans. For example, health
care providers would need to update their software and systems
frequently to ensure the accuracy of information. A failure of either
health care providers or health plans to ensure that the HPIDs and the
corresponding health plan information is up-to-date could result in
increased time spent by health plan and health care provider staff to
ensure the most accurate information is being used for eligibility
determinations and claim payments.
As discussed in the April 2012 proposed rule, we developed the
policies associated with HPID adoption and implementation after
considering stakeholder testimony, analyzing transaction standards'
loops and segments where the health plan identifier will be used, and
taking into account newer versions of the transaction standards and the
adoption of associated operating rules.
We received many comments on the enumeration requirements for CHPs
and SHPs.
Comment: Some commenters generally supported our proposal that a
CHP be required to obtain an HPID, while a SHP would be eligible but
not required to obtain one. These commenters supported the flexibility
this approach provided to a health plan to determine the appropriate
level of enumeration for its organization and enumerate itself in a way
that supports its business needs.
Response: We thank commenters for their support.
Comment: Some commenters emphasized that it is critical that the
approach in the proposed rule be finalized so that health plans have
the flexibility to determine how the health plan chooses to enumerate
itself for use in the standard transaction. For instance, whether it
chooses to have one HPID for its entire organization or whether it
chooses to obtain separate HPIDs for its subhealth plans. While these
commenters supported the proposed enumeration requirements and required
uses of the HPID, they expressed concerns that future rulemaking could
result in requiring divisions within health plans to be enumerated.
Response: While we appreciate the commenters' support for our
proposed approach to establishing an HPID, we find the concerns
expressed about future rulemaking to be outside the scope of this rule.
Nevertheless, we anticipate that future changes in the requirements or
prohibitions will be aligned with industry business needs and
experience.
Comment: A commenter expressed concern about limiting a health plan
to a single HPID. This commenter was concerned that a single HPID may
present issues from a routing perspective because a single health plan
may use multiple processing systems or administrators. The commenter
also noted that if a health plan were limited to being enumerated with
a single HPID, there would need to be intelligence associated with the
HPID, such as a data element to redirect incoming transactions from the
single receiving site to the multiple processing sites. This commenter
further suggested that a health plan be able to obtain and use
subordinate identifiers for routing purposes.
Response: This final rule limits CHPs to obtaining one HPID for
themselves. Permitting a CHP to obtain multiple HPIDs would lead to
unnecessary complexity and potential confusion for no discernible
benefit. Any additional information necessary for the transaction
should be included within the transaction standard, implementation
specifications, or associated operating rule. However, we note that we
do allow CHPs to obtain HPIDs for their subhealth plans based on their
business needs and arrangements and allow CHPs to use the HPID of their
SHPs in the standard transactions.
Comment: Some commenters supported not enumerating at a more
granular level of enumeration because certain information about patient
eligibility or financial information can be provided in other data
fields in the transactions. They stressed that a more granular approach
would add significant administrative costs to the implementation of the
HPID and would require the creation of a clearinghouse to maintain the
various separate identifiers and this would not benefit vendors, health
care providers or health plans.
Response: We agree with these commenters that a greater level of
granularity has the potential to be unnecessarily burdensome and
expensive for all segments of industry. If the industry determines that
additional information is needed for certain electronic transactions,
changes to the transaction standards would likely be more appropriate.
Comment: Commenters recommended that HHS work with the Operating
Rules Authoring Entity for the applicable transactions if additional
information is needed in the future.
Response: The Affordable Care Act authorized the Secretary to
establish a review committee to conduct hearings to evaluate and review
the adopted standards and operating rules. The
[[Page 54672]]
review committee will provide recommendations for updating and
improving such standards and operating rules. We believe that the
industry will have sufficient opportunities to provide information
about developing needs and ways to address those needs with possible
changes to standards and operating rules.
Comment: Some commenters suggested that HHS provide additional
guidance on enumeration to support health plans in making informed
decisions on the most appropriate approach for enumeration. These
commenters cautioned that, without more guidance, the proposed
enumeration approach would result in health plans enumerating their
organizations in different ways and this lack of consistency across
health plans would impact the industry.
Response: We do not believe additional guidance on enumeration is
needed at this time. This final rule seeks in large part to substitute
the use of proprietary and other non-standard identifiers with a unique
standard health plan identifier in HIPAA standard transactions. Covered
entities nevertheless retain certain flexibility to use identifiers in
ways that best serve their own business needs, even within standard
transactions. As health plans are enumerated, HHS will monitor the
industry and assess whether any clarification or guidance is necessary.
More likely, the industry will quickly identify best practices for
health plan enumeration and HHS will seek to facilitate the
dissemination of this information.
Comment: Commenters urged HHS to require a greater level of health
plan enumeration granularity. For example, some commenters suggested
that a patient-specific benefit plan ID is needed. They stated that an
identifier should include this information because from the perspective
of patients, physicians, and other health care providers, the patient-
specific benefit plan information is routinely necessary prior to the
patient encounter. They also stated that while the current set of
adopted operating rules will ensure additional information is
available, they will not provide all the information associated with
the patient-specific benefit plan the commenters believe is needed.
They suggested that the need for a patient-specific benefit plan ID
will only increase as the number of people purchasing coverage directly
from Exchanges grows. According to these commenters, this information
is needed at the point of service, on the eligibility response, and on
the electronic remittance advice (ERA). Currently this information is
only required to be provided on the ERA in text, which makes automation
difficult. These commenters suggested that having specific benefit plan
information associated with the HPID would improve automation.
Response: Given our gradual approach to standardization, a patient-
specific benefit plan identifier is a more specific requirement than we
believe would be appropriate to impose at this early stage. As other
commenters have suggested, a more granular level of enumeration has the
potential to cause ongoing administrative burden and would need to be
continually updated by both the health plans and the providers to
ensure accuracy. We understand that this first step of standardization
for the identification of health plans is not going to achieve as much
transparency initially as some commenters state is needed in the
transactions. After experience with the implementation and use of the
HPID, we will work with industry to explore next steps of enumeration
that may include patient-specific benefit plan information. We also
want to caution that we do not believe a standard identifier alone will
be the final solution to all of the transparency challenges in standard
transactions. The health plan identifier is foundational and will allow
the gradual move towards greater utility.
Comment: Some commenters emphasized the need to enumerate each SHP
because there are situations where the specific benefit package of that
health plan under which services were performed needs to be identified,
such as with coordination of benefit transactions or laboratory
services.
Response: For this phase of implementation of HPID, we determined
that it would not be necessary to require each SHP to obtain an HPID
because health plans are essentially transitioning their multiple
proprietary identifiers to HPIDs. We are not changing what is required
to be identified in the standard transaction so if there are situations
where the SHP may need to be identified, such as with laboratory
services or coordination of benefit transactions, it will be up to the
CHP within the limitations of this rule to determine how that SHP is
identified in the standard transaction to ensure continuous flow of the
transactions. We believe that at this stage of transition, it is wise
to allow CHPs to make these decisions based on their business needs and
structures.
In a previous response, we provided clarification about the
affirmative obligation in 45 CFR 162.510 for covered entities to use an
HPID to identify a health plan in standard transactions, when a SHP may
not have its own HPID, and we believe the discussion is applicable to
this comment. As we explained previously, in those cases, covered
entities would use the HPID that the SHP indicates should be used to
identify that SHP, which may be the HPID of its controlling health
plan. If an entity has in good faith sought to identify the HPID that
should be used for a SHP that has no HPID and has been unsuccessful,
then it obviously cannot use an HPID to identify that SHP. While we
anticipate those circumstances would be rare, we have inserted ``that
has an HPID'' immediately after ``health plan'' in Sec. 162.510(a) and
(b). We consider a health plan as ``having an HPID'' if that health
plan communicates with its trading partners that it consistently uses a
particular HPID, even if the HPID it uses is associated with another
health plan, such as its controlling health plan.
Comment: It was also suggested by commenters that there be a
national standard fee schedule identifier that is separate from the
HPID. A payer-assigned fee schedule identifier and a mandate that each
entity that serves as a contracting agent issue a unique fee schedule
identifier in conformance with that standard for each separate fee
schedule would allow physicians and other health care providers to
automatically post and reconcile claims payments from multiple payers
for multiple products.
Response: For this rule, we decided to take a gradual approach
towards standardization of the health plan identifier and not attempt
to address all information needs that industry wants from the standard
transactions with a health plan identifier. We understand that other
types of identifiers, such as a payer-assigned fee schedule identifier
may be useful in the future to move towards a system where health care
providers can automatically post and reconcile payments. For some of
the suggested identifiers, we may not have the necessary legal
authority to adopt them, and regardless, we believe this final rule
provides a foundation that can be built upon in the future.
Comment: We received numerous comments on enumeration of self-
insured group health plans. Some commenters supported the requirement
because self-insured group health plans may need to be identified as
the financially responsible entity in the standard transactions. A
majority of commenters recommended that only self-insured group health
plans that are conducting the standard transactions directly should be
required to be
[[Page 54673]]
enumerated since few self-insured group health plans directly conduct
transactions. These commenters recommended that if business needs are
identified that require the identification of a self-insured group
health plan, changes to the standards or operating rules should be
considered to address these issues.
Response: The definition of health plan at 45 CFR 160.103
specifically includes the self-insured group health plans. While self-
insured group health plans will be required to obtain an HPID to the
extent they meet the definition of a CHP, the HPID of a self-insured
group health plan will only need to be used by covered entities if that
self-insured group health plan is identified in the standard
transactions. While many commenters recommended that a self-insured
group health plan only be required to obtain an HPID if it needs to be
identified in the standard transactions, we believe it is important
that the requirement to obtain an HPID extend to any entity that meets
the definition of CHP. Therefore, we require self-insured group health
plans to obtain an HPID to the extent they meet the definition of CHP.
Comment: Some commenters also discussed operational challenges that
health plans functioning as TPAs would encounter because of the
requirement that self-insured group health plans obtain an HPID. These
commenters stated that self-insured group health plans would need to
enumerate on behalf of their plan sponsors so that they can be
identified in the standard transactions.
Response: We are not requiring that the HPID of the self-insured
group health plan be used to identify that self-insured group health
plan, if the transaction standard does not require it. For example, if
a covered entity is identifying the self-insured group health plan in
the standard transaction, then the covered entity must use the HPID of
the self-insured group health plan. If, however, the covered entity was
not identifying the self-insured group health plan prior to this final
rule, because, for example, it was identifying either another health
plan or an entity such as a TPA, then the covered entity would not be
required to identify a self-insured group health plan. This rule does
not require that a self-insured group health plan be identified in the
standard transactions.
Comment: Commenters also requested clarification about what
identifier a health plan should use in the standard transaction if it
is functioning as a third party administrator.
Response: The primary purposes of this rule include adopting a
unique health plan identifier and establishing the enumeration system
for the HPID. While we recognize that health plans have various
business structures and arrangements, health plans need to be
identified with a unique identifier using a standardized format. HPIDs
will therefore need to be used in standard transactions to identify
health plans in accordance with the requirements of the implementation
guides for the relevant transaction standards. We would also note that
because health plans are eligible to obtain an HPID, they are
ineligible to receive an OEID.
Comment: A number of commenters requested additional guidance on
enumeration for various business arrangements. A commenter specifically
requested additional guidance on situations where the holding
companies/controlling entities for multiple affiliated health plans do
not meet the definition of health plan and consider allowing affiliated
CHPs to share a single HPID in certain clearly defined circumstances.
Response: While each CHP is required to obtain an HPID, these
comments suggest it may be helpful and more efficient for affiliated
CHPs to share an HPID in limited circumstances in the standard
transactions based on their unique organizational structures and
business arrangements. We appreciate these comments and will provide
further guidance in the near future. We would note that the regulation
text broadly states that a covered entity must use an HPID to identify
a health plan that has an HPID.
Under this latter requirement, we envision that a health plan would
be considered to ``have an HPID'' if it communicates to its trading
partners that it should be identified with a particular HPID of an
entity with which it is associated, such as its CHP. A CHP for instance
could direct its SHPs to use its own HPID for all HIPAA covered
transactions. Presuming that the SHPs have communicated with their
trading partners that they use their CHP's HPID, the SHPs would be
considered to ``have an HPID'' which the trading partners must use to
identify the SHPs.
Comment: A few commenters stated that they already have health plan
identifiers that are identical in format and are consistent with ISO
7812, like the HPID and OEID. These identifiers had been assigned by a
private firm. These commenters recommended that these existing
identifiers be incorporated in the Enumeration System so they do not
have to reissue health insurance cards.
Response: We regret that entities may have already obtained
identifiers from other parties that were not issued through the
Enumeration System. However, this final rule requires that HPIDs only
be obtained from the Enumeration System. This requirement ensures that
HHS oversees the issuance of all HPIDs, that the HPIDs meet the
requirements in this rule, and that necessary information about the
health plan is available in the Enumeration System database. To
grandfather in existing numbers could cause confusion among industry, a
lack of integrity in the database, and disproportionate burden on
health plans that do not have a current number that can be
grandfathered in. While health plans are permitted to put the HPID on
health insurance cards, we do not require it so the determination to
reissue cards lies with the health plans.
Comment: One commenter requested that expatriate health plans,
which they defined as plans whose principal purpose is covering those
lives outside their country of citizenship and their dependents, be
exempted from complying with the HPID requirements. This commenter
alleged that compliance would be an added burden on U.S.-based insurers
of expatriate plans and would competitively disadvantage them vis-
[agrave]-vis their non-U.S. competitors.
Response: As discussed previously, this rule adopts the HPID as the
standard unique health plan identifier for all health plans covered by
HIPAA. Section 162.504 provides that all health plans that are not
small health plans have until 2 years after the effective date of this
rule and small health plans have until 3 years after the effective date
of this rule to obtain an HPID and comply with the other provisions of
Sec. 162.512. To fully implement the HPID, all covered entities have
until 4 years after the effective date of this rule to use an HPID to
identify a health plan that has an HPID in standard transactions and
comply with the other provisions of Sec. 162.510. (For more
information regarding the HPID compliance dates, see section II.E. of
this final rule.) We believe that these dates provide covered entities,
including ``expatriate plans'' that are health plans covered by HIPAA,
sufficient time to meet the requirements of this rule. Moreover, we
note that if a category of health plans were exempted from obtaining an
HPID, other covered entities needing to identify those health plans
would be adversely affected when attempting to conduct standard
transactions with such exempted entities. Furthermore, neither HIPAA
nor the Affordable Care Act authorizes
[[Page 54674]]
HHS to exempt health plans from complying with these adopted
regulations simply because those health plans also conduct certain
financial and administrative transactions electronically outside of the
United States or are also covering individuals that are not U.S.
citizens.
c. Changes to a Health Plan's HPID in the Enumeration System
In the April 2012 proposed rule, we proposed to require each health
plan to disclose its HPID, upon request, to any entity that needs the
HPID to identify that health plan in a standard transaction. We
proposed to require each health plan to communicate changes (updates,
corrections, etc.) to its own data to the Enumeration System within 30
days of the date of the change. We proposed that a SHP would ultimately
be responsible for submitting updates for its own data in the
Enumeration System regardless of whether it obtained its HPID
independently or the CHP obtained the HPID on its behalf.
Comment: We received comments about CHP and SHP responsibilities
for obtaining HPIDs and maintaining information related to the HPID in
the Enumeration System. Some commenters suggested that HHS should
clarify the respective obligations of CHPs and SHPs and that there
should be a clear and defined responsible party for both the HPID
application process and the HPID maintenance process to avoid the need
for coordination. For instance, these commenters suggested that a CHP
have responsibility for application and maintenance of HPIDs for itself
and its SHPs. These commenters believe this would prevent duplicate
numbers that could cause confusion and costly manual intervention in
the claims process. Some commenters recommended that rather than have
the SHP be responsible for updating its own information in the
Enumeration System, the responsibility for updating information
associated with an HPID should be left to the CHP and SHP to determine
based on their business practices.
Response: We allow a CHP or SHP to obtain the HPID for a SHP
because we recognize there are different arrangements that impact what
entity may control the business actions, activities, or policies of an
organization. For example, a CHP may dictate or manage the data and
information systems for all of its SHPs and choose to obtain HPIDs on
behalf of their SHPs to ensure coordination. On the other hand, a CHP
may instruct its SHPs to obtain HPIDs. While we wanted to ensure
flexibility during the application process, we also wanted to be sure
that the responsibility to update the information rested with one
entity and was clearly delineated. We believe that the simplest way to
ensure the integrity of the data is that each entity be responsible for
updating the information linked to its HPID. We anticipate that
entities may delegate the update responsibility to other entities,
although the health plan identified by an HPID still retains the
responsibility to update its required data elements in the Enumeration
System.
Comment: A few commenters recommended that changes to information
associated with an identifier should be required within 5 days of the
change, rather than the proposed 30 days. Another commenter recommended
that an enumerated entity provide a minimum of 60 days' notice prior to
the effective date of any change that would impact the HPID and OEID
under which that entity is enumerated, which would be sufficient time
to allow providers and their vendors or clearinghouses to make
adjustments in their systems to avoid transaction rejections or
failures.
Response: We have considered the comments about notification of
changes and believe that entities should be given up to 30 days to make
changes during this initial implementation stage. We recognize the
operational challenges often associated with organizational changes or
restructuring, and believe that 30 days strikes a good balance between
the need to update the information in the Enumeration System and the
entity's competing operational responsibilities. With that said, we
encourage entities to make any necessary changes in a shorter timeframe
when possible.
After consideration of the public comments, we are finalizing the
policy regarding health plan requirements without modification.
4. HPID Standard Format
a. Introduction
Per the NCVHS recommendations, which were based on stakeholder
testimony from a wide range of potential HPID users, in the April 2012
proposed rule, we proposed to adopt an HPID that is a 10-digit, all-
numeric identifier with a Luhn check-digit as the 10th digit. The Luhn
check-digit is an algorithm used most often on credit cards as a check
sum to validate that the card number issued is correct. We sought
public and stakeholder comments on the feasibility and utility of this
format for the HPID.
b. The International Organization for Standardization (ISO) Standard
The International Organization for Standardization (ISO) is the
world's largest developer and publisher of international standards.
National standards institutes from 160 nations comprise the ISO. The
ISO has published more than 16,500 standards for numerous industries
such as agriculture, electrical engineering, and other information
technology industries. For more information on the ISO, refer to the
Web site at http://www.iso.org. Based on stakeholder testimony, the
NCVHS recommendations, and our review, we proposed that the ISO 7812
standard format, ISO/IEC 7812-1:2006 and ISO/IEC 7812-2:2007, which
consists of a 10-digit, all-numeric identifier with a Luhn check-digit
as the 10th digit, be adopted as the standard for the HPID. We proposed
that the HPID format will essentially be an intelligence-free
identifier, except that the start digit of the identifier would signal
that the identifier is assigned to a health plan, as opposed to an
``other entity'' or a health care provider, which each have a different
start digit. In the proposed rule, we explained that the number of
digits of the HPID will not exceed the number permitted for identifiers
in the relevant data fields of the standard transactions.
Comment: We received many comments regarding the proposed HPID
format. The majority of the commenters supported the proposed format. A
few commenters offered additional suggestions and questions, many of
which were technical. One commenter responded to the following language
in the proposed rule: ``that if additional capacity for HPIDs were
needed in the future, the relevant data fields would permit additional
numeric digits to be added at that time.'' (77 FR 22962). The commenter
suggested that HHS adopt a format that would exceed capacity but was
concerned that HHS would then expand the number of digits in the format
identifier past 10 digits to increase capacity. Increasing the number
of digits in the identifier though would not meet the Luhn check digit.
This commenter emphasized that HHS should adopt a format with ample
capacity in order to avoid the need to perform additional programming
and testing of systems in the future.
Response: In the proposed rule, we did not intend to suggest that
we would be increasing the length of the identifier when we stated we
would add additional numeric digits. Instead, we meant that we would
increase capacity by introducing a new start digit that still
[[Page 54675]]
met the Luhn check digit logic; therefore, we believe that this
commenter's concern has been adequately addressed.
Comment: A commenter supported the rule's proposal to adopt the ISO
Standard 7812 format for the HPID and OEID, similar to the NPI. The
commenter suggested that it may be helpful to provide more information
about the ISO Standard 7812. For instance, information that the full
identifier number under the ISO 7812 Standard is a composite of the ISO
80840 Issuer Identification Number (IIN), a number assigned by the
holder of the IIN, and the Luhn modulus -10 check digit. The commenter
stated this information is clearly provided in the NPI final rule.
Response: We appreciate the comment regarding the importance of
providing information about the ISO 7812 Standard. For those readers
interested in more background on the ISO 7812 Standard, we recommend
that they refer to the discussion in the NPI final rule (69 FR 3442).
After consideration of the public comments received, we are
finalizing the policy to adopt an HPID that is a 10-digit, all-numeric
identifier with a Luhn check-digit as the 10th digit without
modification.
B. Adoption of the Other Entity Identifier (OEID)
In addition to proposing the adoption of an identifier for health
plans, in the April 2012 proposed rule we proposed to adopt a data
element that will serve as the OEID, which would be an identifier for
other entities for use in standard transactions. We proposed that the
OEID would be optional--other entities could choose to obtain one or
not.
Health plans often use the services of other entities to conduct
certain financial and administrative transactions on their behalf.
Rental networks, benefit managers, third party administrators, health
care clearinghouses, repricers, and other third parties often perform
functions similar to, or on behalf of, health plans. In many cases,
these other entities are identified in standard transactions in the
same fields and using the same type of identifiers as health plans. The
NCVHS recommended that HHS consider allowing these entities to obtain
HPIDs as they may be the actual recipients of eligibility queries or
claims on behalf of the health insurance issuer or the entity
ultimately responsible for payment. The NCVHS recommended that HHS
consider making these entities eligible to obtain an HPID when there is
a clear case for them to be enumerated. Based on the NCVHS
recommendation, we found that a clear case does exist for these other
entities to be enumerated.
We proposed that the OEID would serve as an identifier for entities
that are not health plans, health care providers, or individuals,\3\
yet need to be identified in standard transactions. We proposed that
these other entities would not be required to obtain an OEID, but that
they could obtain one from the Enumeration System and use it where they
need to be identified in covered transactions. We proposed that the
OEID could also be used for any other lawful purpose. If they obtained
an OEID, other entities would be expected to disclose it upon request
to entities that need to identify the other entities in covered
transactions.
---------------------------------------------------------------------------
\3\ Individual is defined at 45 CFR 160.103 as ``the person who
is the subject of protected health information.''
---------------------------------------------------------------------------
Offering the OEID as an adopted data element to identify other
entities that need to be identified in covered transactions should
reduce costs and improve efficiency for covered entities. Because other
entities are identified in the transaction standards in a similar
manner as health plans, we believe that establishing a data element to
serve as an identifier for these entities will increase efficiency by
encouraging the use of a uniform identifier and promote compliant use
of the HPID for health plans. Like the standard for HPID we proposed to
adopt, the OEID would also follow ISO standard 7812, and be a 10-digit,
all-numeric identifier with a Luhn check-digit as the 10th digit.
Consequently, entities would not need to significantly modify their
information technology systems to accommodate the OEID since they would
follow the same ISO standard as the HPID.
We solicited industry and stakeholder comments on the enumeration
of other entities and adoption of the OEID for use in the standard
transactions.
We received many comments on our proposal to adopt the OEID for use
in the standard transactions.
Comment: Commenters requested that we provide greater clarification
about the definition of an OEID as it relates to the eligibility to
obtain an OEID. For example, a few commenters questioned whether or not
a non-individual health care provider qualifies for an OEID and whether
non-covered entities, such as auto liability and workers compensation
carriers, are able to obtain OEIDs. A few other commenters suggested
that the definition of OEID be further limited to entities that perform
functions of a health plan and should not include healthcare
clearinghouses because they state the only place the health care
clearinghouse could be identified independently in the existing
transactions is on the ISA envelope.
Response: The intent of the proposal for an OEID is to provide a
mechanism that facilitates standardization to provide greater
transparency in electronic transactions. Thus, we have proposed that
the definition and eligibility for the OEID include a wide variety of
entities, and have provided few limits on the types of entities that
can obtain OEIDs. One limit is that it cannot be an individual. Another
limit is that the entity cannot be eligible to obtain either an HPID or
an NPI. The reason is to avoid having multiple and differing types of
identifiers for the same entity. Therefore, if the non-individual
health care provider is eligible for an NPI, it would not be eligible
to obtain an OEID. On the other hand, HIPAA non-covered entities, such
as auto liability and workers compensation carriers, would be eligible
to obtain an OEID as long as they need to be identified in a HIPAA
covered transaction. They are entities that are not individuals and not
eligible to obtain an HPID or NPI. We included clearinghouses as an
example in the proposed rule as our goal was to keep the definition
broad so that use and requirements for the OEID in the standard
transactions could be further developed in the future.
Comment: A few commenters requested clarification about whether
specific entities are eligible to obtain an OEID, specifically atypical
providers, accountable care organizations (ACOs), and clearinghouses.
Some commenters recommended that we state clearly whether atypical
providers are eligible to obtain an OEID. A few of these commenters
stated that if atypical providers obtained OEIDs, they should be
required to disclose them and use them to identify themselves in all
standard transactions. A commenter stated that the OEID should be
available to any entity that performs the functions of a payer but acts
as an independent third party.
Response: We appreciate the comments about atypical providers.
Atypical providers are individuals or organizations that furnish
atypical or nontraditional services that are indirectly health-care
related, such as taxi, home, and vehicle modification, insect control,
habilitation, and respite services. We encourage entities to review the
definition of health care provider in Sec. 160.103 and the discussion
of atypical providers in the NPI final rule (69 FR 3437) in determining
their
[[Page 54676]]
eligibility to obtain an OEID. We decided to place few requirements on
entities that obtain an OEID, because we wanted to allow industry
business needs to drive industry use of the OEID, presumably through
contractual arrangements.
A determination of eligibility for an OEID will be specific for
each entity based on individual factors.
Comment: A commenter cautioned that if atypical providers are
eligible to obtain OEIDs, the Health Care Provider Taxonomy code should
not be included as a data field in the OEID application. These
commenters stated that if all atypical non-individual providers qualify
for an OEID and taxonomy code(s) are included in the data elements for
the OEID application, it will require adding new taxonomy codes for
this purpose, which will create a potential problem due to the
structure of the code set.
Response: We are still developing the required data elements but do
not anticipate using this taxonomy code.
Comment: A number of commenters requested that we provide
clarification on the use of the OEID in the standard transactions. A
commenter requested clarification on whether the OEID could be used in
the provider identifier field, in some instances.
Response: We will provide further examples of potential ways the
OEID can be used in the standard transactions outside of this final
rule. In the meantime, we encourage those commenters and others to
review the directions within the relevant implementation guides to
determine the appropriateness of using an OEID in particular data
fields.
Comment: Some commenters requested that the Department work with
the appropriate standard development organizations to determine where
the OEID should be included in the standard transactions. They
emphasized that it is important to specify that the OEID should be used
in all places in the standard transactions where the HPID can be used
to avoid confusion and inconsistency. Other commenters suggested that
there should be a pilot test of the OEID to determine if and what
changes are needed to the standard transactions and the operating rules
to clarify OEID use and requirements.
Response: We appreciate the commenters' interest in the development
and use of the OEID. Our intent was to create a standard identifier and
allow business needs and efficiencies to drive its adoption and uses.
At this initial stage of implementation, we do not believe it is
necessary yet to work with standards organizations to address this
question or conduct independent pilot tests.
Comment: We received many comments regarding our proposal that the
OEID be voluntary. Some commenters supported that the OEID be
voluntary, while others advocated that the OEID should be mandatory.
Supporters of a voluntary OEID believed that business needs will drive
the use of the OEID and industry can refine OEID requirements as
experience with the OEID is gained. In addition, some commenters
believed that if the OEID were required it may result in entities that
have no current business need to use an OEID nevertheless obtaining an
OEID. Those commenters in support of the OEID being mandated advocated
that the OEID requirements match the HPID requirements to limit system
requirement variability. They believed that this approach promotes
administrative simplification and encourages a greater return on
investment. They suggested that a voluntary OEID would result in
additional changes to existing connections as some entities replace
their current identifiers and thus would introduce another level of
complexity. They added that a voluntary enumeration system would add
just another identifier option for other entities to use in the
standard transactions and would not necessarily lead to
standardization. One commenter even suggested that the Tax
Identification Number be required rather than create a new identifier.
Response: We created the OEID based on industry input and NCVHS
recommendations that it would be helpful to have a standard identifier
for entities that need to be identified in the standard transactions
but that do not meet the definition of a health plan. The value of the
OEID would be to create greater standardization in the transaction so
that all parties that needed to be identified in the transactions would
have a standard identifier that would be listed in a publicly available
searchable database. Because of the diversity of entity types that may
need an OEID and potential new uses for the OEID, we believe it would
be helpful to begin with a voluntary approach that allows for gradual
implementation and improvised use based on industry needs and
practices. We recognize this approach may have certain risks associated
with it, but we believe the risk of harm to the industry is relatively
low and the potential benefit quite high.
Comment: A commenter suggested that the Secretary should require
all covered entities to require any trading partner that would qualify
for an OEID to be enumerated by contract, trading partner agreement, or
business associate agreement to require that the identifier be used
according to the transaction standards.
Response: We reiterate that covered entities could require their
trading partners and business associates to obtain and use an OEID, and
we believe that entities will take advantage of that approach if it is
appropriate for them.
Comment: A few commenters suggested that other entities be able to
obtain more than a single OEID for use in the standard transactions.
Response: At this point, we believe this proposed approach has the
potential to lead to significant confusion while undermining the goal
of having one unique number tied to each entity.
After consideration of the public comments received, we are
finalizing the OEID requirements without modification.
C. Assignment of the HPID and OEID--The Enumeration System
We proposed in 45 CFR 162.508, that the Enumeration System would
assign unique HPIDs and OEIDs to eligible health plans and eligible
other entities, respectively. Once operational, the Enumeration System
will be a comprehensive system for uniquely identifying and enumerating
all eligible health plans and other entities. It will collect and
maintain certain identifying and administrative information about CHPs,
SHPs, and other entities. The Enumeration System will also disseminate
information through a publicly available searchable database or through
downloadable files.
HPIDs and OEIDs will be assigned by the Enumeration System through
an online application process. A health plan or other entity, when
applying online for an HPID or OEID, will be required to provide
certain identifying and administrative information for verification and
eligibility determinations during the application process. For
assistance, a help desk or other applicant assistance functions will be
available to assist with and troubleshoot the online application
process.
We proposed that the Enumeration System would also be able to
deactivate or reactivate an HPID or OEID based on receipt of sufficient
information to justify deactivation or reactivation. Deactivation of an
HPID may occur in the event of fraudulent or unlawful use of the HPID
by the health plan itself or another entity, the change of ownership of
a health plan, or the restructuring of
[[Page 54677]]
a health plan's data processing systems such that the SHP determines
that its HPID would no longer be needed. Deactivation of an OEID may
also occur for the fraudulent or unlawful use of an OEID by itself or
another entity, the change of ownership of the other entity, or if the
other entity no longer exists. Reactivation of an HPID or OEID could
occur, for example, if there were a change of ownership of a health
plan or other entity, or for health plans if there were a restructuring
of a health plan's data processing systems and a SHP determines that it
again needs its HPID.
With that said, upon further reviewing the proposed regulation text
in the April 2012 proposed rule, we noticed that while we had discussed
having the Enumeration System be able to reactivate a deactivated OEID
or HPID in the preamble of the April 2012 proposed rule, we
unintentionally omitted ``or OEID'' in the proposed Sec. 162.508(c)
that would have enabled the Enumeration System to deactivate an OEID,
as it would an HPID. Because this reflects a technical drafting error
that was obviously inconsistent with the preamble discussion at (77 FR
22963), and further, Sec. 162.508(d) clearly presupposes that the
Enumeration System would have that authority, we are finalizing Sec.
162.508(c) with ``or OEID'' inserted.
We solicited stakeholder comment on our proposals regarding the
enumeration system and process.
Comment: We received numerous comments on the type of information
to be collected in the Enumeration System. Some commenters recommended
that HHS collect only ``minimally necessary'' information that does not
include confidential business information in order to decrease burden.
These commenters recommended collecting data elements, such, as name of
health plan, tax identification number, address, EDI contact phone
number, email address, other legacy identifiers, and the BIN/IIN or PCN
number associated with that health plan. Other commenters suggested
collecting a robust amount of information in the Enumeration System.
These commenters suggested collecting routing and demographic
information. For example, all demographic information related to that
health plan and all information necessary to enroll with the health
plan to send and receive standard transactions as well as transmit
standard transactions to the correct destination. In addition, they
recommended that the database include information to identify the
health plan type, the health plan's relationship with any other entity
serving in a health plan role, and if the health plan utilizes a
different network of physicians through a rental network of the
physician network by region. These commenters also suggested that
specific routing information for each standard transaction for each
mode of transaction (that is, nearly real-time batch) be included in
the database. Many commenters stated they could not provide detailed
feedback on the design and information collected in the Enumeration
System because they were not in the proposed rule and they would like
the opportunity to review and comment on this information.
Response: We appreciate commenters' suggestions regarding the type
of information to be collected in the Enumeration System. The purpose
of the Enumeration System is to provide an identifier and collect only
that amount of information that is necessary to uniquely identify a
health plan and ensure that a link exists between a CHP and its SHPs.
We have not at this point developed the data fields or identified the
specific information we will need to collect to achieve the purpose of
the Enumeration System. At this point, we believe that only minimally
necessary information will be collected in the Enumeration System,
based on the current limited purpose of the Enumeration System. When we
develop the data fields, we will take into consideration the comments
offered to the proposed rule and further consult industry. In the
future, if and when the purpose and use of the Enumeration System
expands, we will work with industry to identify other data elements
that will need to be collected.
Comment: A commenter requested specific guidance that would clarify
when an HPID that has been issued for a health plan can continue to be
used after that health plan has undergone a business merger or
acquisition.
Response: If a health plan wants to retain its HPID after a merger
or acquisition, it should update its health-plan related data in the
Enumeration System. If the health plan does not want to retain its
HPID, it should deactivate its HPID. We anticipate that there will be
more guidance available on operational questions, such as these, as the
Enumeration System is implemented.
Comment: Some commenters stressed the importance of the Enumeration
System having both a look-up capability, similar to that for the NPI,
and downloadable files to easily disseminate information about HPIDs
and OEIDs.
Response: We anticipate that both a look-up function and
downloadable files will be available in the future.
Comment: Some commenters asked when entities could apply for
identifiers from the Enumeration System.
Response: While we anticipate entities may access the system and
learn more about the application process and Enumeration System on
October 1, 2012, we anticipate providing additional information about
the Enumeration System in the near future.
Comment: A few commenters provided other suggestions about system
design and specific system features. For instance, a commenter stated
that all user activity should be conducted through an ``account'' and a
user is granted access to the system by a system administrator. Through
the establishment of an ``account'' in the system, the user would have
the ability to apply for identifiers, maintain information associated
with identifiers, download reports, establish users who could access or
perform activities related to the account, transfer control over an
identifier to another account, and upload batch files. The benefit of
this ``account'' approach is that it would enable an administrator to
access and manage all identifiers for itself and subordinate plans and
other entities. It would also enable the Enumeration System
administrator to deal with fewer entities, reduce phone calls, and
increase accuracy and efficiency. Another commenter suggested that the
Enumeration System have a listserv function so entities could be
notified of any changes in identifier information. Another commenter
suggested that the database have the capability to provide near real-
time updates and the ability to electronically ping databases from a
practice management system or other provider administrative systems
based on selected search criteria.
Response: We are still in the process of collecting information and
developing the Enumeration System and will take these comments into
consideration in the process.
After consideration of the public comments received, we are
finalizing the Enumeration System policies without modification with
the one minor exception of inserting ``or OEID'' in Sec. 162.508(c).
D. Other Considerations
1. Pharmacy Transactions
In the April 2012 proposed rule, we noted that currently, the
pharmacy industry utilizes two unique identifiers to identify entities
responsible for administering claims in retail pharmacy
[[Page 54678]]
transactions, the Bank Identification Number/Issue Identification
Number (BIN/IIN) and the Processor Control Number (PCN). These
identifiers are programmed into the pharmacy's software and identify
the route for processing the transaction from the pharmacy to the
entity responsible for administering the claim, which could be the
health plan or the pharmacy benefit manager. A pharmacy benefit manager
is a third party administrator for prescription drug programs and is
responsible for processing and paying claims on behalf of the health
plan or drug plan sponsor. The BIN/IIN is a 6-digit number, requested
by the pharmacies from either the American National Standards Institute
(ANSI) or the National Council for Prescription Drug Programs (NCPDP),
for use by retail pharmacies to route prescription drug claims to the
entity responsible for processing the transaction, usually the pharmacy
benefit manager. The PCN is an identifier of up to 10 characters that
is assigned by pharmacy benefit claim processors if there is a need to
further define benefits and routing. For instance, the Medicare Part D
prescription drug benefit plan Coordination of Benefits (COB)
contractor has unique requirements for processing Medicare Part D
claims. To accommodate those requirements, many administrators or
processors have created PCNs to further differentiate the Medicare Part
D prescription drug plan benefit COB business from their other
(commercial or Medicaid) COB business.
The BIN/IIN and PCN identifiers are included in information from
pharmacy benefit managers and/or health plans that are distributed to
pharmacies to provide details on who will be processing the
transaction, where to route the transaction and what rules are expected
to be applied during transaction processing. We took note of the
NCPDP's testimony from the July 20120 NCVHS Subcommittee on Standards
meeting that the use of these two identifiers has been very effective
in ensuring efficient, timely prescription claim processing.
We also considered testimony from the July 2010 NCVHS meeting that
the HPID, BIN/IIN and PCN identifiers convey different information and
serve different purposes. The BIN/IIN and PCN identifiers cannot
provide the information needed about the health plan, nor can the
information in the HPID provide the information inherent in the BIN/IIN
and PCN identifiers. We considered the claims that if the health plan
identifier were required to replace the BIN/IIN and/or PCN, such a
change would be extremely costly to the retail pharmacy industry and
cards would need to be re-issued with the HPID, with no direct patient
or pharmacy benefit.
There was also testimony that an HPID-only requirement would
require a substantive change to the NCPDP D.0. In Version D.0, the Plan
ID field is either not used or its use is optional, meaning its use was
intentionally not defined in the standard. However, the use of the BIN
and PCN fields is mandatory.
We reviewed the September 30, 2010 NCVHS recommendation letter to
the Secretary, where the NCVHS observed that retail pharmacy
transactions utilize the BIN/IIN and/or PCN identifier to facilitate
their transaction processing, and that changing to another identifier
would significantly affect existing data flows in the retail pharmacy
industry that currently work effectively. As such, the pharmacy
industry requested an exemption from the requirement to use only HPID
in retail pharmacy transactions because of the current success with the
BIN/IIN and PCN identifiers for routing purposes.
We further considered the NCVHS recommendation that use of the HPID
in place of the existing BIN/IIN and PCN identifier in retail pharmacy
business transactions not be required, but that the use of HPID be
required on the HIPAA-named standard transactions for retail pharmacy.
In the April 2012 proposed rule, we did not propose any changes to
the NCPDP Version D.0 standard. So where the D.0 calls for the BIN/IIN
and PCN to be used, this final rule has no impact or effect because
health plans are not being identified in those fields. We clarified
that we do not believe that the HPID should be required in place of the
existing BIN/IIN and PCN identifier in retail pharmacy transactions.
We received a few comments regarding the use of the HPID in
pharmacy transactions.
Comment: Several commenters did not believe the HPID should be used
in place of the BIN/IIN and PCN in pharmacy transactions, but that the
HPID be required on the HIPAA-named standard transactions for retail
pharmacy.
Response: We thank commenters for their comments.
After consideration of the public comments received, we are
finalizing the policy regarding the use of the HPID in pharmacy
transactions without modification.
2. Definition of Covered Health Care Provider
We proposed to move the definition of ``covered health care
provider'' from 45 CFR 162.402 to 45 CFR 162.103 because the term has a
broader application beyond just Subpart D. We did not receive any
comments on the proposal to move the definition of ``covered health
care provider'' from 45 CFR 162.402 to 45 CFR 162.103, and therefore,
we are finalizing this change as proposed.
E. Effective Date and Compliance Requirements for the HPID
In section 1104(c)(1) of the Affordable Care Act, Congress
specified that ``the Secretary shall establish a standard for a unique
health plan identifier based on the input of the National Committee on
Vital and Health Statistics.'' Congress further provided that the rule
shall be ``effective'' not later than October 1, 2012. The effective
date would mark the beginning of the implementation period for the
HPID, which we indicated in the proposed rule is the day we expect
would be the first day health plans could apply to obtain an HPID and
the first day an entity could apply to obtain an OEID from the
Enumeration System. We would like to clarify that entities will not be
able to obtain identifiers on that date, but that they may begin to
access the Enumeration System and learn more about the application
process. We proposed that the compliance date for all covered entities,
except small health plans, to use the HPID in standard transactions be
2 years after the effective date of the final rule which, if the
effective date is October 1, 2012 as we proposed, would be October 1,
2014. The compliance date for small health plans would be October 1,
2015. Neither small health plans nor other covered entities would be
prohibited from using HPIDs in their transactions at any time before
their respective compliance dates.
In line with our previous interpretations, we have interpreted the
``effective date'' of this rule to mean the date the Secretary adopts
the HPID as the unique health plan identifier. In the NPI final rule,
for instance, the effective date of the rule was the date the Secretary
adopted a standard unique health identifier for health care providers,
and the compliance date marked the date by which an entity had to
obtain and use an NPI in the standard transactions. We consequently
interpreted section of the 1104(c)(1) of the Affordable Care Act as
specifying October 1, 2012 as the effective date of the final rule, the
date on which the policies take effect and the implementation period
for the HPID begins.
We solicited comment on the effective and compliance dates for the
HPID.
[[Page 54679]]
Comment: We received extensive comments on the compliance dates and
implementation requirements of HPID. The majority of commenters
emphasized the need for additional time to test and implement HPID, and
requested that we establish a date by which health plans should obtain
their HPIDs in advance of the date by which covered entities are
required to use the HPID in standard transactions. These commenters
emphasized that health plans must obtain their identifiers and
communicate them to all covered entities well in advance of the
required use of the HPID in the standard transactions. This additional
time would allow for internal system changes to accommodate the HPID
and for extensive testing among trading partners. Commenters explained
that ample time to perform system changes and testing is critical to
the successful implementation of the HPID by all covered entities.
Implied in many of these comments was that because covered transactions
virtually always involve multiple parties, a single ``go-live'' date by
which all covered entities must use the HPID should be established.
Response: We have considered the significant operational challenges
described by commenters that occur as a result of a single compliance
date for both the health plans to obtain HPIDs and covered entities to
use the HPIDs to identify health plans in the standard transactions. We
agree that the successful implementation of HPID could be jeopardized.
Therefore, in this final rule we are changing the approach to
compliance with new implementation requirements shown in Chart 1.
Comment: Commenters warned that if ICD-10 and the HPID have the
same compliance date of October 1, 2014, it will be financially and
administratively burdensome. In addition, commenters suggested that it
would be difficult to determine the cause of any claim delays or
problems with implementation.
Response: We agree that implementation of these two initiatives at
the same time could impose technical and operational problems, which
would be difficult to diagnose and address.
Comment: Some commenters suggested that there be a dual use period
for implementation of HPID, during which time both legacy health plan
identifiers and the new health plan ID is permitted in the
transactions. These commenters suggested that the dual use period would
assist industry during simultaneous compliance for both ICD-10 and
HPID. A dual use period was allowed in the transition to NPI and this
provided the ability to validate crosswalks and resolve any
implementation issues prior to full transition. Finally, these
commenters stated that a dual use period would allow CMS to monitor the
rate of adoption and readiness of the industry through metric
reporting.
Response: While we believe that a period of dual usage would be
helpful, we do not believe it necessary to mandate such a dual use
period. The new HPID compliance dates will address many of the concerns
raised by these commenters. The compliance date for HPID to be used in
the standard transaction, which we are now referring to as the full
implementation date, is no longer the same date as for ICD-10. In
addition, in contrast to the single compliance date for NPI, the new
phased-in approach for HPIDs, where there is lag time between when
health plans are required to obtain an HPID and when covered entities
are required to begin using HPIDs in the standard transactions, will
allow the opportunity for dual use and sufficient time for a successful
transition. The additional time will allow industry the opportunity to
perform extensive testing of the HPID prior to full implementation.
Comment: Commenters recommended that large and small health plans
have the same full implementation date by which all covered entities
must use the HPID should be established.
Response: Based on the comments above regarding the compliance
dates for HPID, the following changes have been made to the
implementation requirements to ensure a smooth transition to the HPID.
The effective date of this final rule is 60 days after the publication
date of this rule. Compliance with the implementation specifications
for obtaining the HPID will be 2 years after the effective date of this
rule, except for small health plans, which will have 3 years after the
effective date of this rule. Full implementation of the HPID--or the
date by which all covered entities must use HPIDs to identify health
plans that have an HPID--will be 4 years after the effective date of
this rule. To reflect our intention of having a single date by which
all covered entities must have fully implemented the HPID, we are
referring to 4 years after the effective date of this rule) as the full
implementation date for the HPID. We determined that 2 years after the
time health plans (other than small health plans) are required to have
obtained their HPIDs and 1 year after the time when small health plans
are required to have obtained their HPIDs provides more than sufficient
time for all covered entities to make any necessary system changes
prior to the full implementation date of 4 years after the effective
date of this rule. In Chart 1, we provide the actual HPID compliance
and implementations dates based on the timeframes discussed in this
section of the final rule. These dates are also reflected in the DATES
section of this final rule.
Chart 1--HPID Implementation
----------------------------------------------------------------------------------------------------------------
Full implementation date-- for using
Entity type Compliance date for obtaining HPID HPID in standard transactions
----------------------------------------------------------------------------------------------------------------
Health Plans, except small health November 5, 2014...................... November 7, 2016.
plans.
Small Health Plans............... November 5, 2015...................... November 7, 2016.
Healthcare Clearinghouses........ N/A................................... November 7, 2016.
Healthcare Providers............. N/A................................... November 7, 2016.
----------------------------------------------------------------------------------------------------------------
After consideration of the public comments received, we are
modifying the compliance requirements of the HPID and have made changes
to the regulation text to reflect these new dates. We have revised
Sec. 162.504(a) to reflect the new policy that all covered entities
are required to use HPIDs in the standard transaction by 4 years after
the effective date of this rule and removed references to compliance
dates for covered health care providers and health care clearinghouses
that are no longer necessary.
[[Page 54680]]
III. Addition to the National Provider Identifier Requirements
A. Background
As discussed in section I of this final rule, the final rule
adopting the NPI as the standard unique health identifier for health
care providers was published on January 23, 2004 (69 FR 3434) (``2004
NPI final rule''). While the 2004 NPI final rule requires covered
health care providers to obtain NPIs for themselves and certain
subparts and use them in standard transactions, it does not require a
health care provider who is not a covered entity to obtain an NPI. Even
if a noncovered health care provider chooses to obtain an NPI, the
provider is not required to comply with certain NPI requirements, which
means the provider does not have to disclose its NPI to entities who
may need it for standard transactions. When a noncovered health care
provider does not obtain an NPI or does not disclose it, certain
problems arise for entities that need to identify that noncovered
health care provider in standard transactions. We proposed an addition
to the requirements in the NPI regulations to address such problems.
The 2004 NPI final rule (69 FR 3445) recognized that,
``[s]ituations exist in which a standard transaction must identify a
health care provider that is not a covered entity * * *. A noncovered
health care provider may or may not have applied for and received an
NPI. In the latter case, * * * an NPI would not be available for use in
the standard transaction. We encourage every health care provider to
apply for an NPI, and encourage all health care providers to disclose
their NPIs to any entity that needs that health care provider's NPI for
use in a standard transaction. Obtaining NPIs and disclosing them to
entities so they can be used by those entities in standard transactions
will greatly enhance the efficiency of health care transactions
throughout the health care industry * * *. The absence of NPIs when
required in * * * claims by the implementation specifications may delay
preparation or processing of those claims, or both. Therefore, we
strongly encourage health care providers that need to be identified in
standard transactions to obtain NPIs and make them available to
entities that need to use them in those transactions.''
The 2004 NPI final rule (69 FR 3445) provided the following example
of a situation when a health care provider is not a covered entity but
its NPI is needed for a standard transaction: ``A pharmacy claim that
is a standard transaction must include the identifier (which, as of the
compliance date, would be the NPI) of the prescriber. Therefore, the
pharmacy needs to know the NPI of the prescriber in order to submit the
pharmacy claim. The prescriber may be a physician or other practitioner
who does not conduct standard transactions. The prescriber is
encouraged to obtain an NPI so it can be furnished to the pharmacy for
the pharmacy to use on the standard pharmacy claim.''
Within just a few months after implementation of the 2004 NPI final
rule, this issue had been raised so frequently to HHS that, on
September 23, 2008, it published a Frequently Asked Question to address
questions about pharmacy claims rejected by payers for lack of an
individual prescriber NPI (Answer ID 9419) (https://
questions.cms.hhs.gov/app/answers/detail/a--id/9419/~/does-the-
national-provider-identifier-(npi)-final-rule-require-individual).
Due to recurring issues, we believe this scenario described in the
2004 NPI final rule needs to be addressed. Pharmacies are encountering
situations where the NPI of a prescribing health care provider needs to
be included in the pharmacy claim, but the prescribing health care
provider does not have an NPI or has not disclosed it. This situation
has become particularly problematic in the Medicare Part D program, as
we explain more fully later in this final rule.
By way of background, every prescriber has at least one identifier
that may be submitted on a pharmacy claim. These identifiers include
the NPI, Drug Enforcement Administration (DEA) number, uniform provider
identification number (UPIN), or State license number. The Medicare
Part D program is an optional prescription drug benefit for all
Medicare beneficiaries. Medicare Part D contracts with private
companies, called plan sponsors, to administer the benefit through Part
D drug plans. In the Medicare Part D program, plan sponsors must submit
a prescription drug event (PDE) record to Medicare Part D every time a
beneficiary's prescription is filled under the program. Plan sponsors
use information from the claim generated by the pharmacy to complete
the PDE record, which contains summary information. These PDE records,
which currently must contain a prescriber identifier, are necessary to
support accurate payments to plan sponsors by Medicare Part D.
The use of multiple and invalid prescriber identifiers in the
Medicare Part D program has been identified as a concern. In a June
2010 report titled, ``Invalid Prescriber Identifiers on Medicare Part D
Drug Claims'' (``June 2010 report''), the HHS Office of the Inspector
General (OIG) reported the findings of its review of prescriber
identifiers on 2007 Part D PDE records. The OIG reported finding 18.4
million PDE records that contained 527,749 invalid identifiers,
including invalid NPIs, DEA registration numbers, and UPINs. Payments
by Part D drug plans and enrollees for prescriptions associated with
these PDE records totaled $1.2 billion. Prescriber identifiers are
valuable Part D program safeguards. These identifiers are the only data
on Part D drug claims to represent that licensed practitioners have
written prescriptions for Medicare enrollees. Although invalid
prescriber identifiers are not an automatic indication of erroneous or
fraudulent prescriptions or pharmacy claims, the lack of valid
prescriber identifiers on Part D drug claims hampers Medicare's program
integrity efforts.
To address these concerns raised by the June 2010 report, in the
``Medicare Program; Changes to the Medicare Advantage and the Medicare
Prescription Drug Benefit Programs for Contract Year 2013 and Other
Changes'' final rule (which was published in the April 12, 2012 Federal
Register (77 FR 22072) and is hereinafter referred to as the April 2012
final rule), CMS requires Part D sponsors to include an active and
valid prescriber NPI on prescription drug event records (PDEs) that
they submit to CMS beginning January 1, 2013. This change will assist
the Federal government in fighting possible fraudulent activity in the
Part D program, because prescribers will be consistently and uniformly
identified. This policy will not interfere with beneficiary access to
needed medications because Part D sponsors must validate the NPI at
point of sale, and if this is not possible, permit the prescription to
be dispensed by paying the claim and obtaining the valid NPI afterwards
(77 FR 22075).
Pharmacies that contract with Part D sponsors may be involved in
obtaining a prescriber's NPI depending on the agreement between the
pharmacies and Part D sponsors. However, Part D sponsors and pharmacies
generally have no regulatory leverage or other recourse over
prescribers who do not have NPIs or do not disclose them. In the latter
case, the sponsors and pharmacies must resort to using provider
information databases to determine if a prescriber has an NPI, or
contact the prescriber if known. If a Part D sponsor or network
pharmacy is unable to obtain a prescriber NPI for use on the claim and
PDE, the reimbursement from Medicare
[[Page 54681]]
Part D to the sponsor (or alternatively, from the sponsor to the
pharmacy depending on the agreement between the parties), could be
negatively affected. This final rule addresses the problems that are
presented by prescribers who do not have NPIs or do not disclose them,
by proposing an additional requirement in the NPI regulations.
B. Provisions for a Requirement To Obtain and Use NPIs
We proposed an additional requirement for organization covered
health care providers that have as a member, employ, or contract with,
an individual health care provider who is not a covered entity and is a
prescriber. Organization health care providers are health care
providers that are not individuals. Our proposal would require an
organization to require such a prescriber to: (1) Obtain an NPI; and
(2) to the extent the prescriber writes a prescription while acting
within the scope of the prescriber's relationship with the
organization, disclose the NPI upon request to any entity that needs it
to identify the prescriber in a standard transaction.
Organization covered health care providers would be required to
implement the requirement within 180 days after the effective date of
the final rule, which we proposed would be reflected in 45 CFR
162.404(a)(2) with regulation text stating that an organization covered
health care provider must comply with the implementation specifications
in 45 CFR 162.410(b). For example, if the final rule was effective on
October 1, 2012, covered organization health care providers would have
to meet the requirement by April 7, 2013.
We proposed that the requirement would be reflected in the
regulation text in 45 CFR 162.410(b) by adding the following new
language. ``An organization covered health care provider that has as a
member, employs, or contracts with an individual health care provider
who is not a covered entity and is a prescriber, must require such
health care provider to: (1) Obtain an NPI from the National Plan and
Provider Enumeration System (NPPES) and (2) to the extent the
prescriber writes a prescription while acting within the scope of the
prescriber's relationship with the organization, disclose the NPI upon
request to any entity that needs it to identify the prescriber in a
standard transaction.''
This requirement represents a narrow exception to the position we
took in the 2004 NPI final rule. In the 2004 NPI final rule (69 FR
3440), we stated ``[w]e do not consider individuals who are health care
providers * * * and who are members or employees of an organization
health care provider to be ``subparts'' of those organization health
care providers, as described earlier in this section. Individuals who
are health care providers are legal entities in their own right. The
eligibility for an ``Entity type code 1'' NPI of an individual who is a
health care provider and a member or an employee of an organization
health care provider is not dependent on a decision by the organization
health care provider as to whether or not an NPI should be obtained
for, or by, that individual. The eligibility for an ``Entity type code
1'' NPI of a health care provider who is an individual is separate and
apart from that individual's membership or employment by an
organization health care provider.''
We still do not consider noncovered health care providers that are
prescribers to be subparts of organization health care providers, and
we did not propose that they would not be legal entities in their own
right. This final rule closes a gap in the NPI rule by virtue of the
types of relationships that covered organization health care providers
have with noncovered individual health care providers.
The providers we intend to reach are prescribers who are not
required to obtain and disclose an individual NPI under the current NPI
regulations. To the best of our understanding, these prescribers are
largely hospital-based providers who staff clinics and emergency
departments, or otherwise provide on-site medical services, such as
medical residents and interns, as well as prescribers in group
practices, whose services are billed under a group, or ``Entity type
code 2'', NPI regardless of whether they have obtained an individual,
or ``Entity type code 1,'' NPI. These prescribers are using the
``Entity type code 2'' to identify themselves on prescriptions, which
does not identify them as individuals, or are using no identifier.
We believe this final rule describes the various relationships that
organization health care providers have with such prescribers, and that
the relationship is one in which organizations can exercise control
over these prescribers and require them to do something. For instance,
a physician or dentist who prescribes may be a member of a group
practice. As noted in the 2004 NPI final rule (69 FR 3439 and 3440),
``group health care providers are entities composed of one or more
individuals (members), generally created to provide coverage of
patients' needs in terms of office hours, professional backup and
support, or range of services resulting in specific billing or payment
arrangements. For purposes of this rule, we consider group health care
providers to be organization health care providers.'' By virtue of the
contractual or other relationship between a group and a member, a group
can require the member to do certain things, such as work certain on-
call hours. Likewise, a resident or nurse practitioner who performs
medical services at a hospital can be required to do certain things,
such as to abide by medical staff by-laws and hospital policies and
procedures, as a hospital employee or contractor.
This final rule does not specify how organization covered health
care providers should impose the requirement to obtain an NPI and
disclose it on prescribers. Organization covered health care providers
may have a number of alternatives by which they may accomplish this,
for example, through a written agreement, an employment contract, or a
directive to abide by the organization health care provider's policies
and procedures.
We proposed that the requirement for a prescriber to disclose his
or her NPI would apply for prescriptions written pursuant to the
prescriber's relationship with the covered health care organization
provider. For example, if a physician works for two group practices, A
and B, group practice A would have to require the physician to disclose
his or her NPI for pharmacy claims that are for prescriptions written
by the prescriber for a patient of group practice A, and group practice
B would be required to do the same for pharmacy claims for
prescriptions written by the prescriber for a patient of that group
practice.
We considered expanding our proposal to organization covered health
care providers that grant clinical privileges to individual health care
providers who are not covered entities and are prescribers, so that we
would be certain to encompass hospital residents and interns under our
proposal (to the extent they are not otherwise required to obtain Type
1 NPIs). However, it is our belief such prescribers will be encompassed
under this final rule, as we believe it encompass virtually all
prescribers who are not currently required to obtain and disclose an
individual NPI. Very limited exceptions may include, by way of example,
a self-employed physician who does not bill insurance plans and does
not have a member, employee or contractual relationship with an
organization covered health care provider (or has one
[[Page 54682]]
with a noncovered organization health care provider), such as a
psychiatrist or plastic surgeon who only accepts cash-paying patients.
Even with respect to these prescribers, we hope this final rule
highlights the importance of voluntarily obtaining NPIs to facilitate
their patients' access to prescribed items.
We believe this final rule furthers several goals and purposes
identified in the Act. First, the statutory purpose of the
Administrative Simplification provisions of HIPAA (see section 261 of
the Act (42 U.S.C. 1320d note)) is to improve the Medicare program
under title XVIII of the Act, the Medicaid program under title XIX of
such Act, and the efficiency and effectiveness of the health care
system, by encouraging the development of a health information system
through the establishment of uniform standards and requirements for the
electronic transmission of certain health information and to reduce the
clerical burden on patients, health care providers, and health plans.
In accord with this statutory purpose, this final rule will improve the
Medicare program by virtually ensuring the availability of an NPI as a
prescriber identifier on pharmacy claims in the Part D program, because
virtually all prescribers would have to obtain an NPI and disclose it
to entities that need it for use in standard transactions. This, in
turn, would support program integrity efforts described in the April
2012 final rule which requires Part D sponsors to submit PDEs that
contain only individual NPIs as prescriber identifiers, effective
January 1, 2013.
As noted in the April 2012 final rule, ``[w]hen multiple prescriber
identifiers, not to mention dummy or invalid identifiers, are used,
authorities must take an additional step in their data analysis before
even achieving a refined data set to use for further analysis to
identify possible fraud. For example, having to cross-reference
multiple databases that update on different schedules to be certain of
the precise prescribers involved when multiple identifiers were used,
would necessitate several additional steps of data pre-analysis and
also would introduce potential errors in correctly matching prescribers
among databases.'' Invalid identifiers are generally those that do not
appear as current in any prescriber identifier registry. Dummy or
default identifiers have never appeared in any prescriber identifier
registry but have been used successfully on pharmacy claims in place of
valid prescriber identifiers (for instance, when the prescriber's NPI
was not available), because they met the length and format requirements
of a prescriber identifier. Dummy and default identifiers present
additional challenges to authorities, since the actual prescription
must be researched to identify the prescriber.
Valid prescriber identifiers are essential to conducting claims
analyses to identify aberrant claims prescribing patterns that may
indicate fraudulent activity, such as drug diversion schemes or billing
for prescription drugs not provided, which includes circumstances with
active prescriber participation and those involving forged
prescriptions. Improving the accuracy and dependability of the
prescriber identifier on Part D claims and PDEs, improves the ability
to identify fraud and, in turn, protects and improves the Medicare
program.
This final rule further improves the Medicare program by nearly
eliminating the instances in which Part D sponsors' reimbursement (or
possibly their network pharmacies' reimbursement, depending on the
contractual relationship between the sponsors and the pharmacies) would
be negatively impacted due to the actions of prescribers with whom they
may have no business relationship. Part D sponsors would be expected to
price any measurable expectation of financial risk, if any, due to
nonreimbursement by CMS into their Part D bids, thus possibly
increasing premiums and subsidies paid under the program. This final
rule makes such action by Part D sponsors unnecessary by virtually
ensuring the availability of prescriber NPIs for PDEs.
This final rule also accords with the purpose of HIPAA as amended
by the Affordable Care Act. Section 1104(a)(2) of the Affordable Care
Act revised the statutory purpose of HIPAA Administrative
Simplification by adding, at the end, that its purpose is to ``reduce
the clerical burden on patients, health care providers, and health
plans.'' To the extent pharmacies only have to accept one identifier--
the NPI--rather than four possible identifiers from prescribers for the
majority of their claims, the administrative burden on all parties
involved in the processing and payment of these claims is lessened.
Pharmacies and payers should no longer have to cross-check provider
identifier databases to determine if the prescriber has an NPI when an
alternate identifier was used, or contact the prescriber. Moreover,
pharmacies and prescribers should no longer have to respond to
inquiries from payers regarding the existence of an NPI because an
alternate prescriber identifier is used.
The final rule is also supported by section 1173(a)(3) of the Act,
which requires the transaction standards adopted by the Secretary to
accommodate the needs of different types of health care providers. This
final rule accommodates the needs of pharmacies, a type of health care
provider, by ensuring that a prescriber NPI is available to them when
needed for their claims and reducing the instances in which they must
cross-reference provider information databases or research a
prescription. Similarly, section 1173(b)(1) of the Act states that,
[t]he Secretary shall adopt standards providing for a standard
unique health identifier for each individual, employer, health plan,
and health care provider for use in the health care system. In
carrying out [this requirement] for each health plan and health care
provider, the Secretary shall take into account multiple uses for
identifiers and multiple locations and specialty classifications for
health care providers.
This final rule takes into account the particular needs of pharmacies
for an NPI.
While some prescribers will have to apply to obtain an NPI under
this requirement, the NPI is free of charge and requires only the
completion of a three-page application form that primarily seeks
identifying and location information. Thus, we believe the reduction in
administrative burden that will be achieved by this final rule
outweighs the minimal burden placed on prescribers who will have to
obtain NPIs.
The 2004 NPI final rule, as noted previously, foretold the issues
that could arise if noncovered health care providers did not obtain
NPIs, and therefore encouraged them to do so. The preamble of the 2004
NPI final rule stated that disclosing NPIs to entities for use in
standard transactions will greatly enhance the efficiency of health
care transactions throughout the health care industry, and that the
absence of NPIs when required in those claims by the implementation
specifications may delay preparation or processing of those claims, or
both. Health care providers responded by obtaining NPIs in large
numbers, even when not required to, and we believe the vast majority of
prescribers already have NPIs. CMS data shows that approximately 90
percent of Medicare Part D claims as reported in PDEs submitted through
January 2012 contained valid prescriber NPIs even though alternate
prescriber IDs are currently permitted. Less than 1 percent of PDEs
were submitted without a valid identifier. Nevertheless, while the vast
majority of Medicare Part D claims contain individual NPIs, 10 percent
do not. We note that this submission rate increased incrementally
through the
[[Page 54683]]
latter months of 2011, likely due to the issuance of the CY 2012 Part D
final call letter on April 4, 2011, signaling that CMS was considering
only accepting individual prescriber NPIs on PDEs for CY2013, the
subsequent CMS outreach to sponsors and pharmacies, and the CMS April
12, 2012 final rule requiring individual prescriber NPIs be submitted
with PDEs. This final rule, coupled with the CMS April 12, 2012 final
rule, will help ensure this last 10 percent is addressed.
After discussions with representatives of the provider data
industry in the fall of 2011, we estimated at that time that there were
approximately 1.4 million active prescribers in the United States, of
which approximately 160,000 did not have an NPI. It is these
prescribers who will have to obtain an NPI under this final rule.
Comment: A national and a state hospital association, several
health care provider associations, a standards organization and a
company offering connectivity solutions to health care providers,
supported our proposal. The state hospital association stated that it
was aware of patients being unable to fill pharmacy prescriptions
because the prescriber NPIs were not available and had already
encouraged its members to obtain NPIs for interns, residents and other
prescribers. One provider association specifically acknowledged that
our proposal would improve coordination of patient care, increase anti-
fraud detection capabilities, and is in line with the goal of
modernizing and reforming the health system at large. The company
agreed with our statement that, because there are few health care
providers who do not already have an individual NPI, our proposal would
have little impact on health care providers and the industry at large.
Response: We appreciate and agree with these comments. We are
concerned about any pharmacy claims being denied for lack of a
prescriber NPI, for instance, because the payer requires an individual
NPI to be submitted on the pharmacy claim, especially when the payer is
not required to pay the claim and obtain the NPI later. We believe this
final rule will address this issue.
Comment: Two prescription health plans/pharmacy benefit managers
supported the proposal, but encouraged us to go further and require all
prescribers to obtain and disclose individual NPIs. Another commenter,
a hospital association, echoed the idea that all prescribers be
required to obtain and disclose individual NPIs. A third commenter
recommended expanding the requirement to all individual referring,
ordering, and rendering providers. In the alternative, one of the
commenters expressed the hope that our rule would highlight the
importance of health care providers voluntarily obtaining individual
NPIs to facilitate their patients' access to prescribed items.
Response: We appreciate the support for our proposal and also hope
that all health care providers who do not currently have an individual
NPI will voluntarily obtain them and not wait to be directed to do so
by an organization covered health care provider of whom they are a
member, are employed by, or with whom they have a contractual
relationship. We note that HIPAA does not give us direct authority over
health care providers who are not covered entities.
In addition, our proposal was intended to address specific problems
that are presented by prescribers who do not have NPIs or do not
disclose them. Therefore, our proposal was designed in consideration of
our authority under HIPAA and narrowly tailored to address these
specific problems.
Comment: A commenter, expressed concern about the compliance burden
placed on hospitals, stating that significant staff time would be
required to mandate, track and disclose NPIs for all prescribers who
are a member, employee, or contract with a hospital, because it would
necessitate the maintenance of a central database that would have to
provide 24-hour staffing to disclose these NPIs to retail pharmacies.
Another commenter, urged us not to underestimate the impact of this
final rule on software vendors and their customers, especially those in
the hospital systems market, without providing any specific details
about the concerns. However, another commenter agreed with our
statement that organization covered health care providers may have
several alternatives for compliance.
Response: The proposed rule did not specify how organization
covered health care providers should impose the requirement on
individual health care providers who are prescribers. We tried to be
very clear in the preamble of the proposed rule that organization
health care providers may have a number of alternatives for doing so,
for example through a written agreement, an employment contract, or a
directive to abide by the organization health care provider's policies
and procedures. Organization covered health care providers may choose a
proactive approach to ensure the requirement it imposes upon individual
prescribers is followed by the prescribers. Other organizations may
choose to take action upon any inquiries or complaints that a
prescriber does not have an NPI or has not disclosed it on
prescriptions, for instance. With respect to the latter, organization
covered health care providers may want to also voluntarily impose an
additional requirement on prescribers to proactively disclose their
individual NPIs, so the organization covered health care provider
receives as few inquiries or complaints as possible. In addition, we
note that pharmacies and payers have access to prescriber NPI databases
which are routinely consulted at point-of-sale, to which the additional
NPIs that must be obtained under this final rule will be added. In this
regard, we fully expect that prescribers will abide by an organization
covered health care provider's requirement to obtain an NPI, if they
have not already done so voluntarily. We do not expect hospitals to
respond to NPI inquiries on a 24-hour basis, but rather, to respond in
a reasonable timeframe to what we believe will be infrequent inquiries
about prescriber NPIs, or virtually no inquiries, if the prescribers
proactively disclose them on the prescriptions they write. We note that
such action by prescribers will assist their patients in obtaining the
medications they have prescribed for them.
With respect to hospital computer updates, we note that individual
NPIs are already obtained by prescribers, who are members of, employed
by, or contracted with, hospitals, and disclosed to pharmacies. Our
proposal merely marginally expands the pool of prescribers who will be
required, by virtue of certain relationships with organization covered
health care providers, to obtain individual NPIs and disclose them.
While some hospitals may desire to implement computer updates to
prevent the use of an alternate prescriber identifier on a
prescription, it is not required by this final rule. Thus, we do not
believe compliance with this new requirement will necessarily be
burdensome.
Comment: A commenter responded to our specific request for comments
on whether our proposal would reach residents and interns by stating
that it would. Another commenter expressed concerns about our
proposal's applicability to residents, interns and medical students,
stating that residents and interns are not in full control of what is
ordered and are typically acting upon an attending physician's
directive, and that medical students would not order or prescribe
without counter signature. This commenter suggested that residents
obtain an NPI for use during their training tenure and later, a
different one for actual practice. A third
[[Page 54684]]
commenter requested that we require residents, medical students, and
prescribers coming from abroad to obtain their NPIs before they leave
training/school and before they enter the United States, respectively.
Response: With respect to the concerns expressed about the
applicability of our proposal to resident, interns, and medical
students, and what their authority is to prescribe, our proposal
applies to all health care providers who are prescribers. Thus, to the
extent a resident, for example, is a prescriber under applicable state
law, and is reached by this new NPI requirement by virtue of his or her
relationship with an organization covered health care provider, such
resident will have to obtain and disclose his or her individual NPI.
While there is currently no NPI type that identifies a person as being
in his or her residency, for purposes of data analysis, a physician can
identify the period of time during which they are/were a resident with
certainty in any outlier analysis. In addition, the NPI is intended to
be a lasting identifier for the health care provider to which or whom
it has been assigned. In the 2004 NPI final rule (69 FR 3441), we
stated that, ``[f]or health care providers with an `Entity type code'
of 1, the NPI will be a permanent identifier, assigned for life, unless
circumstances justify deactivation.'' Residents and other health care
providers en route to this country should be reached by this final rule
by virtue of their relationships with the organization covered health
care providers pursuant to which they are prescribers. If they are not
prescribers, they will not be reached by this final rule.
Comment: A commenter suggested that we replace ``NPI'' in the
regulation text with ``Type 1 NPI.'' The commenter also suggested that,
in order to be more precise as to our intent, we add the word
``proactively'' before ``disclose'' in Sec. 162.410(b)(2) so that the
regulation would read ``To the extent the prescriber writes a
prescription while acting within the scope of the prescriber's
relationship with the organization, proactively disclose the NPI * *
*''
Response: We disagree with the commenter about the suggestion to
add ``Type 1'' to the regulations text. Only individuals may obtain a
Type 1 NPI, so adding ``Type 1'' to the regulation text as the
commenter suggested would be redundant. With respect to the comment
that urges us to add the term ``proactively'' to the regulation, we do
not require other covered health care providers to proactively disclose
their NPIs, and we do not believe it would be appropriate to single out
individual prescriber health care providers to do so. We did not
propose such a change, but we do encourage organization covered health
care providers to require prescribers who are members, employees, or
with whom they have a contractual relationship, to proactively disclose
their Type 1 NPIs on the prescriptions they write, so the pharmacy has
it for the claim and there will be no need for additional follow-up by
the pharmacy or payer.
Comment: A commenter stated that there appears to be a loophole in
the regulation text, when a provider who is not contracted (for
example, out of network), but who bills a health plan, would not need
to obtain an individual NPI.
Response: We believe the commenter misunderstands the applicability
of our proposal. Our proposal applies to organization covered health
care providers. Health plans are not organization covered health care
providers. In addition, to the extent a health care provider bills a
health plan, such health care provider, if a covered health care
provider, would be required to obtain an NPI under HIPAA. If the
prescriber is not a covered health care provider but is, for example, a
member of a group practice that does bill health plans, this final rule
will reach that prescriber by virtue of his or her relationship with
the group practice.
Comment: A few commenters made a number of suggestions concerning
data enhancements to the NPPES data base and NPI registry.
Response: Our proposal was very limited. We consider these
comments, suggesting the creation of new types of NPI numbers and data
base enhancements, to be beyond the scope of our proposal, although we
appreciate suggestions for future improvements.
After consideration of the public comments received, we are
finalizing these provisions as proposed
C. Effective and Compliance Dates
We proposed that the date by which an organization covered health
care provider must comply is 180 days after the effective date of the
final rule. In other words, if the final rule is effective 60 days
after the date of publication; then 180 days after the effective date,
organization covered health care providers that have a prescriber as a
member, employ, or contract with a prescriber who is not a covered
entity must require him or her to: (1) obtain an NPI and; (2) to the
extent the prescriber writes a prescription while acting within the
scope of the prescriber's relationship with the organization, disclose
the NPI upon request to any entity that needs it to identify the
prescriber in a standard transaction.
Comment: A commenter stated that the NPI implementation date of
October 1, 2013 is not attainable. Other commenters requested that the
compliance deadline be delayed until 1 year after the publication of
the final rule so that organization covered health care providers have
sufficient time to implement the requirement.
Response: We are not certain why the other commenter is referring
to a compliance date of October 1, 2013. We proposed that the
compliance date for the modification to the NPI rule would be 180 days
after the effective date of the final rule. This final rule is
effective on 60 days after the date of publication, which means that
the compliance date is 180 days after the effective date of this final
rule. In other words, by 180 days after the effective date of this
final rule, a organization covered health care provider that has a
member, employs, or contracts with, an individual health care provider
who is not a covered entity and is a prescriber, must require such
health care provider to obtain an NPI from NPPES and, to the extent the
prescriber writes a prescription while acting within the scope of the
prescriber's relationship with the organization, disclose the NPI upon
request to any entity that needs it to identify the prescriber in a
standard transaction.
Comment: A few commenters requested that CMS align the compliance
date of this NPI requirement with the compliance date in the Medicare
Part D program requirement that PDEs be submitted with individual NPIs
beginning January 1, 2013.
Response: The Medicare Part D Program PDE requirement that PDEs
must include a valid and active NPI is effective on January 1, 2013. In
order to align the compliance date of the Part D requirement with the
NPI requirement adopted in this final rule, CMS would have to delay the
new requirement for PDEs or we would have to provide a compliance date
for the NPI requirement that is substantially shorter than 180 days. We
are not willing to shorten the 180-day compliance date in order to give
covered organization health care providers sufficient time to comply
with this final rule. Further, the CMS Medicare Part D program
requirement is not within the scope of this regulation. Therefore, we
cannot accept the commenter's suggestion.
After consideration of the public comments received, we are
finalizing these provisions as proposed.
[[Page 54685]]
IV. Change to the Compliance Date for ICD-10-CM and ICD-10-PCS
A. Background
As discussed in section I. of this final rule, the final rule
adopting ICD-10-CM and ICD-10-PCS (collectively, ``ICD-10'') as HIPAA
standard medical data code sets was published in the Federal Register
on January 16, 2009 (74 FR 3328) (the ``2009 ICD-10 final rule''). The
2009 ICD-10 final rule requires covered entities to use ICD-10
beginning October 1, 2013.
In late 2011 and early 2012, three issues emerged that led the
Secretary to reconsider the compliance date for ICD-10: (1) The
industry transition to Version 5010 did not proceed as effectively as
expected; (2) providers expressed concern that other statutory
initiatives are stretching their resources; and (3) surveys and polls
indicated a lack of readiness for the ICD-10 transition.
1. The Transition to Version 5010 and Its Effect on ICD-10 Readiness
Concurrent with the publication of the 2009 ICD-10 final rule, HHS
published in the Federal Register the Modifications final rule which
set January 1, 2012 as the compliance date for Version 5010 (74 FR
3296). As the industry approached the January 1, 2012 Version 5010
compliance date, a number of implementation problems emerged, some of
which were unexpected. These included--
Trading partners were not ready to test the Version 5010
standards due to vendor delays in delivering and installing Version
5010-compliant software to their provider clients;
Version 5010 errata were issued to correct typographical
mistakes and other maintenance issues were discovered as the industry
began its internal testing of the standards, which delayed vendor
delivery of compliant products and external testing;
Differences between address requirements in the ``provider
billing address'' and ``pay to'' address fields adversely affected
crossover claims processing;
Inconsistent payer interpretation of standard requirements
at the front ends of systems resulted in rejection of claims, as well
as other technical and standard misinterpretation issues;
Edits made in test mode were later changed when claims
went into production without adequate notice of the change to claim
submitters; and
Insufficient end to end testing with the full scope of
edits and business rules in place to ensure a smooth transition to full
production.
Given concerns that industry would not be compliant with the
Version 5010 standards by the January 1, 2012 compliance date, we
announced on November 17, 2011 that we would not initiate any
enforcement action against any covered entity that was not in
compliance with Version 5010 until March 31, 2012, to enable industry
adequate time to complete its testing and software installation
activities. On March 15, 2012, this date was extended an additional 3
months, until June 30, 2012.
The 2009 ICD-10 final rule set October 1, 2013 as the compliance
date, citing industry testimony presented to NCVHS and many of the over
3,000 industry comments received on the 2009 ICD-10 final rule. The
analysis in the 2009 ICD-10 final rule with regard to setting a
compliance date emphasized the interdependency between implementation
of ICD-10 and Version 5010, and the need to balance the benefits of
ICD-10 with the need to ensure adequate time for preparation and
testing before implementation. As noted in the 2009 ICD-10 final rule
(74 FR 3334), ``[w]e cannot consider a compliance date for ICD-10
without considering the dependencies between implementing Version 5010
and ICD-10. We recognize that any delay in attaining compliance with
Version 5010 would negatively impact ICD-10 implementation and
compliance.'' Based on NCVHS recommendations and industry feedback
received on the 2009 ICD-10 final rule (74 FR 3334), we determined that
``24 months (2 years) is the minimum amount of time that the industry
needs to achieve compliance with ICD-10 once Version 5010 has moved
into external (Level 2) testing.'' In the 2009 ICD-10 final rule, we
concluded that the October 2013 date provided the industry adequate
time to change and test systems given the 5010 compliance date of
January 1, 2012.
As implementation of ICD-10 is predicated on the successful
transition of industry to Version 5010, we are concerned that the
delays encountered in the implementation of Version 5010 have affected
ICD-10 planning and transition timelines.
2. Providers' Concerns That Other Statutory Initiatives Are Stretching
Their Resources
Since publication of the 2009 ICD-10 and Modifications final rules,
a number of other statutory initiatives were enacted, requiring health
care provider compliance and reporting. Providers are concerned about
their ability to expend limited resources to implement and participate
in the following initiatives that all have similar compliance
timeframes.
The EHR Incentive Program was established under the Health
Information Technology for Economic and Clinical Health (HITECH) Act, a
part of the American Recovery and Reinvestment Act of 2009 (ARRA) (Pub.
L. 111-5). Medicare and Medicaid incentive payments are available to
eligible professionals and hospitals for adopting EHR technology and
demonstrating meaningful use of such technology. Eligible professionals
and hospitals that fail to meaningfully use EHR technology could be
subject to Medicare payment adjustments beginning in FY 2015. The
Physician Quality Reporting System (PQRS) is currently a voluntary
reporting program that provides incentive payments to eligible
professionals and group practices that satisfactorily report data on
quality measures for covered Physician Fee Schedule services furnished
to Medicare Part B fee-for-service beneficiaries. However, eligible
professionals and group practices who do not meet the reporting
requirements will start receiving penalties in 2015. The Electronic
Prescribing (eRx) Incentive Program is a reporting program that uses a
combination of incentive payments and payment adjustments to encourage
electronic prescribing by eligible professionals. Beginning in 2012
through 2014, eligible professionals who are not successful electronic
prescribers are subject to a payment adjustment. Finally, section 1104
of the Affordable Care Act imposes additional HIPAA Administrative
Simplification requirements on covered entities, shown in Chart 2.
[[Page 54686]]
Chart 2--HIPAA Compliance Dates From the Affordable Care Act
------------------------------------------------------------------------
HIPAA Requirements from the
Covered entity compliance date Affordable Care Act
------------------------------------------------------------------------
January 1, 2013................... Operating rules for
eligibility for a health plan and
health care claim status
transactions.
December 31, 2013................. Health plan compliance
certification requirements for
health care electronic funds
transfers (EFT) and remittance
advice, eligibility for a health
plan, and health care claim status
transactions.
January 1, 2014................... Standards and operating
rules for health care electronic
funds transfers (EFT) and
remittance advice transactions.
December 31, 2015................. Health plan compliance
certification requirements for
health care claims or equivalent
encounter information, enrollment
and disenrollment in a health plan,
health plan premium payments,
health care claims attachments, and
referral certification and
authorization transactions.
January 1, 2016................... Standard for health care
claims attachments.
Operating rules for health
care claims or equivalent encounter
information, enrollment and
disenrollment in a health plan,
health plan premium payments,
referral certification and
authorization transactions.
4 years from effective date of Unique health plan
this rule (For more information identifier.
see section II.E. of this final
rule.).
------------------------------------------------------------------------
3. Current State of Industry Readiness for ICD-10
It is crucial that all segments of the health care industry
transition to ICD-10 at the same time because the failure of any one
industry segment to successfully implement ICD-10 has the potential to
affect all other industry segments. Ultimately, such failure could
result in returned claims and provider payment delays that disrupt
provider operations and negatively impact patient access to care.
In early 2012, it became evident that sectors of the health care
industry would not be prepared for the October 1, 2013 ICD-10
compliance date. Providers in particular voiced concerns about their
ability to meet the ICD-10 compliance date as a result of a number of
factors, including obstacles they experienced in transitioning to
Version 5010 and the other initiatives that stretch their resources. A
CMS survey conducted in November and December 2011 (hereinafter
referred to as the CMS readiness survey) found that 26 percent of
providers surveyed indicated that they are at risk for not meeting the
October 1, 2013 compliance date.\4\
---------------------------------------------------------------------------
\4\ ``Version 5010 and ICD-10 Readiness Assessment: Conducted
among Health Care Providers, payers, and Vendors for the Centers for
Medicare & Medicaid Services (CMS),'' December, 2011, Prepared by
CMS. Survey responses received from 404 health care providers, 101
payers, and 90 vendors.
---------------------------------------------------------------------------
In February 2012, the Workgroup for Electronic Data Interchange
(WEDI) conducted a survey on ICD-10 readiness, hereinafter referred to
as the WEDI readiness survey.\5\ WEDI received responses from more than
2,600 providers, health plans, and vendors showing that the industry is
uncertain about its ability to meet ICD-10 compliance milestones. Data
from the WEDI survey indicated that nearly 50 percent of the provider
respondents did not know when they would complete their impact
assessment.\6\ In addition, the survey found that approximately 33
percent of providers did not expect to begin external testing in 2013,
while approximately 50 percent of providers did not know when testing
would occur.\7\
---------------------------------------------------------------------------
\5\ ``Survey: ICD-10 Brief Progress,'' February 2012, conducted
by the Workgroup for Electronic Data Interchange (WEDI).
\6\ An impact assessment for ICD-10 is performed by a covered
entity to determine business areas, policies, processes and systems,
and trading partners that will be affected by the transition to ICD-
10. An impact assessment is a tool to aid in planning for
implementation.
\7\ For providers, the CMS ICD-10 Implementation Guide
recommends that they complete their impact assessments by Winter
2012 and begin external testing in the Fall of 2012. CMS provides
implementation guides for providers, payers, and vendors to assist
with the transition from ICD-9 to ICD-10 codes. It is a resource for
covered entities providing detailed information for planning and
executing the ICD-10 transition process. CMS recommends industry use
the guide as a reference.
---------------------------------------------------------------------------
Other segments of the industry, such as health plans and software
vendors, also reported that they would benefit from additional time for
implementation. While the CMS ICD-10 Implementation Guide recommends
that payers begin external testing in the fall of 2012, the WEDI
readiness survey found that most health plans do not expect to begin
external testing until 2013. In addition, about 50 percent of vendors
are not yet halfway through development of ICD-10 products. Vendor
delays in product development can result in provider and payer delays
in implementing ICD-10.
Given the evidence that segments of the health care industry will
likely not meet the October 1, 2013 compliance date, the reasons for
that likelihood, and the likelihood that a compliance date delay would
significantly improve the successful and concurrent implementation of
ICD-10 across the health care industry, we proposed to extend the
compliance date for ICD-10.
B. Public Comments on the 1-Year Delay of ICD-10
Faced with growing evidence that a group of providers would not be
ready to transition to ICD-10 on October 1, 2013, and the possibility
that payment for millions of health care claims would be delayed, we
considered the following options before proposing a 1-year delay of the
compliance date in the April 2012 proposed rule:
Option 1: Maintain October 1, 2013 deadline
Option 2: Maintain the October 1, 2013 compliance date for ICD-10-PCS
(procedure codes) and only delay the compliance date for ICD-10-CM
(diagnosis codes)
Option 3: Forgo ICD-10 and wait for ICD-11
Option 4: Mandate a uniform delay of the compliance date for ICD-10
We proposed Option 4, mandate a uniform delay for 1 year of the
ICD-10 compliance date, because we believed it would be the most
effective way to mitigate the significant systemic disruptions and
payment delays that could result if a large percentage of providers are
not ready to implement ICD-10 on October 1, 2013. In addition, as the
Regulatory Impact Analysis (RIA) in this final rule indicates, Option 4
is most likely to minimize the costs of delay and to maximize the
benefits to providers who need more time to implement.
Of the more than 500 public comments submitted, there was some
support for each of the options considered. The compliance date of
October 1, 2014, as proposed in the April 2012 proposed rule, was
supported by the highest number of public comments in comparison to the
other options. We summarize the
[[Page 54687]]
options from the April 2012 proposed rule below, present the public
comments related to them, and provide our responses. We also summarize
and respond to additional options and suggestions commenters presented
that were not considered in the April 2012 proposed rule. Finally, we
summarize some of the comments that address issues outside the scope of
this regulation.
1. Option 1: Maintain October 1, 2013 Deadline
Segments of the health care industry expressed support for staying
the course regarding the October 2013 compliance date. Many health
plans, large hospitals, physician practices, and IT vendors have
already made large investments upgrading systems, hiring personnel for
the transition, and making other preparations for implementation. There
is a financial and psychological momentum toward implementing ICD-10
that may be disrupted by a delay. According to the Edifecs poll, ``a
potential delay of the ICD-10 compliance deadline could have far
reaching--and highly negative--impact to the health care industry's
effort to implement the mandate.'' \8\
---------------------------------------------------------------------------
\8\ See ``Survey: Industry Reaction to Potential Delay of ICD-
10--A Delay will be Costly, but Manageable * * * Unless it's more
than a Year,'' Edifecs, February 27, 2012: http://www.edifecs.com/downloads/EdifecsSurvey-ICD10Delay.pdf.
---------------------------------------------------------------------------
Comment: Some commenters recommended maintaining the October 1,
2013 deadline. Some commenters argued that considerable expense has
been expended by many entities in order to meet the October 1, 2013
deadline, and any delay will be costly. Another commenter described the
investment of time and resources that has been spent on education,
outreach, and policy discussions in order to meet the October 1, 2013
compliance date. Some commenters noted the costs that would be incurred
by coders, students, teaching institutions, and training programs if
the compliance date were delayed. Students and teaching programs have
invested much in training geared toward an October 1, 2013 compliance
date.
One commenter noted that, among the downsides to delaying
implementation of ICD-10, if we continue to use current codes, the
ability to progress population-based healthcare and improve patient
care will be limited. Commenters suggested that a delay prolongs the
period until industry can use the improved code sets that support the
improvement of quality and outcomes data, cost-effective approaches to
delivering care, and information for better research.
Another commenter urged no delay, noting that the U.S. health care
industry has known for at least 15 years that ICD-10 would be adopted
as a replacement for the severely outdated and broken ICD-9. The
commenter stated that the industry has had 3 years to prepare, since
the publication of the ICD-10 final rule, and, therefore, it does not
seem likely that the provision of more time, by itself, will be
sufficient to ensure those lagging in ICD-10 will be ready by a delayed
compliance date.
Other commenters recommended that if a delay is necessary, that it
be for less than 1 year, citing similar reasons to those already
described.
One commenter suggested that maintaining the October 1, 2013
compliance date would be difficult because the ICD-10 project timelines
for both physicians and vendors--on which physicians are often
dependent--were affected by the obstacles associated with the
implementation of Version 5010. Another commenter argued that the
survey results used in the RIA that indicated that 25 percent of
physicians did not think they were prepared for IC-10 may well
overestimate the percentage of physicians who would be well-prepared
for an October 1, 2013 compliance date, and that maintaining the
October 1, 2013 date would be ill-advised.
Response: We recognize that many individual entities that were on
target to meet the October 1, 2013 deadline will be financially
impacted by a delay. We also recognize that there are opportunity costs
associated with a delay, such as a delay in taking advantage of the
improved code sets that support the improvement of quality and outcomes
data, cost-effective approaches to delivering care, and information for
better research. But we believe that the risk of a major disruption in
physicians' reimbursements nationwide and the possible effects on
patient care outweighs those costs.
As we indicated in the April 2012 proposed rule, it is clear to us
that a significant number of health care entities will not be prepared
to meet an October 1, 2013 compliance date. Reasons for this include
that entities may not have altered their systems, thoroughly analyzed
their processes, changed their forms, prepared for training their
personnel, begun testing their internal systems, or are not in a
financial position to begin these preparations.
While we cannot project precisely what percentage of certain
sectors of the health care industry would not be prepared for an
October 1, 2013 deadline, the studies we have used in the RIA of this
final rule reflect that the numbers are significant enough to cause a
disruption in health care claim payments. We project a number of
quantifiable negative consequences of such a disruption in the RIA and
believe that there may be a number of unanticipated costs as well,
including possible indirect economic impacts on related industries and
the economy at large.
It is also likely that health care entities have stopped or slowed
their preparations for an October 1, 2013 deadline since the Secretary
announced in February 2012 that a delay would be considered through
rulemaking. Because of this, there may be more entities that would be
unprepared for an October 1, 2013 deadline than what we predicted in
the April 2012 proposed rule.
We believe a delay of the ICD-10 compliance date will increase the
readiness of the industry at large, and thus avoid a large disruption
in health care claim payments. Entities that were not on schedule to be
ready by October 1, 2013 can use the time to become prepared, and
entities that are on schedule can use the delay to conduct more
thorough testing and work with their trading partners to decrease the
possibility of unforeseen obstacles to implementation and increase the
possibility of a smooth transition.
We recognize that the 1-year delay in compliance date does not
guarantee that entities will use the time to become better prepared to
meet the original compliance date of October 1, 2013. However,
additional activities are planned to mitigate this risk. During the 1-
year delay, we expect to increase education and outreach events and to
work with industry on improvements to the overall standards
implementation process.
2. Option 2: Maintain the October 2013 Compliance Date for ICD-10-PCS
(Procedure Codes) and Only Delay the Compliance Date for ICD-10-CM
(Diagnosis Codes)
In the April 2012 proposed rule, we considered a split
implementation alternative: Maintaining the compliance date for ICD-10-
PCS, which is used for inpatient hospital procedure coding, at October
1, 2013, while delaying the compliance date for ICD-10-CM, the
diagnosis codes used by physicians, to some later date, for example
October 1, 2015. The rationale for this option was that hospitals, with
their greater access to resources, would be in a better position to
move forward with ICD-10-
[[Page 54688]]
PCS, which would result in at least partial compliance with the October
1, 2013 date. This option would also afford small providers additional
time to become compliant with the ICD-10-CM diagnosis codes.
Comment: Some commenters believed that a split implementation of
the ICD-10 procedure versus diagnosis codes would be an appropriate
approach. Moving first to adopt ICD-10-PCS for the inpatient setting,
commenters stated, would permit HHS and the industry to evaluate the
impact on a defined part of the health care system and better inform
challenges and solutions before moving the broader health care industry
to ICD-10-CM codes.
One commenter noted that moving to adopt ICD-10-PCS for the
inpatient setting first would alleviate the issue of the lack of
granular coding for inpatient procedures, a concern vocalized by both
hospitals and device manufacturers.
Other commenters argued against mandating different compliance
dates for procedure and diagnosis codes. One commenter stated that a
split approach would result in significant increases in costs to
vendors because they would have to support dual systems. These costs
would then be passed on to clients. Another commenter noted that a
split approach would be costly with regard to the coordination of
concurrent payer rules for ICD-9 and ICD-10 as applied to adjudication,
duplicate claims checking, and fraud and abuse. The same commenter
stated that there would be added complexities for clearinghouses
because they would be running dual systems.
Other commenters argued that splitting the compliance date could
confuse certain providers because of the overlap of hospitals and
ambulatory sites of services in some contexts. Another commenter argued
that splitting the implementation date would have three consequences:
Added cost to support dual coding systems and the analyses, coding, and
testing that each of the two code sets would require before
implementation; increased provider confusion because the industry is
supporting both code sets; and the need for a complete rewrite of CMS'
diagnostic related groups (DRGs). This would eventually have an impact
on revenue neutrality, the commenter suggested. Staggered
implementation would also make interpretation of data difficult, the
commenter added.
Response: We agree with commenters that argue against a phased-in
approach to implementation of ICD-10-PCS followed at a later date by
ICD-10-CM. We believe that different compliance dates for diagnostic
and procedure codes would burden the health care industry with a
substantially greater cost than a uniform implementation because many
sectors of the health care industry would have to run dual systems.
This option would also place considerably more burden on hospitals
because they would effectively have to implement ICD-10 twice: once in
2013 for ICD-10-PCS and then again at a later date for ICD-10-CM,
increasing their implementation costs.
Further, there is a risk that a split implementation of procedure
and diagnostic codes would render an operationally difficult
implementation of the new code set even more difficult. These
operational complexities would translate into added costs for all
parties. Also, where a split-compliance approach contributes its own
implementation challenges--that is, complexities in terms of dual
processing and dual payer rules--we do not believe that HHS would
easily be able to derive useful lessons that could applied to a
successive implementation of ICD-10-CM.
Given that the costs of such an approach would be greater than a
uniform delay of ICD-10-PCS and ICD-10-CM, and that the experience of a
phased approach would yield few beneficial lessons that could be
applied to implementation of ICD-10-CM for the broader industry, we do
not support such an approach.
Comment: Some commenters suggested a related option of adopting
ICD-10-PCS and ICD-10-CM both, but only in the inpatient setting. One
commenter stated that this would mirror the approach taken by other
nations, and would capture much of the nation's public health data.
Commenters noted that moving to ICD-10-CM in the inpatient setting
would provide data that would inform a decision whether to move to ICD-
10-CM in outpatient settings.
One commenter suggested implementing a small ``subset'' of ICD-10-
CM in the outpatient setting and excluding certain providers from
detailed requirements. The commenter referred to Germany's approach in
this regard.
Response: Both these approaches would appear to have the same costs
and involve the same complexities as implementing ICD-10-PCS first and
ICD-10-CM later: (1) Many entities would be required to maintain dual
processing, which is costly and adds complexity; (2) there would be
confusion among providers that are in settings where there is overlap
between inpatient and outpatient environments or environments where
ICD-9 and the small subset of ICD-10-CM would be used; and (3)
concurrent sets of payer rules would have to be followed.
The suggestion that data could be garnered from using ICD-10 in the
inpatient setting to inform a decision whether to move the code set to
outpatient settings, implies that the decision to mandate ICD-10-CM in
outpatient settings has not yet been made, but could be made based on
the experience of implementing ICD-10 in the inpatient setting only.
This is incorrect. The decision to require ICD-10 to be used by covered
entities has already been made, and it was based on years of industry
discussions, consensus building, and government rulemaking. Before
publishing the proposed rule that proposed to require covered entities
to implement ICD-10-CM and ICD-10-PCS, the Secretary considered
recommendations of the NCVHS, as well as input from Federal and State
agencies, private and professional organizations, and industry
stakeholders, including organizations representing providers, health
plans, clearinghouses, and vendors. For a history of the adoption of
ICD-10, see the proposed rule titled ``HIPAA Administrative
Simplification: Modification to Medical Data Code Set Standards to
Adopt ICD-10-CM and ICD-10-PCS'', published on August 22, 2008 (73 FR
49796) (hereinafter referred to as the August 2008 ICD-10 proposed
rule). After the August 2008 ICD-10 proposed rule was published, HHS
considered over 3,000 public comments on the proposed mandate. (See the
January 16, 2009 final rule titled ``HIPAA Administrative
Simplification Modifications to Medical Data Code Set Standards to
Adopt ICD-10-CM and ICD-10-PCS'' (74 FR 3328).)
3. Option 3: Forgo ICD-10 and Wait for ICD-11
The option to forego a transition from ICD-9 to ICD-10, and instead
wait for ICD-11, was another alternative that was considered. This
option was eliminated from consideration because the World Health
Organization (WHO), which creates the basic version of the medical data
code set from which all countries create their own specialized
versions, is not expected to release the basic ICD-11 medical data code
set until 2015 at the earliest.
From the time of that release, subject matter experts state that
the transition from ICD-9 directly to ICD-11 would be more difficult
for industry and it would take anywhere from 5 to 7 years for the
[[Page 54689]]
United States to develop its own ICD-11-CM and ICD-11-PCS versions.\9\
---------------------------------------------------------------------------
\9\ Rhonda Butler, ``Why we can't skip ICD-10 and go straight to
ICD-11,'' Healthcare Finance News, March 29, 2012; Carl Natale,
``Why we're not ready to plan ICD-11 implementation,'' ICD10Watch,
February 20, 2012, http://www.icd10watch.com/, ``ICD-10 Frequently
Asked Questions,'' American Health Information Management
Association (AHIMA), http://www.ahima.org/ICD10/faqsall.aspx#36.
---------------------------------------------------------------------------
Comment: A number of commenters referred to an article titled
``There are Important Reasons for Delaying Implementation of the New
ICD-10 Coding System,'' published in Health Affairs in May 2012, using
it to support their opinion that the United States should forgo ICD-10
and wait for ICD-11.\10\ Commenters noted a number of highlights from
the article, including the following:
---------------------------------------------------------------------------
\10\ C. Chute, S. Huff, J. Ferguson, J. Walker, and J. Halamka,
``There are Important Reasons for Delaying Implementation of the New
ICD-10 Coding System,'' Health Affairs, May 2012, Vol. 31, No. 5.
---------------------------------------------------------------------------
Reference to a study that found that ICD-10 codes failed
to outperform ICD-9 codes in capturing clinical data.
Reference to an analysis of ICD-10 codes that found a
lower percent of codes dedicated to diseases, compared to ICD-9 codes.
Deficiencies in the ICD-10 code set, including a lack of
genomic information such as family history.
Reasons why SNOMED-CT, on which ICD-11 is based, is a
superior clinical coding language.
Reasons why ICD-10 is nearing obsolescence.
One commenter pointed out that, if ICD-11, as scheduled for release
by the WHO, should be accepted without further modifications as the
reporting standard for the U.S., ICD-11 could be ready for adoption
before the 2020-2022 date estimated in the April 2012 proposed rule.
Another commenter argued that we should forgo ICD-10 because
implementing ICD-10 in 2013 or 2014 would delay the eventual adoption
of ICD-11 given the time it takes for code sets to be implemented in
the U.S. This would again put us behind the rest of the world because
we would be using an obsolete code set--ICD-10--for 13+ years after the
WHO adopts ICD-11.
One commenter recommended moving to ICD-11 in the same timeframe as
the rest of the world in order not to defeat the primary purpose of
having the interoperability to exchange the most accurate health care
data.
Other commenters argued against waiting for ICD-11 and argued for
preceding with ICD-10 as mandated. Some of these commenters quoted an
article that was published in the July 2012 Journal of AHIMA that
rebutted the article Chute et.al. point by point. (One commenter
submitted the entire article as her comment.) \11\ Some commenters
argued against waiting for ICD-11 because the current code set, ICD-9-
CM, is not adequate to support health information and data needs. ICD-9
does not allow for clinically relevant or robust data, commenters
wrote, and its continued use reduces physicians' ability to assess
patient outcomes, track public health risks, and exchange meaningful
data with other health care organizations and reporting entities. It
could also slow the adoption of value-based purchasing and other
payment reform models, according to the commenter.
---------------------------------------------------------------------------
\11\ R. Averill and S. Bowman, ``There are critical reasons for
not further delaying the Implementation of the new ICD-10 coding
system,'' Journal of AHIMA, vol. 83, no. 7, July 2012.
---------------------------------------------------------------------------
Some commenters noted that the structure of ICD-10 was designed to
allow for the eventual changeover to ICD-11, and that failure to have
this structure in place for ICD-11 would result in retrofitting many
more health care systems at catastrophic costs. One commenter noted
that, while ICD-11 may hold great promise, the commenter believed that
claims about ICD-11's benefits were speculative, at best, because so
much of it had yet to be developed.
Another commenter noted that, despite the appeal of putting off the
cost and disruption of transitioning to a new code set indefinitely,
the disruption and costs of transitioning to ICD-11 are highly unlikely
to be less those of transitioning to ICD-10.
Response: We recognize that there is a debate within the health
care industry as to the value of ICD-10 compared to ICD-11. We do not
participate in this debate in this rule, except to say that we are
convinced of the benefit of ICD-10 to health care delivery in this
country. One of our responsibilities is to consider costs and benefits.
We can make some rough calculations as to the investment that would be
lost if we were to forgo ICD-10. In the RIA, we estimate the cost of a
1-year delay to be $1 to $6.6 billion. This represents what we believe
to be approximately 10 to 30 percent what has been invested or
budgeted, to date, into implementation of ICD-10. Forgoing ICD-10
translates into a loss of up to $22 billion for the U.S. health care
industry. This does not take into account the projected fiscal and
public health benefits that would be lost every additional year that we
use ICD-9.
Given the considerable financial investment made by entities in
preparation for ICD-10, and the timelines and uncertainties regarding a
possible adoption of ICD-11, we cannot forgo ICD-10 in the hopes that a
future, more effective code set will be adopted.
Comment: One commenter recommended that October 1, 2014 remain the
compliance date for ICD-10-PCS since this is the area that has run out
of ICD-9 procedure codes. HHS should then set October 1, 2016 as the
compliance date for ICD-11 diagnosis codes, using ICD-11 as established
by the WHO without the clinical modification. This would allow the
industry to spend the time prior to October 1, 2016 preparing for ICD-
11.
Response: This approach appears to require the processing of three
different code sets over a 2-year period: ICD-10-PCS and ICD-9-CM from
October 1, 2014 to October 1, 2016; ICD-10-PCS and ICD-11 from October
1, 2016 on. It is unlikely that any version of ICD-11 would be adopted
in the timeframes suggested and, as we have noted, dual processing is a
more costly and complex approach than a uniform implementation. We do
not believe that this is an appropriate approach.
4. Option 4: Mandate a Uniform Delay of the Compliance Date for ICD-10
The fourth option considered was a uniform delay of the compliance
date for both ICD-10-CM and ICD-10-PCS. The advantage to an across-the-
board delay is that it will yield a single compliance date among all
industry segments. Contemplating such an option gave rise to a
secondary question--what length of delay would be appropriate?
In the proposed rule, we considered a 1-year and a 2-year delay of
the compliance date. We believed a 1-year delay achieves a balance
between the needs of those who have already taken the initiative to
plan for one-time compliance with ICD-10 and the need for other
entities to have additional time to become ICD-10 compliant. While not
without additional costs, a 1-year delay, to October 1, 2014,
represents what we consider to be a reasonable compromise. Short of
maintaining the October 1, 2013 date, delaying ICD-10-CM and ICD-10-PCS
by one year does the least to disrupt existing implementation efforts,
while affording the small provider community an additional year to
become compliant.
a. 2-Year Delay
Comment: Some commenters suggested extending the ICD-10 compliance
date 2 years, until October 1, 2015, or beyond. In general, these
[[Page 54690]]
commenters stated that an additional 2 years is needed to perform
system testing, staff training, further analysis, and outreach and
education by both the federal government and the private sector to
those entities that experience difficulty implementing ICD-10.
One commenter suggested that 2 years would be preferable in order
for front line care providers to ``buy into'' the change and integrate
ICD-10 into their day-to-day operations. One commenter suggested that,
given the interdependency between implementing Version 5010 and
implementing ICD-10, HHS should monitor the implementation of Version
5010 carefully, as an additional delay in its implementation may
require a delay longer than one year for ICD-10.
One commenter noted that its state Medicaid program would incur
substantial costs if the delay was 1 year instead of 2 years due to the
schedule in which it Medicaid Management Information System MMIS would
be updated.
Another commenter stated that the uncertainty over the compliance
date had caused resource planning challenges because organizations have
put on hold their partially complete planning and implementation
efforts. A 2-year delay would allow organizations to more effectively
re-plan their efforts. One commenter noted that a 2-year delay would
better align resources and spread costs out over time.
One commenter noted that a 2-year delay is necessary because
federal mandates and independent business initiatives were straining
already constrained resources in health services delivery and health
plan administration. The commenter's organization had committed
significant resources in EHR development, Meaningful Use certification,
PQRS creation and ACO design and development. Two years would also give
the commenter's entity time to implement significant business model
changes in 2013 to accommodate provisions of the Affordable Care Act.
One commenter argued that a 2-year delay would give worker's
compensation (WC) and third party liability (TPL) insurances time to
implement ICD-10 voluntarily because of industry pressure to do so. The
commenter further argued that a 2-year delay would enable further study
demonstrating the positive impact of ICD-10 for providers who have yet
to be convinced.
Some commenters suggested that a delay longer than 2 years was
necessary, citing some of the same reasons given for a 2-year delay.
Many commenters agreed with the assumption that implementation
costs would increase with every year of a delay, while there were no
commenters that argued otherwise. Commenters reported that a 2-year
delay would increase costs to maintain implementation efforts, staff
training, and systems changes. One commenter stated that a delay in
ICD-10 beyond 1 year would result in higher implementation costs for
insurers and ultimately for customers. They stated that a delay beyond
1 year would require costly and time-consuming work, including
conducting systems inventories that will have become outdated and would
need to be completely reassessed.
Some commenters noted that each year of delay prevents the industry
from realizing the anticipated benefits of implementing ICD-10.
Some commenters also suggested that any delay beyond 1 year would
result in the industry losing momentum in implementation efforts, which
could ultimately jeopardize the implementation of ICD-10. One commenter
argued that, in the case of a 2-year delay, the staffing and financial
resources that were dedicated to the implementation would likely be
diverted elsewhere. Some commenters expressed concern about the system
implications of moving to ICD-10 the same year some may implement Stage
2 of Meaningful Use.
A commenter stated that our analysis did not include some
categories of additional costs of a 2-year delay associated with the
ICD-9-CM code set, including ``inaccurate diagnosis and clinical
decisions, administrative inefficiencies due to manual processes,
coding errors due to outdated codes, worsening imprecision of the ICD-
9-CM code (due to stasis if the code freeze is not lifted), and ongoing
maintenance of both ICD-9-CM and ICD-10-CM/PCS code sets.''
Response: Based upon the methodology and baseline estimates from
the RIA that follows, we estimate it will cost health plans up to an
additional 30 percent of their current ICD-10 implementation budgets
for a 1-year delay. Therefore, we can assume that a 2-year delay would
be at least double the cost.
An informal survey of State Medicaid programs also indicated that
an October 1, 2015 compliance date may be problematic for some states
that are undergoing IT-intensive MMIS transitions that same year.
Extending the ICD-10 compliance date to October 1, 2015 would
likely result in having to lift the current code set freeze, as the
industry could not wait an additional 2 years for maintenance updates
to the medical data code sets. A code set freeze is a suspension of
updates to code sets, in this case, the existing and outdated ICD-9
medical code set. Updates to code sets are usually necessary on an
annual basis in order to encompass new diagnosis and procedure codes
that capture new technologies or diseases. Lifting the code set freeze
would result in the release of potentially thousands of changes to the
ICD-10-CM and ICD-10-PCS code sets, all of which would have to be re-
programmed into systems in order to be ready for an October 1, 2015
compliance date, at considerable industry cost. The Medicare fee-for-
service health plan estimated that the cost for re-programming just one
of its systems due to a code set freeze lift would result in, at
minimum, $1 million in additional expense. If each of the nation's
approximately 1,887 health plans incurred a similar cost, it would
translate into a minimum additional expense of nearly $2 billion.
A 2-year delay in the ICD-10 compliance date could also signal a
lack of HHS' commitment to ICD-10, potentially engendering industry
fear that there could be another delay in, or complete abandonment of,
ICD-10 implementation, with subsequent heavy financial losses
attributable to ICD-10 investments already made.
We agree that a 2-year delay would provide more time for entities
to coordinate implementation with other federal mandates and programs
and would give the entire industry more time to conduct system testing,
training, further analysis and outreach and education. However, as
illustrated in the RIA and as reflected in many of the comments, every
year carries considerable costs for those that have already invested
resources in order to meet an October 1, 2013 deadline. As well, the
entire health care industry will suffer the opportunity costs of not
moving to a more effective code set. We also believe there is a risk
that ICD-10 could be abandoned altogether if a 2-year delay was
established. We do not believe the benefits of more time outweigh the
costs and risks of a 2-year delay.
b. 1-Year Delay
Comment: Of all the options, the highest number of commenters
supported the proposed 1-year delay of ICD-10. Commenters supported the
proposed delay for a number of reasons. Some stated they would benefit
from the additional time for implementation given that they are in the
process of
[[Page 54691]]
implementing numerous other competing priorities during the same time
frame. Some commenters believed a 1-year delay would ensure that all
industry segments had ample time to transition to ICD-10 and would be
ready to do so on the same date.
One commenter supported the 1-year delay because it would allow
additional time for planning, testing, training, and price negotiation
with vendors, the opportunity for additional business impact
assessments, and implementation of appropriate workflow changes,
additional time for vendor and payer readiness, and alignment with
other health system-wide initiatives.
Some commenters supported the proposed 1-year delay because of the
financial advantages. One commenter noted that the 1-year delay would
be helpful in order to recover from the cash outlay that was made in
order to transition to Version 5010. Some commenters argued in support
of the 1-year delay because they believed that their organizations
could not support the financial investment necessary to make the ICD-10
transition by the original compliance date.
One commenter supported a 1-year delay because the delay
effectively balances the interests and current implementation status of
multiple stakeholders. The commenter described the range of opinions
and readiness of physicians in the commenter's state, noting that some
physicians preferred a longer delay due to competing initiatives, lack
of resources, and other mitigating factors, while others preferred no
delay because of their early investment in staff and resources to
support the effort.
Many commenters did not agree that a 1-year delay was a reasonable
approach, arguing for one of the other options or arguing for options
that we did not consider in the proposed rule. We have included their
arguments under those options.
Response: We agree with commenters that believe a 1-year delay
would be helpful operationally, financially, and in terms of planning
and coordinating with other initiatives. We agree that a delay beyond
one year carries costs and risks that do not outweigh the benefit of a
longer delay.
5. Options Not Considered in the April 2012 Proposed Rule
Comment: Some commenters suggested a staggered approach to
implementation based on covered entity type. These commenters
recommended that clearinghouses and health plans should comply with
ICD-10 first and then providers should comply at least 12 months later.
Commenters argued that implementation by health plans must be
thoroughly vetted before involving providers in the implementation.
They believed this would allow providers to fully test with trading
partners before their compliance date. These commenters stated that
separate compliance dates would minimize the disruption to health care
delivery and claims payment processes.
One commenter recommended against any dual implementation period
for ICD-10. The commenter argued that such an approach would be nearly
impossible to implement from an operational perspective and would cause
great challenges both in the development of health plan and provider
contracts as well as the implementation of quality improvement strategy
reporting, which depends on ICD-10 diagnostic and procedure codes. It
would also add significant costs and marketplace confusion to the
implementation of ICD-10.
Response: With respect to health plans, all analysis, design and
development has been done according to the initial requirement of a
cutover implementation. This means health plans have not prepared for
processing both ICD-9 and ICD-10 code values on initial claims with
dates of service received after the cutover date, as would be expected
if health plans were required to be ICD-10 compliant before providers.
The strategy to require ICD-10 codes as of a specific date of service
has been reinforced in industry outreach and education by HHS, and
vendor contracts have been based on this strategy. Some entities have
recently indicated a change in this foundational requirement would
effectively require them to start over, which would cause a multiyear
delay. We assume that the same would be true for many entities were we
to change approaches.
A specific compliance date for health plans, followed by another
date a year later for providers' compliance, is effectively a 2-year
delay of the date when the health care industry as a whole ``goes
live'' with ICD-10. In practice, therefore, an argument for a different
compliance date for providers and health plans/clearinghouses is an
argument for a 2-year delay of the compliance date. We have estimated
that a 2-year delay of the compliance date of ICD-10 carries with it
considerable costs. We do not believe that the benefits of a 2-year
compliance delay would be worth the costs.
Comment: Some commenters made suggestions that went beyond
consideration of a delay in compliance date of ICD-10 and questioned
the implementation of ICD-10 in general. Commenters stated that the
initiative should be abandoned completely because it represents an
enormous burden on medical practices with no benefit to patients or no
improvement to quality of care. Another commenter argued that ICD-10
will not enhance the process of reporting medical claims.
Response: Beyond stating the basic thesis that there is no benefit
to implementing ICD-10, the commenters did not provide detail as to how
they arrived at this conclusion. We respectfully disagree with these
commenters' conclusion. Although the benefits of ICD-10 have been
reiterated in many studies and articles, we emphasize a number of the
benefits here: standardized medical data for research, accessing and
interpolating global health data in any language, drug discovery for
complex diseases, individualized medicine (both predictive and
preventative), clinical decision support, improved patient outcomes,
optimized billing, and accurate insurance administration, leading to
lower health care costs. ICD-10 will allow for better monitoring of
patients with chronic conditions such as asthma, diabetes, and sickle
cell disease, and will permit better tracking of injuries that can lead
to improved preventive and safety measures. For a comprehensive
discussion of the expected benefits of ICD-10, and the reasons why we
adopted it, see the ICD-10 proposed and final rules (August 22, 2008
(73 FR 49796) and January 16, 2009 (74 FR 3328), respectively.)
6. Other Suggestions From Commenters on How Best To Implement ICD-10
(a) Increased Education and Outreach
Comment: Many commenters urged increased education and outreach on
ICD-10, both from the federal government and from industry resources
and organizations. One commenter urged HHS to continue to engage the
30+ organizations that are working on ICD-10 education and to leverage
their tools and resources. One commenter noted that industry surveys
continue to show the lack of awareness of ICD-10 among providers and
that education and outreach might mitigate this. Another commenter
suggested that HHS educate providers on the synergies between
Meaningful Use and ICD-10. The commenter suggested that private sector
firms and entrepreneurs should be engaged in education and outreach
tasks. One commenter suggested that HHS reach out to health care
professions and trade organizations to
[[Page 54692]]
assist the health care industry, including local and state providers,
plans, and payers--governmental and private.
One commenter suggested that HHS create an education plan and
conduct education in a wide range of formats, including webinars,
handouts, podcasts, frequently asked questions, and a variety of other
formats.
Some commenters suggested that HHS develop and publish specific
milestones or benchmarks on the implementation of ICD-10 so that
industry could measure its own progress toward ICD-10 readinesss.
One commenter stated that, while large providers many not need
assistance, small providers will need assistance to determine if their
current documentation practices will enable the selection of an
appropriate ICD-10 code.
Response: We will continue to work with industry to provide
outreach and education. We will continue to engage stakeholders on a
wide variety of ICD-10 implementation issues, including reduction of
burden on physicians and other healthcare segments.
Comment: One commenter urged HHS to engage a national Coding
Authority to provide a recognized source of accurate and timely coding
information. The Coding Authority for ICD-10, such as the Cooperating
Parties, would provide the needed awareness and timely answers for ICD-
10 transition questions.
Response: We note that the Cooperating Parties, which includes CMS,
the Centers for Disease Control and Prevention (CDC), the American
Hospital Association (AHA) and the American Health Information
Management Association (AHIMA), serve as the national coding
authorities on both the ICD-10 and the ICD-9-CM code sets. CMS has the
lead on ICD-9-CM and ICD-10-PCS procedure code maintenance. CDC has the
lead on ICD-9-CM and ICD-10-CM diagnosis maintenance. AHA has
established a Central Office on ICD-9-CM coding and will continue that
role with ICD-10. The AHA's Editorial Advisory Board for Coding Clinic
is already addressing ICD-10 coding issues for inclusion in their
publication Coding Clinic for ICD-9-CM. All of the Cooperating Parties
serve on the Editorial Advisory Board. We are confident in the
Cooperating Parties continuing role as the national authorities on both
ICD-9-CM and ICD-10.
(b) Code Freeze
Comment: Some commenters suggested the ICD-10 code freeze be
extended an additional year or until October 1, 2015. One commenter
requested clarification on when the code freeze would be lifted.
Response: The issue of the partial code freeze was discussed over
several meetings of the ICD-9-CM Coordination and Maintenance
Committee. Based on these discussions it was decided to make the last
regular update to ICD-9-CM and ICD-10 codes on October 1, 2011.
Beginning on October 1, 2012, only codes for new technologies and new
diseases would be considered for code updates. The committee decided
that, 1 year after the initial compliance date of October 1, 2013,
regular updates to ICD-10 would begin and no further updates to ICD-9-
CM would occur upon the implementation of ICD-10. The Committee is the
public forum for discussions on the maintenance and updates to both
ICD-9-CM and ICD-10 code sets and will therefore be the source of
discussion and any decisions on the implementation of any further code
freeze based on the provisions of this final rule.
(c) Crosswalks
Comment: One commenter argued that, even with a delayed compliance
date, the lack of a single forward crosswalk from ICD-9-CM to ICD-10-CM
and a single backward crosswalk from ICD-10-CM to ICD-9-CM that is more
specific than the General Equivalence Mappings (GEMs) will hamper
implementation. According to the commenter, the GEMs are not actual
crosswalks that are sufficiently specific to be useful for forward or
backward cross-walking in automated billing systems. The commenter
suggested that HHS establish true forward and backward crosswalks that
eliminate the ambiguity of the GEMs for billing and reimbursement
purposes while providing a single authoritative standard for the
industry.
Another commenter urged that HHS not endorse a single crosswalk
that enhances GEMs with one-to-one mapping forward and backward. ICD-10
creates many-to-many mappings, the commenter noted, and, in contrast to
relying on national crosswalks established by HHS, health plans should
build rules and medical policy and ensure their use of ICD-10 supports
that policy. Another commenter urged that HHS take a lesson from the
Canadian transition to ICD-10: ``don't crosswalk.''
Response: We are aware that there is not an exact one-to-one match
in the forward or backward translation between ICD-9 and ICD-10.
However, we believe that our General Equivalency Mapping (GEMs) is a
useful tool to assist with transitioning between ICD-9 and ICD-10.
Furthermore, we believe that the training materials posted to the CMS
Web site, as well as the scheduled outreach and educational
opportunities which are periodically provided by CMS, suffice for
training and technical support.
(d) Implementation and Testing Plan and Certification
Comment: Some commenters recommended that HHS develop an
implementation and testing plan that expands outreach and education,
ensures adequate testing, and develops milestones/timelines to ensure
the new compliance date is met. Some commenters discussed the need for
HHS to apply lessons learned from Version 5010 implementation when
designing a testing plan. Many commenters suggested that there was a
false sense of readiness with regard to the transition to Version 5010.
True readiness could only be realized through adequate testing.
One commenter suggested that a consistent testing approach be
applied by all stakeholders. Another commenter suggested that an ICD-10
Pilot Test could include a representative number of covered entities
that, after testing, could establish regional solution centers that
would identify best practices on problem solving, obstacles to avoid,
and concrete solutions in the implementation of ICD-10. The commenter
also recommended standardizing the ICD-10 testing process, which should
also include end-to-end testing, so that a national approach could be
used for each particular category of entity.
Another commenter suggested we work with NCVHS to develop an ICD-10
testing and implementation plan. The plan should include milestones and
metrics that would provide a better understanding of the state of the
industry.
Another commenter suggested we tap the Workgroup for Electronic
Data Interchange (WEDI), to identify and coordinate pilot participants,
liaise with CMS, and work with the agency to disseminate the results to
industry.
One commenter suggested that, along with certification, HHS should
survey and publish the expected downstream costs that health plans,
clearinghouses, Medicare Intermediaries, and Medicare Advantage
contractors intend to transfer to their internal and external
customers.
One commenter argued against the development of a certification
program, and urged HHS to leverage and adopt existing best practice
guides and schedules.
One commenter suggested HHS require the certification of all health
plans and clearinghouses to be able to
[[Page 54693]]
accept ICD-10 codes. The commenter suggested that provider management
systems (PMS) and billing systems should be certified by a private
entity. Certification of these products, the commenter stated, would
greatly assist physician practices in identifying the software
necessary to comply with federal mandates and in taking advantage of
the various administrative simplification initiatives. The commenter
added that certification can also drive implementation by standardizing
software requirements and leveraging market forces to ensure practices
can meet federal requirements.
Response: We agree that implementation and testing plans are
essential for a successful transition to ICD-10. We recognize the need
for a shared, industry-wide definition and understanding of
``readiness'' based on testing. We are evaluating methods to establish
that common understanding and will issue guidance and offer general
assistance on timelines and testing protocols through education and
outreach.
(E) PM and Billing Software Vendors
Comment: Some commenters emphasized the integral role PMS and
billing software vendors play in covered entities' abilities to meet
compliance dates. Commenters noted that vendors needed to provide ICD-
10 products and services in a timely manner in order to achieve timely
compliance and functionality for all ICD-10 processes. Some commenters
therefore suggested that there be compliance tracking and testing of
practice management and billing software vendors.
One commenter agreed that software vendors played an important
role, but urged that vendors self-report readiness to implement ICD-10.
The commenter believed that the self-reporting approach affords an
organization more time than a full-blown certification process that
will likely increase the cost of implementation for providers and
vendors. One commenter suggested that HHS aggressively educate and
monitor billing software vendors for the reasons given above.
Response: We agree with commenters that software vendor readiness
impacts covered entities' ability to meet compliance dates. While
certification of software vendors is not within our authority in this
rule, we will issue guidance on expected deliverables and timelines for
vendors, and work to establish effective communication, education and
outreach for vendor support in realizing these objectives.
(f) Coordinating With Other CMS and Federal Initiatives
Comment: Some commenters emphasized the need for CMS to expedite
the availability of a mainframe version of the DRG grouper.
One commenter urged CMS to provide specific guidance on how Durable
Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) should
approach claim submission and medical necessity documentation,
specifically when an initial claim is made in ICD-9 and subsequent
claims are made in ICD-10.
One commenter recommended that CMS evaluate and alleviate the
financial impact of implementation on state Medicaid programs. The
short-term and long-term financial cost associated with ICD-10 will
place excessive stress on safety net payer systems that are already
under duress, the commenter said.
Some commenters argued that CMS should modify the Medical Loss
Ratio (MLR) rule. According to the commenters, in the MLR final rule
published on December 7, 2011, CMS recognized that ICD-10 conversion
implementation costs are quality improvement activities, and the rule
``proposed to limit the amount of ICD-10 conversion costs to only those
incurred in 2012 and 2013. The commenter suggested that the MLR final
rule should adjust the 0.3 percent cap on ICD-10 costs to reflect the
proposed changes' costs and extend the ability to take costs into
account beyond 2013 into 2013.
One commenter requested that all references within the Meaningful
Use Stage 2 regulations from both CMS and the Office of the National
Coordinator (ONC) be adjusted to align with the ultimate decision on
the timing of ICD-10 compliance, including the availability of and
flexibility in certification to clinical quality measure specifications
that reference ICD-10.
Another commenter suggested that ONC require that all certified
EHRs be required to include the capabilities necessary for the use of
ICD-10-CM and ICD-10-PCS in the 2014 certification requirements.
Another commenter suggested that CMS use its Quality Improvement
Organizations to assist providers in the implementation and testing of
ICD-10.
Another commenter brought forward a number of concerns about ICD-10
and CMS' policies regarding the payment system and classification
criteria for inpatient rehabilitation units of general hospitals (IRH/
Us) and access to care for the patients they serve.
One commenter suggested leveraging existing programs, such as
Regional Extension Centers, to enhance provider outreach and education
(ONC has implemented a set of Regional Extension Centers (RECs), which
are defined as organizations that receive funding under the Health
Information Technology for Economic and Clinical Health Act to assist
health care providers with the selection and implementation of
electronic health records). The commenter suggested that we work with
ONC to create and disseminate educational and operational programs,
tools, and other ICD-10 resources.
Other commenters addressed specific impacts of ICD-10 on other CMS
programs and requested guidance or changes to the policies of those
programs based on a delay of ICD-10 implementation.
Some commenters urged that HHS harmonize federal programs with
regard to ICD-10. Lack of a coordination of multiple overlapping
initiatives could threaten ICD-10 implementation, one commenter stated.
Another commenter stated that it was critical that we align the ICD-10
deadline with any dependencies built into all other federal and state
programs, such as those involving clinical quality measures that
reference ICD-10 codes. Another commenter stated that existing federal
health information technology mandates on physicians, such as
meaningful use, e-prescribing and quality reporting, must be evaluated
in the context of the enormous burden and cost of ICD-10.
Response: We appreciate these observations and suggestions.
However, these programs, regulations, and initiatives are the purview
of the CMS and other federal agencies and are, therefore, outside of
the scope of this regulation. We cannot represent CMS' policy decisions
or the programs of other federal agencies.
Comment: Some commenters suggested that HHS review upcoming
administrative simplification deadlines and other federal deadlines to
see if some of them should be adjusted. One commenter suggested that
HHS work with the NCVHS to determine if the compliance dates for
operating rules related to the electronic remittance advice, electronic
funds transfers, and future operating rules related to enrollment,
authorizations, and referrals, and claims should be adjusted. One
commenter stated that the HPID compliance date being on the same date
as the compliance date of ICD-10 (October 1, 2014) would create a
potentially difficult situation in the industry.
Response: We appreciate these observations. We are working to
[[Page 54694]]
improve future regulatory alignment, timetables and scheduled
deliverables within the limits of our authority. For instance, with
HPID, we believe we accommodated some commenters' concerns about the
timeframe for compliance by mandating in this final rule that October
1, 2016 be the date by which covered entities must use HPID in standard
transactions.
Comment: One commenter recommended that the ICD-10 mandate be
extended to noncovered entities, such as workman's compensation and
auto insurance, to eliminate the duplicity of administrative processes
and systems for health care providers. Otherwise, health care providers
will have to maintain dual processes and system capabilities to perform
transactions using ICD-9 and ICD-10, which will result in increased
administrative burden for providers.
Response: We agree with commenters that some noncovered entities
create duplicate processes for health care providers. For purposes of
this rule, however, workman's compensation and auto insurance companies
are not required to implement ICD-10.
Comment: Commenters urged that, once the final rule is published,
HHS not introduce any further delays to ICD-10 implementation,
including ``discretionary enforcement periods'' like those used after
the Version 5010 compliance date. Further delays would impact other
areas of health care such as the successful implementation of
electronic health records and reporting that will be required as part
of state based exchanges. One commenter noted that further changes in
the compliance date would cause significant costs for health plans and
ultimately for their customers at a time when the industry will be
preparing for the implementation of health insurance exchanges and
other Affordable Care Act-mandated changes. This is because systems
naturally evolve for a number of reasons over time and an extended
delay will require an extension of testing activities and prolonged
maintenance of the testing environment.
Other commenters suggested that, as the delayed compliance date
draws closer, HHS assess industry readiness and, if necessary, postpone
compliance further. One commenter suggested establishing a delay, but
delaying still further at a later date if the industry continues to
struggle with Version 5010.
Response: We agree with commenters that further delay of the ICD-10
compliance date would be costly to the industry at large. We do not
expect any further delays of the ICD-10 compliance date.
(g) Further Analysis
Comment: One commenter suggested that an analysis of the costs of
ICD-10 implementation for providers should be conducted by HHS,
including how those costs would contribute to the cost of total health
care delivery. The commenter wanted the study to include an analysis of
whether the ``costs have any benefit to the nation's health,'' and
stated that, once the study was conducted, HHS should consider whether
implementation of ICD-10 was still in the best interests of the country
or if alternatives or an extended timetable for further study would
achieve the best results.
Some commenters suggested additional studies and analysis be
undertaken before HHS mandate any compliance date for providers. For
one, commenters suggested that, as an interim step, HHS fully examine
the current ICD-9-CM code development allocation process and make the
necessary changes to permit the full utilization of the current code
set and the rapid assignment of necessary codes.
Some commenters suggested an analysis be conducted that compared
the costs to industry of using ICD-9 for another few years before
transitioning to ICD-11 to the industry costs of using ICD-10 for those
years. Commenters suggested HHS conduct a further analysis of the cost
of requiring two code conversions--to ICD-10 then to ICD-11--over the
next 15 years. These analyses, commenters stated, are necessary in
order to make a better-informed decision (ostensibly about whether to
implement ICD-10).
Some commenters urged that HHS complete a comprehensive cost-
benefit analysis to determine the impact of ICD-10 implementation on
each health care industry sector before mandating ICD-10. The
commenters stated that this analysis should include consultations with
appropriate provider organizations and HHS advisory groups, and a final
report should be issued that includes the benefits to physician
practices and other sectors. The commenters suggested that the analysis
include costs for information system changes, rate negotiations,
recalculation of reimbursement methodologies, training, and changes to
forms. Further, the analysis should consider the timing of the
transition, including the impact of timing options on costs and
benefits, potential return on investment, and interaction with other
major health information investment tasks, including participation in
other CMS HIT and quality initiatives. The commenters stated that the
analysis should identify immediate and future costs and benefits on
physician practices and others of improved data for, but not limited
to, patient safety, outcomes analysis, reimbursement, disease
management, utilization review and health statistics.
Response: A common assumption of these suggestions is that, after a
particular analysis, HHS would consider the merits of implementing ICD-
10 and whether to mandate its use or not. In terms of this assumption,
we make the following observations:
The decision to mandate ICD-10 for covered entities has
already been made, and it was based on years of industry discussions,
consensus building, and government rulemaking. Before publishing the
proposed rule that proposed to require covered entities to implement
ICD-10-CM and ICD-10-PCS, the Secretary considered recommendations of
the NCVHS as well as input from federal and state agencies, private and
professional organizations, and industry stakeholders, including
organizations representing providers, health plans, clearinghouses, and
vendors. For a history of the adoption of ICD-10, see the ICD-10
proposed rule and final rules (August 22, 2008 (73 FR 49796) and
January 16, 2009 (74 FR 3328), respectively).
A number of studies have been conducted with regard to the
costs and benefits of ICD-10. The April 2012 proposed rule listed a
number of analyses in this regard. A robust analysis of the cost and
benefits of ICD-10 was provided in the August 2008 ICD-10 proposed
rule, and public comments on the analysis were subsequently
incorporated or responded to in the January 2009 ICD-10 final rule. As
well, there have been numerous other academic studies, analysis, and
articles related to ICD-10. All of these studies have demonstrated
costs and benefits with implementation.
Given these points, there is little evidence that another study
would, itself, convince HHS to overturn years of rulemaking (or, in the
likelihood of it approximately concurring with the results of previous
studies, serve any use whatsoever). However, it is clear that further
analysis or study means more delay and uncertainty for the health care
industry. Because ICD-10 has been mandated, many entities have invested
considerable resources to comply. As our RIA--and many of the comments
we received--illustrate: Every day that we delay--or create uncertainty
around--the implementation of what has been mandated translates to
considerable cost to the health care industry.
[[Page 54695]]
We do not believe that further analysis of ICD-9 or ICD-10 would be
a responsible use of stakeholders' and the federal government's
resources.
Comment: Another commenter suggested that a 2-year delay would
provide us with the time to analyze the costs and benefits of
implementing ICD1-10 on physician practices. The commenter suggested
that, at the same time, we should engage all stakeholders to assess
whether an alternative code set approach is more appropriate than the
full implementation of ICD-10. The commenter noted that other countries
implemented ICD-10 with a modified version of the code set. The
commenter argued that stakeholders should reach consensus on the
question of costs, scope, and whether a modified version is appropriate
within the 2-year delay; otherwise, the industry should not implement
ICD-10.
Response: We reiterate that further analysis of the costs and
benefits of ICD-10 is probably not a responsible approach given the
substantial rulemaking and analysis conducted to date and the fact that
a significant proportion of the health care industry has already spent
resources implementing ICD-10. While we appreciate the suggestion that
this analysis take place within a limited time; that is, a 2-year
period, and that the analysis is narrowed only to the impact on
physician practices, we do not believe the health care industry would
participate in a cost/benefit analysis on the current version of ICD-10
while at the same time participating in a decision on whether to create
a modified version, as the commenter suggests. This would send
contradictory messages to the industry as to what is being proposed or
mandated and, again, the delay and uncertainty would be costly,
whatever the outcome of these discussions.
It is unclear from the commenters' comments how the concept of
consensus is defined and whether consensus refers to stakeholder
agreement on the costs of ICD-10 on physicians, stakeholder agreement
on the decision to modify ICD-10, or stakeholder agreement on a
suggested modified version itself. Regardless, it is questionable
whether some defined methodology for achieving consensus would be a
valid or appropriate mechanism for agreeing on cost estimates or a
decision to modify ICD-10, and whether such a process could or should
override years of industry input and government rulemaking that has
been used to arrive at the current mandate.
Given the obstacles and uncertainties that we envision 2 years of
analysis and decision-making would engender, it is unlikely that any
consensus could be made with regard to costs or a proposed modification
of ICD-10 within 2 years. For reasons stated earlier, however, it is
clear that there would be tremendous costs for the both government and
commercial entities.
7. Summary
After analysis and consideration of these comments, we are
finalizing the policy to delay the ICD-10 compliance date by 1 year to
October 1, 2014.
IV. Provisions of the Final Rule
For the most part, this final rule incorporates the provisions of
the proposed rule. Those provisions of this final rule that differ from
the proposed rule are as follows:
In 162.504, we have revised the term ``dates'' to read
``requirements''.
In 162. 504(a), we have revised the term
``specifications'' to read ``requirements''.
In 162.504(a), we have revised the term ``Covered health
care providers'' to read ``Covered entities''.
In 162.504(a), we have revised the year ``2014'' to read
``2016''.
In 162.504(b), we have removed the reference to
``162.510''.
In 162.504, we have deleted paragraph (c).
In 162.508 (c), we have inserted ``or OEID'' after the
phrase ``deactivate an HPID''.
In 162.510, we have inserted the term ``Full'' before
implementation and revised the term ``specifications'' to read
``requirements''.
In 162.510(a), we have inserted ``that has an HPID''
immediately after ``health plan''.
In 162.510(b), we inserted the phrase ``that has an HPID''
immediately after ``health plan''.
V. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), agencies are
required to provide a 60-day notice in the Federal Register and solicit
public comment on a collection of information requirement submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the PRA requires that we
solicited comment on the following issues:
Whether the information collection is necessary and useful
to carry out the proper functions of the agency.
The accuracy of the agency's estimate of the information
collection burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
A. Information Collection Requirements (ICRs) Regarding HPID/OEID on
Health Plan and Other Entities (Sec. 162.512 and Sec. 162.514)
In order to apply for an HPID or OEID, there is an initial one-time
requirement for information from health plans that seek to obtain an
HPID and other entities that elect to obtain an OEID. In addition,
health plans and other entities may need to provide updates to
information.
With respect to the collection of information requirements for the
HPID, it is important to bear in mind that: (1) Systems modifications
necessary to implement the HPID/OEID may overlap with the other systems
modifications needed to implement other Affordable Care Act standards;
(2) some modifications may be made by contractors such as practice
management vendors, in a single effort for a multitude of affected
entities; and (3) identifier fields are already in place and HPID/OEID
will, in many instances, simply replace the multiple identifiers
currently in use.
Under this final rule, a CHP, as defined in 45 CFR 162.103, will
have to obtain an HPID from a centralized electronic Enumeration
System. A SHP, as defined in 45 CFR 162.103, would be eligible but not
required to obtain an HPID. If a SHP seeks to obtain an HPID, it would
apply either directly to the Enumeration System or its CHP would apply
to the Enumeration System on its behalf. Other entities may apply to
obtain an OEID from the Enumeration System. Health plans that obtain an
HPID would have to communicate any changes to their information to the
Enumeration System within 30 days of the change. A covered entity must
use an HPID to identify a health plan that has an HPID in a standard
transaction.
We estimate that there will be up to 15,000 entities that will be
required to, or will elect to, obtain an HPID or OEID. We based this
number on the following data in Chart 3.
[[Page 54696]]
Chart 3--Number and Type of Entities That May Obtain an HPID or OEID
------------------------------------------------------------------------
Number of
Type of entity entities
------------------------------------------------------------------------
Self insured group health plans......................... * 12,000
Health insurance issuers, individuals and group health ** 1,827
markets, HMOs, including companies offering Medicaid
managed care...........................................
Medicare, Veterans Health Administration (VHA), Indian 60
Health Service (IHS), TRICARE, and State Medicaid
programs...............................................
Clearinghouses and Transaction Vendors.................. *** 162
Third Party Administrators.............................. **** 750
---------------
Total............................................... ~15,000
------------------------------------------------------------------------
* ``Report to Congress: Annual Report on Self-Insured Group Health
Plans,'' by Hilda L. Solis, Secretary of Labor, March 2011.
** ``Patient Protection and Affordable Care Act; Standards Related to
Reinsurance, Risk Corridors, and Risk Adjustment, 2011 Federal
Register (Vol. 76), July, 2011,'' referencing data from
www.healthcare.gov.
*** Health Insurance Reform; Modifications to the Health Insurance
Portability and Accountability Act (HIPAA) Electronic Transaction
Standards; Proposed Rule http://edocket.access.gpo.gov/2008/pdf/E8-19296.pdf, based on a study by Gartner.
**** Summary of Benefits and Coverage and the Uniform Glossary; Notice
of Proposed Rulemaking http://www.gpo.gov/fdsys/pkg/FR-2011-08-22/pdf/2011-21193.pdf.
Note that the number of health plans that will be required, or have
the option, to obtain an HPID is considerably larger than the number of
health plans which we used in the calculations in section V. of this
final rule. This is because self-insured group health plans are
required to obtain HPIDs if they meet the requirements of a CHP under
this final rule. However, we assume that very few self-insured group
health plans conduct standard transactions themselves; rather, they
typically contract with TPAs or insurance issuers to administer the
plans. Therefore, there will be significantly fewer health plans that
use HPIDs in standard transactions than health plans that are required
to obtain HPIDs, and only health plans that use the HPIDs in standard
transactions will have direct costs and benefits.
To comply with these requirements, health plans and other entities
will complete the appropriate application/update form online through
the Enumeration System. This online form serves two purposes: applying
for an identifier and updating information in the Enumeration System.
Most health plans and other entities will not have to furnish
updates in a given year. However, lacking any available data on rate of
change, we elected to base our assumptions on information in the
Medicare program that approximately 12.6 percent of health care
providers provide updates in a calendar year. We anticipate this figure
would be on the high end for health plans and other entities. Applying
this assumption, we can expect that 1,764 health plans will need to
complete and submit the HPID application update form in a given year.
Applying for an HPID or OEID is a one-time burden, although we
anticipate health plans will need to update any information changes in
the Enumeration System. In future years, the burden to apply for HPIDs
and OEIDs will impact only new health plans and other entities that
choose to obtain an OEID as described in the section V of this final
rule. While health plans will need to update their information in the
Enumeration System, we anticipate the burden associated with this
requirement will be negligible as health plans will already have access
to the Enumeration System and the information collected about the
health plan is minimal so little information will need to be updated on
a regular basis. From 2013 to 2018, industry trends indicate that the
number of health plans will remain constant, or even decrease.\12\ We
assume that the number of new health plans will be small, and that the
costs for application and update of information in the Enumeration
System will be negligible. Therefore, our calculations reflect that
there will be no statistically significant growth in the number of
health plans or other entities and we calculate zero growth in new
applications.
---------------------------------------------------------------------------
\12\ See Robinson, James C., ``Consolidation and the
Transformation of Competition in Health Insurance,'' Health Affairs,
23, no.6 (2004):11-24; ``Private Health insurance: Research on
Competition in the Insurance Industry,'' U.S. Government
Accountability Office (GAO), July 31, 2009 (GAO-09-864R); American
Medical Association, ``Competition in Health Insurance: A
Comprehensive Study of US Markets,'' 2008 and 2009.
---------------------------------------------------------------------------
We estimate it will take 30 minutes to complete the application
form and use an hourly labor rate of approximately $23/hour, the
average wage reported for professional and business and services
sector, based on data from the Department of Labor, Bureau of Labor
Statistics, June 2011, ``Average hourly and weekly earnings of
production and nonsupervisory employees (1) on private nonfarm
payrolls.'' (ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb11.txt). This
represents a unit cost of $11.50 per application for both HPID and
OEID.
Because our initial estimate for the number of applications for
OEID is small (162 Clearinghouses and Transaction Vendors + 750 TPAs =
912) and the costs negligible, we do not include separate calculations.
We have elected instead to offer the unit cost figure as a baseline if
commenters demonstrate that the universe of applications for OEID is
likely to expand significantly.
To further reduce burden and plan for compliance with the
Government Paperwork Elimination Act, we proposed accepting electronic
applications and updates over the internet. We explicitly solicited
comment on how we might conduct this activity in the most efficient and
effective manner, while ensuring the integrity, authenticity, privacy,
and security of health plan and other entity information.
We did not receive any comments on these [requirements?] and we are
finalizing these provisions as proposed.
B. ICRs Regarding Implementation Specifications: Health Care Providers
(Sec. 162.410)
We proposed to put an additional requirement on covered
organization health care providers that employ, have as members, or
have contracts with individual health care providers who are not
covered entities but who are prescribers. By 180 days after the
effective date of the final rule, such organizations must require such
health care providers: (1) To obtain, by application if necessary, an
NPI from the National Plan and Provider Enumeration System (NPPES); (2)
to the extent the prescriber writes a prescription while acting within
the scope of the prescriber's relationship with the organization,
disclose his or her NPI, upon request, to any entity that
[[Page 54697]]
needs the NPI to identify the prescriber in a standard transaction.
The burden associated with the addition to the requirements of
Sec. 162.410 as discussed in this final rule is the one-time
application burden, and later update burden as necessary, on
prescribers who do not already have an NPI, who have a relationship
with a covered health care provider, and who must be identified in a
standard transaction. We estimate that as of the fall of 2011 there
were approximately 1.4 million prescribers in the United States, of
which approximately 160,000 did not have an NPI. It is these
prescribers who would have to obtain an NPI. Based on the estimations
in the NPI final rule, we estimate that it will take 20 minutes to
complete an application for an NPI and use an hourly labor rate of
approximately $23/hour, the average wage reported for professional and
business and services sector, based on data from the Department of
Labor, Bureau of Labor Statistics, June 2011, ``Average hourly and
weekly earnings of production and nonsupervisory employees (1) on
private nonfarm payrolls.'' (ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb11.txt). Additionally, we have calculated an increase of 3
percent for labor costs for each of the years 2013 through 2016 for an
hour rate of approximately $24/hour for year 2013. Table 2 shows the
estimated annualized burden for the HPID and NPI PRA in hours.
We did not receive any comments and we are finalizing these
provisions as proposed.
Table 2--Total Information Collection Burden *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly
Burden Total labor cost Total capital/
Regulation section OMB Control No. Respondents Responses per annual of Total labor maintenance Total cost
response burden reporting cost costs ($) ($)
(hours) ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 162.410................. 0938-New....... 160,000 160,000 0.33 52,800 24 1,267,200 0 1,267,200
Sec. 160.512................. 0938-New....... 15,000 15,000 0.50 7,500 24 180,000 0 180,000
------------------------------------------------------------------------------------------------------------------------
Total...................... ............... 175,000 175,000 ......... 60,300 ........... ........... .............. 1,447,200
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 2013 dollars.
To obtain copies of the supporting statement and any related forms
for the paperwork collections referenced previously, access our Web
Site address at http://www.cms.hhs.gov/PaperworkReductionActof1995, or
Email your request, including your address, phone number, OMB number,
and CMS document identifier, to Paperwork@cms.hhs.gov, or call the
Reports Clearance Office on (410) 786-1326. If you comment on these
information collection and recordkeeping requirements, please do either
of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this final rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: CMS Desk Officer,
CMS-0040-F; Fax: (202) 395-6974; or Email: OIRA_submission@omb.eop.gov.
VI. Regulatory Impact Statement (or Analysis)
A. Statement of Need
1. NPI for Non-Covered Health Care Providers
The compliance date for use of the NPI by health care providers was
May 23, 2007. As of the fall of 2011, we believe there were 160,000
prescribing health care providers who do not already have an NPI. For
these health care providers, obtaining an NPI is not a burdensome
endeavor, as it is free of charge and takes approximately 20 minutes to
file an application to obtain one. However, the availability of these
additional prescriber NPIs will greatly assist entities who need them
for use in standard transactions, including for the Medicare Part D
program, as described previously. See section V.B. of this final rule
specifically for a summary of the time costs associated with obtaining
an NPI. We have included the costs associated with obtaining an NPI
detailed in section V.B. of this final rule and in the summary Tables
20 and 21 of the RIA.
2. HPID
As noted in section I of this final rule, health plans, and other
payers are identified in a number of different ways in covered
transactions by the health care industry. Health plan identifiers are
currently used to facilitate routing of covered transactions or, in
other words, ``to determine either where the standard electronic
transactions are to be sent if the receiver is [a] health plan or from
where they came from if the sender is a health plan.'' \13\ The primary
function of the HPID in this rule is to create a standard for covered
entities to identify health plans in HIPAA covered transactions.
---------------------------------------------------------------------------
\13\ J. Daley, ``Testimony before the NCVHS Subcommittee on
Standards on the National Health Plan Identifier on behalf of
America's Health Insurance Plans and the Blue Cross and Blue Shield
Association,'' July 19, 2010, http://www.ncvhs.hhs.gov.
---------------------------------------------------------------------------
Different segments in each HIPAA standard transaction require an
identifier to identify the payer or sender/recipient of a particular
transaction. (See Table 1 in the April 2012 proposed rule for a list of
HIPAA standard transactions, and Table 2 for an example of a segment
that requires a payer identifier.) Currently, when a covered entity,
for business reasons, inputs an identifier that identifies a health
plan into a transaction segment, the identifier is proprietary or based
on the NAIC code, EIN, or TIN of the health plan or other entity. Some
health plans use multiple identifiers to identify themselves in
transactions.
Standardization of the health plan identifier is expected to
ameliorate some routing issues. It is expected to clarify, to some
extent, the sender or recipient of standard transactions, when the
sender or recipient is a health plan. For instance, a health plan that
uses different identifiers to identify itself in covered transactions
creates inefficiencies and potential confusion among its trading
partners. Participating health care providers that are its trading
partners, for instance, could be required to use different identifiers
for different transactions, even to identify the same health plan. With
the adoption of the HPID, such a health plan will likely use one
identifier, thereby making it easier for the covered health care
provider to
[[Page 54698]]
identify the health plan as the sender or recipient of the standard
transaction.
By ameliorating routing issues, the HPID and OEID will add
consistency to identifiers, which will provide for a higher level of
automation, particularly for provider processing of the X12 271
(eligibility response) and X12 835 (remittance advice). In the case of
the X12 835, the HPID and OEID will allow reconciliation of claims with
the claim payments to be automated at a higher level.
However, according to testimony and industry studies, the most
significant value of the HPID and the OEID is that they will serve as
foundations for other regulatory and industry initiatives. The
implementation of HPID, in and of itself, may not provide significant
monetary savings for covered entities, with the exception of providing
time savings by immediately solving certain routing issues. Instead,
financial benefits are expected to be realized mostly downstream, when
the HPID is used in coordination with other regulatory and industrial
administrative simplification initiatives. Testimony from the July 19,
2010 NCVHS hearing reinforced this idea.
As an analogy, the standardization of the width of railroad tracks
does not, in and of itself, result in monetary savings. However, such
standardization has ensured connectivity between diverse railroad
systems that has resulted in time and cost savings in the movement of
freight across the country. In a like manner, standardization of a
single data element in health care transactions does not, in and of
itself, produce substantial time or cost savings. However, the diverse
identifiers currently used by multiple health plans are akin to the
different track widths used by various railroad systems. Like the
standardization of railroad track widths, the HPID serves as a
foundation for more efficient and cost effective transmission of health
care information.
In an industry white paper, one health care provider association
echoed the foundational importance of the HPID and stated that a
standard identifier for health plans is ``viewed by many as a crucial
step toward one-stop, automated billing.'' \14\ In the same paper, that
association stated that, in order to begin the movement toward
automated billing, standard identifiers were needed for more entities
with ``payer'' function than just ``health plans,'' including entities
with primary financial responsibility for paying a particular claim,
entities responsible for administering a claim, entities that have the
direct contract with the health care provider, and secondary or
tertiary payers for the claim.\15\ The association went on to contend
that fee schedules and plan and product types would need to be
identified with this health plan identifier.
---------------------------------------------------------------------------
\14\ ``National Health Plan Identifier White Paper,'' prepared
by the American Medical Association (AMA) Practice Management Center
(PMC), September 22, 2009.
\15\ Ibid.
---------------------------------------------------------------------------
We did not propose that the HPID or the OEID contain intelligence
that would include fee schedules or benefit plans or product types.
However, we view the adoption of the HPID and the OEID as foundations
for the ``one-stop, automated billing'' that this professional
association advocated.
This impact analysis will take these foundational benefits of HPID
and, for the sake of illustration, attribute some of the monetary
savings from the downstream results to implementation and use of the
HPID. It is important to view these estimates as an attempt to
illustrate the foundational effect of the HPID rather than as a precise
budgetary prediction.
3. Need for a Delay in Implementation of ICD-10, and General Impact of
Implementation
The ICD-10 final rule requires covered entities to comply with ICD-
10 on October 1, 2013. The provisions of this final rule changes the
compliance date to October 1, 2014.
The process of transitioning from ICD-9 to ICD-10, if not carefully
coordinated, poses significant risk to provider reimbursement. Should
health care entities' infrastructure not be ready or thoroughly tested,
providers may experience returned claims and delayed payment for the
health care services they render to patients. There has been mounting
evidence that a significant percentage of providers believe they do not
have sufficient resources or time to be ready to meet the October 1,
2013 ICD-10 compliance deadline.
Two distinct types of issues are implicated by a transition of this
magnitude, and the costs associated with both might be avoided if the
ICD-10 compliance date is delayed. First, there may be entities that
have not readied their systems, personnel, or processes to achieve
compliance by October 1, 2013. For example, vendor practice management
and/or other software must be updated to process claims with ICD-10
codes, then installed and tested internally. Likewise, staff needs to
be trained and systems and forms prepared for the new code set. In a
CMS survey conducted in November and December 2011 (hereinafter
referred to as the CMS readiness survey), 25 percent of providers
surveyed indicated that they are at risk for not meeting the October 1,
2013 compliance date.\16\ In February 2012, the Workgroup for
Electronic Data Interchange (WEDI) conducted a survey on ICD-10
readiness (WEDI readiness survey) that indicated that nearly 50 percent
of the 2,140 provider respondents did not know when they would complete
their impact assessment.\17\ An illustration of what could occur if
elements of industry are not prepared for the transition to ICD-10 can
be seen by the January 1, 2012 transition to Version 5010, where we
have heard from several provider organizations reporting that numerous
practices were not paid for long periods due to the Version 5010
transition.
---------------------------------------------------------------------------
\16\ ``Version 5010 and ID-10 Readiness Assessment: Conducted
among Health Care Providers, payers, and Vendors for the Centers for
Medicare & Medicaid Services (CMS),'' December, 2011, Prepared by
CMS.
\17\ ``Survey: ICD-10 Brief Progress,'' February 2012, conducted
by the Workgroup for Electronic Data Interchange (WEDI).
---------------------------------------------------------------------------
Second, beyond ``readiness'' and ``compliance,'' there are issues
that will arise if trading partners have not thoroughly tested ICD-10.
``Readiness'' is only a self-reported indicator of the potential
success of an ICD-10 transition and can be unreliable; we know this
from similar industry surveys done for Version 5010 that indicated high
levels of readiness only to find multiple issues once claims were
submitted in production mode. The other indicator of success is the
quality and robustness of testing. Clearinghouses cannot assist in the
ICD-10 transition as they are unable to correct coding issues without
viewing the underlying documentation, which is not a typical
clearinghouse role. In general, only a provider can change/modify a
code, so it is incumbent upon providers to ensure a successful ICD-10
conversion. In many cases, providers' success will be predicated upon
timely vendor delivery of ICD-10-compliant software, and coordination
must be developed with payer systems and new fee schedules. Providers'
practice management systems (PMS) must be programmed to process ICD-10
codes, and, with many providers transitioning to EHRs, there needs to
be a well-tested interface between electronic health records and the
PMS.
In an informal poll conducted by Edifecs (hereinafter referred to
as the Edifecs poll), a health care IT company, with responses from 50
senior health care officials representing a wide range
[[Page 54699]]
of organizations, 37 percent of respondents stated that a 1-year delay
would be beneficial for them.\18\ According to the Edifecs analysis,
``For those organizations that have the determination to keep moving
forward as if the delay had never been announced, it may end up being a
true gift on the testing front.'' \19\
---------------------------------------------------------------------------
\18\ ``Survey: Industry Reaction to Potential Delay of ICD-10--A
Delay will be Costly, but Manageable * * * Unless it's more than a
Year,'' February 27, 2012, conducted by Edifecs. The survey's
participants included commercial payers (25%), Blue Cross Blue
Shield plans (25%), healthcare providers (18%), government entities
such as State Medicaid (9%), medical claim clearinghouses (6%), and
other healthcare industry organizations (17%).
\19\ Ibid.
---------------------------------------------------------------------------
In the CMS readiness survey, 75 percent of providers surveyed cited
the lack of time and/or staff as a barrier to implementing ICD-10 on
time. The survey also indicated that given just 3 additional months, an
additional 14 percent of providers would be able to achieve compliance
by December 31, 2013. This indicates that a delay would be helpful in
overcoming one of the major obstacles to compliance--lack of time--and
that a delay of a year would enable providers to achieve not only
``readiness'' in terms of system interoperability, but also give the
time for more thorough testing of ICD-10.
B. Introduction
We have examined the impacts of this final rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993, as further amended), Executive Order 13563 on Improving
Regulation and Regulatory Review (January 18, 2011), the Regulatory
Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354) (as amended
by the Small Business Regulatory Enforcement Fairness Act of 1996, Pub.
L. 104-121), section 1102(b) of the Social Security Act, section 202 of
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), Executive
Order 13132 on Federalism (August 4, 1999), and the Congressional
Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. Executive Order 13563 also directs agencies not only to
engage the public and provide an opportunity to comment on all
regulations, but also calls for greater communication across all
agencies to eliminate redundancy, inconsistency, and overlapping, as
well as outlines processes for improving regulation and regulatory
review.
A Regulatory Impact Analysis must be prepared for major rules with
economically significant effects ($100 million in 1995 dollars or more
in any 1-year). Because of the impact on the health care industry of
the adoption, implementation, and use of the HPID and the delay in the
compliance date for ICD-10, this rule has been designated an
``economically'' significant regulatory action, under section 3(f)(1)
of Executive Order 12866 as it will have an impact of over $100 million
on the economy in any 1 year.
The impacts of implementing the HPID and delaying the compliance
date for transition to ICD-10 are quite different, and, because of
their respective impacts, both provisions of the final rule would be
considered economically significant. Accordingly, we have prepared two
independent RIAs: One analysis of the impact of the adoption and use of
the HPID and one for the impact associated with the delay of the
compliance date for transition to ICD-10. These RIAs, to the best of
our ability, present the costs and benefits of this final rule, which
has been reviewed by the Office of Management and Budget.
The RIA on the delay of ICD-10 follows the RIA on the
implementation and use of the HPID.
We anticipate that the adoption of the HPID and the OEID and the
additional requirement for organization covered health care providers
to require certain non-covered individuals who are prescribers to
obtain and use an NPI would result in benefits that outweigh the costs
to providers and health plans. We believe that the delay of ICD-10 will
have costs to health plans and clearinghouses, though it will be
beneficial to a group of providers.
In addition, under section 205 of the UMRA (2 U.S.C. 1535), having
considered at least three alternatives for the HPID that are referenced
in the section VI.C. of this final rule, HHS has concluded that the
provisions in this rule are the most cost effective alternative for
implementing HHS' statutory requirements concerning administrative
simplification.
We did not consider alternatives to the addition to the NPI
requirements that are in this rule. The NPI is the standard identifier
for health care providers under HIPAA. Based on ongoing industry
feedback, prescriber NPIs are not always available. Therefore, we
believe a regulatory requirement closing the prescriber loophole in the
NPI rule is necessary to ensure that the remaining prescribers without
an NPI obtain one. We estimate that the addition will have little
financial impact on industry and is therefore cost effective in its own
right.
Similarly, we have considered four alternatives for delaying ICD-10
compliance, and considered comments regarding those alternatives. The
summary of the alternatives, the comments, and our responses to the
comments are included in the preamble and will not be repeated for the
RIA.
The Regulatory Flexibility Act (RFA), as amended, requires agencies
to analyze options for regulatory relief of small businesses if a rule
has a significant impact on a substantial number of small entities. For
purposes of the RFA, small entities include small businesses, nonprofit
organizations, and small government jurisdictions. Small businesses are
those with sizes below thresholds established by the Small Business
Administration (SBA). Individuals and States are not included in the
definition of a small entity.
For purposes of the RFA, most physician practices, hospitals and
other health care providers are small entities, either by nonprofit
status or by having revenues less than $10 million for physician
practices and less than $34.5 million for hospitals in any 1 year.
We have determined that the adoption of the HPID in this final rule
will have an impact on a substantial number of small entities and that
a regulatory flexibility analysis, an analysis on the impact of this
final rule on small entities, is required. The regulatory flexibility
analysis on the impact of the adoption of HPID will come after the RIA.
The regulatory flexibility analysis for HPID concludes that, although a
significant number of small entities may be affected by this final
rule, the economic impact on small entities will not be significant.
We have also determined that the delay of the compliance date for
the use of the ICD-10 medical code set will have an impact on a
substantial number of small entities and this regulatory flexibility
analysis will follow the RIA for the delay of ICD-10. The regulatory
flexibility analysis for the delay of ICD-10 concludes that small
entities will be positively impacted economically by the compliance
date delay and that there will be no significant burden.
In addition, section 1102(b) of the Act requires a regulatory
impact analysis for ``any rule or regulation proposed under
[[Page 54700]]
title XVIII, title XIX, or part B of [the Act] that may have a
significant impact on the operations of a substantial number of small
rural hospitals.'' This final rule, with regard to the HPID, ICD-10,
and NPI provisions, is being finalized under title XI, part C,
``Administrative Simplification,'' of the Act, and, therefore, does not
apply. However, we assume that the impact to small rural hospitals will
be similar to that of other small providers in terms of the HPID, NPI,
and ICD-10 provisions; that is, implementation of the provisions will
either not have a significant economic impact, in the case of HPID and
NPI provisions. Or, in the case of the ICD-10 provision, there will be
a positive impact.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1-year of $100
million in 1995 dollars, updated annually for inflation. In 2012, that
threshold is approximately $139 million. This final rule contains
mandates that would likely impose spending costs on State governments
and the private sector, of more than $139 million. We will therefore
illustrate the costs of adoption of the HPID to the State governments,
specifically the impact to State Medicaid programs, and to the private
sector in our consideration of costs to health plans in the RIA. We
will also illustrate the costs of the delay of ICD-10 to State Medicaid
programs and to the private sector in our consideration of costs to
health plans in the RIA that addresses costs and benefits of the delay
of compliance of ICD-10.
As to the addition to the NPI requirements, again, since the method
for compliance by covered organization health care providers is
discretionary and could vary, for example, from a verbal directive to
prescribers whom they employ or with whom they contract, to updating
employment or contracting agreements, we believe there is no mandate
which imposes spending costs on State government or the private sector
in any 1 year of $139 million or more.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct requirement costs on State and local governments,
preempts State laws, or otherwise has Federalism implications. The
adoption of the HPID in this final rule will not have a substantial
direct effect on State or local governments, does not preempt States,
or otherwise have Federalism implications. The delay of compliance with
ICD-10 in this final rule will not have a substantial direct effect on
State or local governments, does not preempt States, or otherwise have
Federalism implications.
In the RIA for implementation of the HPID in the April 2012
proposed rule, we used the proposed provision that the HPID would be
implemented for use starting in October 2013. In that RIA, we used data
projected for 2013 as our baseline, and 2014 as the first year when
benefits attributable to use of the HPID would begin. We also assumed
that 2013 would be the year in which most of the costs would be
incurred, with 2014 and 2015 as the years in which transition costs
would be incurred. We projected those benefits and costs out until
2023.
Because this final rule has established a date 4 years from
effective date of this rule as the date by which all covered entities
will be required to use HPIDs to identify health plans in the standard
transactions, we have changed the year that we will use as a baseline
from 2013 to 2016. (See section II.E. of this final rule for more
information regarding effective and compliance dates.) For the RIA in
this final rule, we assume, as we did in the proposed rule, that
benefits from the use of the HPID will occur over a ten-year period
beginning the first full year covered entities are required to use the
HPID in standard transactions. That 10-year period will begin in 2017
and continue through 10 years (that is, through 2026) and transition
costs will be incurred in the years 2017 through 2018.
Because we have shifted our costs and savings forward three years,
our conclusions on costs and benefits are different from those in the
RIA of the April 2012 proposed rule.
B. Consideration of Public Comments Regarding the Impact Analysis
In the April 2012 proposed rule, we solicited additional data that
would help us determine more accurately the impact on the various
categories of entities affected by the April 2012 proposed rule. We
received numerous comments on our analysis of the costs and benefits of
implementing the HPID and the delay in the compliance date of ICD-10.
We have provided summaries of those comments and our responses.
Some of our assumptions in the April 2012 proposed rule have
changed because of new information we received through public comments.
However, the assumptions that we changed were based on comments that
were qualitative or anecdotal. The comments did not contain new data or
estimates that would impact the quantitative estimates with regard to
the impact of implementation of HPID and delay of ICD-10 that were made
in the April 2012 proposed rule. Therefore, none of the comments we
received required us to change the calculations and conclusions of the
RIA that we provided in the April 2012 proposed rule with regard to
both the HPID and ICD-10 provisions.
We will summarize those comments and the changes we made to the
assumptions.
We have maintained or summarized sections of the RIA that we
provided in the April 2012 proposed rule in which comments were made or
new information was provided within the comments. We removed or
summarized sections of the RIA where we received no comments.
Although we have not changed any of the calculations or conclusions
of the RIA that we provided in the April 2012 proposed rule with regard
to the ICD-10 provisions of that rule, we have duplicated the summary
tables from the April 2012 proposed rule that illustrate those
calculations for reference.
C.
In deciding to adopt the HPID as the format for the national unique
health plan identifier, we considered a number of alternatives, on
which we solicited public and stakeholder comments. As noted, we did
not consider alternatives to the addition to the NPI requirements.
We did not receive comments with regard to the alternatives
considered in the April 2012 proposed rule regarding the HPID and the
NPI. For more detail about the alternatives we considered, please refer
to the April 2012 proposed rule. Having received no comments meriting a
change in policy, we are finalizing the policy to adopt an HPID that is
a 10-digit, all-numeric identifier with a Luhn check-digit as the 10th
digit.
D. Impacted Entities--HPID and NPI
All HIPAA covered entities may be affected by the HPID standard as
detailed in this final rule although, as we estimate, only a segment of
covered entities will have substantive cost or benefits associated with
the adoption of the HPID. Impacted HIPAA covered entities include all
health plans, health care clearinghouses, and health care providers
that transmit health information in electronic form in connection with
a transaction for which the Secretary has adopted a standard.
Table 3 outlines the estimated number of entities that may be
affected by the
[[Page 54701]]
HPID and OEID, along with the sources of those data.
Table 3--Types and Numbers of Affected Entities
----------------------------------------------------------------------------------------------------------------
Type Number Source
----------------------------------------------------------------------------------------------------------------
Health Care Providers--Offices of Physicians 234,222 Health Insurance Reform; Modifications to the
(includes offices of mental health specialists Health Insurance Portability and Accountability
and substance use treatment practitioners). Act (HIPAA) Electronic Transaction Standards;
Proposed Rule http://edocket.access.gpo.gov/2008/pdf/E8-19296.pdf
(based on AMA statistics)
Health Care Providers--Hospitals................ 5,764 Health Insurance Reform; Modifications to the
Health Insurance Portability and Accountability
Act (HIPAA) Electronic Transaction Standards;
Proposed Rule http://edocket.access.gpo.gov/2008/pdf/E8-19296.pdf
Health Care Providers--Nursing and residential 66,464 2007 Economic Census Data--Health Care and Social
Care Facilities not associated with a hospital. Assistance (sector 62) using the number of
establishments
~NAICS code 623: Nursing Homes & Residential Care
Facilities n=76,395 x 87 percent (percent of
nursing and residential care facilities not
associated with a hospital) = 66,464
Other Health Care Providers--Offices of 384,192 2007 Economic Census Data--Health Care and Social
dentists, chiropractors, optometrists, mental Assistance (sector 62) using the number of
health practitioners, substance use treatment establishments.:
practitioners, speech and physical therapists, ~NAICS code 621: All ambulatory health care
podiatrists, outpatient care centers, medical services (excluding offices of physicians) =
and diagnostic laboratories, home health care 313,339 (547,561 total - 234,222 offices of
services, and other ambulatory health care physicians)
services, resale of health care and social ~NAICS code 62-39600 product code): Durable
assistance merchandise (durable medical medical equipment =70,853
equipment).
Health Plans--Commercial: Impacted commercial 1,827 This number represents the most recent number as
health plans considered in this RIA are health referenced in ``Patient Protection and
insurance issuers; that is, insurance Affordable Care Act; Standards Related to
companies, services, or organizations, Reinsurance, Risk Corridors, and Risk
including HMOs, that are required to be Adjustment,'' Proposed Rule, 2011 Federal
licensed to engage in the business of insurance Register (76 FR 41930), July 15, 2011,'' from
in a State.. http://federalregister.gov/a/2011[dash]17609
Health Plans--Government........................ 60 Represents the 56 State Medicaid programs,
Medicare, the Veteran's Administration (VHA),
and Indian Health Service (IHS), TRICARE
Health Plans--All............................... 1,887 Insurance issuers (n=1,827) + Medicaid agencies +
Medicare, VHA, TRICARE, and IHS (n=60)= 1,887
total health plans
Third Party Administrators...................... 750 Summary of Benefits and Coverage and the Uniform
Glossary; Notice of Proposed Rulemaking http://
www.gpo.gov/fdsys/pkg/FR[dash]2011-08-22/pdf/
2011-21193.pdf
Transaction Vendors and Clearinghouses.......... 162 Health Insurance Reform; Modifications to the
Health Insurance Portability and Accountability
Act (HIPAA) Electronic Transaction Standards;
Proposed Rule http://edocket.access.gpo.gov/2008/
pdf/E8[dash]19296.pdf, based on a study by
Gartner.
Pharmacy Benefit Managers (PBMs)................ 60 National Council for Prescription Drug Programs
(NCPDP) May 17, 2012 letter to Centers for
Medicare & Medicaid Services, Re: CMS-0040-P.
----------------------------------------------------------------------------------------------------------------
E. Scope and Methodology of the Impact Analysis for the HPID and NPI
This impact analysis estimates the costs and benefits that will be
realized through the implementation and use of the HPID. We do not
analyze the costs and benefits of the addition to the NPI requirements,
apart from the costs associated with applying for an NPI that are
already addressed in section V.B. of this final rule concerning the
collection of information requirements. Aside from the time necessary
to apply, we do not anticipate any financial impact as a result of the
addition to the NPI requirements. We asked for comments on this
approach.
Comment: A commenter expressed concerns about the burden placed on
hospitals that would be incurred in order to meet the addition to the
NPI requirements. The commenter noted that NPI requirements would
require hospitals and other organization health care providers to
maintain a central location where prescribers' NPIs would be tracked as
well as provide 24-hour staffing to provide pharmacies with these NPIs.
Response: The preamble makes clear that the rule does not specify
how organization covered health care providers should impose the
requirement on individual health care providers and that they may have
a number of alternatives to do so, for example, through a written
agreement, an employment contract, or a directive to abide by the
organization health care provider's policies and procedures. Thus, we
do not believe compliance with this new requirement will necessarily be
burdensome.
In this RIA, we do not analyze the impact of implementation and use
of the OEID. The OEID, as finalized herein, is a data element that
could be voluntarily used by entities other than health plans. These
other entities may include, for example, health care clearinghouses,
transaction vendors, and third party administrators that provide
administration or management for self-insured group health plans. The
range of total entities that may apply for and use an OEID is from zero
to approximately 1,000 entities (750 Third party administrators + 169
transaction vendors + 60 Pharmacy Benefit Managers). Therefore, using
the methodology employed in this RIA, the cost for implementation of
the OEID for other entities ranges from no cost to over $500 million,
depending on choices made by those entities. Because of the uncertainty
inherent in this range of cost, based on the number of entities that
may apply for the OEID we will not attempt to quantify the impact of
[[Page 54702]]
applying for or using an OEID beyond this limited analysis. Nor will we
include this range of costs in our summary of this RIA. However, we can
assume that implementing and using an OEID would be accompanied by a
proportional range of costs and benefits akin to the cost and benefits
estimated for health plans in this RIA. In the proposed rule, we
welcomed stakeholder comment on the number and kind of entities that
may apply for and use an OEID.
Comment: A commenter noted that he was unable to ascertain whether
Pharmacy Benefit Managers (PBMs), TPAs, transaction vendors and other
entities that might want to obtain OEIDs were included in the RIA.
Response: We limited our RIA to the analysis of costs and benefits
in relation to the HPID, and not the costs or benefits of the OEID. We
concluded that there was no way of projecting how many other entities
would ultimately obtain and use an OEID as it is a voluntary
enumeration. As such, we did not consider costs or benefits to entities
that might want to obtain OEID.
However, we assume that there will be some impact to PBMs, just as
we assume that there will be some impact to other entities that may
obtain and use an OEID. We have included PBMs in Table 3 as a category
of impacted entities, even as we are unable to quantify the impact on
PBMs.
We estimate the cost of the Enumeration System to be $1.5 million.
The Federal Government will bear the costs associated with the
Enumeration System that will enumerate health plans and other entities
and maintain their HPID and enumeration information. These include the
costs of enumerating health plans and other entities, the cost of
maintaining health plan and other entity information in the Enumeration
System, and the costs of disseminating HPID and OEID data to the health
care industry and others, as appropriate. HHS will develop the
Enumeration System, and conduct the application, updating, and data
dissemination activities. We will not provide any further analysis of
this cost within the narrative of the RIA.
The costs to health plans of applying for an HPID and updating and
maintaining the information in the Enumeration System are detailed in
section III. of this final rule. We will reflect these costs in the
summary of the costs to health plans in this RIA.
While we assume that adoption of the HPID will affect a broad range
of health care providers, as illustrated in Table 3, we only examine
the costs and benefits of implementation and use of the HPID on two
types of health care providers: hospitals and physician practices. We
did not analyze the impact to nursing and residential care facilities,
dentists, or suppliers of durable medical equipment.
There are two reasons for narrowing the scope of this analysis to
only two categories of health care providers: First, we have very
little data on the usage of EDI among dentists, suppliers of durable
medical equipment, nursing homes, and residential care facilities. The
lack of data for these types of health care providers has been noted in
other studies on administrative simplification.\20\ Second, we assume
that the greatest benefits will be gained by hospitals and physician
practices as they conduct the majority of standard transactions. In our
proposed rule, we welcomed comment from industry and the public as to
our assumptions.
---------------------------------------------------------------------------
\20\ ``Excess Billing and Insurance-Related Administrative
Costs,'' by James Kahn, in The Healthcare Imperative; Lowering Costs
and Improving Outcomes: Workshop Series Summary, edited by Pierre L.
Yong, Robert S. Saunders, and Leigh Anne Olsen, Institute of
Medicine of the National Academies, the National Academies Press,
Washington, DC: 2010.
---------------------------------------------------------------------------
We did not include an analysis of the impact on pharmacies because
the HPID will not be used extensively in electronic transactions by the
pharmacy industry. Therefore, we assume no impact of the HPID on
pharmacies.
Comment: A commenter disagreed with the assumption that there would
be no impact to pharmacies with regard to implementing and using the
HPID. The commenter noted that the HPID/OEID would be used in other
areas as defined by the NCPDP and ASC X12. The commenter noted that the
pharmacy industry has presented recommendations to NCVHS on specific
fields in the NCPDP Telecommunication VD.0 Standard and ASC X12 5010 in
which the HPID/OEID might be used, and the commenter included a list of
recommendations for where and under what circumstances an HPID might be
required to be used.
Response: While the commenter's recommendations of where and under
what circumstances the HPID might be used in future ASC X12 and NCPDP
standards appear reasonable, they were not considered in the context of
the RIA because they went beyond the provisions of the April 2012
proposed rule, and, subsequently, this final rule with regard to
required use of the HPID. The commenter did not argue that the pharmacy
industry would use the HPID in the manner in which it is required in
the provisions of this final rule. Therefore, we did not change the
assumption we made regarding the pharmacy industry's use of the HPID as
noted in the April 2012 proposed rule: ``[T]he HPID will not be used
extensively in electronic transactions by the pharmacy industry'' (77
FR 22979).
With respect to health care providers, only health care providers
that transmit health information in electronic form in connection with
a transaction for which the Secretary has adopted a HIPAA transaction
standard are considered covered entities under HIPAA.
We assumed that the HPID may be used to identify health plans in
nonelectronic transactions as well, but, as this standard is only
required for use in HIPAA standard transactions, we have not tried to
measure the impact on nonelectronic transactions. The costs and
benefits included in this analysis do not include infrastructure or
software costs for health care providers who are equipping their
practices for the transmittal of electronic transactions for the first
time. The costs in this impact analysis include only those that are
necessary to implement the HPID.
We include health care clearinghouses and transaction vendors as
affected entities in Table 3. Transaction vendors are entities that
process claims or payments for other entities, which may include health
plans. Transaction vendors may not meet the HIPAA definition of health
care clearinghouse, but as used in this context, health care
clearinghouses would constitute a subset of transaction vendors.
Payment vendors are a type of transaction vendor--a transaction vendor
that ``associates'' or ``reassociates'' health care claim payments with
the payments' remittance advice for either a health plan or provider.
For our purposes here, transaction vendors do not include developers or
retailers of computer software, or entities that are involved in
installing, programming or maintaining computer software. Health care
clearinghouses and transaction vendors may be impacted because their
systems would have to accommodate the adoption of the new standards
such as the HPID to identify health plans in standard transactions.
However, we did not calculate costs and benefits to health care
clearinghouses and transaction vendors in this cost analysis because we
assume that any associated costs and benefits will be passed on to the
health plans or providers, and will be included in the costs and
benefits we apply to health plans or providers.
We used the total number of health insurance issuers as the number
of commercial health plans that will be affected by this final rule,
and used this
[[Page 54703]]
number in our impact analysis. A health insurance issuer is an
insurance company, insurance service, or insurance organization,
including an HMO, that is required to be licensed to engage in the
business of insurance in a State, and that is subject to State law that
regulates insurance. Although this number is specific to the individual
and small group markets, we assume that many health insurance issuers
in the large group market are included in this number because they are
likely to market to individuals and small groups as well. While the
category or ``health insurance issuers'' represents a larger number of
health plans than those included in the NAICs codes for ``Direct Health
and Medical Insurance Carriers'' (897 firms), we believe the category
of health insurance issuers is a more accurate representation of
companies conducting HIPAA transactions. Companies that provide
Medicaid managed care plans are included in the category of commercial
health plans.
Although self-insured group health plans meet the HIPAA definition
of ``health plan,'' we did not include them in this impact analysis.
While self-insured group health plans will be required to obtain the
HPID, we assumed that, with a few exceptions, such plans do not send or
receive HIPAA electronic transactions because most are not involved in
the day-to-day activities of a health plan and outsource those services
to third party administrators or transaction vendors. Because they do
not meet the definition of ``health plans,'' TPAs and transactions
vendors are not required to obtain or use an HPID, though they may
elect to obtain and use an OEID. The costs and benefits associated with
the HPID are applicable only to entities that are directly involved in
sending or receiving standard transactions, though we recognize that
some of the cost and benefits will trickle down to employers and their
employees.
The projection of costs in this RIA is based on the number of
health plans that will use the HPID in standard transactions. However,
we do not have data concerning how many health plans are actually
identified in standard transactions, as opposed to ``other entities''
that are identified in their stead. Therefore, we have no assurance of
how many health plans will use the HPID in standard transactions. We
base our cost estimates on the highest number of entities that would
likely use the HPID in standard transactions. The number of health
plans is used as a factor in our calculation of costs, but not in our
calculation for savings. Therefore, we took a conservative approach to
the costs to health plans which we believe is warranted given the
uncertainties in our estimates. In our proposed rule, we solicited
industry and stakeholder comments on our assumptions.
Comment: We received a number of comments that expressed concern
regarding the validity of the RIA for the HPID because the commenters
believed that the purpose and the use of the HPID was unclear.
Response: We cannot project how individual health care entities
might implement and use the HPID given their specific business
organization and needs. We also believe that, to the extent that the
HPID will be used to facilitate transactions in ways that are beyond
what is required by the provisions of this final rule, it is not clear
what all the downstream effects of adopting a national health plan
identifier may be. We believe that the HPID may be used within and
outside of the transactions in ways that we have not required or
envisioned. However, the required use of the HPID was specified in the
preamble of the April 2012 proposed rule. The only required use of the
HPID in this final rule is that if a health plan is identified in the
standard transactions, a covered entity must identify a health plan
using a HPID.
The RIA put forward in the April 2012 proposed rule is based on the
HPID being used as required by the provisions of this final rule. We
agree that there is uncertainty in projecting and estimating the
benefits and costs, even given this specific usage. We emphasize that
the RIA is based on the premise that the HPID is a foundational
standard that will facilitate the routing of all standardized
transactions, but not necessarily directly related to specific
benefits. We deliberately did not claim in the April 2012 proposed rule
that the HPID would be directly responsible for cost savings due to its
required use in the standard transactions, with the exception of
attributing some cost benefit to time savings in routing certain
transactions. The cost savings, we believe, are derived from an
efficiency in routing transactions which, in turn, will incentivize
more health care entities to use those transactions.
Comment: A commenter stated that the cost savings outlined in the
April 2012 proposed rule was conducted prior to the implementation of
Version 5010 and projected savings are therefore questionable.
Response: While much of the RIA in the April 2012 proposed rule was
developed before the January 1, 2012 implementation of Version 5010,
some of the baseline assumptions and data were based on the cost and
savings estimates of Version 5010 as included in the RIA of the
Modifications final rule. The RIA was also written under the assumption
that the HPID would be used in Version 5010 standard transactions. That
being said, the benefits of the HPID are only tangentially related to
the benefits of Version 5010, and we do not believe the implementation
of Version 5010 has a direct affect on the savings or costs of
implementing and using HPID.
Comment: A commenter suggested that we only move forward to adopt
the HPID when the savings to be realized from its use exceeded the cost
of its implementation.
Response: As illustrated in Table 12, our analysis concludes that
the savings outweighs the cost, so it is reasonable to assume that we
should move forward to adopt the HPID. We reiterate that we based many
of our calculations on the assumption that the HPID is a foundational
standard that will enable other initiatives and efficiencies to be
built off of it. HPID cannot be viewed as an individual band-aid that
fixes a specific problem. Instead, HPID is part of a broader picture of
standardizing billing and insurance-related transactions and tasks.
F. Costs Associated with HPID and NPI
1. Costs of HPID to Health Plans
Health plans will bear most of the cost of implementing the HPID.
We estimate the cost to health plans to implement and use an HPID will
be 25 percent of the costs that the impact analysis in the
Modifications final rule calculated in order for industry to implement
Version 5010 of the standard transactions. As noted previously,
implementation of the HPID will be analogous to--yet significantly less
than--implementation of Version 5010 because the same systems will be
affected, and, in both cases, there are both implementation and
transition costs.
For more detail on the justification for using 25 percent of the
cost estimates in the Modifications final rule, please refer to the
April 2012 proposed rule.
The estimate that HPID implementation and transition will be 25
percent of the cost of Version 5010 is a conservative estimate, we
believe, and it is probable that the costs will be much less. However,
by estimating HPID implementation at 25 percent of the cost of Version
5010, we are able to reflect the uncertainty in our calculations
because our calculations maintain the range of minimum and maximum
costs from the Modifications final rule.
[[Page 54704]]
In addition, the cost estimates from the Modifications final rule
have been adjusted down because we estimate there will be fewer health
plans impacted by this rule than are impacted by the Modifications
final rule. For costs associated with applying for and obtaining an
HPID, see section V.A. of this final rule. In our proposed rule, we
solicited comments and data from the industry and other stakeholders on
this assumption, but received no substantive comments in this regard.
While we expect these costs will accrue between the time the final
rule is published and the date the HPID is fully implemented, for
purposes of simplification we have placed all system implementation
costs--including those for small health plans--in 2016. Transition
costs will occur from 2017 through 2018.
Table 4--HPID Cost for Commercial and Government Health Plans*
--------------------------------------------------------------------------------------------------------------------------------------------------------
Minimum Maximum
Minimum cost Maximum cost estimated cost estimated cost
estimate per estimate per Applied of of
Cost category modifications modifications percentage implementing implementing
rule (in rule (in HPID (in HPID (in
millions) millions) millions) millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial Health Plans **................ System Implementation....... $1935.0 $3870.5 25% $483.76 $967.63
-------------------------------------------------------------------------------------------------------------
Transition (Year 2 and 3)... 341.5 683.0 25% 85.37 170.76
--------------------------------------------------------------------------------------------------------------------------------------------------------
Government Health Plans (Medicare, System Implementation....... 281.0 537.8 25% 70.25 134.45
Medicaid, VHS, TRICARE, IHS).
-------------------------------------------------------------------------------------------------------------
Transition (Year 2 and 3)... 49.6 94.9 25% 12.40 23.73
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Health Plans.......................... Enrollment and Updates ***.. .............. .............. .............. 0.18 0.18
-------------------------------------------------------------------------------------------------------------
System Implementation....... .............. .............. .............. 554.19 1102.26
-------------------------------------------------------------------------------------------------------------
Transition (Year 2 and 3)... .............. .............. .............. 97.77 194.48
-------------------------------------------------------------------------------------------------------------
Total................................. ............................ .............. .............. .............. 651.95 1296.74
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Based on 2012 dollars
** Minimum and maximum cost estimates per Modifications Rule for commercial health plans is adjusted to account for a lesser number of health plans
considered than is estimated in the Modifications Rule.
*** See section V.A of this final rule; Collection of Information Requirements, for calculations on enrollment to HPID enumeration system.
2. Costs of HPID for Physician Practices and Hospitals
Covered physician practices and hospitals will be required to use
the HPID in standard transactions. Health care providers that do not
conduct covered transactions electronically (for example, by submitting
a paper claim that the health plan subsequently transmits
electronically to a secondary payer) could also use the HPID, but would
not be required to do so. Implementation costs for covered physician
practices and hospitals depend on whether they generate claims directly
or use a health care clearinghouse or transaction vendor.
If covered physician practices and hospitals submit claims
directly, they would incur implementation costs in converting their
systems to accommodate the HPID. Some covered health care providers may
choose to use the services of software system vendors, billing
companies, transaction vendors, and/or health care clearinghouses to
facilitate the transition to the HPID. These health care providers
would incur costs in the form of potential fee increases from billing
agents or health care clearinghouses. For example, if a health care
provider pays a fee to a billing agent or health care clearinghouse to
process its health care transactions, the billing agent or health care
clearinghouse might increase the cost to perform this service for the
health care provider.
Table 5 illustrates the costs to covered hospitals and physician
practices. Again, the costs are 25 percent of the costs estimated in
the Modifications proposed and final rules. In our proposed rule, we
invited stakeholder comment on our assumptions and method for
estimating the implementation costs, but received no comments in this
regard.
Table 5--HPID Costs to Covered Hospitals and Physician Practices *
--------------------------------------------------------------------------------------------------------------------------------------------------------
I II III IV V VI VII
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maximum
Minimum cost Maximum cost Estimated cost estimated cost
estimate per estimate per Applied of of
Cost category modifications modifications percentage implementing implementing
rule (in rule (in HPID (in HPID (in
millions) millions) millions) millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hospitals................................. System Implementation....... $1042.5 $2085.9 25% $260.63 $521.48
-------------------------------------------------------------------------------------------------------------
Transition (Year 2 and 3)... 184.0 368.1 25% 45.99 92.03
-------------------------------------------------------------------------------------------------------------
Physician Practices....................... System Implementation....... 486.8 973.6 25% 121.70 243.40
-------------------------------------------------------------------------------------------------------------
[[Page 54705]]
Transition (Year 2 and 3)... 85.9 171.8 25% 21.48 42.95
-------------------------------------------------------------------------------------------------------------
All Providers (Total)..................... System Implementation....... 1529.3 3059.5 25% 382.33 764.88
-------------------------------------------------------------------------------------------------------------
Transition (Year 2 and 3)... 269.9 539.9 25% 67.47 134.98
-------------------------------------------------------------------------------------------------------------
Total................................. ............................ .............. .............. .............. 449.80 899.86
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Based on 2012 dollars
G. Savings Associated With HPID and NPI
1. Savings to Health Plans
In our proposed rule, we identified two areas in which health plans
will experience savings due to the adoption of HPID: a reduction in the
number of pended claims and an increased use of electronic health care
transactions.
Comment: A commenter disagreed with the savings analysis stating
that the savings to be realized are from Version 5010 implementation
and not due to use of the HPID.
Response: The savings and benefits associated with the HPID are not
the same as the savings that were calculated in the Modifications final
rule, although we derive the costs associated with the HPID by using
the Modification final rule costs as a baseline.
The savings associated with the HPID are derived from an increase
in three transactions and from the number of pended claims that we have
projected will be decreased on account of better routing through use of
the HPID . In contrast, the savings associated with Version 5010
implementation are based on benefits in three areas: Better standards
or savings due to improved claims standards, cost savings due to new
users of claims standards, and operational savings or savings due to
increased auxiliary standards usage.
In both this final rule and the Modifications final rule, some of
the cost savings are based on an increase in electronic transactions.
However, the specific electronic transactions that will be affected are
different in the two rules, and the calculations used to link savings
to the increase are different.
2. Pended Claims
Pended claims are claims that necessitate a manual review by the
health plan. Pended claims are more expensive than ``clean'' claims,
which do not require a manual review or additional information in order
to be processed. We are projecting a 5 to 10 percent annual reduction
of pended claims as attributable to implementation of the HPID. We have
calculated the savings that would come from this estimated projection
as resulting from: data about claims receipts from the trade
association America's Health Insurance Plans (AHIP),\21\ information
about eligibility transactions from the Oregon Provider and Payer
Survey,\22\ and data from the Modifications proposed and final rules.
---------------------------------------------------------------------------
\21\ ``An Updated Survey of Health Care Claims Receipt and
Processing Times, May 2006,'' America's Health Insurance Plans
(AHIP) Center for Policy and Research.
\22\ A comprehensive survey of 55 percent of Oregon's hospitals
and 225 of the State's ambulatory clinics. http://www.oregon.gov/OHPPR/HEALTHREFORM/AdminSimplification/Docs/FinalReport_AdminSimp_6.3.10.pdf.
---------------------------------------------------------------------------
One of the main goals of the use of the HPID is to have a
consistent identifier for each health plan for use in standard
transactions. This lack of a single identifier has resulted in the need
for manual intervention to resolve eligibility questions and billing
and payment issues when there are inconsistent approaches for
identifying health plans. Covered health care providers would no longer
have to keep track of and use multiple identifiers for a single health
plan. After the initial outlay for changes to their systems, health
care providers would be able to consistently identify the health plan
to which they must submit claims.
According to AHIP, 14 percent of all claims were pended by health
plans.\23\ Assuming 6.8 billion claims will be submitted in 2017, as is
projected in the Modifications proposed rule, this calculates to about
950 million pended claims (Table 6, Column 2).
---------------------------------------------------------------------------
\23\ AHIP, 2006.
---------------------------------------------------------------------------
We assumed that pended claims will decrease by a minimum of 5
percent to a maximum of 10 percent annually attributable to use of the
HPID (Table 6, Columns 4 and 6). This estimate is based on an AHIP
survey entitled, ``An Updated Survey of Health Care Claim Receipt and
Processing Times.'' The survey concluded that 35 percent of all claims
are pended because they are duplicate claims (or assumed to be
duplicate claims), 12 percent are pended because of the lack of
necessary information, 5 percent because of coordination of benefits
(COB), and 1 percent because of invalid codes.\24\ The HPID may help
alleviate these particular pended claims issues by enabling the
automation of the COB process \25\ and providing for more accurate
routing of claims to the correct payer. This conclusion presumes that
providing an HPID will lead to a measurable reduction of duplicate
claims and/or claims pended because of a lack of necessary information.
There is a large measure of uncertainty in this assumption and, as
noted, the HPID would be foundational for subsequent activities such as
the automation of the COB process. By itself, though, the HPID does not
automate any processes. To reflect the uncertainty, we apply a range of
percentages to the assumption.
---------------------------------------------------------------------------
\24\ ``An Updated Survey of Health Care Claims Receipt and
Processing Times, May 2006,'' America's Health Insurance Plans
(AHIP) Center for Policy and Research.
\25\ ``National Health Plan Identifier White Paper,'' prepared
by the American Medical Association (AMA) Practice Management Center
(PMC), September 22, 2009.
---------------------------------------------------------------------------
According to AHIP, it costs a health plan $0.85 to reply
electronically to a ``clean'' claim submission and $2.05 to reply to
claims that ``necessitate manual or other review cost.'' Therefore, a
health plan could save $1.20 per claim by automating a claim otherwise
needing manual review (Table 6, Column 3). In order to calculate the
savings from a 5 to 10 percent decrease in pended claims due to
implementation of the HPID, we
[[Page 54706]]
multiply the projected number of pended claims (Table 6, Column 2)
times 5 percent for the low estimate and 10 percent for the high
estimate. We then multiplied the high and low range of numbers of
pended claims that will be avoided due to use of HPID times the $1.20
per claim that can be saved.
In considering how to project this cost avoidance, we decided that
the 5 to 10 percent savings should continue each year over the 10 years
starting the first full year the HPID is required for use in standard
transactions, 2017, resulting in a savings of approximately $776
million to $1.6 billion. As stated previously, we consider the HPID
standard adopted in this final rule to be foundational standards that
will be built upon by future operating rules and regulations over the
next decade.
Table 6--Annual Savings to Health Plans Due to Decrease in Pended Claims
[In millions]*
--------------------------------------------------------------------------------------------------------------------------------------------------------
LOW number of HIGH number of
pended claims LOW total annual pended claims HIGH total
Number of pended (5%) that will savings through (10%) that will annual savings
Year claims annually Cost to review a be avoided reduction in be avoided through
(in millions)** pended claim*** attributable to pended claims attributable to reduction in
HPID (in (in millions) HPID (in pended claims
millions) millions) (in millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
(Col. 2) (Col. 3) (Col. 4) (Col. 5) (Col. 6) (Col. 1) (Col. 7)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2017........................................ 952.0 $1.35 47.6 $64.3 95.2 $128.5
2018........................................ 994.0 1.35 49.7 67.1 99.4 134.2
2019........................................ 1036.0 1.35 51.8 69.9 103.6 139.9
2020........................................ 1077.4 1.35 53.9 72.7 107.7 145.5
2021........................................ 1120.5 1.35 56.0 75.6 112.1 151.3
2022........................................ 1165.4 1.35 58.3 78.7 116.5 157.3
2023........................................ 1212.0 1.35 60.6 81.8 121.2 163.6
2024........................................ 1260.5 1.35 63.0 85.1 126.0 170.2
2025........................................ 1310.9 1.35 65.5 88.5 131.1 177.0
2026........................................ 1363.3 1.35 68.2 92.0 136.3 184.0
-----------------------------------------------------------------------------------------------------------
Total................................... ................ ................ ................ 776 ................ 1,551
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Based on 2012 dollars
** Based on 14% of total number of annual claims as projected in Modifications proposed rule.
*** AHIP, 2006, adjusted to 2012 dollars.
Comment: A commenter stated that the 5 to 10 percent reduction in
pended claims was a gross overestimate. The commenter, representing a
health plan, stated that the health plan has a front end clearinghouse
that verifies eligibility and then routes transactions or rejects them.
The commenter stated that they anticipate no reduction in pended claims
volume.
Response: We appreciate the commenter's perspective, although we
have no certitude as to how widespread this way of filtering claims may
be among health plans. We received no other comments about our
calculations or assumptions with regard to our estimate on decreased
pended claims. Therefore, we are maintaining the estimates and
calculations on our assumptions in this regard.
Comment: A commenter expressed concerned that the cost savings
analysis did not reflect the efficiency gained by the HPID as proposed
by the April 2012 proposed rule and adopted by this final rule. The
commenter stated that the time and cost savings as stated in the April
2012 proposed rule could only be achieved if the health plan was
enumerated down to the product level. Another commenter stated
similarly that the cost savings estimated in the proposed rule could
not be realized without the adoption of an HPID that was much more
granular; that is, an HPID that identified the entity that holds the
participation contract with the physician, an identification of the
patient-specific benefit plan, and the claim specific fee schedule
identifier.
Response: The provisions in the April 2012 proposed rule and this
final rule do not require health plans to enumerate to the product
level. However, we do believe that, even at the level in which health
plans must enumerate as per this final rule, there will be the savings
that we estimate herein. One of the above-referenced commenters noted
that, if health plans were enumerated at a more granular level than
that which we have adopted in this final rule, then the need for manual
processes in 80 to 85 percent of the transactions could be eliminated.
The estimated cost savings in this final rule, derived from use of the
HPID as it is adopted, is based, partly, on a decrease in a particular
manual process--the process that stems from processing pended claims.
However, the decrease in this manual process is substantially less than
what the commenter envisioned were health plans to enumerate at a lower
level.
We estimated a 5 to 10 percent decrease in total pended claims
based on the reasoning that a standard HPID used in the standard
transactions would improve routing and so decrease a small number of
pended claims. We do not presume to infer that the HPID, as it is
adopted, will decrease a large proportion of manual processes related
to eligibility and claim submissions.
In this final rule, we maintain the range of savings, as presented
in the April 2012 proposed rule that is possible through implementation
of the HPID.
3. Increase in Electronic Transmittal of Three Standard Transactions
The implementation of all administrative simplification initiatives
mandated by the Affordable Care Act are expected to streamline HIPAA
electronic transactions, make them more consistent, and decrease the
dependence on manual intervention in the transmission of health care
and payment information. This, in turn, will drive more health care
providers and health plans to utilize electronic transactions in their
operations. Each transaction that moves from a nonelectronic, manual
transmission of information to an electronic transaction, brings with
it material and time cost
[[Page 54707]]
savings by virtue of reducing or eliminating the paper, postage, and
equipment and additional staff time required to conduct paper-based
transactions.
We estimate an annual increase of 1 (LOW) to 2 (HIGH) percent in
the use of the eligibility for a health plan transaction and the health
care claim status transaction attributable to the implementation of the
HPID from 2017 through 2026 as illustrated in Table 7. We estimate an
annual increase of 2 (LOW) to 3 (HIGH) percent in the use of the
electronic remittance advice transaction resulting from the adoption of
the HPID. These are not annual increases in percentage points, but
rather percent increases in the use of electronic transactions from the
year before. The impact of the HPID on the electronic health care
payment and remittance advice transaction is more than the impact on
the other two transactions because NCVHS testimony supported the notion
that the greatest impact of a standardized health plan identifier would
be on the payment process.\26\
---------------------------------------------------------------------------
\26\ Tammy Banks, Director, Practice Management Center and
Payment Advocacy, ``Testimony By The American Medical Association,''
National Committee on Vital and Health Statistics Subcommittee on
Standards, July 19, 2010.
---------------------------------------------------------------------------
For more detail regarding our assumptions and calculations in this
regard, please refer to the April 2012 proposed rule.
We estimate that the savings to health plans because of increased
usage in three transactions will be at least $850 million within 10
years of HPID use in transactions. Health plan savings are summarized
in Table 7.
The results of this calculation are higher in cost savings than the
results of the same calculation in the April 2012 proposed rule. We
have projected that the number of overall health care information
transactions--electronic and nonelectronic--increases with every year.
The overall number of health care information transactions is a primary
factor in our projection of savings derived from an increase in
electronic transactions. Because the cost savings begins in 2017 in
this final rule, in contrast to 2014 as was assumed in the April 2012
proposed rule, there is an increase in the cost savings of this rule
when compared to the April 2012 proposed rule.
Table 7--Annual Cost Savings for Health Plans From Increase Due to HPID in Volume of Three Electronic Transacions *
--------------------------------------------------------------------------------------------------------------------------------------------------------
I II III IV V VI VII
--------------------------------------------------------------------------------------------------------------------------------------------------------
Savings from increase in eligibility
for a health plan transaction
attributable to HPID
Savings from increase in health care
claim status transaction
attributable to HPID
Savings from increase in health care
payment and remittance advice
transaction attributable to HPID
(remittance advice only)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year LOW annual cost HIGH annual cost LOW annual cost HIGH annual cost LOW annual cost HIGH annual cost
savings savings savings savings savings savings
attributable to attributable to attributable to attributable to attributable to attributable to
HPID (in HPID (in HPID (in HPID (in HPID (in HPID (in
millions) millions) millions) millions) millions) millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2017.................................. $41.5 $72.2 $7.4 $12.3 $9.2 $23.0
2018.................................. 44.8 83.0 8.1 14.7 11.0 27.6
2019.................................. 48.4 89.7 8.9 16.2 12.4 33.1
2020.................................. 52.3 96.8 9.8 17.8 13.8 37.1
2021.................................. 56.5 104.6 10.8 19.6 15.5 41.5
2022.................................. 61.0 113.0 11.9 21.6 17.4 46.5
2023.................................. 63.4 122.0 12.5 23.8 19.5 52.1
2024.................................. 66.0 126.9 13.1 24.9 20.6 58.4
2025.................................. 68.6 131.9 13.7 26.2 21.9 61.9
2026.................................. 71.4 137.2 14.4 27.5 23.2 65.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative Annual Cost Savings:
LOW: $849 million.
HIGH: $1,728 million.
* Based on 2012 dollars.
Table 8--Total Savings for Commercial and Governmental Health Plans *
[In millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
I II III IV V VI
--------------------------------------------------------------------------------------------------------------------------------------------------------
Savings from decrease in penSavings from increase in usage of EDI in three
transactions
Total savings for health plans
--------------------------------------------------------------------------------------------------------------------------------------------------------
LOW HIGH LOW HIGH LOW HIGH
$776 $1,551 $849 $1,729 $1,625 $3,280
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Based on 2012 dollars.
4. Savings to Health Care Providers
We have quantified two areas of savings for health care providers.
First, time and money will be saved at an administrative-level because
of a decrease in claims issues that require manual intervention.
Medical practices will experience these administrative savings by
virtue of decreased time spent interacting with health plans. Second,
material savings will be derived because of an increase in the number
of
[[Page 54708]]
transactions that are conducted electronically, as we explained in our
discussion of the potential impact of this rule on health plans.
a. Time Savings for Health Care Providers
One of the main goals of the use of the HPID is to have a
consistent identifier for each health plan for use in standard
transactions. The lack of a single identifier has resulted in the need
for manual intervention to resolve eligibility questions and billing
and payment issues when there are inconsistent approaches for
identifying health plans. Covered health care providers would no longer
have to keep track of and use multiple identifiers for a single
controlling health plan. After the initial outlay for changes to their
systems, health care providers would be able to simplify their billing
systems and processes and reduce administrative expenses.
The HPID would also assist and simplify coordination of benefits.
Health plans that have sole or shared fiduciary responsibilities for
payment would be more readily identified, and the movement of
information among these entities would be enhanced. According to a 2009
study published in Health Affairs, approximately 60 hours per physician
per week are spent on average interacting with health plans when the
time spent by the single physician, the staff, and the physician
practice's administration are totaled.\27\ Of the time spent
interacting with health plans, 88 percent was spent on authorizations
and claims/billing issues.
---------------------------------------------------------------------------
\27\ Lawrence P. Casalino, S. Nicholson, D.N. Gans, T. Hammons,
D. Morra, T. Karrison and W. Levinson, ``What does it cost physician
practices to interact with health insurance plans?'' Health Affairs,
28(4)(2009):w533-w543.
---------------------------------------------------------------------------
We believe the implementation of an HPID will eliminate some of the
manual intervention that is required when there are questions or errors
identifying the entity responsible for eligibility of a patient or the
payment of a claim. We estimate that the implementation and use of an
HPID by health plans would save a physician's practice a number of
phone calls and emails otherwise required to investigate or verify the
identifier needed for the health plan or to manually investigate claims
that have been rejected by health plans. Of the 60 hours reported
previously, our estimate would be that 15 minutes to 30 minutes per
week--or .4 to .8 percent of the total time spent interacting with
health plans--could be eliminated if the HPID were implemented.
In our proposed rule, we solicited stakeholder input on our basic
assumptions, but we received no comments in this regard. Therefore, we
have retained those basic assumptions. For more details on our
assumptions and calculations, please refer to the April 2012 proposed
rule.
As a result of use of the HPID in the standard transactions, we
anticipate that the time physicians in physician practices will spend
per week interacting with health plans will slightly decrease,
resulting in a cost avoidance of approximately $1.4 to $2.8 billion.
The estimated range of cost avoidance represent an increase in the
estimates that were made in the April 2012 proposed rule because the
savings in this rule are calculated starting in 2017 while the savings
in the proposed rule started in 2014. Due to an increase in the
anticipated number of physicians, the cost avoidance is higher in this
final rule than it was in the April 2012 proposed rule (Table 9).
Due to a lack of baseline data regarding other providers and
physicians working in hospitals, we have not calculated any similar
anticipated decrease in time for other providers and physicians working
in hospitals. We assume, though, that hospitals, because they typically
consolidate their billing functions, will have analogous savings to
physicians in physician practices, albeit less on a ``per physician''
basis.
Table 9--Physician Savings Through Decrease in Time Interacting With Health Plans
--------------------------------------------------------------------------------------------------------------------------------------------------------
I II III IV V VI VII
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total
Hours spent LOW to HIGH percent of annual cost LOW HIGH
per week time interacting with per single reduction in reduction in LOW to HIGH total
per health plans (Col I) physician cost per cost per Number of savings per year
Year physician saved per week per to interact year per year per physicians attributable to HPID
interacting physician attributable with health physician physician (in millions)
with health to HPID (15 to 30 insurance attributable attributable
plans minutes) plans to HPID to HPID
--------------------------------------------------------------------------------------------------------------------------------------------------------
2017................................ 60 0.4 to 0.8%............ $81,523 $ 340 $679 352,103 $120 to $239.2
2018................................ 60 0.4 to 0.8%............ 83,969 350 700 355,568 $124 to $248.8
2019................................ 60 0.4 to 0.8%............ 86,488 360 721 359,033 $129 to $258.8
2020................................ 60 0.4 to 0.8%............ 89,082 371 742 362,498 $135 to $269.1
2021................................ 60 0.4 to 0.8%............ 91,755 382 765 366,561 $140 to $280.3
2022................................ 60 0.4 to 0.8%............ 94,507 394 788 370,625 $146 to $291.9
2023................................ 60 0.4 to 0.8%............ 97,343 389 779 374,688 $146 to $292
2024................................ 60 0.4 to 0.8%............ 100,263 401 802 378,752 $152 to $304
2025................................ 60 0.4 to 0.8%............ 103,271 413 826 382,815 $158 to $316
2026................................ 60 0.4 to 0.8%............ 106,369 425 851 382,815 $163 to $326
-------------------------------------------------------------------------------------------------------------------
Total........................... ........... ....................... ........... ............ ............ ........... $1,413 to $2,826
--------------------------------------------------------------------------------------------------------------------------------------------------------
* In 2012 dollars.
b. Increase in Three Transactions
The second area of savings for health care providers is the per
transaction savings of moving from nonelectronic to electronic
transactions. We used the same assumptions on the number and rate of
increase of three electronic transactions methodology as illustrated
for health plans in Table 7. However, the savings per transaction for
health care providers differ from the savings that health plans will
realize, as reflected in Table 14. We estimate an annual increase of 1
(LOW) to 2 (HIGH) percent in the use of the eligibility for a health
plan transaction and the health care claim status transaction
attributable to implementation of the HPID over the
[[Page 54709]]
next 10 years as illustrated in Table 10. We estimate an annual
increase of 1 (LOW) to 3 (HIGH) percent in the use of the electronic
health care payment and remittance advice transaction (in the health
care electronic funds transfers (EFT) remittance advice transaction).
The savings in each column are a product of the number increase in each
transaction, with high and low ranges, multiplied by the cost savings
of each move to an electronic transaction.
For a more detailed description of the basic assumptions and
calculations we used to arrive at the savings associated with these
three transactions, please see the April 2012 proposed rule.
Table 10--Annual Cost Savings for Providers From Increase Due to HPID in Volume of Three Electronic Transactions *
--------------------------------------------------------------------------------------------------------------------------------------------------------
I II III IV V VI VII
--------------------------------------------------------------------------------------------------------------------------------------------------------
Savings from increase in eligibility
for a health plan transaction
attributable to HPID
Savings from increase in health care
claim status transaction
attributable to HPID
Savings from increase in health care
payment and remittance advice
transaction attributable to HPID/
OEID (remittance advice only)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year LOW annual cost HIGH annual cost LOW annual cost HIGH annual cost LOW annual cost HIGH annual cost
savings savings savings savings savings savings
attributable to attributable to attributable to attributable to attributable to Attributable to
HPID (in HPID (in HPID (in HPID (in HPID (in HPID (in
millions) millions) millions) millions) millions) millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2017.................................. $26.62 $46.30 $4.72 $7.87 $3.36 $8.41
2018.................................. 28.75 53.24 5.19 9.44 4.04 10.09
2019.................................. 31.05 57.50 5.71 10.39 4.52 12.11
2020.................................. 33.53 62.10 6.28 11.42 5.06 13.56
2021.................................. 36.22 67.07 6.91 12.57 5.67 15.19
2022.................................. 39.11 72.43 7.60 13.82 6.35 17.01
2023.................................. 40.68 78.23 7.98 15.21 7.11 19.05
2024.................................. 42.31 81.36 8.38 15.97 7.54 21.34
2025.................................. 44.00 84.61 8.80 16.77 7.99 22.62
2026.................................. 45.76 88.00 9.24 17.60 8.47 23.98
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative Annual Cost Savings:
LOW: $499 million.
HIGH: $985 million.
* Based on 2012 dollars.
To summarize health care provider savings, providers can expect
savings from two indirect consequences of the implementation of a
health plan identifier, as demonstrated in Table 11: the cost avoidance
of a decrease in administrative time spent by physician practices
interacting with health plans, and a cost savings for physician
practices and hospitals for every transaction that moves from a manual
transaction to an electronic transaction.
Table 11--Total Health Care Provider HPID Savings *
[In millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
I II III IV V VI
--------------------------------------------------------------------------------------------------------------------------------------------------------
Savings from decrease in provider time spent
interacting with healthSavings from increase in usage of EDI in three
transactions
Total savings for providers
--------------------------------------------------------------------------------------------------------------------------------------------------------
LOW HIGH LOW HIGH LOW HIGH
$1,413 $2,826 $499 $985 $1,912 $3,811
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Based on 2012 dollars.
H. Summary for the HPID and NPI
Table 12--HPID Summary Table for Health Care Industry
--------------------------------------------------------------------------------------------------------------------------------------------------------
I II III IV V VI
--------------------------------------------------------------------------------------------------------------------------------------------------------
Savings (in millions)
Costs (in millions)
Range of return on investment
(in millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
LOW HIGH LOW HIGH LOW (low HIGH (high
savings/high savings/low
costs) costs)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial and Governmental Health Plans................ $1,625 $3,280 $652 $1,297 $328 $2,628
Health Care Providers................................... 1,912 3,811 451 901 1,011 3,360
-----------------------------------------------------------------------------------------------
[[Page 54710]]
Total............................................... 3,537 7,091 1,103 2,198 1,339 5,988
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Calculated in 2012 dollars.
I. Regulatory Flexibility Analysis of the HPID and NPI
The Regulatory Flexibility Act (RFA) of 1980 (Pub. L. 96-354)
requires agencies to describe and analyze the impact of the final rule
on small entities unless the Secretary can certify that the regulation
will not have a significant impact on a substantial number of small
entities.
In the April 2012 proposed rule, we used a baseline threshold of 3
percent of revenues to determine if a rule would have a significant
economic impact on affected small entities (Table 13).
Table 13, Column II shows the number of small entities as discussed
in the April 2012 proposed rule. Table 13, Column III shows revenues
that were reported for 2009 in the Survey of Annual Services (http://www.census.gov/services/sas_data.html). Table 13, Column IV shows the
costs to health care providers for implementation of the HPID, as
described in the RIA. The estimated high range of costs was used. Table
13, Column V shows the percent of the small entity share of
implementation costs as a percent of the small entity revenues.
In the April 2012 proposed rule we concluded that the anticipated
economic effect of this rule on small entities would not exceed or even
come close to meeting the threshold of 3 percent of revenues.
We did not receive any comments regarding the RFA in the April 2012
proposed rule, therefore we make no changes to the assumptions,
calculations, and conclusions to that analysis. Based on that analysis,
we certify that the HPID provision of this final rule would not have a
significant economic impact on a substantial number of small entities.
Table 13--Analysis of the Burden of Implementation of HPID on Small Covered Entities *
----------------------------------------------------------------------------------------------------------------
I II III IV V
----------------------------------------------------------------------------------------------------------------
Maximum cost of Implementation
Total number of Revenues or implementation of cost revenue
Entities small entities receipts (in HPID (in receipts
millions) millions) (percent)
----------------------------------------------------------------------------------------------------------------
Physician practices................. 220,100 $359,853 $288 0.0014
Hospitals........................... 6,500 729,870 645 0.00033
----------------------------------------------------------------------------------------------------------------
* In 2012 dollars.
J. Alternatives Considered for the ICD-10
Faced with growing evidence that a group of providers would not be
ready for the transition to ICD-10 by October 1, 2013, and the
possibility that payment for millions of health care claims would be
delayed, we considered a number of options before proposing a 1-year
delay in the compliance date in the April, 2012 proposed rule. We list
these options in the preamble and summarize the public comments we
received concerning them. Our responses are included in the preamble.
We decided that Option 4 was the most effective in mitigating the
significant systemic disruption and payment delays that could have
resulted from a large percentage of providers who might not have been
ready to implement ICD-10 this October 1; and, in addition, as the RIA
in this final rule suggests, Options 4 is most likely to minimize the
costs of delay and to maximize the benefits to providers who need more
time to implement.
K. Impacted Entities--ICD-10
All HIPAA covered entities may be affected by a delay in the
compliance date of ICD-10 in this rule. Covered entities include all
health plans, health care clearinghouses, and health care providers
that transmit health information in electronic form in connection with
a transaction for which the Secretary has adopted a standard.
Table 4 outlines the number of covered entities that may be
affected by a delay in ICD-10, along with the sources of those data.
These are the same entities that will be affected by HPID.
While covered entities are required to transition to ICD-10, many
other entities not required to abide by HIPAA (such as workers'
compensation programs and automobile and personal liability insurers)
currently use ICD-9 for a variety of purposes. Because their
operational and business needs often intersect with covered entities,
for practical and business purposes these other entities may
voluntarily transition to ICD-10 alongside HIPAA covered entities. The
ICD codes are used in nearly every sector of the medical and health
industry.
Comment: A commenter noted that it was inaccurate to state that
workers' compensation programs and automobile and personal liability
insurers are not required to abide by HIPAA but may voluntarily do so.
The association noted that Medicare has mandatory Medicare Secondary
Payer reporting requirements for non group health plans (NGHPs) for
liability insurance, no-fault insurance, and workers' compensation.
Included in these required data elements for NGHP is the appropriate
ICD-9 for the reported injury with mandated transition to ICD-10 when
it is implemented.
Response: We agree with the commenter and refine our language to
recognize that, while many health care entities are not required by
HIPAA to comply with the code sets, standards and operating rules
therein, these same health care entities may be required by other state
and federal laws or trade agreements to use ICD codes, as is the case
with Medicare's reporting requirements.
L. Scope and Methodology of the Impact Analysis for ICD-10
This impact analysis estimates the costs and benefits of a delay in
compliance with ICD-10. We are analyzing only the impact of a delay,
not the impact of ICD-10 implementation, which we addressed in the 2008
ICD-10 proposed rule (73 FR
[[Page 54711]]
49476) and the January 2009 ICD-10 final rule (74 FR 3328).
Despite the broad utilization of ICD codes that extends beyond
covered entities, with one exception our analysis is restricted only to
those entities as only they fall under the auspices of this final rule.
With respect to health care providers, only health care providers that
transmit health information in electronic form in connection with a
transaction for which the Secretary has adopted a HIPAA transaction
standard are covered entities. The one area for which we provide
additional analysis is the cost to educational institutions to educate
students being trained in ICD-10 coding because such training costs
have been of particular concern to industry and have been included in
the previous Federal Register ICD-10 rules cost analyses.
Moreover, while we assume that a delay in the implementation of
ICD-10 will affect a broad range of health care providers, as
illustrated in Table 4, we only examine the costs and benefits of a
delay on two types of health care providers--hospitals and physician
practices. We do not analyze the impact on other industry sectors,
including, but not limited to, nursing and residential care facilities,
dentists, durable medical equipment (DME) suppliers, or pharmacies for
various reasons. Consistent with our previous impact analysis in the
2008 ICD-10 proposed rule, we continue to have very little data on the
use of EDI among dentists, DME suppliers, nursing homes, and
residential care facilities. The lack of data for these types of health
care providers has been noted in other studies on administrative
simplification.\28\ We assume that the greatest benefits will be gained
by hospitals and physician practices as they conduct the majority of
standard transactions, although it cannot be assumed that the costs
will necessarily be borne by physician practices and hospitals only. We
have not included an analysis of the impact on pharmacies because
pharmacies typically do not use ICD codes in their routine course of
business so we assume there is no impact on pharmacies.
---------------------------------------------------------------------------
\28\ ``Excess Billing and Insurance-Related Administrative
Costs,'' by James Kahn, in The Healthcare Imperative; Lowering Costs
and Improving Outcomes: Workshop Series Summary, edited by Pierre L.
Yong, Robert S. Saunders, and Leigh Anne Olsen, Institute of
Medicine of the National Academies, the National Academies Press,
Washington, DC: 2010.
---------------------------------------------------------------------------
We include health care clearinghouses and transaction vendors as
affected entities in Table 4. Transaction vendors are entities that
process claims or payments for other entities such as health plans.
Transaction vendors may not meet the HIPAA definition of health care
clearinghouse, but, as used in this context, health care clearinghouses
would constitute a subset of transaction vendors. Payment vendors also
would be a type of transaction vendor--a transaction vendor that
``associates'' or ``reassociates'' health care claim payments with the
payments' remittance advice for either a health plan or provider. For
our purposes, transaction vendors do not include developers or
retailers of computer software, or entities that are involved in
installing, programming or maintaining computer software. Health care
clearinghouses and transaction vendors will be impacted because they
will need to transition their systems to accept ICD-10 codes. However,
we did not calculate costs and benefits to health care clearinghouses
and transaction vendors in this cost analysis because, as in our
previous impact analysis in the August 2008 ICD-10 proposed rule, we
assume that any associated costs and benefits will be passed on to the
health plans or providers and will be included in the costs and
benefits we apply to health plans or providers.
Although self-insured group health plans meet the HIPAA definition
of ``health plan,'' we did not include them in this impact analysis.
While self-insured group health plans will be required to implement
ICD-10, we assume that, with a few exceptions, such plans do not send
or receive HIPAA electronic transactions because most are not involved
in the day-to-day activities of a health plan and outsource those
services to TPAs or transaction vendors.
However, we do include TPAs in this RIA. Although TPAs do not meet
the definition of ``health plans'' and therefore are not required by
HIPAA to use code sets such as ICD-10, as a practical matter they will
be required to make the transition in order to continue to conduct
electronic transactions on the part of self-insured group health plans.
However, the impact of a delay of the compliance date of ICD-10 on TPAs
will be similar to the commercial insurer cost/benefit impact profile
since they serve a similar function and will have to implement and test
their systems in the same manner as health plans. Therefore, when we
refer to ``commercial health plans'' in this RIA we will be including
TPAs, and we include all TPAs in the category of ``small health plans''
in the RFA.
In the proposed rule, we stated that ``Software vendors will incur
considerable responsibility and cost with respect to ICD-10
implementation, but we do not analyze the cost of delay to software
vendors as they ultimately pass their costs to their clients'' (77 FR
22991).
Comment: A commenter disagreed with our assumption that software
vendors will pass on any incurred costs to their clients. The commenter
noted that his organization had incurred costs nearing $1 billion and
that further costs would be incurred with a delay. The commenter stated
that the update to ICD-10 is part of the normal regulatory update
process and that no conversion costs are passed on to the health plans
or providers. Another commenter made a similar statement with regard to
software vendors, but added that there are clearinghouses as well that
make regulatory changes to their software without costs to their
clients. Both commenters suggested including the costs to
clearinghouses and vendors in the cost analysis.
Response: After consideration of the public comment received, we
are revising our assumption with regard to software vendors and
clearinghouses passing their costs of ICD-10 changes on to their
clients, and recognize that there will be substantial costs associated
with any delay for software vendors and clearinghouses in and of
themselves. However, beyond anecdotal evidence, we do not have data on
the numbers of software vendors or clearinghouses who will be affected
or what the financial burden or benefit will be for software vendors or
clearinghouses as a group. Therefore, we will not attempt to quantify
the impact to software vendors or clearinghouses in this RIA.
M. Cost Avoidance of a 1-Year Delay in the ICD-10 for the Health Care
Industry
Our analysis of industry benefit is based on cost avoidance. That
is, we anticipate that there will be greater costs associated with the
compliance date of October 1, 2013 than if the compliance date were to
be delayed 1 year. Therefore, our analysis will demonstrate the costs
associated with the current compliance date of October 2013, and apply
those as savings or benefits attributable to a delayed compliance date.
The assumption behind these savings is that a specific number of
physicians and hospitals will not be prepared to use ICD-10 by October
1, 2013. This lack of readiness would engender a number of costly
consequences.
Estimates on the benefit of a 1-year delay are subject to
considerable variation. A delay in the ICD-10 compliance date increases
the
[[Page 54712]]
opportunity for a successful, timely transition and provides an
opportunity to reduce disruptions in health care delivery and payment.
A basic assumption in this projection of a benefit is that entities
will take the 1-year delay to become compliant and to conduct robust
testing as discussed previously. This is possible, but by no means
inevitable, even if a vigorous public/private campaign is undertaken to
promote and assist with compliance and testing.
Based on the CMS readiness survey, we will use the percentage of
providers who believed they would not be compliant by October 1, 2013
(26 percent) as our high estimate and the percentage of providers who
believed they would not be compliant by December 31, 2013 (12 percent)
as our low estimate. We based our estimates of the cost of not delaying
the compliance date of ICD-10 on the projection that 12 to 26 percent
of providers will not be ready or will not have appropriately tested
for implementation of ICD-10 by October 1, 2013.
We recognize that the survey does not represent a statistically
valid sample of providers, but we have no other recent data with which
to base our readiness estimates.
The total savings attributable to the 1-year compliance date delay
is based on the premise that providers who are not ready for ICD-10
will submit claims to payers that will be automatically returned
beginning on the October 1, 2013 compliance date. We calculate the cost
avoidance of a 1-year delay in the compliance date of ICD-10 based on
two probable scenarios: Returned claims will: (1) cause expensive
manual intervention on the part of both providers and health plans in
order for the ``not ready'' providers to be paid; and (2) financially
impact providers by potentially requiring them to take out loans or
apply for lines of credit to be able to continue to provide health care
in the face of delayed payments. We apply calculations to each of these
scenarios in the analysis that follows. Although the cost to manually
process returned claims will ostensibly occur from, roughly, October 1,
2013 through March, 2014, for simplicity sake our calculations reflect
a cost avoidance that is calculated for 1 year only--the year 2014.
A halt to the payment process for 12 to 26 percent of all providers
has a greater effect than requiring manual intervention and requiring
business loans or lines of credit. In some cases, a payment delay may
pose a serious threat to the continued operation of some providers. For
example, many health care safety net clinics operate with no more than
30 to 60 days of cash on hand, so any prolonged delay would threaten
such entities' viability.
We also anticipated that health care services for a great number of
patients will be adversely affected or interrupted because providers
will need to spend more time to obtain health care claim payments
leaving less time to render health care services.
We received no substantive comments with regard to our calculations
and estimates of the cost avoidance of a 1-year delay in the compliance
date of ICD-10 as described in the April 2012 final rule. We have
provided the estimates and results of our calculations in the summary
Table 17.
While there is a high level of uncertainty in terms of all of our
assumptions, we believe it illustrative to make the calculation in
order to demonstrate the affect that a delay in payments will have on
small physician practices.
Comment: A commenter noted that the cost avoidance calculations are
based on the assumption that certain costs will be completely avoided
if the compliance date is delayed for 1 year. However, the commenter
also noted that if providers are not prepared a year later, then all
that will occur will be a delay of these costs, not an avoidance.
Response: We agree that if the delay is not used by the industry to
be better prepared for the ICD-10 transition, then there will be no
cost avoided by the delay. While there is no guarantee that the delay
will translate into better preparation on the part of all health care
entities, we anticipate that additional testing, outreach and education
efforts will be targeted to help endangered segments, such as small
providers, to achieve
N. Costs of a 1-Year Delay of Implementation of ICD-10 for Health Plans
1. Cost for Commercial Health Plans and TPAs
Health plans are a varied group in terms of size, and the cost of a
delay is calculated using a range that reflects this variance. We
assume that system costs for health plans to transition to ICD-10 have
already been budgeted and funds already spent. A delay of a year for
ICD-10 compliance primarily will allow entities more time to thoroughly
test, but the testing and the continued maintenance of contracts and
personnel required for the transition will be 1 year longer than was
originally budgeted. In fact, one of the main issues for entities that
argue against a delay is the concern that their companies would divert
funds currently dedicated to the transition to ICD-10 to other
priorities.
Table 14 illustrates the calculation of 10 to 30 percent of the
total costs of health plans' ICD-10 system implementation and training
as the range of costs for a 1-year delay. For simplicity sake, we have
calculated all costs as if they occurred in the calendar year 2014.
Table 14--Cost in 2014 of a 1-Year Delay in the Compliance Date of ICD-10*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Col. 1 Col. 2 Col. 3 Col. 4 Col. 5 Col. 6 Col. 7 Col. 8 Col. 9
----------------------------------------------------------------------------------------------------------------------------
LOW total HIGH total
LOW total HIGH total implementation/ implementation/ LOW percent HIGH LOW HIGH
Health insurer categories Number of cost per cost per training for training for of total percent of estimate of estimate of
health health plan health plan all health all health cost for a total cost 1[dash]year 1[dash]year
plans (in (in plans in plans in 1[dash]year for delay (in delay (in
millions) millions) category (col. category (col. delay 1[dash]year millions) millions)
1 * col 2) 1 * col. 3) delay
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National........................................................... 6 $50.40 $100.80 $302.40 $604.80 10 30 $30.24 $181
Multi Regional..................................................... 6 24.00 40.32 144.00 241.92 10 30 14.40 73
Large.............................................................. 75 14.40 24.19 1080.00 1814.40 10 30 108.00 544
Mid[dash]Sized..................................................... 325 3.60 6.05 1170.00 1965.60 10 30 117.00 589
TPAs and Small Health Plans........................................ 2166 1.20 2.02 2599.20 4366.66 10 30 259.92 1310
----------------------------------------------------------------------------------------------------------------------------
Total.......................................................... ........... ........... ........... ............... ............... ........... ........... 530 2,698
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Calculated in 2012 Dollars.
[[Page 54713]]
2. Cost of a 1-Year Delay for CMS Health Plans
The Medicare program reports that it is prepared to be ICD-10
compliant on October 1, 2013. The CMS components affected by an ICD-10
transition delay estimate that there will be additional costs for
extending contracts for systems programming and testing work and
extended staff training and associated development costs. It is
estimated that a 1-year delay in ICD-10 compliance would be reflected
by additional work at an estimated total cost of $5 to $10 million in
addition to funding already requested for the coming fiscal years.
3. Cost of a 1-Year Delay in the Compliance Date of ICD-10 for State
Medicaid Agencies
State Medicaid Agencies (SMAs) were queried informally during
routine status update calls in February 2012 regarding potential
mitigation strategies for ICD-10 implementation. Thirty-nine SMAs
responded, representing all regions of the country from predominantly
rural to densely populated States. We have extrapolated from these
responses as best we could to present a quantitative assessment of
costs and benefits.
In Table 15, we calculate the cost to SMAs of a 1-year delay in the
compliance date of ICD-10. We use the following assumptions:
Based on the informal poll of SMAs, we assume that 37
percent or 20 SMAs would be ready for the October 1, 2013 compliance
date. Therefore, the assumption is that 21 SMAs would be affected
negatively by a delay.
We assume that $4 million is the low estimate for a cost
increase, as exemplified by the rural State that provided that
estimate, while $7 million is the high estimate for a cost increase, as
reported by an SMA. The high estimate is derived from a SMA that
anecdotally described its costs per year of delay. For simplicity sake,
we have calculated all costs as occurring in calendar year 2014. One
State Medicaid program commented that a 1-year delay in the compliance
date would add $5 million to the overall cost of implementation, and
this supports our assumption of high and low costs.
Table 15--Cost in 2014 to State Medicaid Agencies of a 1-Year Delay in the Compliance Date of ICD-10*
----------------------------------------------------------------------------------------------------------------
LOW cost of a HIGH cost of a
LOW cost of a HIGH cost of a 1[dash]year delay 1[dash]year delay
of State Medicaid that 1[dash]year delay 1[dash]year delay for Medicaid for Medicaid
would be negatively affected per state agency per state agency agencies (in agencies (in
(in millions) (in millions) millions) millions)
----------------------------------------------------------------------------------------------------------------
21.............................. $4 $7 $83 $145
----------------------------------------------------------------------------------------------------------------
* In 2012 dollars.
2. Cost of a 1-Year Delay for Providers
We expect that many, if not most, hospitals and large provider
organizations have already spent funds in preparation for the ICD-10
transition. As with health plans, any delay in compliance date will add
costs because large providers must maintain the personnel and
renegotiate contracts necessary to lengthen preparations an extra year.
Likewise, large providers must maintain technological resources for an
extra year.
Because the October 1, 2013 compliance date is more than a year
out, it is likely that few small physician practices have invested a
modest amount of money and resources into the implementation of and
training for ICD-10, although they may have begun planning and
budgeting for the transition and may have contracts in place with
vendors to purchase tools to manage the transition. While we recognize
that there will be costs, we assume that these costs are negligible and
that the extra time to prepare for the transition, as will be possible
with a 1 year compliance date delay, will be more beneficial than
costly for small providers. Therefore, we will not include small
providers (under 50 physicians) in the cost analysis for providers.
Table 16 illustrates the calculations for the cost to hospitals and
large physician practices.
Table 16*--Cost to Hospitals and Large Physician Practices in 2014 for 1-Year Delay in the Compliance Date of ICD-10 \***\
--------------------------------------------------------------------------------------------------------------------------------------------------------
LOW cost for HIGH cost of
Large Mid sized 1[dash]Yr 1[dash]Yr
Hospitals: Hospitals: Hospitals: physician physician Total cost of delay (10% of delay (30% of
400 or more 100[dash]400 Fewer than practices groups ICD-10 current current
beds beds 100 beds (over 100 (50[dash]100 implementation implementation implementation
physicians) physicians) (in millions) costs) (in costs) (in
millions) millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of entities................... 521 2486 2757 393 590
LOW Cost Per Entity (in millions).... $1.85 $0.62 $0.12 $2.46 $0.5
HIGH Cost Per Entity (in millions)... $6.16 $1.85 $0.31 $7.39 $1.48
------------------------------------------------------------------------------------------------------------------
Total LOW (in millions).......... $963 $1,531 $339 $968 $291 $4,093 $409 $1,227
------------------------------------------------------------------------------------------------------------------
Total HIGH (in millions)......... $3209 $4,594 $850 $2,905 $872.17 $12,429 $1,243 $3,728
--------------------------------------------------------------------------------------------------------------------------------------------------------
\*\ Numbers are rounded, so totals may not reflect sum of numbers shown.
\**\ Adjusted to 2012 dollars.
\***\ High and low ranges from Nolan 2003, adjusted to 2012 dollars.
[[Page 54714]]
Comment: A commenter took issue with assumptions that we derived
from the Edifecs poll. The commenter noted that the conclusions of the
poll were based on a small sample of representatives from the various
categories of health care entities, specifically providers.
Response: We agree with the commenter about the Edifecs poll.
However, it is the only information we have, however scant, that
specifically addresses the question of a delay and its costs. We used
the Edifecs poll to arrive at one assumption in this RIA of the impact
of a 1-year delay in the compliance date of ICD-10: A 1-year delay will
cost an additional 10 to 30 percent of what commercial health plans and
large providers have already budgeted on the ICD-10 transition to date.
Comment: Some commenters questioned the total cost to health care
entities of transitioning to ICD-10 that we used as an assumption to
calculate the cost of a 1-year delay. One commenter noted that our
costs were higher than what was calculated in the January 16, 2009 ICD-
10 final rule, and a number of commenters suggested that we conduct a
robust survey of how much the transition is actually costing by polling
health care entities that are in preparation for the transition. Other
commenters also suggested conducting different kind of studies and
further analyses in order to better make a decision on an ICD-10
compliance date. For example, one commenter suggested that a full
examination be made of ICD-9-CM code development and allocation process
and that necessary codes to that code set be assigned quickly.
Response: While we recognize that more robust data and further
analysis could better substantiate a cost analysis--and, thus, better
inform policy decisions- the purpose of this impact analysis was to
help inform whether the health care industry necessitated a delay in
the ICD-10 compliance date and, if so, to inform a policy as to the
length of that delay. However, a great many of the comments insisted
that the regulations that would adopt a compliance date be published as
soon as possible in order that unreasonable costs and obstacles not be
created while the rule itself was being developed. Thus, it was not
deemed prudent to conduct a robust survey in order to obtain what is
truly budgeted for the implementation of ICD-10.
We received no data or substantive arguments during the public
comment period that our estimated cost of implementation was either too
much or too little; only observations and anecdotes that the
calculations were less accurate than they could be and based on surveys
and polls that had questionable validity. We received some data from
commenters on the cost of implementation from specific organizations:
One commenter noted that it had dedicated $40 million to date on
preparing for the ICD-10 transition. This is considerably above our
estimates. Another commenter stated that, although they had started
planning and dedicating resources to the transition, they had not
expended any funds with regard to training or technical modifications.
This is considerably less than our estimates. In light of the fact that
there were no substantive arguments--or contradictory data--offered
through public comment against our calculations, we continue to rely
upon them in this final rule.
O. Summary for ICD-10
Our RIA confirms the need for a delay in the compliance date of
ICD-10. In spite of the lack of conclusive data with regard to the
overall status of the health care industry's preparation for the
transition and the variables inherent in making projections on such a
transition, it is apparent that a significant number of providers would
not be ready for the original October 1, 2013 compliance date. If a
significant number of providers would not be ready, it follows that
there could be delays in the payment of health care claims and risk
that disrupted cash flow to providers could affect access to health
services. We have attempted to quantify a number of the consequences of
such a disruption in this RIA, but possible disruptions in patient care
are not quantifiable.
Given the risk of disruption in health care claim payments, we
sought to measure the negative effects of a delay in the compliance
date in this RIA. Although all the data we cite may not be
statistically valid, there is a cost to every day that the date of ICD-
10 compliance is delayed for entities that have already invested
significant resources preparing for the transition. It is also likely
that the consequences of a delay would affect entities and industries
beyond the HIPAA covered entities that are required to use the code
set. The cost to students and educational institutions in the RIA are
but one example of this.
Weighing the risks and consequences of a disruption to health care
claim payments with an apparent increased cost of delay to the
estimated 75 percent of covered entities who would be able to comply
October 1, 2013, we believe that a one-year delay in the implementation
date strikes the best regulatory balance. It is our best judgment that,
to go forward with the original compliance date would risk disruptions
on many levels, while a delay of any more than a year would incur costs
that could not be justified in the name of avoiding risk.
We summarize the low and high estimates of a 1-year delay in the
compliance date for ICD-10 in Table 17.
The total costs and cost avoidance of a delay in the compliance
date will likely be incurred over a 12-month period; however, due to
the range in impacted entities, including educational institutions,
those 12 months may span different dates and different budget periods.
Given the diversity of budgeting in the industry, there is no precise
way of calculating how much of the cost and cost avoidance falls
outside of the October 1, 2013 to October 1, 2014 delay in compliance
date. For simplicity sake, we calculate all cost avoidance and costs of
a delay in the compliance date for ICD-10 as occurring in the calendar
year 2014.
In Table 17, the net cost avoidance is illustrated with a--
Low net estimate that reflects the low estimate of cost
avoidance less the high estimate of costs;
High net estimate that reflects the high estimate of cost
avoidance less the low estimate of costs; and
Medium net cost avoidance that reflects the average cost
avoidance less the average cost.
Table 17--Summary of Cost Avoidance and Costs in 2014 of A 1-Year Delay
in the Compliance Date of ICD-10 \*\
------------------------------------------------------------------------
MEAN
LOW (in HIGH (in (average)
millions) millions) (in
millions)
------------------------------------------------------------------------
Cost Avoidance for Providers $1,385 $3,001 $2,193
(manual submission of claims)...
Cost Avoidance for Providers 1,446 3,134 2,290
(cost of loan interest).........
[[Page 54715]]
Cost Avoidance for Health Plans 804 1,742 1,273
(manual submission of claims)...
--------------------------------------
TOTAL COST AVOIDANCE FROM A 3,635 7,877 5,756
1[dash]YEAR DELAY IN THE
COMPLIANCE DATE OF
ICD[dash]10.................
------------------------------------------------------------------------
Cost to Commercial Health plans.. 530 2,698 1,614
Cost to Medicare................. 5 10 8
Cost to State Medicaid Agencies.. 83 145 114
Cost to Large Providers.......... 409 3,728 2,069
Cost to Students................. 4 4 4
--------------------------------------
TOTAL COST OF A 1[dash]YEAR 1,031 6,586 3,808
DELAY IN THE COMPLIANCE DATE
OF ICD-10...................
------------------------------------------------------------------------
\*\ Calculated in 2012 dollars.
Table 18--Cost Avoidance Less Cost (Net) of A 1-Year Delay in the
Compliance Date of ICD-10
[In millions] \*\
------------------------------------------------------------------------
------------------------------------------------------------------------
Low Net Estimate (Low Cost Avoidance with High Costs). -$2,950
High Net Estimate (High Cost Avoidance with Low Costs). 6,846
Mean Net Cost Avoidance (average).......................... 1,948
------------------------------------------------------------------------
\*\ Calculated in 2012 dollars.
P. Regulatory Flexibility Analysis: Impact on Small Entities of a Delay
in the Compliance Date of ICD-10
The Regulatory Flexibility Act (RFA) of 1980 (Pub. L. 96-354)
requires agencies to describe and analyze the impact of the final rule
on small entities unless the Secretary can certify that the regulation
will not have a significant impact on a substantial number of small
entities. According to the Small Business Administration's size
standards, a small entity is defined as follows according to health
care categories: Offices of Physicians are defined as small entities if
they have revenues of $10 million or less; most other health care
providers (dentists, chiropractors, optometrists, mental health
specialists) are small entities if they have revenues of $7 million or
less; hospitals are small entities if they have revenues of $34.5
million or less. (For details, see the SBA's Web site at http://www.sba.gov/sites/default/files/Size_Standards_Table.pdf Refer to
Sector 62--Health Care and Social Assistance).
We stated in the April 2012 proposed rule that there were a number
of health maintenance organizations (HMOs) that are small entities by
virtue of their nonprofit status even though few if any of them are
small by SBA size standards. There are approximately one hundred such
HMOs. We also assumed, for purposes of the RFA, that all physician
practices and hospitals were small entities. Accordingly, we found in
the April 2012 proposed rule that a one-year delay in implementation of
the ICD-10 will affect a ''substantial number'' of small entities.
However, as illustrated in Tables 19 and20, we concluded in the
April 2012 proposed rule that the 1-year delay in the compliance date
of ICD-10 will be more beneficial to small and nonprofit entities than
it will be burdensome. Based on that analysis, we certify that the
provisions related to ICD-10 in this final rule would not have a
significant economic impact on a substantial number of small entities.
Comment: One commenter stated that it was impossible to see how we
could arrive at the conclusion that the final rule would not affect
small entities when the cost to implement ICD-10 is so high. The
commenter noted that it was rather falsehearted for us to state, as we
did in the April 2012 proposed rule, that we were only analyzing the
impact of the delay, not the impact of the ICD-10 implementation that
we addressed in the August 2008 proposed rule. Instead, our latest cost
estimates of implementing ICD-10--that the commenter viewed as
improperly documented and misleading--should have triggered a re-review
of the RIA conducted in the August 2008 proposed rule.
Response: The RIA of the April 2012 proposed rule, and this final
rule, are focused on the impact of the provision of the proposed and
final rule; that is, a delay in the compliance date of ICD-10. As noted
in this RFA, a delay will be beneficial for small entities, otherwise
there is no reason to go forward with a delay. We cannot revisit cost/
benefits of implementing ICD-10, at least to the extent it was done so
in the August 2008 proposed rule, because this rule does not mandate
ICD-10; it delays it. As for our estimates on costs and cost avoidance
of a delay in the compliance date of ICD-10, we believe that we have
been transparent in admitting that our calculations are based on some
studies and polls that lack statistical validity. Weighing industry's
need for clarity on the ICD-10 compliance date and the need to meet
high standards of analysis by conducting a comprehensive study or poll,
we believed that an expedient answer on the compliance date would be
more beneficial to industry's financial and business needs.
Table 19--Costs and Benefits in 2014 of a Delay in the Compliance Date of ICD-10 for Providers
[Small Entities] \*\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Physician Physician Physician
practices practices practices Hospitals Hospitals Hospitals
with less with 50 to with more with less with 100 to with more Totals
than 50 100 than 100 than 100 400 beds. than 400
physicians physicians physicians beds beds
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Entities........................................... 233,239 590 393 2,757 2,486 521 239,986
LOW Costs (in millions)...................................... $.00 $29.07 $97 $34 $153 $96 $409
HIGH Costs (in millions)..................................... $.00 $261.65 $871 $255 $1,378 $963 $3,728
[[Page 54716]]
LOW Cost Avoidance (in millions)............................. $1,446 $.00 $.00 $.00 $.00 .00 $1,446
HIGH Cost Avoidance (in millions)............................ $3,134 $.00 $.00 $.00 $.00 .00 $3,134
--------------------------------------------------------------------------------------------------------------------------------------------------------
\*\ Both cost and cost avoidance occur in 2014. In 2012 dollars.
Table 20--Costs and Cost Avoidance in 2014 for Non-Profit Health Plans for A 1-Year Delay of the Compliance Date
for ICD-10 \*\
----------------------------------------------------------------------------------------------------------------
Number of LOW COST HIGH COST LOW COST HIGH COST
non profit per health per health AVOIDANCE AVOIDANCE
health plan (in plan (in (in (in
plans millions) millions) millions) millions)
----------------------------------------------------------------------------------------------------------------
Blue Cross Blue Shield......................... 38 $1.44 $7.26 $88.26 $122.21
HMO............................................ 100 .12 .60 4.02 5.57
----------------------------------------------------------------
Total.......................................... $.00 $1.56 7.86 92.28 127.77
----------------------------------------------------------------------------------------------------------------
\*\ Both cost and cost avoidance occur in 2014. In 2012 dollars.
Q. Summary and Accounting Statement for HPID, NPI and ICD-10
Table 21 summarizes the impacts of this final rule, including the
costs and benefits of implementation of the HPID and the costs and cost
avoidance of a 1-year delay in the compliance date of ICD-10. The costs
and benefits of implementation of the HPID are calculated over an 11-
year period, 2016 through 2026, while the cost avoidance and costs of
the delay of the compliance date of ICD-10 will all occur in 2014.
Table 21--Summary of Costs and Savings/Cost Avoidance, of Implementation
of HPID, NPI and a 1-Year Delay in the Compliance Date of ICD-10
[In millions]*
------------------------------------------------------------------------
LOW HIGH MEAN
------------------------------------------------------------------------
Total Savings/Cost Avoidance..... $7,172 $14,968 $11,070
Total Costs...................... 2,134 8,784 5,459
------------------------------------------------------------------------
* Costs and savings of HPID are calculated over 11 years, 2016 through
2026. Costs and cost avoidance of a delay in the compliance date of
ICD-10 are calculated over 1 year, 2014. In 2012 dollars.
In Table 22, the LOW estimate Net Savings/Cost Avoidance is
calculated using the LOW Savings/Cost Avoidance minus the HIGH
estimated Costs; that is, the worst case scenario in terms of low
benefits and high costs. The HIGH estimate Net Savings/Cost Avoidance
is estimated using the HIGH Savings/Cost Avoidance minus the LOW
estimated Costs; that is, the best case scenario in terms of high
benefits and low costs. The Mean Net Savings/Cost Avoidance is the
average of the best case scenario and the worst case scenario.
Table 22--Summary of Net Cost Avoidance/Savings of Implementation of
HPID, NPI, and a 1-Year Delay in the Compliance Date of ICD-10
[In 2012 dollars]
------------------------------------------------------------------------
LOW NET HIGH NET
SAVINGS SAVINGS
(cost (cost MEAN NET
avoidance/ avoidance/ SAVINGS
savings savings (in
less HIGH less LOW millions)
costs) (in costs) (in
millions) millions)
------------------------------------------------------------------------
Net Savings/Cost Avoidance....... -$1,612 $12,834 $5,611
------------------------------------------------------------------------
[[Page 54717]]
As required by OMB Circular A-4,\29\ Tables 23, 24, and 25 are
accounting statements showing the classification of the expenditures
associated with the provisions of this final rule. Table 23 provides
our best estimate of the costs and benefits associated with the
implementation and use of the HPID. Table 24 provides our best
estimates of the costs and benefits associated with a 1-year delay in
the compliance date of ICD-10. Table 25 provides a combined estimate of
the costs and benefits associated with implementation and use of HPID
and a 1-year delay in the compliance date of ICD-10.
---------------------------------------------------------------------------
\29\ ``Circular A-4,'' September 17, 2003, Office of Management
and Budget (OMB), http://www.whitehouse.gov/omb/circulars_a004_a-4/.
Table 23--Accounting Statement for HPID Implementation: Classification of Estimated Expenditures, From FY 2016
to FY 2026
[In millions of 2012 dollars]
----------------------------------------------------------------------------------------------------------------
Source citation
Category Primary estimate Minimum estimate Maximum estimate (RIA, preamble,
(millions) (millions) (millions) etc.)
----------------------------------------------------------------------------------------------------------------
BENEFITS:
Annualized Monetized
benefits:
7% Discount............ $348.................. $246............. $525............. RIA.
3% Discount............ 329................... 246.............. 506.............. RIA.
Qualitative HPID: Environmental
(un[dash]quantified) (electronic over
benefits. paper), patient
benefits (more staff
time), benefits from
a decrease in time
interacting with
health plans for
hospitals, dentists,
suppliers of durable
medical equipment,
nursing homes, and
residential care
facilities, and
providers other than
physician practices.
COSTS:
Annualized Monetized costs:
7% Discount............ $203.................. $135............. $270............. RIA and
Collection of
Information.
3% Discount............ 172................... 115.............. 229.............. RIA and
Collection of
Information.
Qualitative HPID: Cost for system None............. None.............
(unquantified) costs. changes for dentists,
suppliers of durable
medical equipment,
nursing homes,
residential care
facilities, and
providers other than
physician practices
and hospitals.
TRANSFERS:
Annualized monetized N/A................... N/A.............. N/A..............
transfers: ``on budget''.
From whom to whom?......... N/A................... N/A.............. N/A..............
Annualized monetized N/A................... N/A.............. N/A..............
transfers:
``off[dash]budget''.
----------------------------------------------------------------------------------------------------------------
Table 24--Accounting Statement: Classification of Estimated Expenditures for 1-Year Delay of ICD-10 Compliance
Date for 2014
[In millions of 2012 dollars]
----------------------------------------------------------------------------------------------------------------
Source citation
Category Primary estimate Minimum estimate Maximum estimate (RIA, preamble,
(millions) (millions) (millions) etc.)
----------------------------------------------------------------------------------------------------------------
BENEFITS:
Annualized Monetized
benefits:
7% Discount............ $5,756................ $3,635........... $7,874........... RIA.
3% Discount............ 5,756................. 3,635............ 7,874............ RIA.
Qualitative Avoidance of returned
(unquantified) health care claims.
benefits.
COSTS:
Annualized Monetized costs:
7% Discount............ $3,808................ $1,031........... $6,586........... RIA and
Collection of
Information.
3% Discount............ 3,808................. 1,031............ 6,586............ RIA and
Collection of
Information.
Qualitative Downstream costs of a None............. None.............
(unquantified) costs. delayed return on
investment for
covered entities.
TRANSFERS:
[[Page 54718]]
Annualized monetized N/A................... N/A.............. N/A..............
transfers: ``on budget''.
From whom to whom?......... N/A................... N/A.............. N/A..............
Annualized monetized N/A................... N/A.............. N/A..............
transfers:
``off[dash]budget''.
----------------------------------------------------------------------------------------------------------------
Table 25--Accounting Statement: Classification of Estimated Expenditures for HPID Implementation and 1-Year
Delay of ICD-10 Compliance Date, From FY 2014 to FY 2026
[In millions of 2012 dollars]
----------------------------------------------------------------------------------------------------------------
Source citation
Category Primary estimate Minimum estimate Maximum estimate (RIA, preamble,
(millions) (millions) (millions) etc.)
----------------------------------------------------------------------------------------------------------------
BENEFITS:
Annualized Monetized
benefits:
7% Discount............ $916.................. $613............. $1,292........... RIA.
3% Discount............ 795................... 540.............. 1,134............ RIA.
Qualitative HPID: Environmental
(unquantified) (electronic over
benefits. paper), patient
benefits (more staff
time), benefits from
a decrease in time
interacting with
health plans for
hospitals, dentists,
suppliers of durable
medical equipment,
nursing homes, and
residential care
facilities, and
providers other than
physician practices.
DELAY IN COMPLIANCE
DATE FOR ICD[dash]10:
Avoidance of returned
health care claims.
COSTS:
Annualized Monetized costs:
7% Discount............ $596.................. $229............. $963............. RIA and
Collection of
Information.
3% Discount............ 493................... 191.............. 795.............. RIA and
Collection of
Information.
Qualitative HPID: Cost for system
(unquantified) costs. changes for dentists,
suppliers of durable
medical equipment,
nursing homes,
residential care
facilities, and
providers other than
physician practices
and hospitals.
DELAY IN COMPLIANCE None............. None.............
DATE OF ICD-10:
Downstream costs of a
delayed return on
investment for
covered entities.
TRANSFERS:
Annualized monetized N/A................... N/A.............. N/A..............
transfers: ``on budget''.
From whom to whom?......... N/A................... N/A.............. N/A..............
Annualized monetized N/A................... N/A.............. N/A..............
transfers:
``off[dash]budget''.
----------------------------------------------------------------------------------------------------------------
List of Subjects in 45 CFR Part 162
Administrative practice and procedures, electronic transactions,
health facilities, health insurance, hospitals, incorporation by
reference, Medicaid, Medicare, Reporting and recordkeeping
requirements.
For the reasons set forth in this preamble, the Department of
Health and Human Services amends 45 CFR part 162 to read as follows:
PART 162--ADMINISTRATIVE REQUIREMENTS
0
1. The authority citation for part 162 continues to read as follows:
Authority: Secs. 1171 through 1180 of the Social Security Act
(42 U.S.C. 1320d-1320d-9), as added by sec. 262 of Pub. L. 104-191,
110 Stat 2021-2031, sec. 105 of Pub. L. 110-233, 122 Stat. 881-922,
and sec. 264 of Pub. L. 104-191, 110 Stat 2033-2034 (42 U.S.C.
1320d-2(note)), and secs. 1104 and 10109 of Pub L. 111-148, 124 Stat
146-154 and 915-917.
[[Page 54719]]
Subpart A--General Provisions
0
2. Section 162.103 is amended by adding the definitions of
``Controlling health plan (CHP),'' ``Covered health care provider,''
and ``Subhealth plan (SHP)'' to read as follows:
Sec. 162.103 Definitions.
* * * * *
Controlling health plan (CHP) means a health plan that--
(1) Controls its own business activities, actions, or policies; or
(2)(i) Is controlled by an entity that is not a health plan; and
(ii) If it has a subhealth plan(s) (as defined in this section),
exercises sufficient control over the subhealth plan(s) to direct its/
their business activities, actions, or policies.
Covered health care provider means a health care provider that
meets the definition at paragraph (3) of the definition of ``covered
entity'' at Sec. 160.103.
* * * * *
Subhealth plan (SHP) means a health plan whose business activities,
actions, or policies are directed by a controlling health plan.
Subpart D--Standard Unique Health Identifier for Health Care
Providers
Sec. 162.402 [Removed and Reserved]
0
3. Section 162.402 is removed and reserved.
0
4. Section 162.404 is amended as follows:
0
A. Redesignating paragraph (a) as paragraph (a)(1).
0
B. Adding paragraph (a)(2).
The addition reads as follows:
Sec. 162.404 Compliance dates of the implementation of the standard
unique health identifier for health care providers.
(a) * * *
(2) An organization covered health care provider must comply with
the implementation specifications in Sec. 162.410(b) by May 6, 2013.
* * * * *
0
5. Section 162.410 is amended as follows:
0
A. Redesignating paragraph (b) as paragraph (c).
0
B. Adding a new paragraph (b).
The addition reads as follows:
Sec. 162.410 Implementation specifications: Health care providers.
* * * * *
(b) An organization covered health care provider that has as a
member, employs, or contracts with, an individual health care provider
who is not a covered entity and is a prescriber, must require such
health care provider to--
(1) Obtain an NPI from the National Plan and Provider Enumeration
System (NPPES); and
(2) To the extent the prescriber writes a prescription while acting
within the scope of the prescriber's relationship with the
organization, disclose the NPI upon request to any entity that needs it
to identify the prescriber in a standard transaction.
* * * * *
0
6. Part 162 is amended by adding subpart E to read as follows:
Subpart E--Standard Unique Health Identifier for Health Plans
Sec.
162.502 [Reserved]
162.504 Compliance requirements for the implementation of the
standard unique health plan identifier.
162.506 Standard unique health plan identifier.
162.508 Enumeration System.
162.510 Full implementation requirements: Covered entities.
162.512 Implementation specifications: Health plans.
162.514 Other entity identifier.
Subpart E--Standard Unique Health Identifier for Health Plans
Sec. 162.502 [Reserved]
Sec. 162.504 Compliance requirements for the implementation of the
standard unique health plan identifier.
(a) Covered entities. A covered entity must comply with the
implementation requirements in Sec. 162.510 no later than November 5,
2014.
(b) Health plans. A health plan must comply with the implementation
specifications in Sec. 162.512 no later than one of the following
dates:
(1) A health plan that November 5, 2014.
(2) A health plan that is a small health plan-
November 5, 2014.
Sec. 162.506 Standard unique health plan identifier.
(a) Standard. The standard unique health plan identifier is the
Health Plan Identifier (HPID) that is assigned by the Enumeration
System identified in Sec. 162.508.
(b) Required and permitted uses for the HPID. (1) The HPID must be
used as specified in Sec. 162.510 and Sec. 162.512.
(2) The HPID may be used for any other lawful purpose.
Sec. 162.508 Enumeration System.
The Enumeration System must do all of the following:
(a) Assign a single, unique--
(1) HPID to a health plan, provided that the Secretary has
sufficient information to permit the assignment to be made; or
(2) OEID to an entity eligible to receive one under Sec.
162.514(a), provided that the Secretary has sufficient information to
permit the assignment to be made.
(b) Collect and maintain information about each health plan that
applies for or has been assigned an HPID and each entity that applies
for or has been assigned an OEID, and perform tasks necessary to update
that information.
(c) If appropriate, deactivate an HPID or OEID upon receipt of
sufficient information concerning circumstances justifying
deactivation.
(d) If appropriate, reactivate a deactivated HPID or OEID upon
receipt of sufficient information justifying reactivation.
(e) Not assign a deactivated HPID to any other health plan or OEID
to any other entity.
(f) Disseminate Enumeration System information upon approved
requests.
Sec. 162.510 Full implementation requirements: Covered entities.
(a) A covered entity must use an HPID to identify a health plan
that has an HPID when a covered entity identifies a health plan in a
transaction for which the Secretary has adopted a standard under this
part.
(b) If a covered entity uses one or more business associates to
conduct standard transactions on its behalf, it must require its
business associate(s) to use an HPID to identify a health plan that has
an HPID when the business associate(s) identifies a health plan in a
transaction for which the Secretary has adopted a standard under this
part.
Sec. 162.512 Implementation specifications: Health plans.
(a) A controlling health plan must do all of the following:
(1) Obtain an HPID from the Enumeration System for itself.
(2) Disclose its HPID, when requested, to any entity that needs the
HPID to identify the health plan in a standard transaction.
(3) Communicate to the Enumeration System any changes in its
required data elements in the Enumeration System within 30 days of the
change.
(b) A controlling health plan may do the following:
(1) Obtain an HPID from the Enumeration System for a subhealth plan
of the controlling health plan.
(2) Direct a subhealth plan of the controlling health plan to
obtain an HPID from the Enumeration System.
[[Page 54720]]
(c) A subhealth plan may obtain an HPID from the Enumeration
System.
(d) A subhealth plan that is assigned an HPID from the Enumeration
System must comply with the requirements that apply to a controlling
health plan in paragraphs (a)(2) and (a)(3) of this section.
Sec. 162.514 Other entity identifier.
(a) An entity may obtain an Other Entity Identifier (OEID) to
identify itself if the entity meets all of the following:
(1) Needs to be identified in a transaction for which the Secretary
has adopted a standard under this part.
(2) Is not eligible to obtain an HPID.
(3) Is not eligible to obtain an NPI.
(4) Is not an individual.
(b) An OEID must be obtained from the Enumeration System identified
in Sec. 162.508.
(c) Uses for the OEID. (1) An other entity may use the OEID it
obtained from the Enumeration System to identify itself or have itself
identified on all covered transactions in which it needs to be
identified.
(2) The OEID may be used for any other lawful purpose.
0
7. Section 162.1002 is amended by revising paragraph (b) introductory
text and paragraph (c) introductory text to read as follows:
Sec. 162.1002 Medical data code sets.
* * * * *
(b) For the period on and after October 16, 2003 through September
30, 2014:
* * * * *
(c) For the period on and after October 1, 2014:
* * * * *
Dated: August 21, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: August 22, 2012.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2012-21238 Filed 8-24-12; 12:00 pm]
BILLING CODE 4120-01-P