[Federal Register Volume 79, Number 1 (Thursday, January 2, 2014)]
[Proposed Rules]
[Pages 298-324]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-31318]
[[Page 297]]
Vol. 79
Thursday,
No. 1
January 2, 2014
Part IV
Department of Health and Human Services
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45 CFR Parts 160 and 162
Administrative Simplification: Certification of Compliance for Health
Plans; Proposed Rule
Federal Register / Vol. 79 , No. 1 / Thursday, January 2, 2014 /
Proposed Rules
[[Page 298]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of the Secretary
45 CFR Parts 160 and 162
[CMS-0037-P]
RIN 0938-AQ85
Administrative Simplification: Certification of Compliance for
Health Plans
AGENCY: Office of the Secretary, HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would require a controlling health plan
(CHP) to submit information and documentation demonstrating that it is
compliant with certain standards and operating rules adopted by the
Secretary of Health and Human Services (the Secretary) under the Health
Insurance Portability and Accountability Act of 1996 (HIPAA). This
proposed rule would also establish penalty fees for a CHP that fails to
comply with the certification of compliance requirements.
DATES: To be assured consideration, comments must be received at one of
the addresses provided, no later than 5 p.m. on March 3, 2014.
ADDRESSES: In commenting, please refer to file code CMS-0037-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address only: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-0037-P, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address only: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-0037-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments only to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC-- Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201
(Because access to the interior of the Hubert H. Humphrey Building is
not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD-- Centers for Medicare & Medicaid
Services,
Department of Health and Human Services, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-1066 in advance to schedule your
arrival with one of our staff members.
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Matthew Albright, (410) 786-2546.
Terri Deutsch, (410) 786-9462 for questions regarding Collection of
Information and the Regulatory Impact Statement.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments, call
1-800-743-3951.
I. Background
A. Introduction
Many factors contribute to the high cost of health care in the
United States, but studies find that administrative costs substantially
impact spending growth \2\ and can likely be reduced.\2\ Automated
processes, through the use of standardized electronic transactions, can
lessen health care providers' administrative burden in interacting with
health insurers. Under the authority of the Health Insurance
Portability and Accountability Act of 1996 (HIPAA), the Secretary
adopts standards and operating rules that facilitate the use of
electronic transactions by creating greater uniformity in data exchange
and reducing the health care industry's reliance on paper forms and
manual processes to transmit data.
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\2\ ``Technological Change and the Growth of Health Care
Spending,'' A CBO Paper, Congressional Budget Office, January 2008,
pg. 4, http://www.cbo.gov/ftpdocs/89xx/doc8947/01-31-TechHealth.pdf
\2\ Morra, D., Nicholson, S., Levinson, W., Gans, D. N.,
Hammons, T., & Casalino, L. P. ``U.S. Physician Practices versus
Canadians: Spending Nearly Four Times as Much Money Interacting With
Payers,'' Health Affairs: 30(8):1443-1450, 2011.
Blanchfield, Bonnie B., James L. Hefferman, Bradford Osgood,
Rosemary R. Sheehan, and Gregg S. Meyer, ``Saving Billions of
Dollars--and Physician's Time--by Streamlining Billing Practices,''
Health Affairs: 29(6):1248-1254, 2010.
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Although HIPAA standards and operating rules can reduce
administrative burden, the health care industry has experienced
difficulty transitioning to them by the regulatory compliance dates.
Many in the industry attribute at least some implementation
difficulties to the lack of a consistent testing process or framework
before implementation of new standards and operating rules. This
proposed rule is intended to serve as an initial step toward the
development of a consistent testing process that will enable entities
to better achieve and demonstrate compliance with HIPAA standards and
operating rules.
This rule proposes that controlling health plans (CHPs) must submit
certain information and documentation that demonstrates compliance with
the adopted standards and operating rules for three electronic
transactions: eligibility for a health plan, health care claim status,
and health care electronic funds transfers (EFT) and remittance advice.
Such documentation would be an indication that a CHP has completed some
internal and external testing.
[[Page 299]]
B. Legislative and Regulatory Background
This section summarizes the legislative and regulatory history of
standards, operating rules, and the enforcement processes in order to
frame the process we refer to in this proposed rule as certification of
compliance.
1. HIPAA Standards and Code Sets
Section 1172(a) of the Social Security Act (the Act) provides that
any standard adopted under HIPAA shall apply, in whole or in part, to
the following persons, known as ``covered entities'': (1) A health
plan; (2) a health care clearinghouse; and (3) a health care provider
who transmits any health information in electronic form in connection
with a HIPAA transaction. Covered entities are required to conduct as
standard transactions all electronic transactions for which the
Secretary has adopted a standard.
In the August 17, 2000 Federal Register (65 FR 50312), we published
a final rule titled ``Health Insurance Reform: Standards for Electronic
Transactions'' (hereinafter referred to as the Transactions and Code
Sets final rule). That rule implemented some of the HIPAA
Administrative Simplification requirements by adopting standards
developed by standards development organizations (SDOs) for certain
electronic health care transactions, and medical data code sets to be
used in those transactions. The Transactions and Code Sets final rule
adopted the Accredited Standards Committee (ASC) X12 standards Version
4010/4010A1 and the National Council for Prescription Drug Programs
(NCPDP) Telecommunication standard Version 5.1.
In the January 16, 2009 (74 FR 3296) final rule titled, ``Health
Insurance Reform; Modifications to the Health Insurance Portability and
Accountability Act (HIPAA) Electronic Transaction Standards''
(hereinafter referred to as the Modifications final rule), we adopted
updated versions of the standards (ASC X12 Version 5010) (hereinafter
referred to as Version 5010) and NCPDP Telecommunication Standard
Implementation Guide, Version D. Release 0 (hereinafter referred to as
Version D.0), and equivalent Standard Batch Implementation Guide,
Version 1, Release 2 (hereinafter referred to as Version 1.2) for the
electronic health care transactions that were originally adopted in the
Transactions and Code Sets final rule. We also adopted a new standard
for the Medicaid pharmacy subrogation transaction--the Batch Standard
Medicaid Subrogation Implementation Guide, Version 3, Release 0
(hereinafter referred to as Version 3.0), which is specified at 45 CFR
162, subpart S. Covered entities were required to comply with Version
5010 and Version D.0, and Version 3.0 for Medicaid pharmacy subrogation
transactions, effective January 1, 2012 (except for small health plans,
which were required to comply with Version 3.0 on January 1, 2013).
In the January 10, 2012 (77 FR 1556) interim final rule with
comment period, titled ``Administrative Simplification: Adoption of
Standards for Health Care Electronic Funds Transfers (EFT) and
Remittance Advice'' (hereinafter referred to as the Health Care EFT
Standards IFC), we adopted standards for the health care electronic
funds transfers (EFT) and remittance advice transaction, defined the
transaction, and explained how the adopted standards support and
facilitate it.
In the September 5, 2012 Federal Register (77 FR 54664), we
published a final rule, ``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'' (hereinafter referred to as
the HPID final rule). That rule, as relevant here, adopted the standard
for a national unique health plan identifier (HPID), established
requirements for HPID implementation, and adopted a data element to
serve as an ``other entity'' identifier (OEID)--an identifier for
entities that are not health plans, health care providers, or
individuals, but that need to be identified in standard transactions.
2. HIPAA Operating Rules
Section 1173(g) of the Act was added by section 1104 of the Patient
Protection and Affordable Care Act (Pub L. 111-148), enacted on March
23, 2010, as amended by the Health Care and Education Reconciliation
Act of 2010 (Pub. L. 111-152), enacted on March 30, 2010 (collectively
known as and hereinafter referred to as the Affordable Care Act).
Section 1173(g) of the Act requires the Secretary to adopt a single set
of operating rules for each of the transactions listed in section
1173(a)(1) of the Act. Operating rules are defined by section 1171(9)
of the Act as ``the necessary business rules and guidelines for the
electronic exchange of information that are not defined by a standard
or its implementation specifications as adopted for purposes of this
part.'' Additionally, sections 1173(g)(2)(D), (g)(3)(C), and (g)(3)(D)
of the Act clarify aspects of the operating rules and the requirements
of the operating rules authoring entity.
The Council for Affordable Quality Healthcare (CAQH) Committee on
Operating Rules for Information Exchange (CORE) was established in 2005
as a national initiative, bringing together over 100 health care
industry stakeholders to simplify health care administration through
the improvement of electronic health care information exchange. CAQH
CORE's mission is to ``build consensus among healthcare industry
stakeholders on a set of operating rules that facilitate administrative
interoperability between providers and health plans.'' \3\
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\3\ CAQH CORE Web site: http://www.caqh.org/pdf/CORE_MASTER_Presentation_4-15-08.pdf.
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With consensus among health care industry stakeholder members, CAQH
CORE, in 2008, developed two sets of operating rules for the
eligibility for a health plan and health care claim status transactions
(hereinafter referred to as Phase I and Phase II CAQH CORE Operating
Rules). The operating rules built upon applicable HIPAA standard
transaction requirements, and enabled providers to submit transactions
from any system, facilitating administrative and clinical data
integration. Numerous health care entities voluntarily adopted the
Phase I and II CAQH CORE Operating Rules, and CAQH CORE demonstrated
that the use of these rules yielded a positive return on investment for
health plans and providers.\4\
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\4\ CAQH CORE Web site: http://www.caqh.org/pdf/CORE_MASTER_Presentation_4-15-08.pdf. http://www.caqh.org/COREIBMstudy.php.
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In August and September, 2010, the National Committee on Vital and
Health Statistics \5\ (NCVHS), in furtherance of its statutory mission
to advise the Secretary, engaged in a comprehensive review of health
care operating rules and their authors. The NCVHS advised the Secretary
that CAQH CORE met the requirements of section 1173(g)(2) of the Act to
be the operating rules authoring entity for the non-retail pharmacy
eligibility for a health plan and health care claim status
transactions.\6\
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\5\ Established by the Congress, the NCVHS is a body that
advises the Secretary on health data, statistics, and national
health information policy and that has a significant role in the
Secretary's adoption of operating rules under section 1173(g)(3) of
the Act.
\6\ September 30, 2010 letter from NCVHS to Secretary Kathleen
Sebelius, re: Affordable Care Act, Administrative Simplification:
Operating Rules for Eligibility and Claims Status Transactions:
http://www.ncvhs.hhs.gov/reptrecs.htm.
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After assessing its qualifications and the NCVHS's recommendation,
the
[[Page 300]]
Secretary determined that CAQH CORE was qualified to be the operating
rule authority entity for the eligibility for a health plan and health
care claim status transactions. In the July 8, 2011 (76 FR 40458)
interim final rule with comment period (IFC) titled, ``Administrative
Simplification: Adoption of Operating Rules for Eligibility for a
Health Plan and Health Care Claim Status Transactions'' (hereinafter
referred to as the Operating Rules IFC), we adopted Phase I and II CAQH
CORE Operating Rules for the two transactions.\7\ The Operating Rules
IFC also defined the term ``operating rules,'' revised the definition
for ``standard transaction'' to indicate that a standard transaction is
one that complies with both the adopted standards and operating rules,
and described the relationship between operating rules and standards.
In the Operating Rules IFC, we did not adopt the Phase I and II CAQH
CORE Operating Rules requirements regarding acknowledgments, nor did we
adopt CORE's Certification process by which an entity demonstrates
compliance with Phase I and II CAQH CORE Operating Rules.\8\
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\7\ CAQH CORE Phases I and II Operating Rules are available
online at no charge at http://www.caqh.org/COREVersion5010.phb.
\8\ Provisions of the Operating Rule IFC at 76 FR 40461.
Information on the CAQH CORE Rules can be found at: http://www.caqh.org/CORE_phase1.php, http://www.caqh.org/CORE_phase2.php,
and http://www.caqh.org/CORE_phase3.php. CAQH CORE FAQS can be
found at: http://www.caqh.org/pdf/COREFAQsPartA.pdf for general
information; http://www.caqh.org/pdf/COREFAQsPartC.pdf for Phase I
and II.
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On March 23, 2011, the NCVHS recommended that CAQH CORE, in
collaboration with NACHA--The Electronic Payments Association, be the
authoring entity for the health care electronic funds transfers (EFT)
and remittance advice transaction operating rules.\9\ In developing the
health care electronic funds transfers (EFT) and remittance advice
transaction operating rules, CAQH CORE held more than thirty open
conference calls and conducted over 15 straw polls with industry and
government representatives between March and August 2011. More than 80
health care entities analyzed, reviewed, and achieved consensus on the
operating rules.
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\9\ March 23, 2011 NCVHS letter to the Secretary: http://ncvhs.hhs.gov/110323lt.pdf.
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On December 7, 2011, the NCVHS, in its advisory role, recommended
to the Secretary (subject to CAQH CORE making certain revisions) that
the Phase III CAQH CORE EFT & ERA Draft Operating Rule Set (or Phase
III Operating Rules) be adopted as the operating rules for the health
care electronic funds transfers (EFT) and remittance advice
transaction. On August 10, 2012, in 77 FR 48008, we adopted these
operating rules in a rule titled ``Administrative Simplification:
Adoption of Operating Rules for Health Care Electronic Funds Transfers
(EFT) and Remittance Advice Transactions; Final Rule'' (hereinafter EFT
& ERA Operating Rule Set IFC). We did not, however, adopt the CAQH CORE
operating rule in the EFT & ERA Operating Rule Set that required the
use of the Version 5010 999 acknowledgements standard in the Phase III
CAQH CORE 350 Health Care Claim Payment/Advice (835) Infrastructure
Rule requirement 4.2 (77 FR 48017).\10\
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\10\ CAQH CORE FAQS for Phase III can be found at http://www.caqh.org/pdf/COREFAQsPartD.pdf.
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The NCVHS recommended in May 2012 that CAQH CORE be the authoring
entity for the operating rules for the remaining HIPAA transactions
\11\--health care claims or equivalent encounter information, health
claims attachments, enrollment and disenrollment in a health plan,
health plan premium payments, and referral certification and
authorization, with respect to which the Secretary agreed.\12\
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\11\ May 5, 2012 NCVHS letter to the Secretary: http://www.ncvhs.hhs.gov/120505lt.pdf.
\12\ September 12, 2012 letter from Secretary to NCVHS: http://www.ncvhs.hhs.gov/120912lt.pdf.
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3. Current HIPAA Administrative Simplification Enforcement
Under sections 1176 and 1177 of the Act, covered entities may be
subject to civil money penalties (CMPs) and criminal penalties for
violations of HIPAA Administrative Simplification rules. HHS
administers the CMPs under section 1176 of the Act and the U.S.
Department of Justice administers the criminal penalties under section
1177 of the Act.
Section 1176(b) of the Act sets out limitations on the Secretary's
authority and provides the Secretary certain discretion with respect to
imposing CMPs. For example, this section provides that no CMPs may be
imposed with respect to an act if a penalty has been imposed under
section 1177 of the Act with respect to such act. This section also
generally precludes the Secretary from imposing a CMP for a violation
corrected during the 30-day period beginning when an individual knew
or, by exercising reasonable diligence, would have known that the
failure to comply occurred. The Secretary promulgated rules pertaining
to compliance with, and enforcement of, the HIPAA Administrative
Simplification rules that are codified at section 45 part 160, subparts
C, D, and E, and collectively referred to as the Enforcement Rule.
In the April 17, 2003 Federal Register (68 FR 18895), we issued an
interim final rule entitled, ``Civil Money Penalties: Procedures for
Investigations, Imposition of Penalties, and Hearings'' that
established the procedural requirements for the imposition of CMPs for
violations of HIPAA Administrative Simplification requirements. We
expanded upon that rule with a February 16, 2006 final rule entitled,
``HIPAA Administrative Simplification: Enforcement'' (71 FR 8390), that
made the compliance rules applicable to all HIPAA Administrative
Simplification Rules. That rule also amended the rules relating to the
imposition of CMPs and clarified the investigation process, bases for
liability, determination of the penalty amount, grounds for waiver,
conduct of the hearing, and the appeal process. These rules' preambles
provide additional information that may be helpful regarding HIPAA's
compliance and enforcement.
Section 13410(d) of the Health Information Technology for Economic
and Clinical Health Act (HITECH), enacted on February 17, 2009 as part
of the American Recovery and Reinvestment Act of 2009, revised section
1176 of the Act by strengthening enforcement of the HIPAA rules.
In the October 30, 2009 Federal Register (74 FR 56123), we
published an IFC titled ``HIPAA Administrative Simplification:
Enforcement'' that conformed HIPAA's enforcement regulations to section
1176 of the Act, as it was modified by section 13410(d) of HITECH. That
rule amended HIPAA enforcement regulations as they relate to the
imposition of CMPs to incorporate the HITECH categories of violations,
tiered ranges of CMP amounts, and revised limitations on the
Secretary's authority to impose CMPs for established violations of
HIPAA Administrative Simplification rules.
In the January 25, 2013 Federal Register (78 FR 5566), we published
a final rule titled ``Modifications to the HIPAA Privacy, Security,
Enforcement, and Breach Notification Rules Under the Health Information
Technology for Economic and Clinical Health Act and the Genetic
Information Nondiscrimination Act; Other Modifications to the HIPAA
Rules'' (hereinafter referred to as the HIPAA Omnibus final rule).
Among other modifications to the HIPAA rules, the HIPAA Omnibus final
rule modified HIPAA Privacy, Security, and Breach
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Notification Rules as mandated by HITECH, as well as finalized a number
of modifications to the HIPAA Enforcement Rule, including incorporating
a tiered civil money penalty structure, that were originally published
as an interim final rule on October 30, 2009 (74 FR 56123) and proposed
in a notice of proposed rulemaking on July 14, 2010 (75 FR 40868).
4. HIPAA Administrative Simplification Enforcement Under the Affordable
Care Act
Section 1104 of the Affordable Care Act amended the Social Security
Act by adding sections 1173(h) and (j). Section 1173(h) of the Act
includes certification of compliance requirements for health plans, and
requires the Secretary to conduct periodic audits of health plans and
entities that have service contracts with health plans. Section 1173(j)
of the Act establishes new penalties for health plans that fail to
comply with the certification of compliance requirements.
5. Health Plan Certification of Compliance Requirements
Section 1173(h)(1)(A) of the Act requires health plans to file a
statement with the Secretary, in such form as the Secretary may
require, by December 31, 2013, certifying that their data and
information systems are in compliance with the standards and operating
rules for the following transactions: Eligibility for a health plan,
health care claim status, and health care electronic funds transfers
(EFT) and remittance advice. In this proposed rule, we refer to the
requirements mandated by section 1173(h)(1)(A) of the Act as the
``first certification of compliance requirements.'' Table 1 displays
the specific standards and operating rules to which the requirements
for the first certification of compliance apply.
In similar fashion, section 1173(h)(1)(B) of the Act mandates, by
December 31, 2015, health plan certification of compliance for the
following HIPAA transactions: Health care claims or equivalent
encounter information, enrollment and disenrollment in a health plan,
health plan premium payments, health claims attachments, and referral
certification and authorization. Likewise, section 1173(h)(5) of the
Act mandates that health plans meet certification of compliance
requirements for later versions of the standards and operating rules.
The scope of this proposed rule is limited to the first
certification of compliance. Because operating rules for the
transactions listed in section 1173(h)(1)(B) of the Act have not yet
been adopted, nor has a standard been adopted for health claims
attachments, we cannot yet determine what documentation will be
necessary to demonstrate compliance with those standards and operating
rules. We will adopt certification of compliance requirements for the
transactions listed in section 1173(h)(1)(B) of the Act, and for later
adopted versions of standards and operating rules, in subsequent
rulemaking.
Table 1--Standards and Operating Rules to Which the First Certification
of Compliance Applies
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Transactions Standards Operating rules
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Eligibility for a Health Plan ASC X12 Standards The following CAQH
(request and response)-- for Electronic CORE Phase I and
Dental, Professional, and Data Interchange Phase II operating
Institutional. Technical Report rules, excluding
Type 3--Health where such rules
Care Eligibility reference and/or
Benefit Inquiry pertain to
and Response acknowledgements and
(270/271), April CORE certification):
2008, ASC X12N/ (1) Phase I CORE 152:
005010X279. Eligibility and
Benefit Real Time
Companion Guide
Rule, version 1.1.0,
March 2011, and CORE
v5010 Master
Companion Guide
Template.
(2) Phase I CORE 153:
Eligibility and
Benefits
Connectivity Rule,
version 1.1.0, March
2011.
(3) Phase I CORE 154:
Eligibility and
Benefits 270/271
Data Content Rule,
version 1.1.0, March
2011.
(4) Phase I CORE 155:
Eligibility and
Benefits Batch
Response Time Rule,
version 1.1.0, March
2011.
(5) Phase I CORE 156:
Eligibility and
Benefits Real Time
Response Rule,
version 1.1.0, March
2011.
(6) Phase I CORE 157:
Eligibility and
Benefits System
Availability Rule,
version 1.1.0, March
2011.
(7) Phase II CORE
258: Eligibility and
Benefits 270/271
Normalizing Patient
Last Name Rule,
version 2.1.0, March
2011.
(8) Phase II CORE
259: Eligibility and
Benefits 270/271 AAA
Error Code Reporting
Rule, version 2.1.0.
(9) Phase II CORE
260: Eligibility &
Benefits Data
Content (270/271)
Rule, version 2.1.0,
March 2011.
(10) Phase II CORE
270: Connectivity
Rule, version 2.2.0,
March 2011.
Eligibility for a Health Plan-- Telecommunication .....................
Retail Pharmacy Drugs. Standard
Implementation
Guide, Version
D, Release 0
(Version D.0),
August 2007, and
equivalent Batch
Standard
Implementation
Guide, Version
1, Release 2
(Version 1.2),
National Council
for Prescription
Drug Programs.
[[Page 302]]
Health Care Claim Status...... ASC X12 Standards The following CAQH
for Electronic CORE Phase II
Data Interchange operating rules
Technical Report (updated for Version
Type 3--Health 5010), excluding
claim status where such rules
Request and reference and/or
Response (276/ pertain to
277), August acknowledgements and
2006, ASC X12N/ CORE certification:
005010X212, and (1) Phase II CORE
Errata to Health 250: Claim Status
claim status Rule, version 2.1.0,
Request and March 2011, and CORE
Response (276/ v5010 Master
277), ASC X12 Companion Guide,
Standards for 00510, 1.2, March
Electronic Data 2011.
Interchange (2) Phase II CORE
Technical Report 270: Connectivity
Type 3, April Rule, version 2.2.0,
2008, ASC X12N/ March 2011.
005010X212E1.
Health Care Electronic Funds ERA: ASC X12 The following CAQH
Transfers (EFT) and Standards for CORE Phase III EFT &
Remittance Advice. Electronic Data ERA Operating Rule
Interchange Set, approved June
Technical Report 2012:
Type 3--Health (1) Phase III CORE
Care Claim 380 EFT Enrollment
Payment/Advice Data Rule, version
(835), April 3.0.0, June 2012.
2006, ASC X12N/ (2) Phase III CORE
005010X221. 382 ERA Enrollment
Data Rule, version
3.0.0, June 2012.
(3) Phase III 360
CORE Uniform Use of
CARCs and RARCs
(835) Rule, version
3.0.0, June 2012.
(4)
CORE[dash]required
Code Combinations
for
CORE[dash]defined
Business Scenarios
for the Phase III
CORE 360 Uniform Use
of Claim Adjustment
Reason Codes and
Remittance Advice
Remark Codes (835)
Rule, version 3.0.0,
June 2012.
(5) Phase III CORE
370 EFT & ERA
Reassociation (CCD+/
835) Rule, version
3.0.0, June 2012.
(6) Phase III CORE
350 Health Care
Claim Payment/Advice
(835) Infrastructure
Rule, version 3.0.0,
June 2012, except
Requirement 4.2
titled ``Health Care
Claim Payment/Advice
Batch
Acknowledgement
Requirements``.
(7) ACME Health Plan,
CORE v5010 Master
Companion Guide
Template, 005010,
1.2, March 2011
(incorporated by
reference in Sec.
162.920), as
required by the
Phase III CORE 350
Health Care Claim
Payment/Advice (835)
Infrastructure Rule,
version 3.0.0, June
2012.
Stage 1 Payment
Initiation: The
National
Automated
Clearing House
Association
(NACHA)
Corporate Credit
or Deposit Entry
with Addenda
Record (CCD+)
implementation
specifications
as contained in
the 2011 NACHA
Operating Rules
& Guidelines:
NACHA Operating
Rules, Appendix
One: ACH File
Exchange
Specifications;
and NACHA
Operating Rules,
Appendix Three:
ACH Record
Format
Specifications,
Subpart 3.1.8
Sequence of
Records for CCD
Entries.
Data content in
CCD Addenda
Record:
Accredited
Standards
Committee (ASC)
X12 Standards
for Electronic
Data Interchange
Technical Report
Type 3, ``Health
Care Claim
Payment/Advice
(835), April
2006: Section
2.4: 835 Segment
Detail: ``TRN
Reassociation
Trace Number,''
Washington
Publishing
Company,
005010X221.
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Section 1173(h)(2) of the Act provides that a health plan will not
be considered to have met section 1173(h)(1) of the Act certification
requirements unless it provides the Secretary adequate documentation of
compliance that--
Demonstrates to the Secretary that it conducts the
electronic transactions specified in section 1173(h)(1) of the Act in a
manner that fully complies with the regulations of the Secretary; and
Shows that it has completed end-to-end testing for such
transactions with its
[[Page 303]]
partners, such as hospitals and physicians.
Section 1173(h)(3) of the Act extends the certification and
submission requirements to entities that have service contracts with
health plans, though the compliance onus remains on the health plan. In
addition, the Secretary is authorized by section 1173(h)(4) of the Act
to designate independent, outside entities to certify that health plans
have complied with the certification requirements, so long as the
certification standards used by these entities are in accordance with
the standards and operating rules adopted by the Secretary.
6. Penalty Fees
Section 1173(j) of the Act specifies penalties for health plans
that fail to meet section 1173(h) certification and documentation of
compliance requirements. Sections 1173(j)(1)(B) through (F) of the Act
specify the amount of, and process for assessing, penalty fees against
health plans. Section 1173(j)(1)(B) of the Act requires the Secretary
to assess a $1 per covered life per day penalty fee, assessed per
person covered by the plan for which its data systems for major medical
policies are not in compliance for each day the plan is not in
compliance, against a health plan until certification is complete.
Section 1173(j)(1)(C) of the Act requires the Secretary to double the
amount of the penalty fees assessed against a health plan that
knowingly provides inaccurate or incomplete information in certifying
compliance. Section 1173(j)(1)(F) of the Act directs the Secretary to
determine the number of covered lives underlying the calculation of the
penalty fee amount based upon a health plan's most recent statements
and filings submitted to the Securities and Exchange Commission.
Section 1173(j)(1)(D) of the Act directs that the penalty fees be
increased on an annual basis by the annual percentage increase in total
national health care expenditures, as determined by the Secretary.
Finally, section 1173(j)(1)(E) of the Act caps the penalties that may
be annually imposed on a health plan to $20 per covered life under such
plan, or, in the event of misrepresentation under section 1173(j)(1)(C)
of the Act, $40 per covered life.
7. Notice, Dispute, and Penalty Process
Sections 1173(j)(2) through (4) of the Act outline how the penalty
fees are to be assessed and collected. Section 1173(j)(2) of the Act
requires the Secretary to establish a process to assess penalty fees
that provides a health plan with reasonable notice and a dispute
resolution procedure prior to the Secretary of the Treasury sending a
notice of assessment to a health plan.
Section 1173(j)(3) of the Act directs the Secretary, by May 1,
2014, and annually thereafter, to provide the Secretary of the Treasury
with a report of health plans that have been assessed penalty fees.
Section 1173(j)(4) of the Act directs the Secretary of the Treasury to
collect the penalty fees, and by August 1, 2014 and annually
thereafter, provide each plan assessed a penalty fee a notice of the
amount and due date of the fee. Section 1173(j)(4)(C) of the Act
directs health plans assessed penalty fees to make payment to the
Secretary of the Treasury by November 1, 2014, and annually thereafter.
Section 1173(j)(4)(D) of the Act provides that interest, at a rate as
determined pursuant to the underpayment rate established under section
6621 of the Internal Revenue Code of 1986, accrues on any penalty fee
not paid by the due date, and that any unpaid penalty fees are to be
treated as a past due, legally enforceable debt owed to a federal
agency for purposes of section 6402(d) of the Internal Revenue Code of
1986. Finally, section 1173(j)(4)(E) of the Act states that any fee
charged or allocated for collection activities conducted by the
Department of the Treasury's Financial Management System will be passed
on to the health plan on a pro-rated basis and added to the penalty fee
collected.
8. Audits
Section 1173(h)(6) of the Act states that the Secretary shall
conduct periodic audits to ensure that health plans, including entities
that have service contracts with health plans, are in compliance with
the adopted standards and operating rules, as referenced in Table 1.
The process and scope of these audits are not addressed in this
proposed rule.
C. Certification of Compliance and Strategy for a Consistent Testing
Processes
Beyond the first certification of compliance, section 1173(h)(5) of
the Act requires health plan certification for new and revised
standards and operating rules adopted by the Secretary. We intend for
future rulemakings in which we adopt new or modified standards and
operating rules to also include certification of compliance processes
for those new or modified standards and operating rules. We believe the
benefit of including the certification of compliance requirements in
those rulemakings is that it will move covered entities toward a
consistent, industry-wide testing framework that, we believe, will
support a more seamless transition to new and modified standards and
operating rules.
In recent years, the health care industry has experienced
challenges in implementing the HIPAA Administrative Simplification
requirements, such as Version 5010, ICD-10, and the operating rules for
the eligibility for a health plan and health care claim status
transaction, by the regulatory compliance dates. We have responded to
industry's needs for additional time by delaying implementation or
relaxing enforcement periods for the requirements, but such practices
can be expensive to industry.
While many factors may cause a covered entity to have difficulty
implementing a new Administrative Simplification requirement, many in
industry attribute some implementation issues to the lack of a
consistent testing process or framework.\13\ The health care industry
reports that testing is critical to ensure the integrity of internal
application systems and confirm a system's capability to conduct
compliant transactions.\14\ The NCVHS stated that a uniform testing
process that included full end-to-end testing well before the
compliance dates for Version 5010 would have identified issues that
could have been mitigated in advance of the compliance date.\15\
---------------------------------------------------------------------------
\13\ Many of the assumptions in this section come from an NCVHS
hearing held on June 20, 2012 in which these issues were discussed.
The hearing and the NCVHS' conclusions are summarized in ``Re:
Findings from NCVHS Hearings on Administrative Simplification in
June 2012--an Update on Health Care Administrative Transactions,''
September 21, 2012 letter to Secretary Sebelius from the National
Committee on Vital and Health Statistics, pg 2. A copy of the letter
and testimony from the hearing can be found at: http://www.ncvhs.hhs.gov/.
\14\ See ``Transaction Compliance and Certification: A White
Paper Describing the Recommended Solutions for Compliance Testing
and Certification of the HIPAA Transactions,'' prepared by the
Workgroup for Electronic Data Interchange (WEDI) Transactions
Workgroup, March 10, 2010.
\15\ Ibid.
---------------------------------------------------------------------------
Ideally, certification of compliance, as mandated by section
1173(h) of the Act, should support a standardized process for
demonstrating compliance. Such a standardized process for demonstrating
compliance should require a health plan to undergo testing within a
consistent, industry-wide framework that results in the ability to
generate specific documents that demonstrate compliance. We believe
such a process would solve some of the significant implementation
issues the industry has experienced. The certification of compliance
provisions we propose in this rule are the first step toward a
standardized testing framework to
[[Page 304]]
support a more seamless transition to new and revised standards or
operating rules.
II. Provisions of the Proposed Rule
A. Submission Requirements
Section 1173(h) of the Act requires health plans to provide the
Secretary, in such form as the Secretary may require, adequate
documentation of compliance with the standards and operating rules. In
accordance with section 1173(h) of the Act, we propose the information
and documentation that controlling health plans (CHPs) would be
required to submit to the Secretary for the first certification of
compliance in the new regulation Sec. 162.926.
In the HPID final rule, we created two categories of health plans
\16\ for purposes of specifying enumeration requirements for the health
plan identifier (HPID): CHPs and subhealth plans (SHPs). In this
proposed rule, we propose that CHPs, on behalf of themselves and their
SHPs, if any, be responsible for submitting the information and
documentation for the first certification of compliance under Sec.
162.926.
---------------------------------------------------------------------------
\16\ The regulatory definition of health plan at 45 CFR 160.103
was initially adopted in the Transactions and Code Sets final rule.
The basis for the additions to, and clarifications of, the statutory
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.''
---------------------------------------------------------------------------
Under proposed Sec. 162.926, a CHP would be required to submit the
following information and documentation, in one submission, to the
Secretary:
Its number of covered lives on the date it submits the
documentation.
Documentation that demonstrates it has obtained either a
CAQH CORE--
++ Certification Seal for Phase III CAQH CORE EFT & ERA Operating
Rules (hereinafter referred to as a Phase III CORE Seal); or
++ HIPAA Credential for the eligibility for a health plan, health
care claim status, and health care electronic funds transfers (EFT) and
remittance advice operating rules (hereinafter referred to as the HIPAA
Credential).
Collectively, these constitute the submissions, and we refer to the
requirements to submit them to the Secretary as the ``submission
requirements.'' The submission requirements, as proposed in this rule,
are a ``snap shot'' of a CHP's compliance with the standards and
operating rules. Such information and documentation does not reflect
continuing compliance, nor do we do intend the information or
documentation to be updated or resubmitted on a regular basis.
We are not, at this time, proposing the specific format for the
submission requirements. We will likely require a CHP to submit its
number of covered lives through an online form. We may require an
electronic version or copy of a Phase III CORE Seal or the HIPAA
Credential to be submitted online, or we may ask for a tracking number
that links to CAQH CORE records of such. Information about the
mechanics for meeting the submission requirements for the first
certification of compliance will be forthcoming at or near the time the
final rule is published.
1. Responsibilities of a CHP
As previously noted, in Sec. 162.926 we propose that a CHP be
responsible for submitting the following on behalf of itself and, if it
has any, its SHP(s):
The number of covered lives of a CHP: The number of
``covered lives of a CHP,'' as the term is proposed to be defined in
Sec. 162.103, would include the number of covered lives, if any, of a
CHP's SHPs. (We discuss the definition of ``covered lives of a CHP'' in
more detail in section II.B.1 of this proposed rule.) The CHP would be
responsible for submitting its total number of covered lives as of the
date it meets the submission requirements of Sec. 162.926(a)(1) or
(b)(1).
Documentation that demonstrates the CHP has obtained
either a Phase III CORE Seal or the HIPAA Credential.
In order to obtain the documentation for this submission
requirement, a CHP, also representing all of its SHPs, would have to
meet the CORE requirements necessary to obtain either a Phase III CORE
Seal or the HIPAA Credential. We discuss this documentation requirement
in more detail in section II.A.3 of this proposed rule.
We believe the proposal that the CHP be responsible for meeting the
submission requirements for itself and its SHPs is consistent with the
framework of the HPID final rule. A CHP is defined at Sec. 162.103 as
exercising sufficient control over its SHPs to direct its/their
business activities, actions, or policies. We believe a CHP has
sufficient control over its SHPs to require that it be responsible for
the Sec. 162.926 requirements for itself and its SHPs. As described in
section II.B.1 of this proposed rule, the CHP would also be responsible
for the penalty fees that may be assessed if it fails to meet the first
certification of compliance's submission requirements as proposed in
Sec. 162.926.
We note that a CHP's proposed obligations under Sec. 162.926 would
not necessarily extend to other Administrative Simplification
compliance or enforcement activities. Nothing in the provisions of this
proposed rule would alter the requirement that all health plans must
meet Administrative Simplification requirements per Sec. 160.102. As
health plans, SHPs are covered entities and independently responsible
for ensuring they are compliant with the standards and operating rules,
but, for purposes of this rule, we propose that the responsibility to
meet the first certification of compliance submission requirements lies
with the CHP.
We emphasize that state and federal government entities that meet
the definition of a CHP must meet the requirements of this proposed
rule and may be assessed penalty fees as described in the statute and
in this rule; section 1173(h) of the Act provides no exemptions for
state or federal government health plans.
2. Proposed Submission Requirements: Number of Covered Lives of a CHP
Section 1173(j)(1) of the Act requires the Secretary to assess a
penalty fee against a health plan that fails to meet the certification
of compliance requirements of section 1173(h). Section 1173(j)(1) of
the Act specifies the penalty fee amount, which is based on the covered
lives of a health plan. Because we need to know the number of covered
lives of a CHP (including the number of covered lives of its SHPs, if
it has any) should circumstances require us to calculate penalty fees,
we propose in Sec. 162.926(a)(1) and (b)(1) to require CHPs to submit
to the Secretary the number of covered lives of a CHP.
We propose that the number of covered lives of a CHP submitted
pursuant to Sec. 162.926(a)(1) and (b)(1) would be the number of
covered lives as of the date the CHP submits the documentation proposed
in Sec. 162.926(a)(2) and (b)(2) to the Secretary. For example, if a
CHP submits the documentation required by the first certification of
compliance on January 1, 2015, then its submission would reflect its
number of covered lives as of that date. In Sec. 162.926 (and
discussed in section II.A.7 of this proposed rule), we propose that a
CHP would have up to 12 months prior to the certification of compliance
deadlines to satisfy the submission requirements. The definition of the
``covered lives of a CHP'' is best explained in the context of the
penalty fees, which we do in section II.B.1 of this proposed rule where
we describe the calculation of penalty fees.
[[Page 305]]
3. Proposed Submission Requirements: HIPAA Credential or Phase III CORE
Seal
We propose to require CHPs to choose among two options, the HIPAA
Credential or a Phase III CORE Seal, as described in this section, to
demonstrate compliance for the first certification of compliance.
There are any number of reasons why a CHP may elect to obtain one
of these options over the other. A CHP will find that one or the other
better aligns with the implementation process it uses to implement new
operating rules.
a. Process and Requirements for Obtaining HIPAA Credential
We are proposing in Sec. 162.926(a)(2) and (b)(2) that a CHP has
the option of selecting the HIPAA Credential as one of two alternatives
for meeting the first certification of compliance submission
requirements. The HIPAA Credential is administered by CAQH CORE and
demonstrates that a CHP has attested to compliance with HIPAA standards
and operating rules for the eligibility for a health plan, health care
claim status, and electronic funds transfers (EFT) and remittance
advice transactions, and that the CHP has conducted a certain level of
testing. CAQH CORE is currently developing the HIPAA Credential--which
we expect to be finalized prior to the time we finalize this rule--and
we describe here the expected process and requirements for obtaining
it. Just as CAQH CORE provides explicit details about the CORE Seals on
its Web site, we expect it will do the same for the HIPAA Credential.
Should the final HIPAA Credential differ in any material way from the
way we describe it herein, we would reopen the comment period for this
topic to allow for further comment.
The scope of the HIPAA Credential would only encompass the HIPAA-
mandated standards and operating rules. For example, we have not
adopted HIPAA standards and operating rules for acknowledgements,
therefore the HIPAA Credential would not require attestation or
compliance with respect to standards and operating rules regarding
acknowledgements.
To obtain the HIPAA Credential, a CHP would have to submit to CAQH
CORE--
The CAQH CORE HIPAA Attestation Form (similar to the form
required for the CORE Certification process,\17\ discussed in section
II.A.3(b) of this proposed rule);
---------------------------------------------------------------------------
\17\ http://www.caqh.org/pdf/CLEAN5010/COREHIPAAForm.pdf, http://www.caqh.org/pdf/COREPIIHIPAAForm.pdf, and http://caqh.org/Host/CORE/EFT-ERA/CORE_PIII_HIPAA_Form.pdf, http://www.caqh.org/pdf/CLEAN5010/COREHIPAAForm.pdf, http://www.caqh.org/pdf/COREPIIHIPAAForm.pdf, and http://caqh.org/Host/CORE/EFT-ERA/CORE_PIII_HIPAA_Form.pdf for the Phase I, II, and III CAQH CORE HIPAA
Attestation Forms respectively.
---------------------------------------------------------------------------
An application form (similar to the form required to
obtain a CORE Seal) with signature verifying that all forms have been
submitted to CAQH CORE and indicating that HHS may view the application
and associated forms if such a request is made to CAQH CORE; and
An attestation form, with features or requirements that
would include the following:
++ Attestation, in which the CHP confirms that it has successfully
tested the operating rules for the eligibility for a health plan,
health care claim status, and health care electronic funds transfers
(EFT) and remittance advice transactions with trading partners. For
each of the three transactions, the CHP must confirm that the number of
transactions conducted with those trading partners collectively
accounts for at least 30 percent of the total number of transactions
conducted with providers. For each of the three transactions, the CHP
must confirm that it has successfully tested with at least three
trading partners, but if the number of transactions conducted with
three trading partners does not account for at least 30 percent of the
total number of transactions conducted with providers, the CHP could
confirm that it has successfully tested with up to 25 trading partners.
The CHP would have to list those trading partners.
We do not define ``successfully tested'' in this proposed rule, or
prescribe any specific kind or level of testing for the HIPAA
Credential.
++ When a CHP attests that it has successfully tested with trading
partners that, collectively, conduct at least 30 percent of the total
number of transactions conducted with providers, it is representing
itself and its SHPs. When calculating 30 percent of the transactions
conducted with providers, the total of the CHP's and SHPs' transactions
would be used.
++ The CHP would have to provide contact information, including,
but not limited to, name, phone number, and email address, for each of
the listed trading partners.
++ Trading partners may be transaction-specific. For example, a CHP
may list the same or different trading partners for each of the three
transactions, so a CHP may list three or more trading partners.
++ Trading partner testing would only be required for current
HIPAA-mandated operating rules and standards, so trading partner
testing would not be required for the use of acknowledgments, or
optional aspects of standards.
In reviewing CHPs' HIPAA Credential application packages, CAQH CORE
will likely identify applications containing obvious errors, and not
award the HIPAA Credential based on such information. CAQH CORE will
also identify when required information, such as trading partner
contact information, is missing in the HIPAA Credential application
package.
While CAQH CORE will likely identify obvious errors or missing
information in the HIPAA Credential application package, CAQH CORE will
not be responsible for addressing intent on the part of the CHP with
regard to such errors or missing information. That is, CAQH CORE will
not investigate what a CHP knew or didn't know when it submitted an
inaccurate HIPAA Credential application package to CAQH CORE.
Similarly, CAQH CORE will not address any claims that may be submitted
to CAQH CORE about a CHP's intent behind any inaccuracies or incomplete
information in a HIPAA Credential application; for example, CAQH CORE
will not address claims that a CHP knowingly provided inaccurate or
incomplete information in its HIPAA Credential application.
Other aspects of the HIPAA Credential include:
Unlike the CORE Seals, it would only be offered to health
plans.
The HIPAA Credential would not have a requirement for
certification testing, as is required for a Phase III CORE Seal. The
HIPAA Credential would not have a requirement to test with a third-
party testing vendor.
The HIPAA Credential requires external testing; however,
it does not require a specific approach to external testing, and, thus,
does not directly support a consistent, industry-wide testing framework
to the extent that a Phase III CORE Seal does. Thus, we view the HIPAA
Credential as an initial step toward a consistent testing framework for
CHPs that decide not to undergo the certification testing for a CORE
Phase III Seal.
b. Process and Requirements for Obtaining a CORE Seal
The three current CAQH CORE Operating Rule sets are referred to as
phases: Phase I is the operating rule set for the eligibility for a
health plan transaction; Phase II includes operating rules for both the
eligibility for a health plan and the health care claim status
transaction; and Phase III is the
[[Page 306]]
operating rule set for the health care electronic funds transfers (EFT)
and remittance advice transaction. The Secretary has adopted the sets
as the operating rules for the respective transactions, with the
exceptions we describe in section I.B.2 of this proposed rule.
CAQH CORE has developed separate certification testing requirements
for each of the three phases of operating rules. Any health care entity
that conducts the applicable electronic health care transactions may
voluntarily undergo certification testing with an independent CORE-
authorized testing vendor and a certification process through CORE to
demonstrate compliance with the three phases. An entity that
successfully completes the testing and submits the appropriate
documentation to CAQH CORE is awarded a CORE Seal for the specific
phase for which it tested. In order to be awarded a CORE Seal for all
three phases, a CHP would be required to conduct certification testing
for compliance with the requirements in Phases I, II, and III, which
may be done chronologically or concurrently.
We are proposing a Phase III CORE Seal as one of two options a CHP
may choose to meet the submission requirements of the first
certification of compliance. The preparation required to apply for, and
the documentation required in order to be awarded, a CORE Seal for each
phase reflects the kind of consistent internal and external testing and
documentation of compliance that we believe will ameliorate many of the
challenges industry has recently faced during transitioning to new
standards and operating rules.
Because we propose that CHPs may choose to obtain a CORE Seal to
satisfy the requirements of proposed Sec. 162.926(a)(2) or (b)(2), we
describe the steps involved for entities to obtain a CORE Seal: \18\
(1) Conduct a gap analysis by evaluating, planning, and completing
necessary system upgrades; (2) sign and submit the CAQH CORE Pledge to
make a commitment to become a CORE-certified entity within 180 days;
(3) conduct testing through a CORE-authorized testing vendor; and (4)
apply for a Phase III CORE Seal by submitting the proper documentation
and fee to CAQH CORE for consideration. This four-step process is
described in more detail as follows:
---------------------------------------------------------------------------
\18\ Step-by step process for certification for Phase I and
Phase II can be found at: http://www.caqh.org/CORE_step_by_step.php.
---------------------------------------------------------------------------
Step 1: Conduct A Gap Analysis
Entities that implement the CAQH CORE Operating Rules conduct a gap
analysis in order to determine what system and business process changes
may be necessary to ensure their data and information systems are
remediated to address any gaps between existing system requirements and
CORE Operating Rule requirements. (Certification testing is described
later in this section.) Project managers, business analysts, system
analysts, architects, and other key staff conduct the gap analyses,
which include an inventory of the systems affected by the specific
phase of operating rules and the drafting of a detailed project plan.
CORE provides an analysis and planning guide as a gap analysis tool for
each of its current phases.\19\
---------------------------------------------------------------------------
\19\ http://www.caqh.org/Host/CORE/CAQHCORE_Analysis&PlanningGuide.pdf and http://www.caqh.org/Host/CORE/CAQHCORE_EFT&ERA_Analysis&PlanningGuide.pdf.
---------------------------------------------------------------------------
Step 2: Sign and Submit the CORE Pledge
An authorized, executive-level employee of the entity that is
applying for any of the three CORE Seals signs a binding CORE
Certification Pledge to adopt, implement, and comply with the CAQH CORE
Operating Rules. By signing the pledge, an entity commits to working
with a CORE-authorized Testing Vendor to demonstrate that its
product(s) or IT system(s) is operating in accordance with a specific
phase of the CORE Operating Rules. (We discuss CORE-authorized Testing
Vendors in more depth in section II.A.2.d of this proposed rule.)
Testing with a CORE-authorized Testing Vendor must be completed within
180 days of signing the pledge,\20\ though extensions may be granted by
signing and submitting a new pledge.
---------------------------------------------------------------------------
\20\ http://www.caqh.org/CORE_certification.php.
---------------------------------------------------------------------------
Step 3: Testing by a CORE-authorized Testing Vendor using
CORE Certification Master Test Suites (Certification Testing)
CAQH CORE developed documents called CORE Certification Master Test
Suites (Test Suites) for each of its three operating rule phases. The
phase-specific Test Suites are operating rule and documentation
requirements that an entity must meet to be awarded a CORE Seal for
that phase.
Test Scripts--which include a description of operating rule-by-
operating rule requirements, as well as specific documentation or
information necessary to demonstrate compliance with each operating
rule requirement--are the primary tools in each phase-specific Test
Suite. Tables 2 and 3 illustrate two examples of Test Scripts for two
different operating rule requirements. Table 2 illustrates a test
script from Phase I CORE 152 Companion Guide Rule Certification Testing
and Table 3 illustrates a test script from Phase I CORE 154 Eligibility
and Benefits (270/271) Data Content Rule Certification Testing. As
illustrated by Table 2 and Table 3, each Test Script includes the
following five columns:
Column 1--The criteria or description of the requirements
of the rule.
Column 2--The expected result of a test of compliance with
the rule. Entities upload documents or submit transaction files to
CORE-authorized Testing Vendors that demonstrate they have met the
requirements of each Test Script.
Column 3--The actual result that the entity found upon
testing the rule (that is, whether the expected outcome was achieved).
Column 4--Indicates whether the entity was able to produce
the expected result in terms of pass or fail.
Column 5--Indicates which stakeholder would be required to
produce the expected result.
For operating rules with requirements about data content, an entity
would submit a transaction file to be tested in the CORE-authorized
Testing Vendor's testing engine. Using the example of the Test Script
illustrated in Table 3, an entity would be required to submit a
transaction file, detailed in column 2, and receive a ``pass'' from the
CORE-authorized Testing Vendor in column 4 indicating the file met the
requirement.
In other cases, an entity would submit other types of documents
that demonstrate the expected result of the Test Script. Using the
example of the Test Script illustrated in Table 2, an entity would be
required to submit an electronic version of the table of contents of
its ASC X12 v5010 270/271 companion document, including an example of
the ASC X12 v5010 270/271 content requirements,'' to the CORE-
authorized Testing Vendor in order for the vendor to give a ``pass'' to
that test.
The process of submitting documents or uploading files to CORE-
authorized Testing Vendors is virtual, and an entity may access the
CORE-authorized Testing Vendor's testing portal from a desktop
computer.
The certification testing, described here as a key step in
obtaining a CORE Seal, would be conducted after an entity has conducted
internal and external testing of the operating rules. CORE's
standardized certification testing demonstrates that a consistent and
standard IT system testing has been completed. Therefore, certification
testing, such as that which is described here, reflects our intent of
supporting an
[[Page 307]]
industry-wide consistent trading partner testing process or framework.
Table 2--Illustration A: Sample Test Scripts From Phase I Core Certification Test Suite Sample Test Script for Phase I Core 152 Companion Guide Rule
Certification Testing
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Criteria Expected result Actual Pass/fail
result
Stakeholder
---------------------------------------------------------
Provider Health plan Clearing N/A
house
--------------------------------------------------------------------------------------------------------------------------------------------------------
Companion Document conforms to Submission of the ........... [square] Pass [square] Fail [square] [square] [square] [square]
the flow and format of the Table of Contents
CORE master Companion Document of the v5010 270/
Template. 271 companion
document,
including a
example of the
v5010 270/271
content
requirements.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 3--Illustration B: Sample Test Scripts From Phase I Core Certification Test Suite A Test Script From Phase I Core 154 Eligibility and Benefits
(270/271) Data Content Rule Certification Testing
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Criteria Expected result Actual Pass/Fail
result
Stakeholder
---------------------------------------------------------
Provider Health plan Clearing N/A
house
--------------------------------------------------------------------------------------------------------------------------------------------------------
Create a valid v5010 271 Output a valid ........... [square] Pass [square] Fail [square] [square] [square] [square]
response transaction as fully enveloped
defined in the CORE rule v5010 271
indicating the patient eligibility
financial responsibility for response
each of the benefits covering transaction set
the individual (Key Rule with the correct
Requirement 6 through co[dash]insurance
18). ,
co[dash]payment,
and deductible
patient financial
responsibilities
for both in/out
of network in
either
EB08[dash]954 or
EB07[dash]782 at
either the
subscriber loop
2110C or
dependent loop
2100D levels.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Step 4: Apply for a CORE Seal
Once an entity successfully completes the certification testing
with a CORE-authorized Testing Vendor, it submits an application
package to CAQH CORE, and the CAQH CORE staff then reviews the
application package prior to granting the appropriate CORE Seal. The
application package includes the following:
++ Documentation from a CORE-authorized Testing Vendor
demonstrating the entity's compliance with the phase-specific CAQH CORE
Operating Rules through successful certification testing.
++ The CAQH CORE HIPAA Attestation Form, signed by a senior-level
executive, indicating that, to the best of the applicant's knowledge,
the entity is HIPAA compliant for security, privacy, and the
transaction standards. This form is addressed in more detail in section
II.A.3(c) of this proposed rule.
++ The CAQH CORE Health Plan IT Exemption Form, if applicable. This
form and its relationship with the submission requirements of the first
certification of compliance is discussed in section II.A.3(e) of this
proposed rule.
++ The CAQH CORE Application. This form collects contact
information for the individual responsible for the organization's CORE-
certification process. The form also outlines the required materials
for a complete CORE Certification Application, the process by which
CAQH CORE will review and approve applications, and terms and
conditions for CORE Certification.
++ A fee, as illustrated in Table 4.
Upon receipt of this documentation, CAQH CORE will complete a final
assessment within 30 business days unless there are extenuating
circumstances. CAQH CORE reviews test results and maintains records for
each entity that is awarded a CORE Seal.
A health plan must be awarded a CORE Seal in a previous phase to be
eligible for a subsequent phase's Seal.\21\ For example, a health plan
must be awarded a CORE Seal for Phase I and II Operating Rules in order
to be eligible for a CORE Seal for Phase III Operating Rules. CAQH CORE
provides the option of applying for and conducting certification
testing for all three phases concurrently. In the context of the
requirements for the first certification of compliance, this means that
a CHP that chooses the option to submit a CORE Seal for Phase III
Operating Rules will need to obtain CORE Seals for Phases I and II
first, or concurrently.
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\21\ See question 4, page 9 of 23 at http://www.caqh.org/pdf/COREFAQsPartA.pdf.
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We believe that the CORE Seal, obtained through the CORE
certification process, is a reasonable and appropriate demonstration of
compliance with the operating rules because--
CAQH CORE develops its CORE Seal certification process
through a multi-stakeholder approach. CAQH CORE is an industry-wide
collaboration committed to the development and adoption of national
operating rules for administrative transactions. The more than 140 CORE
Participants represent all key stakeholders including providers, health
plans, vendors, clearinghouses, government agencies, Medicaid, banks
and standard development organizations. CAQH CORE draws on this
representation to develop the requirements for CORE Certification (Test
Suites and Test Scripts) through a transparent, consensus-based
process. To our knowledge, no other entity currently has an equivalent
multi-stakeholder process for developing certification testing for
operating rules;
Through the CORE-authorized Testing Vendor framework, CAQH
CORE has created a marketplace for multiple commercial testing vendors
to compete, while requiring CORE-authorized Testing Vendors to utilize
standardized Test Scripts and specific submission requirements in
testing entities. In its role as the ``certifier,'' in contrast to a
``tester,'' CAQH CORE maintains a third party position, independent
from both the entity seeking the CORE Seal and the testing vendors with
commercial interests. This
[[Page 308]]
allows CAQH CORE to carry out the certifying process--and enforcement,
appeals and exception policies and processes--in a neutral, transparent
manner;
CORE Certification is recognized as an Administrative
Simplification tool for health plans and states. Currently, over 30
health plans have been awarded or have pledged to seek CORE Seals for
Phases I, II, or III, or have pledged to seek the CORE Seal.\22\ CORE
Certification is also a crucial element in state-based health care
reform initiatives in Oregon \23\ and Colorado. Colorado, for example,
requires that, ``[w]hen installing new operating systems after December
31, 2012, all carriers are required to use CORE-certified systems for
communications, those systems which meet CORE certification standards,
or contract with a vendor who has applied by January 1, 2013 to be
CORE-certified.'' \24\ The Colorado regulation also states that ``Phase
I CORE certification shall be accepted as evidence of compliance'' with
the CORE operating rules that the regulation also adopted; \25\ and
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\22\ For updated information on entities that have CORE-
certification or have committed to receive CORE-certification,
please refer to http://www.caqh.org/CORE_organizations.php.
\23\ O.A.R. 836-100-0115(1): http://arcweb.sos.state.or.us/pages/rules/oars_800/oar_836/836_100.html.
\24\ 3 CCR 702-4-2-32: http://cdn.colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1=Content-Disposition&blobheadername2=Content-Type&blobheadervalue1=inline%3B+filename%3D%224-2-32+Standardized+Electronic+Identification+And+Communication+Systems+Guidelines+For+Health+Benefit+Plans.pdf%22&blobheadervalue2=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251823308663&ssbinary=true.
\25\ Ibid., Section 5.
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CAQH CORE's Certification Infrastructure. CAQH CORE's
infrastructure includes: robust on-line and live support for entities
during the certification process; a complaint-driven enforcement
mechanism that identifies instances of non-compliance; an exemption
policy and process; a re-certification process; and an appeals process
allowing an entity to request a hearing if it disagrees with CAQH
CORE's decision of non-compliance.
We request comments on a Phase III CORE Seal as an option for CHPS
to meet the documentation requirements for the first certification of
compliance.
c. CAQH CORE HIPAA Attestation Forms as Documentation of Compliance
With the HIPAA Standards
In order to obtain a CORE Seal for each of the operating rule
phases, an entity must sign the CAQH CORE HIPAA Attestation Form by
which it attests to compliance with applicable HIPAA transaction
provisions, and the HIPAA privacy and security provisions, of 45 CFR
Parts 160, 162, and 164. We anticipate that CAQH CORE's HIPAA
Credential application process will similarly require such an
attestation for the HIPAA Credential, and we find such an attestation
to be an essential document of compliance for purposes of the first
certification of compliance. We note that, attesting to compliance with
the HIPAA privacy and security provisions or obtaining a CORE Seal (or
the HIPAA Credential) does not prevent or preclude the Office for Civil
Rights from conducting HIPAA Privacy or Security Rules investigations,
compliance reviews or audits; settling cases; making findings of non-
compliance; or imposing civil money penalties for HIPAA violations.
The proposed submission requirements of Sec. 162.926(a)(2) and
(b)(2) demonstrate a CHP is compliant with applicable standards and
operating rules. We considered proposing a framework by which CHPs
would demonstrate compliance with applicable standards styled similarly
to the proposed framework for demonstrating compliance with operating
rules. That is, we considered requiring a CHP to obtain documentation
from a third-party demonstrating it has conducted external testing with
the standards adopted for the eligibility for a health plan, health
care claim status, and health care electronic funds transfers (EFT) and
remittance advice transactions. At this time, however, we believe CAQH
CORE's HIPAA Attestation Form satisfies the section 1173(h)(2) mandate
that health plans submit adequate documentation of compliance with the
applicable standards for purposes of the first certification of
compliance. We chose this approach because we--
Believe that requiring just the CAQH CORE HIPAA
Attestation Form minimizes CHPs' burdens in complying with the first
certification submission requirements, while not altering or
undermining the statutory requirements or our objectives in ensuring
compliance; and
Are not aware of existing programs that demonstrate
consistent testing for compliance with the standards that parallel the
proposed process for certifying health plans for compliance with the
operating rules. There may be commercial entities that ``certify''
entities as being compliant with the standards, but we do not know of
any that have developed a standards certification process,
certification testing, or certification infrastructure with significant
participation from industry.
We also recognize that, while the HIPAA Credential option relies on
entities having successfully conducted testing with trading partners,
it does not directly support a consistent, industry-wide testing
framework of new standards and operating rules. We view the first
certification of compliance submission requirements as an initial step
in that direction. We solicit comments on our assumptions and proposed
approach.
d. CAQH CORE Documentation and Policies
We are proposing that CHPs may choose between two CAQH CORE
documents--a Phase III CORE Seal or the HIPAA Credential--to
demonstrate compliance for the first certification of compliance. We
believe either of these documents through CAQH CORE is a reasonable
approach because CAQH CORE--
Is recognized as a technical expert in the implementation
of operating rules and supports the standards for those transactions to
which the operating rules apply, adopted by the Secretary (after a
vetting process discussed in section I.B.2 of this proposed rule). CAQH
CORE is the authoring entity of the operating rules and is, therefore,
well-versed in the operating rules and their interpretation and
implementation, and how they coordinate with the adopted standards;
Has infrastructure to reach out to, and educate, CHPs that
will be required by this proposed rule to obtain either a Phase III
CORE Seal or HIPAA Credential; and
Has the ability to convene workgroups with significant and
diverse health care industry participation to continually inform, and,
where appropriate, improve processes associated with the CORE Seal and
HIPAA Credential products.
We solicit comments on our proposal to limit CHPs' options to
documents obtained through processes governed by CAQH CORE.
e. CAQH CORE's Exemption and Enforcement Policies as Applied to the
Proposed Submission Requirements
(1) CAQH CORE Certification Exemption Policies
Under proposed Sec. 162.926(a)(2) and (b)(2), we specify that a
CHP may not be under the CORE IT Exemption Policy at the time of
submission with regard to the CORE Phase I, II, or III CORE Seals
[[Page 309]]
that the CHP uses to meet the submission requirements.\26\
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\26\ For Phases I, II, and III, CORE addresses certification
exemptions at: http://www.caqh.org/pdf/CLEAN5010/103.pdf, http://www.caqh.org/pdf/CLEAN5010/203.pdf and http://caqh.org/Host/CORE/EFT-ERA/303_Exemption_Policy.pdf Forms at: http://www.caqh.org/pdf/CLEAN5010/COREPII_ITExemptionRequestForm.pdf, http://www.caqh.org/pdf/CLEAN5010/103.pdf, and http://caqh.org/Host/CORE/EFT-ERA/303_Exemption_Policy.pdf for Phases I, II and III.
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CAQH CORE's Certification Exemption Policy enables a health plan,
in certain situations, to be awarded a CORE Seal for a particular phase
even if all of its IT systems do not pass the Test Scripts for that
phase. So long as the remainder of a health plan's IT systems are
compliant, CAQH CORE may grant a health plan a Health Plan IT System
Exemption if it has a scheduled migration, within the upcoming 12
months, of an existing, non-conforming IT system(s).\27\ Subsequent to
the migration(s), CAQH CORE requires the health plan to submit
documentation demonstrating the new IT system(s) complies with the
operating rules, standards, and other items required by CORE
Certification.\28\
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\27\ These exempted IT systems must serve no more than 30
percent of the health plan's membership or applicable transactions.
\28\ For Phases I, II, and III, CORE addresses certification
exemptions at: http://www.caqh.org/pdf/CLEAN5010/103.pdf, http://www.caqh.org/pdf/CLEAN5010/203.pdf and http://caqh.org/Host/CORE/EFT-ERA/303_Exemption_Policy.pdf.
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Although a health plan may obtain a CORE Seal under such a CAQH
CORE exemption, we make clear in Sec. 162.926(a)(2) and (b)(2) that,
on the date a CHP submits documentation to meet the submission
requirements of the first certification of compliance, it may not be
under such an exemption with respect to the CORE Phase I, II, or III
Seals. To be clear, a CHP may receive a CORE Seal under CAQH CORE's
Health Plan IT System Exemption policy. However, a CHP that receives a
CORE Seal under CAQH CORE's Health Plan IT System Exemption must no
longer be exempted on the date it provides its submissions to the
Secretary in order to meet the first certification of compliance
requirements.
CAQH CORE's Health Plan IT System Exemption Policy does not apply
to the HIPAA Credential, so a health plan's systems must be fully
compliant with the applicable operating rules to obtain the HIPAA
Credential.
(2) CORE Enforcement Policy
CAQH CORE's Enforcement Policy \29\ is a complaint driven process
that, under the guidance of the CORE Enforcement Committee comprised of
CAQH CORE participants, reviews complaints for completeness and
timeliness, and verifies or dismisses complaints.
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\29\ See http://www.caqh.org/pdf/CLEAN5010/105.pdf, http://www.caqh.org/pdf/CLEAN5010/205.pdf, and http://caqh.org/Host/CORE/EFT-ERA/305_Enforcement_Policy.pdf for Phase I, II, and III
enforcement policies.
---------------------------------------------------------------------------
CAQH CORE's Enforcement Policy applies to its CORE Seal product
(not the HIPAA Credential), and thus would apply to CHPs that elect to
obtain a Phase III CORE Seal to fulfill the submission requirements
proposed in this rule.
(3) A CHP Is Decertified by CORE
CAQH CORE's policies specify a number of circumstances by which an
entity may be ``decertified,'' could ``lose'' its CORE Seal, or have
its certification ``terminated'' because of instances of noncompliance
with the operating rules for which it is certified. One such policy
with this possible consequence is the CAQH CORE IT Exemption Policy,
described in section II.A.3 (e) of this proposed rule, whereby a health
plan that has obtained a CORE Seal under the policy may be decertified
if its new IT system fails to pass the applicable Test Scripts within a
prescribed timeframe.\30\ Similarly, CAQH CORE's Enforcement Policy
specifies that an entity with a CORE Seal may be decertified if it is
found to be out of compliance with an operating rule(s) or standard if
the violation is not remedied within the allowed grace period.\31\
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\30\ http://www.caqh.org/pdf/CLEAN5010/103.pdf, http://caqh.org/Host/CORE/EFT-ERA/303_Exemption_Policy.pdf, http://www.caqh.org/pdf/CLEAN5010/103.pdf, and http://www.caqh.org/pdf/CLEAN5010/203.pdf.
\31\ http://www.caqh.org/pdf/CLEAN5010/105.pdf, http://www.caqh.org/pdf/CLEAN5010/205.pdf, and http://caqh.org/Host/CORE/EFT-ERA/305_Enforcement_Policy.pdf.
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As discussed previously, on the date a CHP submits its
documentation, none of the CHP's CORE Seals may be terminated or the
CHP decertified by CAQH CORE.
In keeping with the ``snap shot'' approach described in section
II.A. of this proposed rule, we will not track the status of a CHP's
CORE Certification (that is, whether it has been terminated or has come
under the CAQH CORE IT Exemption Policy) subsequent to the date it
meets the proposed submission requirements.\32\
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\32\ However, to be clear, health plans are covered entities
obligated to continually abide by adopted HIPAA standards and
operating rules, and the requirements of this proposed rule do not
impede our enforcement authority.
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(4) CHP's Responsibilities With Respect to Entities Conducting
Transactions on Its Behalf
Section 1173(h)(3) of the Act requires a health plan to ``ensure
that any entities that provide services pursuant to a contract with
such health plan shall comply with any applicable certification and
compliance requirements (and provide the Secretary with adequate
documentation of such compliance) under this subsection.'' Because
section 1173(h) of the Act is concerned with certification of
compliance with the HIPAA standards and operating rules, we believe
``services pursuant to contract'' means services provided by business
associates (BAs), as that term is defined at Sec. 160.103, that are
contracted to conduct all or part of a HIPAA transaction on behalf of a
health plan.
Although we considered requiring CHPs to require their BAs to
comply directly with the requirements of Sec. 162.926, we are not
pursuing that option. Rather, when a CHP submits documentation in
accordance with the submission requirements of Sec. 162.926, we
believe that, by virtue of meeting the requirements of Sec. 162.923(c)
(which requires covered entities that use BAs to conduct transactions
on their behalf to require those BAs to comply with the requirements of
part 162), it will be certifying that its, and its SHP(s)', BAs that
conduct all or part of a HIPAA transactions on its/their behalf are
compliant with the HIPAA standards and operating rules. We do not
believe section 1173(h)(3) of the Act places any new requirements or
burdens on health plans with regard to their BAs that are not already
accounted for in Sec. 162.923(c).
Under CAQH CORE policy, to obtain a CORE Seal, a health plan must
demonstrate that entities or vendor products that conduct all or part
of a transaction related to a CAQH CORE are compliant with the
operating rules.\33\ This CAQH CORE policy on non-health plan entities
that conduct all or part of a transaction related to a CAQH CORE phase
on behalf of a health plan aligns with our approach to BAs that conduct
part or all of a transaction on behalf of a CHP or its SHPs. Likewise,
as we have described here, if a BA that is not a health plan conducts
all or part of a transaction on behalf of the CHP or its SHP(s), then
the CHP is responsible for ensuring the entity conducts any HIPAA
standard transactions in accord with
[[Page 310]]
any applicable HIPAA transactions standards and operating rules.
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\33\ See CAQH CORE FAQs on CORE Certification & Endorsement:
http://www.caqh.org/pdf/COREFAQsPartF.pdf.
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As noted previously, CAQH CORE requires that any health plan
wishing to obtain a CORE Seal that is dependent on a BA--for the health
plan to meet one or more of the CORE operating rule requirements--must
have that BA achieve CORE certification. Similarly, if the health plan
is dependent on a software vendor to meet one or more of the CORE rule
requirements, then the vendor's product name and vendor must be CORE-
certified.
(5) Documentation Demonstrating End-to-End Testing
Section 1173(h)(2)(B) of the Act states that a health plan shall
not be considered to have provided adequate documentation of compliance
unless it ``provides documentation showing that [it] has completed end-
to-end testing for such transactions with [its] partners, such as
hospitals and physicians.''
Even outside the context of health plan certification, the meaning
of the phrase ``end-to-end testing''--as well as the types of testing
necessary for successful transitions to new or revised standards, code
sets, or operating rules--is presently the subject of active discussion
in the health care industry. HHS, through the Office of E-Health
Standards and Services (OESS), is conducting a pilot that seeks to
develop a process and methodology for testing the transaction
standards, operating rules, code sets, identifiers, and other
Administrative Simplification requirements based on industry feedback
and participation. One of the goals of that effort is to establish a
definition for end-to-end testing in this context that can be applied
industry-wide.
Although we know of no standard definition for end-to-end testing
at this time, we believe the concept of end-to-end testing likely
requires, at a minimum, external testing with trading partners. We
emphasize that in order to obtain either a Phase III CORE Seal or the
HIPAA Credential, some external testing is required. Note that
certification testing, as is required to obtain a CORE Seal, is not the
same as internal or external testing. However, certification testing
includes submitting documentation that demonstrates certain levels of
internal and external testing have taken place. By contrast, the HIPAA
Credential directly requires external testing with trading partners.
Thus, we believe CHPs that meet the submission requirements proposed in
this rule meet the section 1173(h)(2)(B) of the Act's requirement.
(6) Other Considerations About CORE Certification
(a) Cost of CORE Seal and CORE HIPAA Credential
CAQH CORE charges entities a fee, on a sliding scale according to
net annual revenue, for administering and awarding CORE Seals. Table 4
illustrates the current fees that CAQH CORE charges a health plan.
Table 4 reflects the total costs for a CHP to obtain three CORE Seals,
one for each CAQH CORE Operating Rule phase.\34\ The fees to obtain the
CORE Seals do not include the cost for certification testing with a
CORE-authorized testing vendor.\35\
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\34\ The current CORE fee structure for the CORE Seal can be
found at: http://www.caqh.org/CORE_phase1_fees.php.
\35\ As of this writing, the single CORE-authorized testing
vendor does not charge a fee for entities to test with it.
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Table 4 also illustrates the approximate fees that we expect CAQH
CORE will charge CHPs for the HIPAA Credential it is currently
developing.
CAQH CORE does not charge federal and state government entities for
the CORE Seals, but we expect federal or state government entities will
be charged $100 to obtain the HIPAA Credential.
TABLE 4--CAQH Core Fees for Core Seal and HIPAA Credential
------------------------------------------------------------------------
Fee for CAQH Phase
Fee for HIPAA III CORE Seal
Size of health plan credential including Phase I
and II Seals
------------------------------------------------------------------------
Federal and State government $100.............. No charge.
health plans.
CAQH Member Plans............... No charge......... No charge.
Below $5 million in net annual $100.............. $12,000 ($4,000
revenue. per phase).
$5 million to below $25 million $1,000............
net annual revenue.
$25 million to below $50 million $2,000............
net annual revenue.
$50 million to below $75 million $4,000............
net annual revenue.
$75 million and above net annual .................. $18,000 ($6,000
revenue. per phase).
------------------------------------------------------------------------
(b) Treatment of Acknowledgements
We have previously stated in both the Operating Rules IFC and the
EFT & ERA Operating Rules IFC that we do not require covered entities
to comply with any CAQH CORE Operating Rule requirements pertaining to
acknowledgments in Phases I, II, and III (Sec. 162.1203, Sec.
162.1403, and Sec. 162.1603). However, each of CORE's three phase-
specific Test Suites require that applicants demonstrate compliance
with acknowledgments-related operating rules. CHPs that seek to obtain
a Phase III CORE Seal will be bound by CAQH CORE's requirements; in
other words, the fact that HHS does not require compliance with
acknowledgments-related operating rules does not relieve the burden of
CHPs seeking a CORE seal to abide by CAQH CORE's requirements.
By contrast, the requirements underlying CAQH CORE's HIPAA
Credential will only apply to the operating rules adopted by the
Secretary, so CHPs will not have to comply with the acknowledgements
operating rules to obtain the HIPAA Credential.
(7) Compliance Timelines for CHPs To Meet Submission Requirements for
the First Certification of Compliance
(a) CHPs That Obtain an HPID Before January 1, 2015
(i) Submit Documentation by December 31, 2015
In Sec. 162.926(a), we propose that a CHP that obtains an HPID
before January 1, 2015, would be required to meet the submission
requirements (proposed in section II.A of this proposed rule) for the
first certification of compliance on or before December 31, 2015. See
Table 5, Row 1. Per the requirements of Sec. 162.504, all CHPs (except
those that are small health
[[Page 311]]
plans) must obtain HPIDs on or before November 5, 2014. CHPS that are
small health plans must obtain HPIDs on or before November 5, 2015.
Based on our analysis, we think very few health plans meet the
definition of a small health plan,\36\ so we anticipate most CHPs will
have obtained HPIDs on or before November 5, 2014.
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\36\ In the HPID proposed rule, we concluded there were
approximately 138 health maintenance organizations that were small
entities by virtue of their nonprofit status though ``few, if any of
them are small by SBA size standards'' (77 FR 23000) and that no
other category of health plan could be considered ``small'' (77 FR
22999). Our conclusions were based on an analysis included in a
proposed rule on the establishment of the Medicare Advantage program
(69 FR 46866, August 3, 2004).
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We propose a different date (December 31, 2015) than that in
section 1173(h)(1) of the Act (December 31, 2013) for most CHPs to meet
the first certification of compliance requirements because we believe,
for the following reasons, CHPs will likely need until the end of 2015
to meet the requirements for the first certification of compliance:
In section II.A.3(b) of this proposed rule, we discuss the
steps a CHP would have to take in order to obtain a CORE Phase III
Seal, should it elect to pursue that option. We believe the deadlines
proposed in this rule offer CHPs adequate time to complete the gap
analysis (planning and evaluation, design and development, and internal
and external testing) and subsequent certification testing with a CORE-
authorized testing vendor necessary to obtain CORE Seals for Phase I,
II, and III Operating Rules. CAQH CORE suggests it will take 20 to 60
days of staff time to conduct certification testing with a CORE-
authorized testing vendor and complete and submit one CORE Seal
Application packet.\37\ A CHP may also choose to simultaneously pursue
CORE Seals for all three phases. Therefore, for CHPs that do not now
have, but choose to obtain, a Phase III CORE Seal, it could take up to
180 days to obtain Seals for all three operating rules phases, not
including any time that CORE requires to review applications.
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\37\ See FAQ 11 at http://www.caqh.org/pdf/COREFAQsPartA.pdf.
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In section II.A.3(a) of this proposed rule, we discuss the
broad requirements of the HIPAA Credential. Like a Phase III CORE Seal,
it will take some time to meet the requirements for the HIPAA
Credential, though many CHPs may have already met the testing
requirements.
In section II.A.1 of this proposed rule, we propose that a
CHP, in meeting the submission requirements for the first certification
of compliance requirements, will demonstrate not only that it is
compliant with operating rules and standards, but that its SHP(s), if
it has any, are compliant. This task will also take time.
October 1, 2014 is the compliance date for the
International Classification of Diseases, 10th Edition (ICD-10) Medical
Data Code Sets. Facilitating the health care industry's smooth
transition to ICD-10 is of paramount importance, and health plans need
to prepare and fully test their systems to ensure a smooth and
coordinated transition. We expect health plans to be dedicating
significant resources towards the ICD-10 transition prior to, and for a
time after, the compliance date, which transition may require
participation from the same human and IT resources as will be necessary
to meet the first certification of compliance submission requirements.
We believe the proposed December 31, 2015 deadline for completing the
first certification of compliance requirements would allow sufficient
time for health plans to deploy resources to make both initiatives
successful.
Furthermore, the December 31, 2015 date aligns with the requirement
for a CHP to obtain an HPID, as all CHPs must obtain an HPID on or
before November 5, 2015. Moreover, by virtue of this alignment of
dates, we will have a database of all CHPs that will be required to
meet the submission requirements proposed in this rule on or before
December 31, 2015, and thus should be able to identify any CHPs that do
not meet the submission requirements proposed in this rule.
As noted in section I.C of this proposed rule, our goal with the
first certification of compliance is to help move the health care
industry incrementally toward consistent testing processes in order to
transition as seamlessly as possible to new standards or operating
rules. We believe a certification of compliance process that penalizes
more CHPs than it incentivizes to carry out testing would not
accomplish this goal and, for the reasons previously articulated, we
believe it would be unreasonable to require CHPs to abide by the
statutory date of December 31, 2013. To be clear, however, this does
not mean CHPs may delay compliance with the operating rules beyond
their respective compliance dates. All covered entities were required
to be compliant with the operating rules for the eligibility for a
health plan and health care claim status transactions on January 1,
2013,\38\ and must be compliant with the EFT & ERA Operating Rule Set
adopted for health care electronic funds transfers (EFT) and remittance
advice transactions on January 1, 2014. Those compliance requirements
and dates continue to govern HHS's separate HIPAA enforcement
processes.
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\38\ Early in 2013, CMS announced a 90-day enforcement
discretion period for compliance with the Operating Rules IFC
stating that it would not initiate enforcement action until March
31, 2013. See http://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/Downloads/010213Sec1104ofACAAnnouncement.pdf.
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(2) Date When CHPs Can Begin Submitting Information and Documentation
We propose that a CHP that obtains an HPID before January 1, 2015
may begin to meet the submission requirements of proposed Sec.
162.926(a) on January 1, 2015; this is the ``start date'' by when we
will be ready to accept the submission of documents. This does not mean
a CHP must obtain a CORE Phase III Seal or HIPAA Credential during the
period of January 1, 2015 through December 31, 2015, as the CHP could
be awarded either one earlier. For example, a CHP that has been awarded
a CORE Phase III Seal prior to January 1, 2015, would already have the
documentation required under this proposed rule, which it would then
submit on or after January 1, 2015, and on or before December 31, 2015.
(b) CHPs That Obtain an HPID On or After January 1, 2015 and On or
Before December 31, 2016
We propose in Sec. 162.926(b) that a CHP that obtains an HPID on
or after January 1, 2015, and on or before December 31, 2016 would be
required to meet the submission requirements for the first
certification of compliance within 365 calendar days of obtaining an
HPID (see Table 5, Row 2).
Under Sec. 162.504, any large or small health plans now extant
that meet the definition of a CHP must obtain an HPID on or before
November 5, 2015, thus any health plans enumerated as CHPs after
November 5, 2015 are likely new CHPs. We propose that such CHPs be
allowed one year from the time they obtain an HPID to submit the
documentation proposed in Sec. 162.926(b). CHPs that obtain HPIDs on
or after January 1, 2015 and on or before December 31, 2016 will have
to: Coordinate with their SHP(s), if applicable; gather the appropriate
documentation to complete certification testing, and apply for a Phase
III CORE Seal or HIPAA Credential; and meet the documentation
submission requirements for the first certification of compliance. We
believe one year from obtaining an HPID will be adequate for
[[Page 312]]
a new CHP to complete that process, but solicit comments on this
assumption.
We propose that a CHP that obtains an HPID after December 31, 2016
would not be required to meet the requirements proposed in this rule
for the first certification of compliance (see Table 5, Row 3). A CHP
that obtains an HPID after December 31, 2016, if given the same time to
meet the requirements as CHPs that obtain HPIDs on or before December
31, 2016, would be meeting the requirements into 2018. There are too
many unknowns that far into the future for us to establish requirements
for this category of CHPs. For instance, we may have adopted new or
modified versions of the standards and operating rules for the
eligibility for a health plan, health care claim status, and health
care electronic funds transfers (EFT) and remittance advice
transactions. We may address requirements for a CHP that obtains an
HPID after December 31, 2016 for the first certification of compliance
in a later rule.
We solicit industry and stakeholder comments on our proposed
certification of compliance dates.
Table 5--Comparison of Operating Rule Sets Compliance Dates, the Statutory Deadlines for Completing the First
Certification of Compliance Requirements, and the Proposed Deadlines for Completing the First Certification of
Compliance Requirements
----------------------------------------------------------------------------------------------------------------
Col 1 Col 2 Col 3
--------------------------------------------------------------------------
Deadline for health Deadlines for health
Compliance date for plans to meet first plans\*\ to meet first
Operating rule sets health plans to comply certification of certification of
with the operating compliance requirements compliance requirements
rules as mandated by section as proposed in this
1173(h)(1) of the Act rule
----------------------------------------------------------------------------------------------------------------
Eligibility for a health plan........ January 1, 2013........ December 31, 2013...... December 31, 2015 for
Health care claim status............. CHPs that obtain an
HPID before January 1,
2015. Within 365
calendar days of
obtaining an HPID for
CHPs that obtain their
HPID on or after
January 1, 2015 and on
or before December 31,
2016.
Health care electronic funds January 1, 2014........
transfers (EFT) and remittance
advice.
----------------------------------------------------------------------------------------------------------------
* Requirements for CHPs that obtain their HPID after December 31, 2016 are not addressed in this proposed rule.
B. Certification of Compliance Penalty Fees
1. Calculating Penalty Fees: Defining Covered Lives of a CHP and Major
Medical Policies
Section 1173(j)(1) of the Act specifies that the penalty fee amount
assessed when a health plan does not meet the certification of
compliance requirements is based on its number of covered lives. So
that we may calculate the potential penalty fee amount should we find a
violation(s) of the first certification of compliance, we must know the
number of covered lives of a CHP.
Section 1173(j)(1)(F) of the Act requires the Secretary to
determine the number of covered lives under a health plan ``based upon
the most recent statements and filings that have been submitted by such
plan to the Securities and Exchange Commission'' (SEC). We have
learned, however, that the SEC only collects data from publicly traded
health plans (that represent a mere subset of the total number of
health plans),\39\ and, even then, health plans submitting filings to
the SEC are not required to include in such filings the number of
``covered lives'' or any comparable measure. Some health plans may
volunteer this information in a descriptive text section of a filing
called the 10-K, used to describe the business and its attributes, but
this is not a requirement of the 10-K.\40\ In fact, according to a 2007
study on enrollment in U.S. health insurance products, ``[t]here is no
national databank containing enrollment figures for all the public and
private health insurers in the United States, nor is there a single
database linking all the federal programs.'' \41\
---------------------------------------------------------------------------
\39\ For information on the SEC's role, see http://www.sec.gov/about/whatwedo.shtml.
\40\ 10-K filings and other publically available company filings
can be viewed through the EDGAR database: http://www.sec.gov/edgar/searchedgar/companysearch.html. For more information on the 10-K see
http://www.sec.gov/answers/form10k.htm. For the 10-K form itself:
http://www.sec.gov/about/forms/form10-k.pdf.
\41\ ``Health Care Delivery Covered Lives--Summary of
Findings,'' John F. Kennedy School of Government: Harvard
University, Mossavar-Rahmani Center for Business & Government
(http://www.hks.harvard.edu/m-rcbg/hcdp/numbers/Covered%20Lives%20Summary.pdf).
---------------------------------------------------------------------------
Therefore, we propose to use the number of covered lives the CHP
reports in accordance with the proposed submission requirements under
Sec. 160.926(a)(1) and (b)(1) as the primary source for the number of
covered lives to calculate penalty fees. Should a CHP fail to include
the number of covered lives as part of its Sec. 162.926 submission, or
should we have reason to question the CHP's number of self-reported
covered lives, we may undertake an independent investigation through
means that may include, but would not be limited to: Analyzing recent
filings, if any, submitted by the CHP to the SEC; and researching data
bases or publicly available documents such as news articles, reports,
advertisements, brochures, and Web pages where the number of covered
lives of a CHP is referenced or estimated.
In Sec. 162.103, we propose to define ``covered lives of a CHP''
as individuals covered by or enrolled in major medical policies of a
CHP and the SHP(s) of that CHP. Individuals may be described in such
major medical policies by terms, including, but not limited to the
following:--
Individuals.
Spouses.
Dependents.
Employees.
Subscribers.
Policyholders.
Medicaid recipients.
Medicare beneficiaries.
Tricare beneficiaries.
Veterans.
Survivors.
In section II.B.1 of this proposed rule, we discuss in more detail
how the definition of covered lives of a CHP would be used to calculate
penalty fees. We include spouses, partners, and dependents in the
proposed definition to make clear that covered lives of a CHP includes
more than just the policyholder, and encompasses all individuals
covered by major medical
[[Page 313]]
policies, and also include in the definition examples of terms that
government payers may use to describe their covered lives.
Within the definition, we clarify that covered lives includes only
those individuals enrolled in major medical policies. Section
1173(j)(1)(B) of the Act states that penalty fees may only be assessed
for persons ``covered by the plan for which its data systems for major
medical policies are not in compliance.'' We only include individuals
enrolled in major medical policies in the definition since individuals
that are not covered by such policies will not be included in the
calculation of the penalty fee. In cases in which an individual is
covered by both a major medical policy and another policy/(ies) that
does not meet the definition of major medical policy, the definition
contemplates that such individual would be considered a covered life of
a CHP.
In Sec. 160.604, we propose that, for purposes of this proposed
rule, ``major medical policy'' be defined as ``an insurance policy that
covers accident and sickness and provides outpatient, hospital,
medical, and surgical expense coverage.'' We developed this definition
by surveying how the term major medical policy is defined in various
contexts.
To be clear, we propose in Sec. 162.926 that all CHPs,
irrespective of whether they issue major medical policies, must meet
the first certification submission requirements. However, only CHPs
with major medical policies may be assessed penalty fees. Moreover,
should a CHP be assessed a penalty fee, the basis for the assessment
calculation would be using only those covered lives that are covered or
enrolled in a major medical policy.
We indicate in the definition that covered lives of a CHP includes
the covered lives of the CHP, and, if it has any, its SHP(s). We
include the covered lives of any SHP(s) of the CHP because, under the
provisions discussed in section II.A.1 of this proposed rule, the
submission requirements and applicable penalty fees are the CHP's, not
its SHP's, responsibility.
We intend to only include those individuals who are enrolled in or
covered by health insurance in the definition of covered lives of a
CHP, as opposed to those individuals who are merely eligible, but not
enrolled or covered.
We propose to use the phrase ``covered by or enrolled in'' to
indicate a distinction that is sometimes made--but that we are not
making here--between voluntary enrollment or automatic coverage in a
health plan. That is, irrespective of the actions of an individual, we
would consider an individual who has major medical coverage under a
health plan to be a covered life of a CHP. For example, we would
consider an individual who is automatically enrolled in Medicare Part A
upon turning 65 years old to be a covered life of Medicare.
We solicit comments on the proposed definition of covered lives of
a CHP and the definition of major medical policy.
2. Basis for the Assessment of a Penalty Fee and the Amount of the
Penalty Fee
Section 1173(j)(1)(B) of the Act requires the Secretary to assess a
penalty fee against a health plan in the amount of $1 per covered life
per day until certification is complete. Section 1173(j)(1)(C) of the
Act requires the Secretary to double the amount of the penalty fee
assessed against a health plan that knowingly provided inaccurate or
incomplete information in certifying compliance. Section 1173(j)(1)(E)
of the Act caps the penalties that may be imposed on a health plan,
providing that a penalty fee against a health plan shall not exceed, on
an annual basis, an amount equal to $20 per covered life under such
plan, or an amount equal to $40 per covered life where
misrepresentation has occurred under section 1173(j)(1)(C) of the Act.
In Sec. 160.612, we propose the bases for assessing penalty fees
and, in Sec. 160.614, we propose the amounts of penalty fees that
would be assessed. We think the bases for penalty fees that we propose
in Sec. 160.612 and the amount of the penalty fee proposed in Sec.
160.614 are sufficiently intertwined so that it is more effective to
describe the proposed provisions together.
a. Failure To Submit Required Documentation by the Deadlines
In Sec. 160.612(a), we propose that the Secretary would assess a
penalty fee against a CHP that fails to comply with the submission
requirements specified in Sec. 162.926(a)(2) or (b)(2). This means the
Secretary would assess a penalty fee when a CHP fails to provide the
documentation that demonstrates the CHP has been awarded a Phase III
CORE Seal or the HIPAA Credential.
The basis for the penalty fee proposed in Sec. 160.612(a) would
apply when a CHP does not provide the required documentation at all, or
does so after the deadlines specified in Sec. 162.926(a)(2) or (b)(2).
A CHP that does not provide the required documentation by the deadlines
would be assessed $1 per covered life of the CHP per day until the
requirements of Sec. 162.926 have been met, and as limited by the cap
described by proposed Sec. 160.614(a)(1). For example, if a CHP with
100 covered lives enrolled in major medical policies obtains an HPID
before January 1, 2015 and then submits the required documentation in
Sec. 162.926 on January 1, 2016--1 day past December 31, 2015 (the
deadline that would be required under Sec. 162.926(a))--the CHP would
be assessed a penalty fee of $1 per covered life of the CHP, for a
penalty fee totaling $100.
In Sec. 160.614(a), we propose that a CHP that is assessed a
penalty fee under Sec. 160.612(a)--failure to provide the required
documentation according to the deadlines in Sec. 162.926(a)(2) or
(b)(2)--may not be assessed a penalty fee that exceeds $20 per covered
life of the CHP. For example, a CHP that obtains an HPID before January
1, 2015 that fails to make the required submissions on or before
December 31, 2015 would, starting January 1, 2016, be assessed a $1 per
covered life penalty fee that, per section 1173(j)(1)(E)(i) of the Act
as implemented by proposed Sec. 160.614(a)(1), would reach its
maximum, and be capped, on January 21, 2016 at $20 per covered life of
the CHP. The same maximum penalty cap would apply in instances where a
CHP fails to ever provide the required documentation.
We will utilize all reasonable means to ensure that CHPs satisfy
their obligations under this proposed rule. Because all CHPs are
required to obtain an HPID, we will, for example, once this proposed
rule is finalized and implemented, compare a roster of the CHPs that
have satisfied the requirements of the rule with a roster of CHPs that
have obtained HPIDs. Moreover, we note that section 1173(j)(3) of the
Act requires us to report unpaid penalty fees to the Secretary of the
Treasury and that unpaid penalty fees, per section 1173(j)(4)(D) of the
Act, shall be increased by the interest accrued.
We solicit comments on our proposal for assessing penalty fees for
CHPs.
b. Knowingly Providing Inaccurate or Incomplete Information
The penalty fee for knowingly providing inaccurate or incomplete
information that we propose in Sec. 160.612(b) implements section
1173(j)(1)(C) of the Act, which provides that a ``health plan that
knowingly provides inaccurate or incomplete information in a statement
of certification or documentation of compliance . . . shall be subject
to a penalty fee that is double the amount that would otherwise be
imposed.''
[[Page 314]]
In Sec. 160.612(b), we propose that a basis for assessment of a
penalty fee is providing inaccurate or incomplete information with
actual knowledge of the inaccuracy or the incompleteness of the
information, or acting in deliberate ignorance or reckless disregard of
the accuracy or completeness of the information. We clarify in Sec.
160.612(b) that information may be in the form of statements, in
documents, or otherwise. Hereinafter, we refer to the basis for
assessment of a penalty fee proposed in Sec. 160.612(b) as ``knowingly
providing inaccurate or incomplete information.''
In Sec. 160.614(a)(2), we propose that a CHP would be assessed a
penalty fee of $40 per covered life of the CHP when assessed a penalty
fee on the basis of Sec. 160.612(b). To be clear, we do not believe a
``per day'' calculation (as described in section II.b.2.a) would apply
to a situation in which a CHP has knowingly provided inaccurate or
incomplete information. Because the first certification of compliance
is a ``snap shot'' of compliance on the date a CHP makes its Sec.
162.926 submission, the CHP either knowingly provided inaccurate or
incomplete information on that day or it did not. A CHP does not
knowingly provide inaccurate or incomplete information on the date
submitted, and, on the next, or succeeding, day(s), discontinue the
state of ``knowingly providing inaccurate or incomplete information or
documentation.'' Hence, we would apply only the maximum penalty fee in
such a situation.
We interpret the statutory language as intending a cap of $40,
thus, in Sec. 160.614(b), we propose that a CHP may not be assessed
more than $40 per covered life of the CHP, even where a CHP meets the
bases for penalty fees under both Sec. 160.614(a)(1) and (2). For
instance, a CHP may provide the required documentation to the Secretary
past the applicable deadline, and, later, also be found to have
knowingly provided inaccurate or incomplete information; such a CHP
would be assessed a penalty fee of $40 per covered life. Following are
two examples (not meant to be inclusive of all possible scenarios)
where we would determine a CHP to have knowingly provided inaccurate or
incomplete information as described in Sec. 160.612(b):
To obtain a CORE Seal, a CHP would submit documentation to
a CORE-authorized testing vendor during certification testing, and to
CAQH CORE in applying for the Seal. We would have a basis for assessing
a penalty fee under Sec. 160.612(b) should a CHP knowingly provide
inaccurate information in the documentation it submits to the testing
vendor or to CAQH CORE as part of the certification process, that, in
turn, would then be submitted as part of the Sec. 162.926 submission
requirements.
To obtain the HIPAA Credential, a CHP must attest that it
has successfully completed testing with at least three of its trading
partners. We would have a basis for assessing a penalty fee under Sec.
160.612(b) should a CHP be found to have knowingly provided inaccurate
information with respect to the minimum required number of trading
partners that would then be submitted as part of the Sec. 162.926
submission requirements. We solicit comment on our proposed penalty fee
policy for a CHP that knowingly provides inaccurate or incomplete
documentation or information.
3. Annual Fee Increase
Section 1173(j)(1)(D) of the Act provides for an annual increase in
penalty fees by the annual percentage increase in total national health
care expenditures. We are not proposing an annual increase methodology
at this time because the first certification of compliance framework we
propose here would assess only a one-time penalty fee, not a penalty
fee that would be assessed year after year. We may revisit this issue
in future rulemaking.
4. Notice of Penalty Fee, CHP's Response to Notice of Penalty Fee, and
Defenses
In Sec. 160.616, we propose that the Secretary would provide a CHP
notice (sent by certified mail with a return receipt requested) that it
meets one or more bases to be assessed a penalty fee under proposed
Sec. 160.612. Such a notice would specify:
The penalty fee amount;
Reference to the bases, under proposed Sec. 160.612, for
the penalty fee;
A description of the findings of fact regarding the
violations upon which the penalty fee is based; and
The reason(s) why the violation(s) subject the CHP to a
penalty fee.
We believe these notice elements would enable a CHP to understand
why it met the criteria to potentially be assessed a penalty fee, and
the amount proposed to be assessed.
In Sec. 160.618, we propose that a CHP may submit evidence of any
of the defenses described in Sec. 160.620 in response to the notice of
penalty fee. Under proposed Sec. 160.618(b), a CHP must assert any
such defense(s) in writing, and within 30 days of receipt of the notice
of penalty fee. We propose in Sec. 162.620 that the Secretary will
consider only the following defenses:
The CHP is not subject to the requirements of Sec.
162.926. For a number of reasons, the documentation or deadline
requirements of the first certification of compliance may not apply to
a particular CHP. For instance, a CHP may not offer any major medical
policies, and, therefore, may not be assessed a penalty fee.
The CHP's failure to meet the requirements of Sec.
162.926 was attributable to a ministerial and non-substantive error. We
propose to apply this defense narrowly; such a ministerial and non-
substantive error might include a typographical mistake made in the
process of providing the required documentation to the Secretary.
The failure to meet the requirements of Sec.
162.926 was beyond the control of the CHP. As with the previous
defense, we propose to apply this defense narrowly. A failure to meet
the documentation or deadline requirements of Sec. 162.926 beyond the
control of the CHP conceivably might include an ``act of god'' (and not
an act of the CHP or SHP's own making) that made it impossible for the
CHP to meet the requirements. Given the length of time that we propose
CHPs would have to meet the submission requirements, however, we
believe successful application of this defense would be extraordinarily
rare, and limited only to catastrophic situations.
By proposing to limit the scope of the defenses the Secretary will
consider in Sec. 160.620, we make clear that that Secretary will not
consider any other asserted defense, including, but not limited to, any
defense associated with a CHP's cost considerations in meeting the
requirements, or lack of knowledge or confusion about either the
requirements of the first certification of compliance or about the
operating rules and standards themselves.
We propose to allow a CHP to respond to a notice of penalty fee as
an opportunity to present the circumstances that prevented it from
meeting the first certification of compliance requirements prior to a
potential appeal to an administrative law judge (ALJ). This opportunity
to present defenses is analogous to, but much narrower than, our
complaint-driven process when a covered entity may resolve a complaint
brought against it before CMPs are imposed in a notice of determination
under Sec. 160.420.
We solicit comments on the defenses the Secretary may consider.
[[Page 315]]
5. Notice of Determination and a CHP's Hearing Rights
In Sec. 160.624, we propose sending a notice of determination (by
certified mail with return receipt requested) to a CHP indicating
whether a penalty fee is, or is not, being assessed. A notice of
determination will be sent irrespective of whether a CHP responds to
the proposed Sec. 160.616 notice of penalty fee, and irrespective of
whether the Secretary determines to assess, or not to assess, a penalty
fee.
Should a penalty fee will be assessed, Sec. 160.624 proposes that
the notice of determination would specify:
A description of the statutory basis for the assessment of
the penalty fee;
The amount of the penalty fee;
The regulatory basis, under Sec. 160.612, for the
assessment of the penalty fee;
The findings of fact regarding the violations on which the
assessment of the penalty fee is based;
Any defenses described in Sec. 160.620 that were
considered in determining whether to assess the penalty fee and the
reason(s) why the defenses were rejected;
Instructions for appealing the penalty fee; and
A statement that the failure to request a hearing within
90 days results in the imposition of the penalty fee.
We believe the proposed contents of the notice of determination
would be sufficient to enable a CHP to understand why it is being
assessed a penalty fee, the amount of the penalty fee, and how the CHP
could appeal the penalty fee. We solicit comment on the proposed
contents of the notice of determination.
Should the Secretary determine not to assess a penalty fee, the
notice of determination would indicate why any defense(s) raised under
Sec. 160.620 was/were successful, and what, if any, actions the CHP
must take. Because the first certification of compliance process does
not otherwise envision the application of a corrective action process,
the only actions we contemplate would be associated with remedying the
situations associated with the exercise of successful defenses asserted
under proposed Sec. 1620.620(b) or (c).
6. Administrative Appeals Process
In Sec. 160.626, we propose that, upon receiving a notice of
determination assessing a penalty fee described in Sec. 160.624(a), a
CHP may file a request for a hearing before an administrative law judge
(ALJ). Should the CHP fail to request a hearing within 90 days of
receiving the notice of determination (or otherwise affirmatively waive
its right to a hearing within that 90 days), it would forego its right
to a hearing and the Secretary would notify it that the penalty fee
assessed in the notice of determination is final and inform it how the
penalty fee must be paid.
If a CHP timely requests a hearing with an ALJ, the CHP would
participate in a process that is already largely codified at Sec.
160.500 through Sec. 160.552. Administrative appeals before ALJs are
widely used to adjudicate disputes between government agencies and
individuals/entities aggrieved by agency decisions, and such a process
is currently used for HIPAA Administrative Simplification violations.
We believe that using the ALJs that already have jurisdiction over
HIPAA Administrative Simplification violations handled under Sec.
160.300, and using the same appeals process, would support consistency
in adjudication of HIPAA Administrative Simplification appeals.
Section 160.500 is the Applicability provision for Subpart E--
Procedures for Hearings, and provides, ``[t]his subpart applies to
hearings conducted relating to the imposition of a civil money penalty
by the Secretary under 42 U.S.C. 1320d-5.'' We propose to revise this
provision by adding a reference to 42 U.S.C. 1320d-2(j), to indicate
that Subpart E also applies to the assessment of a penalty fee under
Subpart F.
The term ``respondent'' is defined in Sec. 160.103 as ``a covered
entity or business associate upon which the Secretary has imposed, or
proposes to impose, a civil money penalty.'' In order to make clear
that the term respondent, when used in Subpart E, includes entities
that are assessed a penalty fee pursuant to Subpart F, we propose to
revise the definition to state that respondent ``means a covered entity
or business associate upon which the Secretary has imposed or proposes
to impose, a penalty fee under Subpart F or a civil money penalty.''
Section 160.506 specifies the rights of the parties. The ALJ
authority is delineated in Sec. 160.508. Sections 160.510 through
160.544 describe the ALJ hearing process. The right to appeal the ALJ
decision to the Departmental Appeals Board is addressed in Sec.
160.548. As noted, we propose applying most of Sec. 160.500 through
Sec. 160.552, as already promulgated, as the procedure for CHPs to use
in appealing a notice of determination. Because it is not always clear
from those provisions that the process may apply to penalty fee
assessments under Subpart F, in the following sections we propose to
revise the regulation text to explicitly account for the specific
health plan certification of compliance penalty fees and notice
procedures: Sec. 160.500, Sec. 160.504, Sec. 160.534, Sec. 160.540,
Sec. 160.546, Sec. 160.548, and Sec. 160.550.
7. Other Issues
a. Relationship of Certification of Compliance Process to Complaint-
Driven Process
In section I.B.3 of this proposed rule, we describe the current
HIPAA complaint-driven enforcement procedure through which an entity
may bring a complaint against any entity it believes is not in
compliance with adopted HIPAA transaction standards, operating rules,
or code sets. Such a complaint would generate a fact-finding and
resolution process, which could result in a corrective action plan, the
imposition of CMPs, or a hearing before an ALJ.
The complaint-driven and first certification of compliance
enforcement processes are markedly different, even though both may
result in a determination that may be appealed to an ALJ. The
complaint-driven enforcement process is initiated as a result of a
complaint, uses an informal fact-finding process, employs a corrective
action plan if the complaint is valid, and imposes CMPs if the
corrective action plan is not followed. Conversely, the first
certification of compliance requires certain submissions by specific
dates, and provides for an enforcement process with respect to a CHP
that fails in various ways to abide by these requirements. Notably, the
first certification of compliance, as proposed in this rule, does not
employ a corrective action plan should a CHP fail to meet the
certification of compliance requirements.
These two distinct enforcement processes assess CMPs (in the case
of the complaint-driven process) or penalty fees (in the case of the
first certification of compliance) for different reasons. The
complaint-driven process addresses complaints regarding a covered
entity's failure to comply with any Administrative Simplification
requirement, with the exception of a failure to comply with the first
certification requirements proposed in this rule (as we describe in
this section). The first certification of compliance process assesses
penalty fees for CHPs that fail to meet the submission requirements or
that knowingly provide inaccurate or incomplete documentation
associated with such submissions, as proposed in this rule.
[[Page 316]]
Nothing in this proposed rule prohibits the Secretary from pursuing
both processes at the same time against a CHP--through CMPs, in the
case of the complaint-driven process for failure to comply with
Administrative Simplification requirements, and through penalty fees
for failure to meet the first certification of compliance requirements.
Further, an investigation through the complaint-driven process could
lead to the assessment of a penalty fee for a first certification of
compliance violation if it revealed through that investigation that the
CHP failed to meet the first certification of compliance requirements
or knowingly provided inaccurate or incomplete information required for
the first certification of compliance. For instance, if an
investigation based on a complaint revealed that a CHP never submitted
documentation or knowingly submitted inaccurate or incomplete
documentation in order to be awarded a CORE Phase III Seal or HIPAA
Credential under Sec. 162.926, it is possible both CMPs and penalty
fees may be imposed/assessed.
Section 160.300 is the Applicability provision under Subpart C--
Compliance and Investigations--which is the complaint-driven
enforcement process for Administrative Simplification violations. We
propose to amend this section, that now states ``[t]his subpart applies
to actions by the Secretary, covered entities, business associates, and
others with respect to ascertaining the compliance by covered entities
and business associates with, and the enforcement of, the applicable
provisions of this part 160 and parts 162 and 164 of this subchapter,''
to clarify that the complaint-driven process does not apply to the
requirements in Sec. 162.926. That is, we propose that a complaint-may
not be filed against a health plan alleging that it fails to meet the
certification of compliance submission requirements in Sec. 162.926.
III. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is 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
solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our 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.
We are soliciting public comment on the information collection
requirements (ICRs) regarding the first certification of compliance
documentation requirements. Among other requirements, the Affordable
Care Act requires health plans to file statements with the Secretary
certifying that they are compliant with standards and operating rules
for specific transactions. The Affordable Care Act also mandates that
the Secretary assess a penalty fee against a health plan that fails to
file a statement with the Secretary certifying that it is compliant
and/or fails to submit adequate documentation of compliance.
In section II. of this proposed rule, we discuss the proposed
requirements for the first certification of compliance. In section
II.A.7 of this proposed rule, we discuss our proposal that a CHP must
comply with the first certification of compliance requirements based on
when it obtains its HPID. Submission requirements are explained in
section II.A.2 and .3 of this proposed rule. We discuss the penalty
fees that may be assessed on a CHP that does not meet the submission
requirements or knowingly provides inaccurate or incomplete information
in section II.B. of this proposed rule.
The provisions in this proposed rule align with existing statutory
and regulatory mandates. In previous regulations, specified in section
I.B.1 and 2 of this proposed rule, we have mandated compliance with the
adopted standards and operating rules for the HIPAA transactions for
which documentation of compliance is proposed in this rule. Other
existing regulations that are complimented through this proposed rule
include Sec. 160.310 which requires covered entities to maintain
records and compliance reports and provide these to the Secretary if
requested, and Sec. 162.923, that requires covered entities to require
their BAs to comply with applicable HIPAA standards and operating
rules.
In this proposed rule and in this ICR, we are focused on the one-
time requirement that CHPs, as defined by Sec. 162.103, must provide
the Secretary the following information and documentation for the first
certification of compliance: (1) the number of covered lives of a CHP;
and (2) documentation that demonstrates that the CHP has obtained a
Phase III CORE Seal or the HIPAA Credential.
We do not know at this time how many health plans would meet the
definition of a CHP as defined in Sec. 162.103. In the HPID final rule
(77 FR 54696), we identified 12,000 self-insured group health plans,
1,827 health insurance issuers, and 60 government health plans that
might meet the definition of health plan. We believe there will be
considerably less than the approximately 15,000 health plans that would
meet the definition of a CHP, but we will not know the actual number of
CHPs until after the deadline for CHPs to obtain an HPID has passed;
that is, November 5, 2015. While we do not have objective data that
identifies which or how many health plans would be CHPs, for the
purpose of the ICRs, we assume that 3,000 to 5,000 health plans may
meet the definition of a CHP. Health plans have been increasingly
consolidating into larger organizations whereby a single CHP exercises
sufficient control over an increasing number of SHPs to direct their
business activities, actions, or policies. Thus, we do not believe that
more than one-third (5,000) of health plans meet the definition of a
CHP and, in fact, believe the number may be significantly less. We
solicit comments on our assumption of the number of CHPs.
A. ICRs Regarding Submission of the Number of Covered Lives (Sec.
162.926(a)(1) and (b)(1))
Proposed Sec. 162.926(a)(2) would require that a CHP that obtains
an HPID before January 1, 2015 must provide to the Secretary documents
demonstrating compliance as explained in section II.A.3. of this
proposed rule. Proposed Sec. 162.926(b)(2) would require that a CHP
that obtains an HPID on or after January 1, 2015 and on or before
December 31, 2016, must, within 365 days of obtaining an HPID, provide
to the Secretary documents demonstrating compliance as explained in
section II.A.7. of this proposed rule. Proposed Sec. 162.926(a)(1) and
(b)(1) require a CHP to submit the number of covered lives of a CHP (as
defined in Sec. 162.103) on the date that the documentation required
in Sec. 162.926(a)(2) and (b)(2) is submitted. In section II.A.1. of
this proposed rule, we indicate that the number of covered lives must
include the number of covered lives of a CHP's SHPs, if it has any. We
explain the submission requirements of covered lives in section II.A.2.
of this proposed rule, including
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the reason for including the number of covered lives of the SHPs of the
CHP.
The one-time burden associated with this requirement is the time
and effort associated with the CHP to: (1) Obtain the number of covered
lives of the CHP (including those of its SHPs); (2) calculate the total
number of covered lives of the CHP and its SHPs that would meet the
definition of major medical policy as defined in proposed Sec.
160.604; (3) have the information reviewed by a CHP executive; and (4)
submit the number of covered lives to the Secretary. We believe that a
CHP would have accurate records of the number of covered lives of the
CHP and each of its SHPs and would be able to access this easily.
Therefore, we assume that the CHPs would not need to contact each SHP
to obtain the required information. We also believe that CHPs would
have easily accessible data on the total number of covered lives of the
CHP and its SHPs that have major medical policies. We make these
assumptions on the basis that a CHP's data on the number of covered
lives and policies--used to determine, for example, risk, costs of
care, human resource needs, and other factors--is essential information
to have in order to for a CHP to conduct business.
We estimate this burden for proposed Sec. 162.926(a)(1) and (b)(1)
would be 2 hours for each CHP to obtain the number of covered lives for
the CHP and each of its SHPs, 2 hours to calculate the total number of
covered lives that have major medical policies, one hour for an
executive to review the number of covered lives with major medical
policies, and, 30 minutes to submit the number of covered lives of the
CHP and its SHPs to HHS.
We used the median hourly labor rate of $38.31 for a computer
information system analyst; $58.15 for a computer and information
system manager; and $80.84 for a chief executive as reported by the
Department of Labor, Bureau of Labor Statistics, May 2012, found at:
http://www.bls.gov/oes/current/oes_nat.htm#13-0000. We believe that a
computer analyst would be an appropriate position to obtain the number
of covered lives and submit the number to the Secretary, a computer and
systems manager to do the calculation, and a chief executive would
verify the accuracy of the information to be submitted. All CHPs must
comply with these requirements.
We estimate that proposed Sec. 162.926(a)(1) and (b)(1) would
impose a one-time, 5.5 hour burden on each CHP. The total burden
associated with this task for each of the estimated 3,000 to 5,000 CHPs
would be: (1) $76.62 ($38.31 x 2 hours) to obtain the number of covered
lives; (2) $116.30 ($58.15 x 2 hours) to calculate the number of
covered lives in major medical plans; (3) $80.84 ($80.84 x 1 hour) for
an executive to review the number of covered lives; and (4) $19.16
($38.31 x 0.5 hours) to submit the number of covered lives to the
secretary. We estimate that the total cost for each CHP would be
$292.92.
The estimated annual burden for this requirement would be 16,500
(3,000 CHPs x 5.5 hours) to 27,500 hours (5000 CHPs x 5.5 hours). The
total estimated one-time cost associated with all of the requirements
in proposed Sec. 162.926(a)(1) and (b)(1) would be approximately
$878,760 ($292.92 x 3000 CHPs) to $1,464,600 ($292.92 x 5000 CHPs).
B. ICRs Regarding Submission of a Phase III CORE Seal (Sec.
162.926(a)(2)(i) and (b)(2))
Section 162.926(a)(2)(i) and (b)(2) would require that a CHP
provide documentation demonstrating it obtained a Phase III CORE Seal
or the HIPAA Credential. Should a CHP choose to obtain a Phase III CORE
Seal, proposed Sec. 162.926(a)(2)(i) and (b)(2) would require that it
provide documentation demonstrating it had obtained a Phase III CORE
Seal. We explain in section II.A.3.(b). of this proposed rule that a
CHP electing to obtain a Phase III CORE Seal must obtain the seal for
each of the three CAQH CORE operating rules phases, or, in other words,
a CHP must obtain a CORE Seal for Phases I and II to obtain a Phase III
CORE Seal. However, as proposed in Sec. 162.926(a)(2), we require only
the submission of a Phase III CORE Seal to comply with the
certification compliance documentation requirements. Consequently, for
the ICR in this proposed rule, we considered the time and effort for
submitting documentation that the CHP has obtained the Phase III CORE
Seal and not the time and effort for a CHP to obtain the CORE Phase I
and II Seals.
In sections II.A.3.(b). and II.A.3.(d). of this proposed rule, we
discuss CORE certification testing, CORE-authorized Testing Vendors,
and the CORE certification process. We describe the four-step process
required to be awarded any of the CORE Seals: (1) Conduct a gap
analysis by evaluating, planning, and completing necessary upgrades;
(2) sign the CAQH CORE Pledge committing to become CORE certified; (3)
conduct testing through a CORE-authorized Testing Vendor (certification
testing); and (4) apply for a Phase III CORE Seal. In section II.A.3.
of this proposed rule, we explain that the documentation that
demonstrates that the CHP has obtained a Phase III CORE Seal is
considered adequate documentation of compliance by the CHP and its SHPs
with the operating rules for the eligibility for a health plan, health
care claim status, and health care electronic funds transfers (EFT) and
remittance advice transactions.
For the purposes of the ICR, we do not include the time and effort
for a CHP to obtain a CORE Phase III Seal because we believe that the
process of obtaining a Phase III CORE Seal is inherent in the cost of
doing business and we accounted for the time and effort as well as the
cost for complying with the operating rules in previous rulemaking. As
we indicated, we have mandated compliance with the adopted standards
and operating rules for HIPAA transactions in previous regulations. The
costs associated with compliance includes for example, analyzing
existing data capability and infrastructure, development or enhancement
of existing infrastructure, and testing of the CHPs systems both
internally and externally. We believe that, because CHPs are expected
to be compliant with the operating rules, they have undertaken the
steps necessary to ensure that they are compliant and are able to
perform transactions with their trading partners according to the
adopted standards and operating rules. In this rule, we are proposing
submission documentation requirements; therefore, in this analysis, we
are only analyzing the cost of submitting this documentation.
We have proposed two options for documentation that demonstrates
compliance with the operating rules and standards. We expect that the
decision to obtain the CORE Phase I and II Seals and provide
documentation of the CORE Phase III Seal would be a business decision
based on a health plan's strategy for implementing new standards or
operating rules. Therefore, because the time and effort for compliance
with standards and operating rules have been addressed in previous rule
making and, because a CHP determines if it wishes to obtain the CORE
Phase I and II Seal and submit the Phase III CORE Seal to comply with
the documentation requirements, we do not include any costs for the
time and effort associated with infrastructure development or
enhancement or testing of systems to ensure compliance. We also do not
include the time and effort costs in the ICR to comply with any of
CORE's specific requirements to obtain the CORE Seals. Finally, we do
not account for the variability in time,
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readiness and success that may or may exist for a CHP to meet CORE's
requirements for the CORE Seals. There may be CHPs that have undergone
extensive testing and will be able to undergo the CORE process
efficiently and in a relatively short time. Other CHPs may require
assistance and guidance and a more extensive time period to meet CORE's
requirements.
Included in the CORE fee paid by each CHP is assistance and
guidance for CHPs. We account for the fee to CORE in the regulatory
Impact Statement in this proposed rule. For the purposes of the ICR in
this proposed rule, we considered the time and effort for a CHP to
obtain documentation of the Phase III CORE Seal awarded by CORE, and
the time and effort for the CHP to submit the documentation of that
Seal to the Secretary. As we discussed previously, in this proposed
rule, we only consider the time and effort to comply with the
certification of compliance requirements described in this proposed
rule.
At the current time, we do not know how many CHPs will elect to
obtain a Phase III CORE Seal. According to CAQH CORE's Web site at
http://www.caqh.org/CORE_organizations.php, 30 health plans have
voluntarily obtained CORE Seals for Phases I and II, and it reports at
http://www.caqh.org/ben_participating.php that 25 health plans and 16
government agencies are CORE participating organizations. Ten CORE
participating health plans have obtained Phase I and Phase II CORE
Seals. We assume that any health plan that has obtained the CORE Seal
for Phases I and II will obtain a Phase III CORE Seal and therefore
meet the requirements of Sec. 162.926(a)(2)(i) or (b)(2). We also
assume that there may be CORE participating health plans that will
obtain a Phase III CORE Seal.
Because we are unable to quantify the number of CHPs that will
obtain a Phase III CORE Seal, we are unable to estimate the total cost
with any certainty. Therefore, for the purposes of the ICR, we estimate
that 40 percent of health plans that would meet the definition of a CHP
(that is, 1,200 to 2,000 CHPS) will obtain a Phase III CORE Seal and
submit documentation of a Phase III CORE Seal to comply with Sec.
162.926(a)(2) and (b)(2)(i). We solicit comment on our assumption of
the number of CHPs that would obtain a Phase III CORE Seal.
The one-time burden associated with Sec. 162.926(a)(2)(i) or
(b)(2) is the time and effort for the estimated 1,200 to 2,000 CHPs to
(1) obtain a Phase III CORE Seal from CAQH CORE; and (2) submit the
documentation of a Phase III CORE Seal to the Secretary. We estimate
this burden to be 1 hour to obtain the Phase III CORE Seal from CAQH
CORE and 30 minutes to submit documentation of the CORE Seal to the
Secretary. We used the median hourly labor rate of $38.31 for a
computer information system analyst as reported by the Department of
Labor, Bureau of Labor Statistics, May 2012, found at: http://www.bls.gov/oes/current/oes_nat.htm#13-0000 because we believe that a
computer analyst would be required to obtain the Phase III CORE Seal
and submit documentation to the Secretary.
We estimate that proposed Sec. 162.926(a)(2)(i) and (b)(2) would
impose an estimated one-time, one and one half hour burden on each CHP.
The total estimated burden associated with this task for each CHP would
be: (1) $38.31 ($38.31 x 1 hour) to obtain the Phase III CORE Seal from
CAQH CORE; and (2) $19.16 ($38.31 x 0.50 hours) to submit documentation
of the CORE Seal to the Secretary. The estimated one-time burden in
proposed Sec. 162.926(a)(2)(i) and (b)(2) would be 1,800 (1,200 CHPs x
1.5 hours) to 3,000 hours (2,000 CHPs x 1.5 hours). The total estimated
one-time cost associated with the requirement Sec. 162.926(a)(2)(i)
and (b)(2) would be approximately $68,958 ($38.31 x 1,800 hours) to
$114,930 ($38.31 x 3,000 hours).
C. ICRs Regarding Submission of the HIPAA Credential (Sec.
162.926(a)(2)(ii) and (b)(2))
In section II.A.3(a) of this proposed rule, we explain that the
HIPAA Credential indicates that the CHP has confirmed that it has
successfully tested the operating rules for the eligibility for a
health plan, health care claim status, and health care electronic funds
transfers (EFT) and remittance advice transactions with trading
partners. For each of the three transactions, the CHP must confirm that
the number of transactions conducted with those trading partners
collectively accounts for at least 30 percent of the total number of
transactions conducted with providers. For each of the three
transactions, the CHP must confirm that it has successfully tested with
at least three trading partners, but if the number of transactions
conducted with three trading partners does not account for at least 30
percent of the total number of transactions conducted with providers,
the CHP could confirm that it has successfully tested with up to 25
trading partners. The CHP would be required to provide a list of the
names of the trading partners and their contact information to CORE. A
CHP would be representing itself as well as all of its SHPs with the
attestation.
Should a CHP choose to obtain the HIPAA Credential, proposed Sec.
162.926(a)(2)(ii) and (b)(2) would require the CHP to provide
documentation that it has obtained the CORE HIPAA Credential. In
section II.A.3 of this proposed rule, we explain that the documentation
that demonstrates that the CHP has obtained the HIPAA Credential is
considered adequate documentation of compliance by the CHP and its SHPs
with the operating rules for the applicable transactions.
For the purpose of the ICR, we are not considering the time and
effort for a CHP to perform testing with its trading partners because,
as we have discussed previously, we addressed the time and effort to
comply with the operating rules in previous rule making, which includes
testing with the CHPs trading partners. The CORE HIPAA Credential will
require testing before being obtained, and we assume that every health
plan's implementation preparation plan requires internal and external
testing prior to implementing new standards or operating rules.
However, in previous rule making, we did not account for the time
and effort for a CHP to identify at least three trading partners with
which it or its SHPs have successfully tested the operating rules for
each of the three transactions (eligibility for a health plan, health
care claim status, and electronic funds transfers (EFT) and remittance
advice transactions).
The estimated one-time burden associated with Sec.
162.926(a)(2)(ii) and (b)(2) for the HIPAA Credential is the time and
effort to: (1) Confirm that testing has been conducted for each of the
three transactions with trading partners that collectively conduct no
less than 30 percent of the total number of transactions conducted with
providers; (2) list the names of the trading partners and their contact
information; (3) verify the accuracy of the trading partner list; (4)
obtain the HIPAA Credential from CORE; and (5) submit documentation of
the HIPAA Credential to the Secretary. The tasks associated with the
application for and submission of the HIPAA Credential--and, therefore,
the estimated burden to a CHP--may change if warranted by any changes
in the draft requirements for the HIPAA Credential.
As mentioned, we are unable to determine how many CHPs will choose
to obtain the HIPAA Credential to fulfill the requirements of Sec.
162.926(a)(2)(ii) and (b)(2)(ii), but we believe that most CHPs will
choose the least costly
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certification option. Because we are unable to quantify the number of
health plans that will obtain the HIPAA Credential, we cannot estimate
the total cost with any certainty. We estimate that 60 percent of CHPs
(that is 1,800 to 3,000 CHPS) will obtain the HIPAA Credential and
submit documentation of such the HIPAA Credential to comply with Sec.
162.926(a)(2)(ii) and (b)(2). We solicit comment on our assumption of
the number of CHPs likely to obtain the HIPAA Credential.
As mentioned, CAQH CORE is currently developing the HIPAA
Credential--which we expect to be finalized prior to the time we
finalize this proposed rule--and we described in section II.3.(a) the
expected process and requirements for obtaining it. Should the
requirements for the final HIPAA Credential differ in any way from the
way we described it in section II.3.(a), we would reopen the comment
period to permit additional comment on the HIPAA Credential, including
on the topic of the estimated number of health plans that would obtain
the HIPAA Credential.
We estimate that the burden associated with proposed Sec.
162.926(a)(2)(ii) and (b)(2) for each of the estimated 1,800 to 3,000
CHPs would be 2 hours to obtain documentation of the three testing
partners; one hour to prepare the trading partner list; one hour to
verify accuracy of the list; one hour to obtain the HIPAA credential
form CORE; and 30 minutes to submit the CORE HIPAA Credential to the
secretary. We used the median salaries as reported by the Department of
Labor, Bureau of Labor Statistics, May 2012, found at: http://www.bls.gov/oes/current/oes_nat.htm#13-0000. We used the median hourly
labor rate of $38.31 for a computer information system analyst to
prepare the trading partner list, obtain the HIPAA credential from CORE
and submit the documentation; $58.15 for a computer and information
system manager to confirm that testing has been conducted with trading
partners that collectively conduct no less than 30 percent of the total
transactions conducted with providers for each of the three
transactions (eligibility of a health plan, health care claim status,
and the electronic funds transfers (EFT) and remittance advice
transactions); and $80.84 for an executive to verify the trading
partner list.
We estimate that proposed Sec. 162.926(a)(2)(ii) and (b)(2) will
impose a one-time, 5.5 hours burden on each CHP. The total time and
effort burden associated with this task for each CHP would be: (1)
$116.30 ($58.15 x 2) to obtain the trading partner documentation; (2)
$38.31 ($38.31 x 1) to compile the trading partner list; (3) $80.84
($80.84 x 1) to verify the trading partner list; (4) $38.31 ($38.31 x
1) to obtain the HIPAA Credential from CORE; and (5) $19.16 ($38.31 x
0.5) to submit documentation of the HIPAA Credential to the Secretary.
We estimate the total burden for each CHP would be $292.92.
The total estimated one-time burden associated with all of the
requirements in proposed Sec. 162.926(a)(2)(ii) and (b)(2) would be
9,900 (1,800 CHPs x 5.5 hours) to 16,500 hours (3,000 CHPs x 5.5 hours)
and approximately $527,256 ($292.92 x 1,800 CHPs) to $878,760 ($292.92
x 3,000 CHPs).
Calculations are illustrated in Table 6. For simplicity, Table 6
demonstrates burdens and costs based on the high estimate of CHPs
(5,000) that are expected to certify compliance.
Table 6--Estimated Annual Burden for Reporting, Recordkeeping and Third-Party Disclosure Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly
Burden per Annual labor cost Total labor
Regulation section OMB Control No. Respondents Responses response burden of cost of Total costs
(hours) (hours) reporting reporting ($)
($) ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
162.926(a)(1) and (b)(1).......... 0938--New............ 5,000 15,000 2.5 * 12,500 38.31 478,875 478,875
162.926(a)(1) and (b)(1).......... 0938--New............ 5,000 5,000 1 5,000 80.84 404,200 404,200
162.926(a)(1) and (b)(1).......... 0938--New............ 5,000 5,000 2 10,000 58.15 581,500 581,500
162.926(a)(2)(i) and (b)(2)....... 0938--New............ 2,000 5,000 1.5 ** 3,000 38.31 114,930 114,930
162.926(a)(2)(ii) and (b)(2)...... 0938--New............ 3,000 7,500 2.5 ** 7,500 38.31 287,325 287,325
162.926(a)(2)(ii) and (b)(2)...... 0938--New............ 3,000 3,000 1 3,000 80.84 242,520 242,520
162.926(a)(2)(ii) and (b)(2)...... 0938--New............ 3,000 3,000 2 6,000 58.15 348,900 348,900
----------------------------------------------------------------------------------------------
Total......................... ..................... 10,000 27,000 ............ ** 37,500 ........... ........... 2,458,250
--------------------------------------------------------------------------------------------------------------------------------------------------------
* There are no capital or maintenance costs associated with the information collection requirements contained in this notice of proposed rulemaking.
Therefore, we have removed the designated column from Table 6.
** Even though the information collection requirements are comprised of one-time burdens, all burden estimates have been annualized over the standard 3-
year OMB approval period.
IV. Regulatory Impact Statement
We have examined the impact of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social
Security Act, section 202 of the Unfunded Mandates Reform Act of 1995
(March 22, 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, distributives, and equity). A regulatory
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). We believe
this proposed rule does not reach the economic threshold for being
considered economically significant, and thus, is not considered a
major rule. We solicit comment on, and data regarding, the assumptions
and findings presented in this initial regulatory analysis.
The proposed rule would require a CHP to submit documentation to
the Secretary that demonstrates compliance with the standards and
operating rules adopted by the Secretary under HIPAA, establish the
first certification of compliance process, and establish penalty fees
for CHPs that fail to comply with the first certification of compliance
requirements. This proposed rule would implement elements of the
certification of compliance mandate in the Affordable Care Act. We
expect that the
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first certification of compliance provision is an initial step toward a
consistent, industry-wide testing framework.
As discussed in more detail earlier in this proposed rule, many of
the requirements of this proposed rule build on already existing
statutory and regulatory mandates. In the ICRs, we estimate a total
one-time burden of approximately $1,475,000 to $2,458,000 for 3,000 to
5,000 CHPs to comply with the submission requirements of proposed Sec.
162.926.
In sections II.A.3.(a) and A.3.(b). of this proposed rule, we
discuss the two options for meeting the submission requirements: a
Phase III CORE Seal and the HIPAA Credential, respectively. A CHP may
choose either option. In section II.A.3.(a) and (b) of this proposed
rule, we describe the process for obtaining either a Phase III CORE
Seal or the HIPAA Credential.
We expect that certification testing, such as that required for
CHPs obtaining the CORE Phase III Seal, would become more widespread as
a result of this proposed rule, and thus the rule would generate costs
associated with credentialing activities and greater compliance with
operating rules (which requires updating infrastructure). We are unable
to quantify either the current rate of non-compliance with HIPAA
requirements, the number of CHPs that would become newly compliant as a
result of this proposed rule, or the cost, per CHP becoming newly
compliant, of infrastructure updates and requisite testing.
A category of impacts for which we have been able to make estimates
is the CAQH CORE fees.\42\ In section II.A.6.(a) of this proposed rule,
we discuss the cost of a Phase III CORE Seal and HIPAA Credential based
on current fees that CAQH CORE charges for a Phase III CORE Seal and
the fees that CAQH CORE believes that it will charge for the HIPAA
Credential. Federal and state government entities are currently not
charged for a Phase III CORE Seal, nor are CAQH member plans. However,
CAQH CORE will charge government entities a $100 fee for obtaining the
HIPAA Credential.
---------------------------------------------------------------------------
\42\ We believe that, in general, these fees represent real
costs to society, in the form of labor and other resources used by
CAQH CORE for conducting certification.
---------------------------------------------------------------------------
We assumed the same number of CHPs that we use in the ICRs (that is
1,200 to 2,000 CHPs would obtain a Phase III CORE Seal and 1,800 to
3,000 CHPs would obtain the HIPAA Credential). For the purpose of this
analysis, we considered the cost to obtain either the CORE Seals (Phase
I, II, and III) or the HIPAA Credential for all of the estimated 3,000
to 5,000 CHPs and did not account for the CHPs that currently have
obtained the CORE Seal for Phase I and II or CAQH member plans. That
means we did not deduct the number of health plans with current Phase I
and Phase II CORE Seals or CAQH member plans that are not assessed a
fee by CAQH CORE to obtain a Phase III CORE Seal.
For the purpose of the impact analysis, we did not account for any
penalty fees that could be assessed for CHPs that fail to comply with
the certification of compliance submission requirements. We believe
that we have structured the provisions of this proposed rule such that
most CHPs will be able to meet the submission requirements. They will
have had significant time to implement the applicable standards and
operating rules, conduct the transactions in a compliant manner, and
conduct certification testing or testing with their trading partners.
Further, because the penalty fees are substantial, we believe they
serve as a strong disincentive for noncompliance. We therefore believe
few CHPs will fail to certify compliance, and the total amount of
assessed penalty fees will be insignificant.
For the 1,200 to 3,000 CHPs we estimate would obtain a Phase III
CORE Seal, we assumed that 50 percent would have net annual revenues
less than $75 million with a CAQH CORE fee of $12,000 each ($4,000 for
each of the three CAQH CORE Operating Rule Phases). We assumed that 50
percent of the CHPs would have net annual revenues equal or greater
than $75 million with a CAQH CORE fee of $18,000 each ($6,000 for each
of the three CAQH CORE Operating Rule Phases). We estimate that the
total cost for all CHPs that would obtain a CORE Seal would be
approximately $18 million [($12,000 x 600 CHPs) + ($18,000 x 600 CHPs)]
to $30 million [($12,000 x 1000 CHPs) + ($18,000 x 1000 CHPs)].
For the 1,800 to 2,000 CHPs that we estimate would obtain a HIPAA
Credential, we assumed that 5 percent would have net annual revenues
less than $5 million with a CAQH CORE fee of $100 each; 20 percent
would have net annual revenues of $5 million to below $25 million with
a fee of $1,000 each; 20 percent would have net annual revenues $25
million to less than $50 million with a fee of $2,000 each; and 55
percent would have net annual revenues of greater than $50 million with
a fee of $4,000 each. The estimated total cost for all CHPs that would
obtain the HIPAA Credential is approximately $5,049,000 [($100 x 90
CHPs) + ($1,000 x 360 CHPs) + ($2,000 x 360 CHPs) + ($4,000 x 990
CHPs)] to $8,415,000 [($100 x 150 CHPs) + ($1,000 x 600 CHPs) + ($2,000
x 600 CHPs) + ($4,000 x 1,650 CHPs)]. We note, because government
entities do not generate net annual revenues, they have been included
in the 5 percent computation of CHPs with net annual revenues less than
$5 million.
Consequently, we estimate the total cost to comply with Sec.
162.926 (that is, for the estimated 3,000 to 5,000 CHPs to provide the
documentation of obtaining the CORE Seal or the HIPAA Credential) would
be approximately $25 million to $41 million. This total cost includes
the time and effort discussed in the ICR. The calculation is as
follows: [Time and effort in ICR: $1,475,000 to $2,458,000] + [total
fee for CORE Seals: $18,000,000 to $30,000,000] + [total fee for the
HIPAA credential: $5,049,000 to $8,415,000] = $24,524,000 to
$40,873,000.
We are proposing in Sec. 162.926 that a CHP that obtains an HPID
before January 1, 2015 must meet the submission requirements proposed
in this rule on or before December 31, 2015. We explained in section
II.A.7.(a)(1) of this proposed rule that this date is different than
that in section 1173(h)(1) of the Act: December 13, 2013. We describe
here the impact in benefits and penalty fees of the 2 year difference
between the date in section 1173(h)(1) of the Act and the date proposed
in this rule.
In the Modifications final rule, Operating Rules IFC, Health Care
EFT Standards IFC, and the EFT & ERA Operating Rule Set IFC, described
in the background of this proposed rule, we described the financial and
qualitative benefits to implementing the standards and operating rules
for the eligibility for a health plan, health claim status, and health
care electronic funds transfers (EFT) and remittance advice
transactions. Those rules measured the financial benefits of the
standards and operating rules from the compliance dates of those
particular standards and operating rules: January 1, 2012 is the
compliance date for Version 5010 standards for the three transactions;
January 1, 2013 is the compliance date for operating rules for the
eligibility for a health plan and claim status transactions; and
January 1, 2014 is the compliance date for the standards and operating
rules for the health care electronic funds transfers (EFT) and
remittance advice transaction.
The cost and savings of implementing those standards and operating
rules on
[[Page 321]]
their compliance dates are not addressed in this proposed rule as they
are accounted for in the previously mentioned rules, and the first
certification of compliance requirements, as proposed in this rule, do
not affect the costs and benefits of implementing these standards and
operating rules.
It is possible that some CHPs may view the first certification of
compliance deadline, December 31, 2015, as proposed in this rule, as an
opportunity to implement the required standards and operating rules
later than the compliance dates of those standards and operating rules
as required in the applicable regulations. However, we assume that the
number of CHPs that would slow or delay implementation based on the
first certification of compliance deadline is quite small. As we noted
before, thirty health plans have already obtained a Phase I CORE Seal,
and many of those have obtained or are pursuing a Phase II CORE Seal.
This growing group of CORE Certified entities represents many major
health plans with extensive reach in terms of commercially covered
lives.\43\ Further, the complaint-driven process for enforcing
compliance with these standards and operating rules applies as of their
respective compliance dates.
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\43\ See map with data on commercially insured lives that have
policies with a CORE Certified health plan on CAQH CORE Web site:
http://www.caqh.org/pdf/COREPIwebmap.pdf.
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We assume that the CORE-certified health plans include the process
of obtaining CORE Seals for each phase of operating rules as part of
their process to successfully implement new standards or operating
rules. We assume these CORE-certified health plans make CORE
Certification part of their implementation strategy regardless of the
first certification of compliance submission requirements as proposed
in this rule. As discussed in section II.A.7(a)(1) of this proposed
rule, the December 31, 2015 deadline for submission of information and
documentation, proposed in this rule, gives these CORE Certified
entities time to obtain the Phase III CORE Seal. It also gives CHPs
that would not otherwise use the CORE Certification process time to
obtain either the CORE Phase I, II, and III Seals or the HIPAA
Credential.
Because we believe that a negligible number of CHPs will use the
December 31, 2015 deadline proposed in this rule as a reason to slow
implementation of the standards or operating rules required by previous
rules, and because the financial benefits for those standards and
operating rules were calculated over 10-year periods, we believe the
impact of the December 31, 2015 deadline on the overall financial and
qualitative benefits to using these standards and operating rules to be
negligible.
The amount in penalty fees that would have been assessed with a
December 31, 2013 deadline cannot be determined under the proposed
certification of compliance requirements because the December 31, 2015
date and other requirements proposed in this rule were developed to
align chronologically with other regulatory and commercial sector
initiatives. For instance, CAQH CORE began offering a Phase III CORE
Seal in 2013; \44\ the first entity to receive a Phase III CORE Seal
did so in August 2013.\45\ Given this timeframe, it is unlikely that
many CHPs could have obtained a Phase III CORE Seal earlier than
December 31, 2015. Likewise, CHPs have until November 2015 to obtain an
HPID, and the first certification of compliance requirements apply only
to CHPs.
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\44\ CORE Web page: http://www.caqh.org/ORMandate_EFT.php.
\45\ http://www.instamed.com/news-and-events/industry-first-instamed-achieves-phase-iii-caqh-core-certification/.
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Therefore, due to the vast difference in requirements associated
with the December 31, 2013 and the December 31, 2015 deadlines, we are
unable to perform an analysis of the amount of penalty fees that would
have been assessed with the December 31, 2013 deadline as it would
entail assuming a completely different set of requirements.
The Regulatory Flexibility Analysis (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 governmental
jurisdictions.
The health insurance industry was examined in depth in the RIA
prepared for the proposed rule on establishment of the Medicare
Advantage program (69 FR 46866, August 3, 2004). It was determined, in
that analysis, that there were few, if any, ``insurance firms,''
including HMOs that fell below the size thresholds for ``small''
business established by the SBA Health. We assume that the ``insurance
firms'' are synonymous, for the most part, with health plans that
conduct standard transactions with other covered entities and are,
therefore, the entities that will have costs associated with meeting
the first certification of compliance requirements. In fact, at the
time the analysis for the Medicare Advantage program was done, and even
more so now, the market for health insurance is dominated by a relative
handful of firms with substantial market shares.
However, there are 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 100 such HMOs which may meet the definition of, and
therefore define themselves, as CHPs. These HMOs and the Blue Cross and
Blue Shield plans that are non-profit organizations, like the other
CHPs affected by this proposed rule, will be required to meet the first
certification of compliance requirements.
Accordingly, this proposed rule may affect a number of small
entities. We estimate, however, that the costs of this proposed rule on
``small'' health plans do not remotely approach the amounts necessary
to be a ``significant economic impact'' on firms with revenues of tens
of millions of dollars. Therefore, the Secretary proposes to certify
that this proposed rule would not have a significant economic impact on
a substantial number of small entities. We welcome industry and
stakeholder input on our assumption in this regard.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory analysis for ``any rule or regulation proposed under title
XVIII, title XIX, or part B of [the Act] that may have significant
impact on the operations of a substantial number of small rural
hospitals.'' This proposed rule, however, is being proposed under title
XI, part C, ``Administration Simplification,'' of the Act, and,
therefore, does not apply. Regardless, this requirement of this
proposed rule is only applicable to CHPs and will not have a
significant impact on the operations of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 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 2013, that
threshold is approximately $141 million. This proposed rule would
impose a minimal effect on state, local, or tribal governments or on
the private sector because the requirements for all CHPs regardless of
ownership, to comply with the certification of compliance documentation
requirements. The related costs for all 5,000 estimated CHPs is
approximately $40 million, which is less than $141 million.
[[Page 322]]
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on state
and local governments, preempts state law, or otherwise has federalism
implications. Since this regulation does not impose any substantial
costs on state or local governments, the requirements of Executive
Order 13132 are not applicable.
In accordance with the provisions of Executive Order 12866, this
rule was reviewed by the Office of Management and Budget.
List of Subjects
45 CFR Part 160
Administrative practice and procedure, Computer technology,
Electronic information system, Electronic transactions, Employer
benefit plan, Health, Health care, Health facilities, Health insurance,
Health records, Hospitals, Investigations, Medicaid, Medical research,
Medicare, Penalties, Privacy, Reporting and recordkeeping requirements,
Security.
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 proposes to amend 45 CFR parts 160 and 162 to
read as follows:
PART 160--GENERAL ADMINISTRATIVE REQUIREMENTS
0
1. The authority citation for part 160 continues to read as follows:
Authority: 42 U.S.C. 1302(a); 42 U.S.C. 1320d-1320d-9; sec. 264,
Pub. L. 104-191, 110 Stat. 2033-2034 (42 U.S.C. 1320d-2 (note)); 5
U.S.C. 552; secs. 13400-13424, Pub. L. 111-5, 123 Stat. 258-279; and
sec. 1104 of Pub. L. 111-148, 124 Stat. 146-154.
0
2. Section 160.103 is amended by--
0
A. Adding the definition of ``Penalty fee'' in alphabetical order.
0
B. Revising the definition of ``Respondent''.
The addition and revision read as follows:
Sec. 160.103 Definitions.
* * * * *
Penalty fee means the amount determined under Sec. 160.614.
* * * * *
Respondent means a covered entity or business associate upon which
the Secretary has imposed, or proposes to impose, a penalty fee under
subpart F or a civil money penalty.
* * * * *
Sec. 160.300 [Amended]
0
3. Section 160.300 is amended by removing the phrase ``parts 162 and''
and adding in its place the phrase ``parts 162 (excluding Sec.
162.926) and''.
0
4. Section 160.500 is revised to read as follows:
Sec. 160.500 Applicability.
This subpart applies to hearings conducted relating to the
following:
(a) The imposition of a civil money penalty by the Secretary under
42 U.S.C. 1320d-5.
(b) The assessment of a penalty fee by the Secretary under 42
U.S.C. 1320d-2(j).
0
5. Section 160.504 is amended by revising paragraph (c) to read as
follows:
Sec. 160.504 Hearing before an ALJ.
* * * * *
(c) The request for a hearing must do the following:
(1) Clearly and directly admit, deny, or explain each of the
findings of fact contained in the notice of proposed determination
under Sec. 160.420 or in the notice of determination under Sec.
160.624 with regard to which the respondent has any knowledge. If the
respondent has no knowledge of a particular finding of fact and so
states, the finding shall be deemed denied.
(2) State the circumstances or arguments that the respondent
alleges constitute the grounds for any defense and the factual and
legal basis for opposing the penalty or penalty fee, except that a
respondent may raise an affirmative defense under Sec. 160.410(b)(1)
or Sec. 160.620(a) at any time.
* * * * *
0
6. Section 160.534 is amended by revising paragraphs (b)(1) and (d)(1)
to read as follows:
Sec. 160.534 The hearing.
* * * * *
(b)(1) The respondent has the burden of going forward and the
burden of persuasion with respect to any of the following:
(i) Affirmative defense under Sec. 160.410 or defense underSec.
160.620 of this part.
(ii) Challenge to the amount of a proposed penalty pursuant to
Sec. 160.404 through Sec. 160.408, including any factors raised as
mitigating factors, or to the amount of the penalty fee pursuant to
Sec. 160.624.
(iii) Claim that a proposed penalty should be reduced or waived
pursuant to Sec. 160.412.
(iv) Compliance with subpart D of part 164, as provided under Sec.
164.414(b).
* * * * *
(d)(1) Subject to the 15-day rule under Sec. 160.518(a) and the
admissibility of evidence under Sec. 160.540, either party may
introduce, during its case in chief, items or information that arose or
became known after the date of the issuance of the notice of proposed
determination under Sec. 160.420, the notice of determination under
Sec. 160.624, or the request for hearing under Sec. 160.504, as
applicable. Such items and information may not be admitted into
evidence, if introduced--
(i) By the Secretary, unless they are material and relevant to the
acts or omissions with respect to which the penalty is proposed in the
notice of proposed determination under Sec. 160.420 or in the notice
of determination under Sec. 160.624, including circumstances that may
increase penalties or penalty fees; or
(ii) By the respondent, unless they are material and relevant to an
admission, denial or explanation of a finding of fact in the notice of
proposed determination under Sec. 160.420 or in the notice of
determination under Sec. 160.624, or to a specific circumstance or
argument expressly stated in the request for hearing under Sec.
160.504, including circumstances that may reduce penalties or penalty
fees.
* * * * *
Sec. 160.540 [Amended]
0
7. In Sec. 160.540, paragraph (g) is amended by removing the phrase''
notice of proposed determination under Sec. 160.420 of this part ''
and adding in its place the phrase ``notice of proposed determination
under Sec. 160.420 or in the Secretary's notice of determination under
Sec. 160.624.''
0
8. Section 160.546 is amended by revising paragraph (b) to read as
follows:
Sec. 160.546 ALJ's decision.
* * * * *
(b) The ALJ may affirm, increase, or reduce the penalties or
penalty fees imposed by the Secretary.
* * * * *
Sec. 160.548 [Amended]
0
9. Section 160.548 is amended by:
0
A. In paragraph (e), removing the phrase ``of this part'' and adding in
its place the phrase ``or a defense under Sec. 160.620(a)''.
0
B. In paragraph (g), removing the phrase ``any penalty determined by
the
[[Page 323]]
ALJ'' and adding in its place the phrase ``any penalty or penalty fee
determined by the ALJ.''
Sec. 160.550 [Amended]
0
10. In Sec. 160.550, paragraphs (a) and (b) are amended by removing
the phrase ``penalty'' and by adding in its place the phrase ``penalty
or penalty fee'' each time it appears.
0
11. Subpart F is added to part 160 to read as follows:
Subpart F--Imposition of Penalty Fees
Sec.
160.602 Applicability.
160.604 Definitions.
160.612 Basis for the assessment of a penalty fee.
160.614 Amount of the penalty fee for failure to comply with
submission requirements or knowingly providing inaccurate or
incomplete information.
160.616 Notice of penalty fee.
160.618 CHP's response to notice of penalty fee.
160.620 Defenses that may be raised in response to notice of penalty
fee.
160.624 Notice of determination.
160.626 Right to a hearing.
Subpart F--Imposition of Penalty Fees
Sec. 160.602 Applicability.
This subpart applies to the imposition of penalty fees by the
Secretary under 42 U.S.C. 1320d-2.
Sec. 160.604 Definitions.
As used in this subpart, the following definitions apply:
Controlling health plan (CHP) means a health plan as defined at
Sec. 162.103 of this subchapter.
Major medical policy means an insurance policy that covers accident
and sickness and provides outpatient, hospital, medical and surgical
expense coverage.
Sec. 160.612 Basis for the assessment of a penalty fee.
The Secretary assesses a penalty fee against a CHP with major
medical policies if the Secretary determines the CHP did either of the
following:
(a) Failed to provide the documentation in accordance with Sec.
162.926(a)(2) or (b)(2) of this subchapter.
(b) With respect to information submitted to the Secretary under to
Sec. 162.926 of this subchapter--made by statements, in documents, or
otherwise--upon which either a CORE Seal (under Sec. 162.926(a)(2) or
(b)(2) of this subchapter) or the HIPAA Credential (under Sec.
162.926(a)(2) or (b)(2) of this subchapter) is based, provides
inaccurate or incomplete information--
(1) With actual knowledge of the inaccuracy or incompleteness of
the information; or
(2) Acting in deliberate ignorance or reckless disregard of the
accuracy or completeness of the information.
Sec. 160.614 Amount of the penalty fee for failure to comply with
submission requirements or knowingly providing inaccurate or incomplete
information.
(a) The penalty fee amounts are as follows:
(1) For the basis specified at Sec. 160.612(a), $1 per covered
life of the CHP per day until the requirements of Sec. 162.926(a)(2)
or (b)(2) of this subchapter, as applicable, have been met, not to
exceed $20 per covered life.
(2) For the basis specified at Sec. 160.612(b), $40 per covered
life of the CHP.
(b) A CHP is not assessed more than $40 per covered life of the CHP
under the basis specified at Sec. 160.612.
Sec. 160.616 Notice of penalty fee.
The Secretary provides notice, by certified mail with return
receipt requested, to a CHP that meets any of the bases for a penalty
fee in Sec. 160.612. A notice of penalty fee includes all of the
following:
(a) The penalty fee amount.
(b) Reference to the regulatory basis, under Sec. 160.612, for the
penalty fee.
(c) A description of the findings of fact regarding the violations
upon which the penalty fee is based.
(d) The reasons(s) why the violation(s) subject the CHP to a
penalty fee.
Sec. 160.618 CHP's response to notice of penalty fee.
(a) In response to a notice of penalty fee under Sec. 160.616, a
CHP may submit to the Secretary evidence of any of the defenses
described in Sec. 160.620.
(b)(1) A CHP that chooses to assert a defense(s) under paragraph
(a) of this section must do so in writing within 30 calendar days of
receipt of the notice under Sec. 160.616.
(2) For purposes of this section, the CHP's date of receipt of the
notice of penalty fee is presumed to be 5 days after the date of the
notice unless the CHP makes a reasonable showing to the contrary to the
Secretary.
Sec. 160.620 Defenses that may be raised in response to notice of
penalty fee.
The Secretary will consider no defenses aside from the following in
response to a notice of penalty fee under Sec. 160.616:
(a) The CHP is not subject to the requirements of Sec. 162.926 of
this subchapter.
(b) The CHP's failure to meet the requirements of Sec. 162.926 of
this subchapter was attributable to a ministerial and non-substantive
error.
(c) The failure to meet the requirements of Sec. 162.926 of this
subchapter was beyond the CHP's control.
Sec. 160.624 Notice of determination.
The Secretary sends the CHP, by certified mail with return receipt
requested, a notice of determination as to whether a penalty fee is
assessed.
(a) A notice of determination to assess a penalty fee includes all
of the following:
(1) A description of the statutory basis for the assessment of the
penalty fee.
(2) The amount of the penalty fee.
(3) Reference to the regulatory basis, under Sec. 160.612, for the
assessment of the penalty fee.
(4) The findings of fact regarding the violations on which
assessment of the penalty fee is based.
(5) Any defenses described in Sec. 160.620 that were considered in
determining whether to assess the penalty fee and the reason(s) why the
defenses were rejected.
(6) Instructions for requesting a hearing under Sec. 160.626.
(7) A statement that the failure to request a hearing within 90
days results in the imposition of the penalty fee specified in the
notice of determination.
(b) A notice of determination to not assess a penalty fee includes
the following:
(1) Any defenses described in Sec. 160.620 that were considered in
determining whether to assess the penalty fee and the reason(s) why the
defenses were accepted; and
(2) Actions the CHP must take.
Sec. 160.626 Right to a hearing.
(a) Upon receipt of a notice of determination under Sec.
160.624(a), a CHP may request a hearing before an ALJ by filing a
request in accordance with Sec. 160.504.
(b) If a CHP does not request a hearing within the time prescribed
by Sec. 160.504, the Secretary notifies the CHP that the penalty fee
in the notice of determination is final and the means by which the CHP
must pay the penalty fee.
PART 162--ADMINISTRATIVE REQUIREMENTS
0
12. 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.
[[Page 324]]
1320d-2 (note), and secs. 1104 and 10109 of Pub. L. 111-148, 124
Stat. 146-154 and 915-917.
0
13. Section 162.103 is amended by adding the definitions of ``Covered
lives of a CHP'' and ``EFT'' in alphabetical order to read as follows:
Sec. 162.103 Definitions.
* * * * *
Covered lives of a CHP means individuals covered by or enrolled in
major medical policies of a CHP and the SHP(s) of that CHP. Individuals
may be described in such major medical policies by terms, including,
but not limited to, the following:
(1) Individuals.
(2) Spouses.
(3) Dependents.
(4) Employees.
(5) Subscribers.
(6) Policyholders.
(7) Medicaid recipients.
(8) Medicare beneficiaries.
(9) Tricare beneficiaries.
(10) Veterans.
(11) Survivors.
* * * * *
EFT stands for electronic funds transfers.
* * * * *
0
14. Section 162.926 is added to read as follows:
Sec. 162.926 Certification of Compliance--submission requirements
(a) Submission requirements for a CHP that obtains an HPID before
January 1, 2015. For the health care electronic funds transfers (EFT)
and remittance advice, eligibility for a health plan, and health care
claim status transactions, a CHP that obtains an HPID before January 1,
2015 must, on or after January 1, 2015 and on or before December 31,
2015, provide the following to the Secretary in one submission:
(1) The number of covered lives of a CHP (as that term is defined
in Sec. 162.103 of this subpart) on the date that the documentation
required under paragraph (a) of this section is submitted.
(2) Documentation that demonstrates the CHP has obtained a Council
for Affordable Quality Healthcare (CAQH) Committee on Operating Rules
for Information Exchange (CORE)--
(i) Certification Seal for Phase III CAQH CORE EFT & ERA Operating
Rules. The CHP must not be under the CORE IT Exemption Policy at the
time of submission with regard to the CORE Phase I, II, and III Seals;
or
(ii) HIPAA Credential for the operating rules for the transactions
listed in paragraph (a) of this section.
(b) Submission requirements for a CHP that obtains an HPID on or
after January 1, 2015 and on or before December 31, 2016. A CHP that
obtains an HPID on or after January 1, 2015 and on or before December
31, 2016, must, within 365 calendar days of obtaining an HPID, provide
the following to the Secretary in one submission:
(1) The number of covered lives of a CHP (as that term is defined
in Sec. 162.103) on the date the documentation required under
paragraph (b) of this section is submitted.
(2) The documentation required under paragraph (a)(2) of this
section.
Dated: December 20, 2013.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Dated: December 20, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-31318 Filed 12-31-13; 8:45 am]
BILLING CODE 4120-01-P