National Committee on Vital & Health Statistics

JUN 25 1997

The Honorable Donna E. Shalala

Secretary of Health and Human Services

Independence Avenue, SW

Washington, DC 20201

Dear Secretary Shalala:

On behalf of the National Committee on Vital and Health Statistics (NCVHS),
I am pleased to forward to you our recommendations relating to some of the
health data standards being proposed for adoption in accordance with the
administrative simplification provisions of the Health Insurance Portability and
Accountability Act of 1996 (HIPAA). As you are aware, HIPAA outlines a new
approach to the adoption of data standards to support electronic data
interchange in the health industry in the United States, in a framework that
protects the privacy and security of health information. The law assigns to you
the responsibility for adopting such standards by February 1998. It also asks
you to provide detailed recommendations to Congress with respect to the privacy
of individually identifiable health information by next August. The NCVHS is
very pleased to provide support, advice and consultation to you in this effort.

To assist in carrying out our advisory responsibilities to you, the NCVHS,
in collaboration with HHS, has held a number of public hearings to obtain input
and advice from throughout the health industry, State government, and the
research and public health communities. We have heard a great deal of input
from the private and public sectors, and have synthesized that input into the
following recommendations regarding the administrative simplification standards.

Administrative Transaction Messages

The NCVHS recommends that you adopt the following standards for transmission
of administrative and financial transactions. In addition, we recommend that
you specify the acceptable versions and implementation guides for these
standards at the time the final rules are issued.

Health Claims* or Equivalent Encounter Information

Pharmacy — NCPDP Telecommunications Standard Format

Institutional — ASC X12N Health Care Claim (837)

Professional — ASC X12N Health Care Claim (837)

Dental — ADA Implementation Guide for ASC X12N 837

* the X12N standard for claims includes standard information for
coordination of benefits.

Enrollment and Disenrollment in a Health Plan

ASC X12N Benefit Enrollment and Maintenance (834)

Eligibility for a Health Plan

ASC X12N Health Care Eligibility/Benefit Inquiry (270)

ASC X12N Health Care Eligibility/Benefit Information (271)

Health Care Payment and Remittance Advice

ASC X12N Health Care Claim Payment/Advice (835)

Health Care Premium Payments

ASC X12N Consolidated Service Invoice/Statement (811)

ASC X12N Payment Order/Remittance Advice (820)

First Report of Injury

ASC X12N Report of Injury, Illness or Incident (148)

Health Claim Status

ASC X12N Health Care Claim Status Request (276)

ASC X12N Health Care Claim Status Notification (277)

Referral Certification and Authorization

ASC X12N Health Care Service Review Information (278)

The adoption of a standard for claim attachments is not due until next year,
so we will make a timely recommendation for that transaction at a later time.

Although we recommend that institutional and professional claims should move
to the ANSI X12N 837 standard, we recommend a strategy to ease the transition
for providers and payers that currently rely on the older NSF or UB92 flat-file
formats for electronic claims submissions. We have learned at the hearings that
the financial health of providers is extremely sensitive to the timing of
payments for claims submitted. As a result, there is some fear in the industry
that pushing this transition to the 837 too rapidly could lead to financial
failures if payments were delayed because of technical problems during the
conversion. We recommend a transition strategy whereby willing trading
partners, by mutual agreement, could continue to use existing flat-file
mechanisms (NSF and UB92) to exchange claim transactions until February, 2002.
Strict adherence to section 1175 of HIPAA (which forbids plans from refusing
standard transactions or delaying payment on the grounds that a transaction is
standard) will be expected and should be enforced.

Transaction Data Content

The Committee has a long history of national leadership on health data
content issues. We will review the information now being collected by HHS in
the master data dictionary of transaction data elements and, once that is
available, will formulate our recommendations. The Committee’s recommendations
on data content also will include specific recommendations for a process for
changing, maintaining, and updating the standard data content specifications for
the above administrative transactions. As part of our ongoing responsibilities,
we will continue to advise you on the need for new data elements, as well as
deletions and modifications to current data elements, for health care

At this time, we would like to make specific recommendations about several
data elements. In a previous communication, we endorsed HCFA’s NPI proposal for
a unique identifier for providers. The Committee would like to endorse the HCFA
proposed Payer ID as the national standard for the payer identifier. A
recommendation on the individual identifier may follow, after the Committee has
had opportunity to review and discuss the commissioned report on this topic.

The Committee recommends that diagnosis and procedure coding continue to use
the current code sets because replacements will not be ready for implementation
by the year 2000. ICD-9- CM diagnosis codes, ICD-9-CM Volume 3 procedure codes,
and HCPCS (including CPT and CDT) procedure codes should be adopted as the
standards to be implemented by the year 2000. Annual updates to ICD-9-CM and
HCPCS should continue to follow the schedule currently used. In addition, we
recommend that you advise industry to build and modify their information systems
to accommodate a change to ICD-10-CM diagnostic coding in the year 2001 and a
major change to a unified approach to coding procedures (yet to be defined) by
the year 2002 or 2003. We recommend that you identify and implement an approach
for procedure coding that addresses deficiencies in the current s ‘stems,
including issues of specificity and aggregation, unnecessary redundancy, and
incomplete coverage of health care providers and settings. The committee will
continue its leadership and participation in this endeavor.

Security Standards

Security standards will be recommended by the Committee after hearings are
held on this topic. These hearings are currently scheduled for August.

We appreciate your national leadership in health data standards, electronic
data interchange and privacy, and we are privileged to work with you on these



Don E. Detmer, M.D.