[This Transcript is Unedited]

NATIONAL COMMITTEE ON VITAL AND HEALTH STATISTICS

SUBCOMMITTEE ON STANDARDS

ADMINISTRATION SIMPLIFICATION UNDER THE
PATIENT PROTECTION AND AFFORDABLE CARE ACT
NATIONAL HEALTH PLAN IDENTIFIER AND
OPERATING RULES FOR ELIGIBILITY AND CLAIMS STATUS

July 20, 2010

Hamilton Crowne Plaza Almas Building
1315 K Street, NW
Washington, D.C.

Proceedings by:
CASET Associates, Ltd.
Fairfax, Virginia 22030

CONTENTS

  • Welcome/Introductions – Judith Warren, Co-Chair, Walter Suarez, Co-Chair, Lorraine Doo
  • Session B1: Presentations from Authors of Operating Rules and Standards
    • Gwen Lohse, CAQH CORE
    • Richard Donoghue, NYU Langone Medical Center
    • Eric Wallace, Linxus
    • Lynne Gilbertson, NCPDP
    • Margaret Weiker, X12
  • Panel B2: Reactions and Perspective
    • Patrice Kuppe, State of Minnesota
    • Pete Cutler, Washington State Insurance Dept.
    • Jeanette Thornton, AHIP
    • Jan Estep, NACHA
    • Tim McMillan, Cooperative Exchange
    • Jim McNiff, Montefiore
    • George Arges, DSMO/NUBC
    • George Langdon, GE HealthCare
    • Jerry Killough, Clinix, HBMA
    • Barbara Mayerick, VA
    • Dan Powell, VA
    • Nancy Orvis, DoD
    • Nancy Spector, NUCC
    • Tammy Banks, AMA
    • Michele Davidson, Walgreens
    • Janet Jackson, BCBSNC
    • Randy Miller, NMEH
    • Susanne Powell, Emdeon
    • Don Bechtel, WEDI
    • Joe Miller, AmeriHealth Mercy

P R O C E E D I N G S (9:00 a.m.)

Agenda Item: Welcome and Introductions, General Remarks

DR. WARREN: Let’s get started. This is day two of the hearings of NCVHS’
Standards Subcommittee and today we are going to be hearing about operating
rules. Before we begin I would like to remind people who are in attendance, in
the interest of time we are not going to pass the microphone for those who are
here, but please be sure to sign because we do need to post the attendance in
our minutes and stuff so everyone knows – part of our transparency kind of
thing.

With that I would like to have introductions around the table. For committee
members please let us know if you have any conflicts of interest.

I am Judith Warren. I am co-chair of the standards committee and member of
the full committee and I am from University of Kansas School of Nursing and
having no conflicts.

DR. SUAREZ: Good morning. I am Walter Suarez with Kaiser Permanente. I am a
member of a committee and I am also a member of a few organizations that have
testified and will be testifying. One is WEDI, Workgroup for Electronic Data
Interchange, I am a member of the board of directors. I am also a member of the
Public Health Data Standards Consortium board, and I am also involved in the
standards developing groups — HL7.

DR. OVERHAGE: Good morning. Marc Overhage, Regenstrief Institute, Indiana
Health Information Exchange. I am a member of the committee and no conflicts.

DR. FITZMAURICE: Hi, Michael Fitzmaurice, Agency for Health for Healthcare
Research and Quality — staff of the subcommittee on the standards and
subcommittee on quality.

MS. AMATAYAKUL: Margret/A, Margret/A Consulting, contractor to the
committee.

MS. DOO: Lorraine Doo, Office of eHealth Standards and Services at CMS. Lead
staff to the committee and no conflicts.

DR. SCANLON: Bill Scanlon, National Health Policy Forum, member of the
committee, no conflicts.

DR. CARR: Justine Carr, Caritas Christi Health Care, chairman of the
committee, member of the subcommittee, no conflicts.

MS. GREENBERG: Marjorie Greenberg, National Center for Health Statistics,
CDC and executive secretary to the committee.

DR. WARREN: Before we start with the panel — just a quick check of someone
who is not here who is on our agenda. Walter Suarez and I met briefly with
Lorraine and what we would like to do is let people know what our plans are for
Wednesday morning because several of you have volunteered to help. We are
taking you up on that.

It occurred to us that one of the things that would really help us in
constructing our recommendations to the Secretary is if we had use cases about
health plan IDs, especially one with a bin in it. We remember Glen. That is
what we would like to do for the first thing in the morning is really use your
expertise for us to come up with all the different ways that people know that
the health plan ID is used and develop use cases around those.

The other thing that we thought would be helpful is if we could develop a
graph that tracks the money. In other words, what money is attached to that
plan ID, how do people get paid, and how do they request to get paid, so that
if we could develop a graphic of that flow, I think that would also help as
part of the appendix of the letter to really help us clarify what the plan ID
is used for, what it is and what it isn’t, who qualifies for one and who
doesn’t, so that we answer that granularity issue. And then if anybody has any
other ideas besides the use cases and the graphic, please let Walter and I
know. We are more than grateful for assistance in this.

Today we are going to be talking about operating rules and I want to start
out to remind both the subcommittee, our staff, and then all the attendees,
what NCVHS’ charge is in these rules. Right now our charge is to advise the
Secretary as to whether a non-profit entity meets the requirements under
paragraph two, operating rules developments, to review operating rules
developed and recommended by such a nonprofit entity, determine whether such
operating rules represent a consensus view of the health care stakeholders, and
are consistent with and do not conflict with other existing standards. And then
to evaluate whether such operating rules are consistent with the electronic
standards adopted for health information technology.

A plan for the letter for both the health plan ID and for the operating
rules and will be writing a letter for each one so two letters is to have that
to the full committee of NVCHS at their September meetings. We are on a very
fast timeline, and that is so that we can meet all the other deadlines that are
specified in the legislation just so that people are clear.

And then what I would like to call attention to is in the packets of the
committee members and staff, Walter I have worked with, Lorraine. There is a
packet in there called operating rules and national health plan identifier,
options and considerations. It is a fairly thick packet. It looks like this. A
gray bar on the top. The front page are all the questions that we have sent out
to our speakers so that you know what they are answering and then after that
there is a worksheet. We really felt that we needed to be sure that we captured
all of the testimony is accurate as it can. That worksheet is there for your
use for giving a better way to keep track of your ideas, feel free to look at
that as well.

The next thing is Lorraine is going to be giving Karen Trudel’s opening
remarks. While she sets up what I would like to do is remind the panel Lorraine
is our time keeper. Please watch. She has worn a pretty dress today so that you
can see her. She told me to tell you that. She is dressed for the event. We are
giving everybody 20 minutes, and then after your presentation the committee
will ask you questions. We will take 10 to 15 minutes. We have a little bit a
leeway that if we need more information from you, we can do that and then we
will go on to the next set of presenters. Any questions from the panel about
how we are organized? Okay, Lorraine.

MS. DOO: Good morning everybody. How many of you were here yesterday? Okay
we are done. For some of you there will be a test if you were here yesterday on
what I am going to say, and for the others in all fairness just to give an
overview of where we are today and why we are here. The Patient Protection and
Affordable Care Act as you all probably read all 2057 pages, we have a small
section called 1104 and 10109 relating to administrative simplification.

The Act has in it, even though it is called administrative simplification
and even though we are a fairly small piece of the entire legislation, has some
pretty significant implications. There are some main things that we are going
to have to do over the next very short timeframe. One is we were talking about
yesterday, is to adopt our unique health plan identifier. The other is some new
standards and operating rules for those standards to adopt a standard for EFT
and to require that Medicare pay all providers via EFT, which means all
providers will have to accept EFT, electronic funds transfer payment.

There will be a compliance certification which is different than the
enforcement methodology that we have today where plans will have to certify
their compliance and we have some fairly stringent penalties that can be
applied for lack of compliance.

And then there are audits. And again, right now our complaint system as you
all know is really voluntary compliance and it is complaint driven. We will be
doing much more proactive audits related to that. And then taking a look at the
existing standards and operating rules to see if there is any way that we can
do them better if we need to expedite. Everybody would volunteer for.

And then also to adopt as if it were a standard an ICD-10 crosswalk, and
some of you have probably been involved in some of the meetings that have been
held on that topic. I think there is going to be one in September related to
that.

If you look at the next slide of our dates, it is a fairly aggressive
timeline, which is why Judy and Walter are nervous. We are going to be doing
Interim Final Rules. It is not the regular notice and proposed rule-making
process, it is Interim Final Rules, and our first two come out in July and
August of next year, one on the first year operating rules for claims status
and eligibility, and then for the plan identifier. The effective dates are no
less exciting, October 2012 for the plan ID, and January of 2013 for the
operating rules.

And then it doesn’t get much more civilized with the standard for the
electronic funds transfer and the operating rules, those are in 2012. And then
we down for the next grouping of operating rules into 2014 for claims
attachment, which some people will be very excited about and then for the
other, standards.

The dates are very aggressive which means these hearings are going to be on
an aggressive time table as well, which is why these are so critical.

Our strategy for executing the Affordable Care Act as it has been other
standards, is we do these hearings which means we get public input and we have
had — yesterday was a very full day, today will be a very full day. It is the
best way to really get at what information we need to have from the industry in
terms of the challenges and the opportunities and the costs. What we will do as
we have been doing, is to really see what is happening with industry’s
engagement in this process and looking at how these standards and operating
rules have been developed and making sure that we have consensus and
collaboration, and also to make sure there are a number of other areas in the
Affordable Care Act that are related to our work. It doesn’t seem obvious on
the surface, but there actually are connections. We will be looking to make
certain that we are collaborating with other areas of the department and other
federal agencies, to make sure that we are being synergistic with those other
provisions.

And as we have heard over and over again, we have to do a lot of education
and outreach with the industry along the way so that we are making sure that we
understand what the challenges are and if there are any other changes or course
direction that we need to make.

The drivers for the Affordable Care Act is what Congress recognized is that
we needed to continue to move forward with what we were doing with standards
and obviously operating rules, and to make them work better for us. This was
moving this ball down the field of really getting to administrative
simplification and standardizing the standards. I am sure many of you have used
that and wished the standards were more standard. That we needed to use them
more consistently and that we also needed to add t our portfolio. We had many
good standards, some of which were being used fairly well in the industry and
many which were not. We still know that they are not being used as aggressively
as they could be, but things like electronic funds transfer is clearly a value
added to the industry. We didn’t have the requirement without the standard for
that.

And making the rule-making process more nimble by virtue of the fact that we
are now able to do interim final rule making has clearly built that opportunity
and challenge in front of us. And then to build on the successes and lessons
learned and yesterday was a great example because a number of people came
forward and gave terrific information about what we have learned from
implementation of the provider identifier and how we can leverage that for what
we do for the health plan identifier.

In the Affordable Care Act the Congress wisely we hope with some guidance
from our office, but I think from many, many conversations with many of you
revise the statement of purpose for what we are supposed to do in
administrative simplification and so if you look at the purpose obviously is
for effectiveness and efficiency and improve the Medicare and the Medicaid
program that talked about the establishment of the uniform standards and
requirements. This is really getting at the standardization of the standards of
really making these tools useful for and by everyone.

And then it goes on to talk about administrative simplification, reducing
the clerical burden on patients, providers, and health plans. And that is what
you all are here to help guide us in is how do we get rid of those clerical
burdens. We are in the 21st century. Most other industries have been
very successful and we are getting there, but they are saying we have the
opportunity to do more.

There are pretty specific guidance from Congress and also as Karen calls
them, these were clues or hints as to what we could do more of and better, and
one of them is the determination of eligibility and financial responsibility
prior to or at the point of care. And anyone who has ever been in the
physician’s office knows what a value add that could be for both a physician as
well as the patient.

Also being comprehensive and requiring minimal augmentation so that we don’t
have to resort to faxes, paper, or phone calls, the point of electronic
transactions to do that communication.

Also being timely and transparent, making sure the people have information
at the point of which they need it in order to make certain decisions. And then
being able to describe all the data elements in unambiguous terms and that in
part goes to our issue having consensus and collaboration that everybody has
different needs and needs to apply them, but we have to get to a point where we
come to agreement on what those terms mean and how they are going to be used.
We have very clear direction from Congress on this.

The context of these hearings is using the guidance that we have seen and
the guidance that we have had from Congress in the past, is how we will develop
new standards that we need to, how we will ensure a consensus stage process and
really move towards this whole concept of effectiveness and efficiency, and
then how we actually move in that direction, how we actually get there, how do
we move the ball around the field, how do we encourage the reduction of the
burden on everybody, and again we are talking not just providers and plans and
clearing houses, but also the patients, and really ready us for this next stage
as we move towards the electronic health records and the provisions and
meaningful use legislation. All of these things are going to be required of us
in order to get there together.

The identifier — I am actually going to not dwell on this and I will try
and move forward, but yesterday we did talk about some of the opportunities for
health plan identifier. The key for that is that it be usable for multiple
purposes. We are not just talking about how do I put it in this field in this
standard, but all of these other ways in which identifiers may now be needed in
electronic communications and transactions and systems. That multiple uses is
this something that will be a significant conversation tomorrow?

And what we did hear, aside from what Lynn was talking about, is don’t get
rid of the bin is that we have a diverse set of types of health plans, first
needs for that, and diverse uses. We are going to have to come to some
consensus on what the best way is going to be to use that for the standards and
for the next set of requirements.

We will move past that slide and talk about operating rules which is the
agenda for today.

This is how it was defined in the legislation. It is a fairly simple
definition. What are the necessary business rules and guidelines for the
electronic exchange of information that are not defined yet in the standards
themselves or the implementation specification? That is pretty broad. What we
are going to look at and this is what Judy was reading from the charge to this
committee, is adopting a single set of operating rules for each of the
standards and we are doing two in this process, but they have to be consensus
based, as are our current standards. That is a requirement for our current
standards is that they are consensus based and that they reflect the needs of
all of the covered entities and all of the players in the industry.

They have to be developed by a non-profit entity based on a recommendation
of the Secretary from NCVHS and ensuring consultation with providers. That is
actually the first time that we have seen that specific reference that we have
to ensure consultation with providers in our legislation. It is obviously
something that the authors are paying attention to as well as the industry.

As we said this is similar to the chart that we reviewed before. We will
focus on eligibility and claims status, but I think it is important that we
will gain some learning from these hearings so that when we move into the next
set we will be able to benefit from that.

Just a reminder, that the compliance date is a term that is used in the
legislation, is effective date. When you see effective date in the legislation,
it now means compliance date. Those terms are going to be used interchangeably.
We do have to adopt two new standards. Again, that is for EFT and for planned
attachments. Those will be ones we don’t have adopted yet.

A couple of things to remember, we do not have to select one authoring
organization this week that will be the authoring organization for all
standards. There may be different authoring organizations for different
standards for the operating rules and because other entities and organizations
will be coming forward and saying we have an idea for what operating rules can
be for this. And it does give us an opportunity to relook at how we have done
collaboration and consensus building to really look at doing it better than we
have in the past, not that it has been bad at all. I think the voluntary effort
is extraordinary, but we have an opportunity to look at the way we have been
doing things and to move ahead in a new way.

I want to thank you very much for coming again in standing room only. I
think we have a couple of chairs in the front actually, and I will let the meat
of the presentation begin. It is much more interesting. Thanks so much.

DR. WARREN: I forgot to ask who was on the phone. We didn’t hear you. Can
you say again?

DR. FERRER: Jorge.

DR. WARREN: Thank you. Jim and Karen have joined us if you would like to
introduce yourselves.

MS. TRUDEL: Good morning. Karen Trudel, CMS, staff of the subcommittee and
liaison to the full committee.

DR. SORACE: Hi, Jim Sorace, ASPE staff to the subcommittee.

DR. WARREN: With that we are ready to begin. Gwen, when you are ready.

Agenda Item: Panel B1: Presentations from authors of
operating rules and standards

MS. LOHSE: Good morning, Gwendolyn Lohse from CAQH. I am the CORE managing
director and also the deputy director of CAQH. Let me begin by thanking the
committee for the opportunity to speak to you on behalf of CAQH. We have worked
together for the last five years to develop the first three phases of CORE for
the Healthcare Information Exchange.

In addition I would like to recognize today’s discussions that have been
provided by HIPAA. Many organizations have had roles in the implementation of
HIPAA, but most important of them, NCVHS and the standards setting
organizations. Without NCVHS we would not be here to support the national
initiative that will drive administrative simplification.

In my presentation this morning I won’t be able to touch upon a few of the
many details that were included in my written testimony. Let me begin by
briefly summarizing three key points that I hope to leave you with. First, we
have a unique opportunity to address administrative simplification; however, we
need long-term commitment to clear and experienced-based themes to ensure
long-term success.

Second, standards and operating rules must coexist and work together to
achieve the full potential of administrative simplification. Third, all our
experience informs us to the highly integrated model will expedite the
transformation of administrative data exchange.

Having giving you these points let me get into some of the details beginning
with a little context. CAQH is a non-profit alliance focused on simplification
of administrative processes in healthcare. We have a vision of an American
health care system in which administrative processes are efficient,
predictable, and easily understood by patients, caregivers, and by providers.

In this system administrative and clinical data are fully integrated to
effectively support the delivery of care. HIPAA established a foundation for
administration simplification and initial standards began to advance the
electronic exchange of administration and claim information; however, the
standards were not always implemented in a uniform manner. The health care
environment continues to evolve rapidly and we are responsible for driving
change across the industry had not experienced the value initially anticipated
by HIPAA.

Five years ago CORE established CAQH. CAQH established CORE as a
multi-stakeholder collaborative to address the needs of providers and health
plans, to exchange more robust information in real time.

CORE is the only national effort engaged in the development of operating
rules to facilitate medically focused administrative transactions. It brought
this concept to health care based on experience from other industries in which
streamlining business processes have become imperative such as the banking
industry.

In these other industries operating rules and standards coexist and work
together. The Affordable Care Act through Section 1104 has made amendments to
HIPAA. These amendments provide for more comprehensive approach to
administrative simplification and specifically we have the definitions Lorraine
provided us this morning. I am not going to walk through them.

The industry is to move forward collaboratively to meet the intent of the
associated timelines laid out in Section 1104. We have the opportunity to
massively reduce administrative overhead that burdens the US health care
system.

CAQH CORE and the CORE participants stand ready to work in full
collaboration with NCVHS, the SDOs and the other committed entities to take
advantage of this moment in time.

Today’s hearing is focused on how HHS can address the aggressive timeframes
for the development of the first operating rules. Those are related to
eligibility and claims status. There is significant pressure on organizations
to address internal business strategies, as well as meet industry-wide and
legislative requirements while improving infrastructure and lowering costs and
while doing so in the limitations of resource constraints.

Any change driven by 1104 will need to consider the framework in which all
organizations are working. Meaningful change will also need to align with a
broader health care environment; HITECH being one of the key examples where
that is critical especially for providers.

In light of these imperatives unproductive replication of effort can no
longer be sustained. Every entity involved will need to be looking for ways to
take the greatest advantage of industry expertise and vision for every
component of the overall process.

In June of this year NCVHS issued a concept paper highlighting how
administrative data exchange must play within the broader context of health
care. CAQH is in complete agreement with this philosophy.

In a written testimony offered detailed explanation of the reasons why
operating rules and standards need to coexist and work together. We would like
to give you just one example of where this already has occurred: the banking
industry.

When CORE was conceived, we worked with NACHA, the electronic payments
association to learn from their experience in the application of operating
rules and standards together in that highly regulated industry.

The effective use of credit cards and ATMs have revolutionized banking
processes for every one of us in this room, but the ability to conduct that
transaction that underlie the use of such tools relies on understanding the
difference, but interdependence role of standards and operating rules.
Standards established the outlining and detailed technical framework for
transactions. Operating rules build on the standards to more precisely describe
the roles and responsibilities of each of the individual stakeholders. They
also address gaps in order to deliver on the market value of the transactions.

To give some additional context standards and operating rules together bring
a real return on investment and interoperability. Operating rules should always
support standards. The skill sets and resources necessary to develop and
implement operating rules are different. In health care operating rules need to
support a range of standards including non-mandated aspects of HIPAA, such as
those supported by the CORE financial data elements, non-mandated health care
standards, such as those supported by the CORE acknowledgement rules, and
mutual standards, such as those supported by the CORE connectivity rules.

It is also important to note the current CORE rules including the draft
phase three rules are in compliance with existing federal mandates including
the ANSI X12 standards.

Let me now focus on the structure of CORE. For the integrated model is that
it is applied to develop and implement the rules. CORE’s mission is to build a
consensus among essential industry stakeholders on a set of operating rules
that facilitate administrative interoperability starting with eligibility and
then moving sequentially the other transactions in the claims process.

CORE’s vision is a sole provider access to administrative information before
or at the time of service using the electronic system of their choice of the
provider for any patient or any health plan.

CORE is compiled of organizations from across the health care spectrum
including SDOs, government entities, for-profit and non-for-profit health
plans, provider groups, hospitals, vendors and consultants. CAQH is the
facilitator of the CORE initiative.

CAQH takes no part in voting. It has no authority with regard to approval of
any of the operating rules. We recognize the original CORE governing
procedures. We have given that CAQH has the right to veto specific operating
rules. This right was eliminated earlier this year and in fact its application
was never considered by the CAQH board.

Let me move on to discuss the CORE integrated model in which has been
developed by three key components: a rule development and writing process
inclusive of the voting process, education and outreach designed to build
awareness of CORE rules, and inform CORE participants about other initiatives
that align with the objectives, and a certification and endorsement process.
This integrated model has led to a series of clear, tangible outcomes in a very
compressed timeframe.

We look at the section of 1104 and we ask ourselves what exactly has CORE
accomplished over the last five years as relevant to the goal of this
legislation. I am going to use the next few slides to address that.

First, we have built a multi-stakeholder initiative driven by strong guiding
principles with transparent processes for approval at every rule and every
modification along the way. We now have more than 115 participating entities
from all sectors of the industry including health plans that represent almost
75 percent of the commercially insured lives in America.

Bringing all of these organizations to the table and keeping them there has
been no small accomplishment. In appendix B of our written testimony you can
see the CORE participants. We have kept participation costs low. Annual fees
for SDOs and public entities are waived. Others are capped at $6000 per year
even for the largest commercial entities.

The rule development writing approval process is built on the elements of
best practice, industry alignment, and balancing vision with reality. Details
about these processes and the guiding principles are available in our written
testimony. Moreover, each rule is developed with recognition of the
interdependencies among the rules within individual organizations and across
the stakeholders that must exchange this data. The time and effort to create
each rule cannot be underestimated.

Including in the CORE guiding principles is the important of tracking
financial and non-financial benefits. An early doctors’ study of the use of the
Phase I rules and their impact on certified health plans, vendors, and
providers showed that a 10 to 12 percent reduction in provider claim denials, a
24 percent increase in patient eligibility verifications, an average cost
savings of nearly three dollars for each phone call related to patient
eligibility verification, accelerated use of electronic transactions by all
participants, and estimated cost savings of three billion in three years have
also most of the industry adopted the Phase I rules.

Finally, education and outreach have been on the cornerstone of the overall
CORE initiative. This begins with building awareness and flows through to
specific tactical opportunities. We conduct detailed analyses on individual or
clients for organizations seeking certification. We have worked closely with
WEDI and HIMSS on a range of traditional activities and have conducted
demonstration projects and pilot projects. A current example is the digital
certified called pilot project. We are conducting with VeriSign in
Massachusetts, including health plan providers and vendors.

We have developed a range of tools for certified — use of their trading
partners and to address such matters as request for proposals and contracts.

We have worked hard to coordinate and gain recognition for important federal
and state efforts. Lorraine’s comment this morning about coordination could not
be more relevant.

The timeline allotted for the substantial outreach to the federal and state
efforts is substantial and is aligning efforts around the country as you can
see on the slide.

Finally, from resource and budgetary point of view today CAQH covers 85
percent of the CORE costs and it brings important executive level awareness.
The degree of CORE’s progress in such a limited period would never have been
possible without the time and experience committed by the participating
organizations as well as full time and contracted resources that CAQH was able
to bring to the initiative. The magnitude of this effort is dependent on a high
level of resource commitment.

Since 2005 CORE has developed and rules out the Phase I and II operating
rules and has prepared Phase III operating rules for release later this year.
Many of the CORE rules to date are specific to eligibility and claims status as
projected and long-term roadmap.

Each of these rules and their specific benefits is outlined in our written
testimony. As indicated on this slide, the rules can be categorized to include
infrastructure, claims status content, and eligibility content. Each rule
includes requirements to certification testing.

CORE has been a voluntary effort. Entities becoming certified have all the
best intention. However, it was agreed upon from the beginning that testing was
necessary to ensure compliance and certification as was adequate staff to guide
entities through the process.

The core certification testing is conducted by independent testing entities
based on conformance requirements and tests approved by the CORE participants.
Today over 50 organizations are Phase I or II certified.

The Core Phase I and II rules are already being applied to almost 50 percent
of the commercially insured as a result of the CORE certified health plans.
Endorsements build awareness. CORE rules have been endorsed by more than 30
organizations including provider organizations such as the AMA and the AAFP.
These entities are not eligible for certification, but their endorsement is
critical. The cost of certification is kept low with a one-time fee of
certification for each stakeholder type that is capped at $6000 per
certification phase.

Up until now I have reviewed where CORE has come from and what has been
achieved; however, it is very clear to us that for the CORE model to be adopted
for the development and implementation of operating rules in a mandatory
environment specific adjustments will be essential.

CORE and CAQH are ready to work with NCVHS and the broader industry to
define and implement these adjustments. We believe the work must occur as soon
as possible.

Potential adjustments that have been widely discussed include changes to the
structure of the organization including modifications to its governance and
leadership, expansion of the number and types of participating organizations, a
financial structure for the initiative that assures continuous stability
particularly something with unfunded mandate.

Revisions to, and reassessment of the scope, the content and the development
of the rules recognizing the perspectives of various new participants. A timely
reassessment of the current voting process for rules and development approval,
and finally, new mechanism for education and outreach. As an example, HITECH
may be able to provide support in this reason and we need to coordinate with
those direct centers.

Collaboration has been at the very heart of CORE from day one including the
involvement of SDOs and others such as MGMA, WEDI and EMA.

Going forward should CORE be selected we need additional resources and these
resources will enable the development expanded skill sets, tools, processes,
and distribution channels that will be required to make this successful. To
address this need properly CAQH will partner with HIMSS and NACHA. NACHA, who I
mentioned earlier because they have an experience working about 15,000
institutions in the banking industry.

This particular partnership would focus on facilitation and implementation
and the CORE participants would retain complete control over the development,
writing and approval of the operating rules and the criteria for certification
of appropriate organizations. We are delighted that HIMSS and NACHA have agreed
to work closely to support CORE. They bring deep expertise that speaks to the
magnitude of this effort.

To produce meaningful operating rules there is significant lead time to
activities such as business case development, research, gap analyses, et
cetera. CAQH is ready to address eligibility and claims status; however, a
united effort must be started on the future stages of Section 1104: electronic
remittance advice and electronic funds transfer. The partnership with HIMSS and
NACHA is poised to begin this work on these long-term imperatives.

Several times this morning I made reference to the importance of thoughtful
guiding principles. On this slide we have outlined recommendations for a series
of themes that can guide the industry to successful outcomes. The importance of
long-term clarity of purpose, commitment to a strong underlying infrastructure,
sensitivity to market realities, the value of understanding and taking
advantage of lessons learned already.

This slide includes too much detail on each of these themes. It would take
too much time to go through all of them, but I would like to highlight one
example that speaks to translating the themes into daily practice. Let me use
the example that relates to the sensitivity of market readiness. Build on what
exists. Don’t replicate what already works and don’t reinvent the wheel. When
developing the business cases for each CORE rule, substances, and strategic
analyses have always been used to highlight how CORE can embrace well tested
and tried practices. This must continue.

I began this testimony by speaking the three points that I want to leave
with you today. Let me come back to these points. First, we have a unique
opportunity to meaningfully address health care administrative simplification;
however, we need to be committed to clear and experienced-based themes to
ensure long-term success. Second, uniform standards and operating rules must
co-exist and work together if we are to achieve the full potential of the
administration simplification. Third, a highly integrated model will expedite
the transformation of administrative data exchange.

In conclusion, I will leave you with one final thought. Collaboration and
alignment will be the foundation on which we can expand and sustain the
momentum that CORE has brought to administrative simplification. We understand
there are differences of opinion as to how to address the challenges that we
were working to resolve, but the time has come for us to work together on a
bigger vision based on solutions that are effective and efficient in the real
world. The timeline for Section 1104 can be realized if we build on what exists
today. Thank you for your time and please let me know if you have any
questions.

DR. WARREN: I have one question — just for my clarity from CAQH’s
perspective, could you distinguish between operating rules and companion
guides?

MS. LOHSE: Operating rules and companion guides. We did have a CORE Phase I
rule and a Phase II rule on companion guides. The companion guide is the flow
and way of the format that each entity presents the way in which it does
transactions. It includes a whole host of things beyond the transactions. It
may include customer service numbers. It may include addresses and items like
that.

There are sections of the companion guide that will directly refer to the
operating rules. With that said we believe that every companion guide, the flow
and format, the table of contents should look very similar for the provider. We
have created a rule that is based on companion guides and it speaks to the flow
and the format so they are all the same. It is reviewed in the testing and
certification and the sections that are specific to the transactions as we go
to this iterative process of operating rules, those sections should be
referring to the operating rules.

If you look at — you will hear from Jan later from NACHA. ACH has a very
large guide with its operating rules and the entities. The 15,000 entities of
exchange data in the banking industry refer to that guide and one could make
some comparisons with a companion guide on that.

DR. CARR: Thank you. Very excellent testimony. The entities that do not
belong to CORE, what are the major reasons why they do not?

MS. LOHSE: Great question. I think one: resources. Resource constraints are
a real reality today and even more so as we move forward. We have many
different parts of the reform bill coming out. We have HITECH coming out. Many
entities are dealing with the HIEs and not really embracing those and then we
also have ICD-10, we have 5010 and then we have state regulations which — I
know there are a number of entities from the states here today and they can
speak to that more, but I really believe it is resource constraints is a matter
of prioritization.

DR. SUAREZ: I have like 20 questions. I will start with the organization.
Thank you very much for the testimony. I think it is great. I have gained a lot
of clarity and understanding about the organization. A number of the questions
around the type of organizations that would be qualified, authorizing
organizations include of course openness and participation. In other standard
development organizations that I have been part of there has always been a lot
of engagement and there is a challenge of engaging organizations into dose by
those efforts because of resources as you pointed because there is always large
opportunities for open, common processes and all that. Could you walk us
through the process itself of we are going to develop an operating rule on X.
We have a team that is — how large it is first of all that develops because is
it all volunteer? Does that actually work on development of the actual document
that becomes the operating rule? What is the process and how long does it take?
And then what the vetting itself that you do in terms of once you have the
final document, how do you make it be the final document if you will?

MS. LOHSE: Great question. First selection of what is actually in the scope.
When CORE started out we obviously needed some place to start. CAQH did select
the scope in the first phase. It lets a woman to the second phase because then
it gets much more representative of what we are talking about moving forward.
The CORE participants then decided the second scope. They did this through a
multi-voting exercise, phone calls, and a host of things. For instance, the AMA
was very clear they would not endorse CORE until we had year to date
deductibles. We didn’t put year to date deductibles in the first phase because
we thought you could only achieve so much so quickly. They went into the second
phase and AMA was really responsible as well as many others for making sure
that that occurred. The entities select the scope.

We then farm out the responsibilities of each of the rules to subgroups and
there are chairs for the subgroups. They volunteer. And then entities from the
CORE participants participate in those subgroups. Before the subgroups actually
get started, we spend considerable amounts of time providing tools and research
that they can start out with very strong business cases, gap analyses, and make
sure that we have the right people at the table. If we are talking about, for
instance, the acknowledgements that X12 has done such a great job of creating,
we make sure that people that are creating the acknowledgements we invite them
to the calls. We talk to them beforehand. Throughout the process you have a
number of participants that are at the table that are experts as well as the
staff that can spend their full time supporting those experts and the
participants to continue to evolve the detailed analyses that are required to
write the operating rules.

There are many things such as response time. We had to do a lot of
surveying. It is all blinded. It is all aggregated. We do not share any details
on individual companies. There needs to be staff that goes across. Corrects
whether it is clean status business codes, whether it is response times,
whether it is companion guides. It does that whole analysis. It presents it to
the subgroup and work group. And then they debate and then they decide and
prioritize what to keep in and what to keep out and that usually takes months
and months of debate. There are many different versions the draft rules by the
subgroup. Then it slowly works up to the work group and then the work group
obviously has comments. There is a lot of straw pulling before the actual
official voting happens. We probably do six or seven stages of straw pulling
and that has to have staff support obviously and it could make some big changes
to the rules during that straw pulling.

And then there is a work group vote. And then it moves up to the steering
committee to make sure there is then appropriate alignment among the
stakeholders and also appropriate alignment with external factors. And I talk
about external factors a lot. I think Lorraine’s overview could not be more
appropriate. We have to align with other efforts in the industry, for instance,
the CORE connectivity rule is aligned with what happened with HITSP and NHIN,
and we can’t operate in a bubble. You need staff to do the research to present
it. Steering committee checks that and then it goes for the all CORE vote.

The all CORE vote is different than the previous votes in the sense that it
is only the entities that actually have to use the rules and their daily
business practice that does that final vote. Before that every entity can vote.
It is the health plans and the providers and the vendors that do that final
vote. That is a very long — hopefully you wanted a long reply, but that is
generally how the process works.

You asked about the number of people. I think you really truly this well. At
a minimum you need six staff people to support each of the rules in various
different places. You need some people that have the technical requirements.
Other people — there is an individual here who works with us that she knows
revenue cycle. You need people that know the detail, the business process and
then you need other folks that are able to do all the surveying and the
analysis and of course without support staff the whole thing can’t happen. You
can’t have phone calls. You can’t have meetings. You can’t have dial ins. The
support staff is absolutely essential.

DR. SUAREZ: In terms of the membership of those work groups, not staff, but
volunteers what would be the size?

MS. LOHSE: It ranges. Some of the groups — for instance, when the
eligibility started they were up to probably 75 percent of the participating
organization sat on that group. Some attend all the time. We make everything
available off line. We make everything available on line. Some people just
can’t afford the time at that moment. They review it at another time and
provide feedback at another time. Typically about 70 to 80 percent of the
entities that are at the table participate. If someone does not attend the
meetings, we have not asked them to move off and not vote. I know HITSP did
take that approach and we have not taken that approach.

And then some of the groups like connectivity tend to have a higher volume
of participants that have a certain level of expertise depending on the topic.

DR. SUAREZ: Just a follow up. Once that the rule is done they have a testing
period and an open review of the defined set of rules before they get —

MS. LOHSE: Absolutely. Could they right now — the rules that we have are
very common things that are happening in the industry in pockets. They are not
happening all over the industry and I think until we get to a place where we
have 85, 90 percent adoption you are not going to see the full impact and plus
you need coordination between the health plans, the vendors and the providers
to see the full impact.

Right now the rules that have passed have been used by entities that are at
the table, and then moving forward I think you are going to see much more of
piloting certain things like digital certificates. I think it really depends
upon do we have items that are used in the market today by a certain percentage
of entities that work like using aspects of the standards that we know are
going to drive down the phone calls.

We did an analysis, for instance, across many of the health plans, but what
is actually driving their phone calls and it is certain data elements that are
in the standard, but they weren’t mandated. The rules include requirement to
use those pieces of a standard because if it is the 80/20 rule, what is going
to drive down the costs and it exists and we should use it now.

DR. SUAREZ: One more. There is a critical concept. You referred to standards
and then operating rules. In the middle there is this sort of thing called
implementation specifications in the federal regulations and the law really.
Now we have three levels of standard setting elements: the standards
themselves, the implementation specifications and now the operating rules. I
think the challenge is to define what constitutes this operating rule that is
as defined in the law not covered already in the standards and the
implementation specifications. Usually the companion guides are covering things
that are in the implementation specifications, but are refinements of those
definitions of implementation specifications or clarifications or constraints
if you will in some cases between trading partners.

The question is really is the operating rule going to be an extension of the
implementation specifications. It is going to be not just an extension, but
also cover other things and what are the limitations of what should not be
covered in an operating rule. I know that is a big question I guess, but it is
really going to help us define. If we are really talking about operating rules
to be the next concept of companion guides and as you pointed out in your
written testimony one single companion guide is an example of what could become
in the future I guess an operating rule. We are talking about that. What other
things are there involved in the operating rules themselves that are not what
traditionally is part of a companion guide.

MS. LOHSE: I am going to refer to your implementation guides versus
companion guides because your question was for implementation guides, right?
Okay. For the implementation guides they are specific to standards and they do
allow for some variability of how to use the standard. There could be things
that are optional and aren’t required and the operating rules —

DR. SUAREZ: Situational.

MS. LOHSE: Situational -– right. They are situational so they are not
mandated. Just as an example, under HIPAA, the X12 guide has some
implementation guides. There are some situational elements. We have worked to
adopt those. We support the standards and have used data to figure out if there
are certain elements within that implementation guide that could be required to
help get to the policy goals of administrative simplifications. I think that is
going to be the ongoing iterative process.

As we presented in our written testimony, I think we are going to see as we
move forward that iterative process between the standards and operating rules
based upon the needs of the market. We don’t know, for instance, reform is
going to drive a lot of different types of changes over the next few years. Are
there other elements in there that are going to be essential to drive and get
to the policy goals?

Separate from that there are many other standards that are industry neutral
that we are going to have to start embracing in health care and their
implementation guides may not speak directly to the needs of our market place.
We are going to have to work together to figure out how do you apply if it is
open web services to health care. I think there is going to be a lot of work
that has to be done in that area. We started that process working to align with
the efforts under the NHIN, under HITSP, but there is also that aspect. The
standards that are currently under HIPAA but it is also other standards that
are being embraced by HITECH, by HIEs and that process is going to continue and
we are going to need to find a way of an industry to make it work.

MS. TRUDEL: Gwen, I think your testimony says over 50 organizations are
Phase I and/or Phase II certified. Could you split that out and also what are
some of the critical aspects of Phase II over Phase I?

MS. LOHSE: Absolutely. For Phase I — I will run through the critical
aspects first because that might be easier. Phase I was eligibility focused and
this was based on a long-term plan. You can’t have a silver bullet to fix
everything over night, we wouldn’t get anyone to the table. We did pick out
data elements within the transaction that were driving some of the questions
and the phone calls, so co-pay deductible co-insurance for a number of the high
volume services.

Then paired that with the requirement for sending everything in real time
and there was a lot of debate of what does real time mean in Phase I. We picked
20 seconds and I know PNC was on the steering committee at the moment and they
said 20 seconds, you mean two seconds. I said no I mean 20 seconds. We are
starting out in a phase approach.

There are also requirements for acknowledgements, the format and flow of
companion guides, getting onto the Internet, and then having your systems up.
The providers work on weekends. The claim process needs to work where the
providers work if there are inquiries coming in. You have a mix of data content
as well as infrastructure to keep the transaction moving.

In Phase II we added to the data content of eligibility to get to several
more services that are high volume, again, based on significant research. And
then more financials like year-to-date deductibles, I talked about that earlier
what the AMA is asking, and then additionally more infrastructure.

Getting onto the Internet we worked to ensure there was two plug and plays,
so if you wanted to use the Internet, you had two ways you could directly do
it, and then doing some patient matching and identification. Smaller things
like do you use a hyphen in your name and if so, we are all going to translate
the hyphens with special characters the same way. That was based on a
California HealthCare Foundation study that we did. And then also
infrastructure for a whole host of the claims status transactions. Again, going
in real time, system availability, acknowledgements, connectivity, the
companion guides. The Phase I was eligibility. Phase II was eligibility in
claims status with more infrastructures.

The entities that are Phase I certified you would ask, Karen, with the
health plans. There are about 52 of those. It is health plans, vendors,
clearing houses and providers. It is a mix of both national plans, regional
plans, non-for-profits and for-profits and the vendors are a mix of entities
that are really practice management systems and also clearing houses and then
providers such as Montefiore was actually Phase I certified and NAO Wake
Forest. For Phase II there are a number of the entities that are Phase I.
Almost 88 percent of them are committed to Phase II certification. Does that
answer your question?

DR. FITZMAURICE: Thank you also for your testimony. I have two questions.
You have taken on a quest for interoperability of administrative information.
Do the CORE operating rules specify for a given transaction the specific
vocabularies, data elements, their definitions, and representations? By that I
mean their specific code set for things like marital status or race and
ethnicity if it is there, standard format for name and address, and for a time.
Do you work with the SDS to maintain the standards for that transaction on the
definitions you choose so that your definitions are harmonized, maybe identical
to those in X12, NCPDP of HL7? Do you get down to the data element level for
specificity in your operating roles and you work with the SDOs to make it
uniform across SDOs?

DR. LOHSE: The first response is absolutely use the standards. We are not a
standard setting body and what never will be we don’t have the skill sets. We
have to support the standards that exist. We are incorporating and supporting
the standards. Absolutely. We are not changing the definitions with data
fields. They exist. We support them and there is a lot of expertise that went
into that process. We have not at this point there are definitions across
different standards that do need to be unified and other than in connectivity
we have not started that process. I think that is something that will need to
occur, but that’s not something that we have started and that is going to
become more and more relevant as we move forward.

DR. FITZMAURICE: Second thing. Is this a state consensus-based process? How
do you find the consensus that you hope to achieve or maybe the other side is
could it be not achieving a consensus?

DR. LOHSE: We do have a consensus-based process. I think you have to build
up consensus from the beginning and we absolutely work towards that every
single day and then the voting plays into that. I know Karen was nice enough at
the end of the Phase II voting we had one item — and you helped work through
that. Absolutely consensus but then voting on top of that so there is
transparency.

As I talked about layering my testimony, I think the industry will need to
decide. After we go through consensus that final vote, who will be at that
final vote? Is it just the health plans and the payers or do the vendors also
belong there and then Walter asked about a public comment period. We have been
a voluntary initiative. We have had the CORE participants doing the consensus
and the voting and also reaching out to other entities. We haven’t officially
had a comment period. In a mandatory environment absolutely you have to have a
public comment period.

I guess there is consensus I see consensus from the beginning then through a
voting and then also public comment.

MS. DOO: (Mic off) Thank you for the presentation — and I laugh at the age
of the group. I have been involved in — organizations for a while now and part
of what I have learned is the extent to which volunteers are so valuable and
what hard work is, but it is also very hard work to get people to the table and
to get the votes and to get the consensus. And having sat in on a number of —
HL7 and X12 and with CAQH and seeing how difficult it is (mic fixed) for each
of you to think about it and for Gwen for you to answer, do you have a strategy
for really increasing the number of people that are at the table consistently
and getting the votes that feel like you really are getting representations we
have moved forward and it is the same issue that all of the standards
organizations struggle with because of their resource constraints and I just
wonder if you have a strategy. I will ask the same for everybody.

MS. LOHSE: Absolutely. We like to call it styling for dollars. One of the
strategies absolutely is to make the process and the documents the most
accessible. We have to use technology better than we have in the past. People
have constrained budgets. They can’t travel as much. How do we make sure we use
technology in a very thoughtful way? And I do think we can take some lessons
learned from other industries. We just have not embraced them enough. We had a
lot of lessons learned from NACHA to do everything online, do things like
conference calls, and make sure that you are available. If certain entities
cannot attend the calls at the time, you need to have staff that can walk
through all the materials at another time and that means resources. You have to
have the resources for the acceptability.

Additionally, I would say that moving forward that outreach and coordination
with things like the rec centers and the HIEs. The more we are able to show for
administrative simplification that it is aligned with some of the clinical work
and the more we are able to work with that alignment you are going to have more
people at the table because they are going to see the effort that is put into
align resources and it is more relevant to them, but I think that plays a big
part in it as well.

DR. WARREN: Sorry I misspoke. Walter has the last word.

DR. SUAREZ: It is a two-part question, but it is a very quick one. This is
about in your slide eight you talk about three major CORE operating rules,
parts, components for eligibility and claims status. The first one is a set of
infrastructure. The second one is the eligibility content and third is claims
status content. The two-part question is are there interdependencies between
the three or at least between, for example, eligibility content and
infrastructure that will require that operating rules within the infrastructure
be part of the eligibility. That is the first question.

The way one would think or maybe this is a wrong perspective is we have the
standard. We have the implementation specification — 750-page 837 or concrete
document that has that. The operating rules one would expect there is a book, a
document that has this as the operating rules for eligibility. As part of that
book do you see infrastructure element in it, eligibility content elements in
it or do you see just the eligibility part be the operating rule itself and it
has no interdependency with some of the other? That is the first question and
maybe you can address that.

And then the second one is in your slide you have a little marker that a
simulated case rule requiring data content that is not mandated by federal
regulations. My question is in the operating rules do you require data content
that is above and beyond the standard?

MS. LOHSE: I will answer the second question first. Yes.

DR. SUAREZ: You do.

MS. LOHSE: We do absolutely, both with the eligibility transaction and also
with the claims status transaction. Yes. Those additional data elements were
driven by research to get to reducing the cost and clean efficiency obviously
supporting the standards to do that.

The second question with interdependencies we have viewed this as there is
interdependencies everywhere. There is interdependencies among the data content
and the infrastructure and that goes to a technical level, but also when
entities implement HIT they are implementing that across their systems which
are all interdependent. Then we also look at it as there are interdependencies
in the full revenue cycles, and you cannot look at one transaction whether it
is the data content or the infrastructure, and not consider the bigger picture
within the revenue cycle.

And then additionally, there are interdependencies within the industry. With
the health plans, the clearinghouse is in the providers. The CORE rules have
been packages of rules that include 11 rules or 12 rules or 13 rules. All of
the interdependencies between the data content and the infrastructure are
essential. There are things in the connectivity that have to align with the
eligibility content and then also addressing the interdependencies among the
entities that are exchanging data. There is a role for the health plans. There
is a role for the clearinghouses and the providers.

If we don’t acknowledge the interdependencies, I think it is going to be
very hard for us to move forward. It is a great question, Walter.

DR. WARREN: Thank you very much, Gwen. Our next presenters are from Linxus.
Did I say that right? Linxus. You confuse me when you have syllable in the
middle here. We have Richard Donoghue and Eric Wallace. Thank you.

MR. DONOGHUE: Good morning. My name is Richard Donoghue. I am the senior
vice president for strategy and planning at NYU Langone Medical Center and with
me here today is Eric Wallace the executive director of Linxus. This is my role
at NYU. I am the current chair of the board of Linxus. There has been a lot of
terrific conversations this morning and presentations about why we are all here
today and the importance of this subject most of which we also kind of covered
in our written materials so I — to repeat those items.

I think what I would like to do this morning as my component of this is
bring you through a little bit of how one system evolves and I think it goes a
little bit to answer the question that Lorraine just asked about how do you get
real ownership of moving this from the people who are in the parties that are
very much involved and need to really be driving this change. I will go through
a little bit of that and — to Eric who will — some information on lessons
learned as well as our view about this could evolve in the next couple of
phases.

Just to give you a little bit of background on Linxus and how it evolved in
2003. Of course the mandate for standardized transactions and code sets became
effective and pretty quickly we were in that — this really didn’t help. As a
matter of fact, it has created all kinds of problems for us.

There was a small group of us that got together: Montefiore Medical Center,
NYU Langone, Empire Blue Cross and Greater New York. The people who got
together were senior executives from those organizations. It was the chief
financial officer from Montefiore, myself from NYU and the chief operating
officer of Empire. And we got together because we were so dissatisfied about
the HIPAA transaction sets really created more of a problem than they did
anything else because now we had communication going through electronically
that created no information really and we had to make even more phone calls to
try to figure what was going on.

We got together as a little bit of a pilot and we essentially grabbed up our
billing operations and our IT operations and put them in a room. They all
believed that the other side had just created this problem just to satisfy
their own business imperatives and we brought them in the room. We forced them
to talk to one another and they come out of the room and said holy cow. They
think this is as bad as we think it is. Maybe there is a way we can work to fix
this. We began to work hard through examples of issues on how we could really
implement what HIPAA was trying to achieve. It was not an easy process. It was
very detailed. It was hard work and we actually made some progress.

Your sort of founding principles, as we started getting into this. It was
all about consensus. It was about mutual value. It had to be valuable for both
sides of this transaction. The imperative was driven, not relationship driven.
Reach specificity, interoperability, openness, accountability and clear roles
and responsibilities. That was the way in which we approach this.

The piece that is missing up here — in 2005 we hired Eric Wallace because
we knew we needed someone to really start driving this force that we were
trying to do this kind of from a committee perspective and work with our teams,
but we really needed someone to help our people and work through the day-to-day
issues to go some with what Gwen just specified. You really need people on
ground. This is their job to help drive the change.

In 2006 the three entities that were involved — the results with that,
Brennan, other members of our community, health plans as well as the medical
centers in New York and said this is what we achieved as a small group. Let’s
see if it can be something that can move at a higher scale and we began the
process of seeing about ruling out what NYU and Montefiore and Empire had done.

In this transaction, the original set of transactions, NYU played the role
of the hospitals. Empire played the role of the plan and Montefiore had very
large position component and that was kind of how we brought Montefiore in and
their role was to play their doctor element of this and that is how we brought
it forward and then brought it back to our entities.

In 2007, we spent some time with the other members that you see there in
2006. We unanimously agreed that we needed to create this as a separate legal
entity, that this was a really good idea and it needed to have more formal
structure to it so we created a non-profit organization, Linxus. It is pretty
much controlled, 50 percent by the plans and the providers. Its budget is
funded 50 percent by the plans and the providers. Interestingly we didn’t make
it so cheap. The hospital’s fees were $40,000 a piece and the plan fees were
$60,000. This is just to make sure that the annual effort involved is
significant and focused and everybody has paid their dues consistently and we
have done some really good work I think as a result of that.

With that you see the here the implementation specifications: version 1,
version 2, and version 3. We tried to take this imaginable function. We haven’t
provided you with all the details with that and certainly we can do that and I
think it is posted on our website. If you want to go through those, we can
certainly do it.

We have gone through a process of each year, the groups getting together. We
meet quarterly as a board. There is very strong participation from the senior
executives from each of those medical centers as well as senior leadership from
each of the plans, but yet a detail of what we do is make sure that our staff
and patient financial service and IT are working very hard and closely on the
different work groups. We have an enterprise that has the ownership of the
leaders of those organizations and then we have the work groups that have
significant people with technical expertise who engage on a regular basis to
make progress on the things we need to do.

When we look at the imperative here — what we even found those with that
kind of leadership involvement is — because this is a voluntary effort we have
slippage at times. Our tension spans are pulled in so many different ways that
what we have really concluded is it needs to be strong, regulatory mandates for
the way in which these things have to evolve and then the organizations will
jump all over it.

We really believe that there is substantial value here, substantial value. I
think that what we can do is probably skip through, Eric, to some of the other
pieces of this.

Number one, we feel that there really needs to be a level playing field of
the business priorities of all the parties need to be equally considered. When
I think about all the priorities, with all due respect to the IT vendors that
are out there, I think they are a very important component of all this, but the
parties involved here are the payers and the providers. We are the ones that
have the mandate to fix this. The vendors are supporting actors and really
important ones, but at the end of the day the leading players here are the
providers and the plans. We need to be equally involved in figuring this
problem out and taking ownership of it.

We think there needs to be an imperative for the industry. On health reform
— actually this is kind of — we are all kind of familiar with some of these
numbers at this point, but the Medicare cuts, the $597 billion.

Interestingly, we believe that on the plan and provider side, that kind of
money in administrative simplification, but it is not coming from the
government. That money is coming from the plans and the providers and it can
come if we simplify the administrative component of the way we operate. But the
governmental plans there is a really good way in which we communicate now with
Medicare and Medicaid, but we don’t communicate very well between the health
plans and the providers. That is what we think this is really all about, but we
need the government to create the rule set for the way in which the plans and
the providers get together.

I think we have here some numbers. Again, I think that is kind of repetitive
for what I have just gone through. What I would like to do is turn it over to
Eric on some of our lessons learned and the way in which we think we can go
forward.

MR. WALLACE: Great. Thanks, Rick. Again, I am Eric Wallace, the executive
director of Linxus. As Rick just outlined, obviously a lot of the problems that
have I think brought us to this room today — we had a chance to actually meet
with the Congress and talk through legislative language for administrative
simplification because I think a lot of the common themes and issues that we
are experiencing I think are consistent with what a lot of panelists will be
talking about today. As we think about what some of the lessons are that we
have learned and how do we go about constructing a way to resolve those
problems, I think all of these are critical points to consider and at the end
of the day we are trying to bring this back to a cohesive and a structured
process whereas Rick said we have equal participation of the trading partners
who are really responsible for driving down the costs and that is the payers
and the providers.

Let me just talk about in terms of regulations because I think Rick hit on
this very clearly that we can’t do this voluntary as an industry. Regulations
are absolutely essential to making this work. We have tried to do this on a
voluntary basis. We have had now standards on the current version. They are now
12 years old. It is an entirely too long of a maintenance cycle to try to move
this on a purely voluntary basis by moving to new versions of standards. What
the regulations provide is they provide an ability to have a routine and
predictable maintenance cycle and we must have a routine and predictable
maintenance cycle that aligns all the interested parties.

Basically efforts of Linxus have been trying to identify where those gaps
are in the current standards which if you go back to the previous slide, you
will note that there was an implementation guide that we are currently working
with 4010 that was produced in the year 2000 which incorporates really the
business knowledge of the late 1990s. We have evolved considerably since the
late 1990s and we really need regulation to help move us as an industry to the
next version with industry input. We can’t wait for industry adoption to happen
on a purely voluntary basis.

We would suggest even though HIPAA originally called for annual reviews that
we go to at a minimum every two-year review cycles which says basically the
industry has to come forward to say what are the issues with standards, what
potential operating rules are necessary, and what do we need to do in order to
fix problems and then regulate the implementation across the entire industry. I
think that will really get to the disconnect that I think we are all
experiencing between standards and the business needs that are necessary.

I think there are a lot of advantages to actually moving to the more routine
and predictable cycle. Number one, the business users as Rick said the folks
are in the patient financial services areas, the folks in the revenue cycle who
are dealing with the phone calls to the payers and having significant issues
with interacting electronically can come forward actually and begin to
incorporate their feedback into national mandates as opposed to having to wait
every 12 years for the new standards to come in. I hope that we get an update
that fixes those problems instead if we had a predictable cycle we could come
forward and bring those issues and make sure that they are getting
incorporated. I think you would see a lot more participation.

The implementers of the technology of the vendors, the folks who are doing
internal work I think also would be able to better manage resource if there was
a predictable schedule where I could actually look into a two-year advanced
window and say I know what my implementation requirements are going to be and I
can actually begin to resource accordingly around what the technical
requirements are rather than essentially having to do some guess work around
when the regulations might actually gain some speed.

The regulators obviously want to have a better understanding of where the
industry is and have some sense of scale of what the industry can actually
accomplish and if you have a two-year cycle, you can actually begin to scale
around what can be done in a two-year window as opposed to a last minute rush
to try to get everything in because of a concern about having to wait a long
time for the next regulatory cycle. That would greatly improve the oversight
function for the regulator.

And obviously the standards developers who are trying their best to try to
incorporate for the industry into their implementation guides set timetables
will give them the ability to actually prioritize their work, move things into
current versions of implementation guides that can be adopted to regulation or
defer to the next version of a guide so that we have some ability to actually
prioritize those things, but not necessarily go back to the industry to say we
are not going to incorporate that because we have to get the regulations out.
Rather we could say we are going to include it in this version but we are going
to wait for a change in particular that you have a concern with to the next
version. It is only two years out so you don’t have to wait a long time for
that.

I think the idea of an annual cycle is probably pretty aggressive, but a
two-year cycle I think that is pretty reasonable and it gives people an
opportunity to actually experience from the implementation perspective where
the issues are, where the problems are and then begin to incorporate that into
next versions.

The other part of — once we have these mandates they have to be balanced
and they have to have technical experts and they have to have business users
not just the technical experts driving the business mandate, but both groups
together really making sure that that happens.

And then it has to have, as Rick said before, equal direction from business
users from the payer and the provider as well. Both are interested parties and
have to be at the table.

The certification function is the next thing I would like to touch on which
was raised earlier and we have to have a process that works better than what we
have today and obviously audits are going to be very helpful. The complaint
process has not worked and really there is no organization today that is out
there that is capable of operating rule and standard certification. And the
most important part is that you have to have a group that is going to be
equally controlled from the payer and the provider perspective looking at
certification because we have to have that feedback loop to go back into
standards of development. You can’t have certification identifying problems
that then can’t be fixed. You have to be able to take that level of
certification because it is going to surface issues and when it surfaces those
issues it has to go back into the standards and operating rules development
process.

I think we have talked about this that the idea of having funding and
governance really over the process and that is absolutely essential
particularly the funding to make sure you have the folks who can align the work
that is being done with the policy goals and really making sure it is their
full-time job.

I want to touch on our recommendations. Our recommendations are both a short
term and a long term. I am going to show you a couple of pictures and you have
some questions around those, but basically we want to talk about long-term
solution around standards and operating rules because we have viewed this as a
single process. Any goal of this is to be able to make the standards work
better. We have to be able to have a business imperative and we have to be able
to have a good open process for development of technical specifications.

What I want to talk about today is a proposal. This is a picture and this is
for purposes of further discussion and actually what we would like to do is
propose that we actually have this longer term discussion as a committee in
another hearing. What we want to be able to do out of this is have meaningful
standards and operating rules consistent with what is in statute and we believe
this particular model says there is a guideline for how we do regulations going
forward.

What we see is on the left hand side what we are calling just for purposes
of this discussion is steering committee and that is to represent the business
imperative and that would help set the policy direction for standards and
operating rules and I think get the right people to the table. The question was
asked how do we get the people to the table and you have to have a group of the
committed stakeholders, the ones who are going to be responsible for reducing
costs, bringing the right people from within the organizations to the table and
making sure they have a voice. We think this is an essential part of standards
development and operating rules development. It has to be equally directed by
the payers and the providers so that any version of standards or operating
rules that get proposed for mandatory national adoption won’t just clear
standards experts, but also have clear input from the business users.

We actually shared this conceptual model with AHIP and AHA. We are planning
to meet and discuss with the AMA as well and we actually would like to request
some more time for these discussions to see if we can reach consensus in
setting up this entity so it has a national footprint beginning on day one and
represent health plan, hospital and physician business imperatives.

We have also approached CAQH CORE because we think we collectively have a
considerable amount of expertise and knowledge around the business imperatives
and I think collectively we would be able to add tremendous value to the SDO
work products.

In this model SDO work does continue as it does because it is public. It is
open. It would have the added responsibility, however, of creating operating
technical documents and instructions in addition to the implementation guides
for standards. We are strongly recommending that the standards and operating
will document creation be managed under the same DSMO umbrella so the energy
creating operating rules are following the same procedures in accordance with
the American National Standards Institute or ANSI.

The operating rule technical documents should be subject to the same
disciplined procedures that are already required for standards, technical
documents, and instructions and that the current SDOs are already set to
accommodate through ANSI if the ANSI process if they follow. And finally on the
left hand side as you will see the certification function falls under the
business imperative group.

The model is — it is again a work in progress. It requires substantive
conversations between the various parties who are contributed to date and we
have begun talking to several groups as I have said about getting this up and
running, but we do recognize that we have to meet a short-term objective being
able to get claims status and eligibility operating rules developed when we
talk about the short term.

This is a model that we are proposing for the short term so that we can
ultimately get to the longer term vision of bringing these parties together.
What we are going to propose essentially for this interim process is that the
SDOs, X12 and NCPDP for example, are the only entities that publish the
operating rules for technical documents in instructions for claims and
eligibility. The SDOs are the technical subject matter expertise for
eligibility and claims status transactions and they are experiencing publishing
consensus, technical documents already.

The SDOs must agree to in turn for this publish file documents for the DSMO
to present recommendations for final regulation that have to be issued by July
of 2011 and refer to recommending the SDO’s file identical procedures required
for ANSI-accredited status in developing operating rules and for the operating
rule technical documents.

Furthermore, we are to insure that the business imperative for providers and
health plans incorporated into SDO technical documents we are recommending that
all groups like Linxus, CORE and any other entity that believes this created
operating rules that they would all independently submit the recommendation
request to the DMSO. In fact Linxus has already done this. We have submitted
our recommendations and our requests to the DMSO and we are going to work
through the DSMO to triage these recommendations and requests to the
appropriate SDOs and we recognize that some of our recommendations and requests
will not be operating rules. In fact many of them may be considered updates
that need to go into the next version of standards after we have implemented
5010.

The decision by the SDOs either create an operating rule specification or
updates standard specifications is the critical role the SDOs will provide
under our interim proposal.

The legislation clearly states that standards or implementations that an
operating rule is distinct in that the operating rules are guidelines that are
not defined by standards or its implementation specification. Charging the SDO
to differentiate that our requested operating rules specification is either
standard update or an operating rule avoid the risk of duplication of effort or
conflicting requirements. If an entity does less expert and standards charge
creating operating rule effect specifications on a parallel path, we run that
risk.

Finally, the SDOs have the responsible entity for creating eligibility and
claims status operating rules. It centralizes. It streamlines decision making
so there is less risk in meeting that July deadline. If we have multiple
entities coming forward with recommendations and then the committee having to
choose between them, I think that may add some more time to actually getting
the consensus.

I think that the work that all of us have done in trying to come with ways
to fix the problems around administrative simplification will be incredibly
important and informative to the process of updating standards and creating
operating rules.

We do recognize that our recommendations would have certain limitations and
that we have had predominantly providers at the table who represent large urban
academic medical centers, but we think the process that we went through is
incredibly valuable. We got through a level of specificity and granularity that
I think is very informative to this overall process and we are confident in
submitting our recommendations through the DSMO and through the SDO is to have
the creation of operating rules happen in that forum because of the open nature
of that type of a forum.

The final reason I think that this interim process was well is it is really
a test case to give us an opportunity to take a look at what is working through
the current process of developing not just the implementation guides, again, on
that more regular cycle, but also the operating rules documents through the
SDOs and be able to react to that to be able to come back to this committee as
we look at the longer range plan as we presented earlier plus the additional
transactions that we know we are going to have to incorporate.

For that I think we are happy to answer any questions. We very much
appreciate the opportunity to talk with you. Thanks.

DR. WARREN: Just to let everybody know after we have the questions, we are
going to take a 15-minute break before we hear the last presentation.
Questions? I know Walter has his hand up.

DR. SUAREZ: I will start.

DR. WARREN: No.

DR. FITZMAURICE: I will be quick. Let me ask. Is the Linxus process a
consensus-based process? I am interested, both between interested and concern,
about the breadth of the representation at Linxus, that is, the national
representation with what you have to offer.

MR. WALLACE: Sure. I will first take a cut at it and then I will let Rick
jump in. I think, again, as Rick outlined earlier the way Linxus formed, it was
in response to the inadequacy of the national standards. Our input process was
through the committed volunteer effort of organizations that noted the
delinquency of standards and wanted to actively work on improving it. We have
the challenge of playing in organizations that want to take an active part in
that voluntary process. Ultimately the lessons that we have learned we believe
have to go through an accredited process of consensus developed.

It is why we have very closely been working with green recommendations that
we have come up with to X12, to the SDOs in order to basically take what we
have still tested and bring it into the larger national process. We know again
the constituency that we pulled together doesn’t meet the requirements of an
open consensus process as is defined by ANSI and other accredited standards
organizations. We think we have become very much a theater to that because we
represent the business imperative. It is important to have that business
imperative perspective and have a broad perspective and one of the things that
Rick mentioned when we incorporated was to bring an open process for providers
and payers across the country to join who have an interest in driving that
business imperative and the goal was to be able to have anyone who is
interested in participating in that capacity help to inform the standards
development process.

We think that you have to have people at the table. You have to have the
right level of people at the table and then you have to have an open standards
development community of forum to be able to drive that in an open and
transparent way.

MR. DONOGHUE: If I could just add a little bit to that. There is no question
that the group that we have put together at Linxus is very regionally focused;
however, I can tell you that for NYU our patient base includes people who are
principally covered by national plans and national products. There aren’t too
many companies that have their headquarters in New York, but everybody has
representation there. The plans are developed on a national place somewhere and
the patient base knows it is taken care of on a local plus the fact that we
have patients coming from New Jersey and Connecticut.

We appreciated right from the start that having a new work based activity
was woefully inadequate. However, having said that we thought that were some
things that we could do to work on. What they are looking for and I think what
Eric is suggesting and what we would like to do is engage in a conversation
that brings players and representation from a national base. I guess in my
dream it would be the national hospital organization would appoint some
critical people and the national AMA would appoint some critical people and
AHIP would appoint some critical people and we have the key representations
that would be there who would really take on the role of the activity that
Linxus did in New York. That is what I would like to see happen.

DR. SUAREZ: Thank you also for the testimony. It was very helpful. Just a
couple of questions. One is above the implementation specifications that Linxus
has put together are what you would consider standardized companion guides
through the implementation specifications? Ultimately the implementation
specifications that are in statute or in regulations are the implementation
value for the transactions. You have mentioned in version three of the
implementation specification for eligibility claim status, remittance
transactions. Are those companion guides for your perspective?

MR. WALLACE: Yes, I think there has been no question about companion
documents that you are asking. I think the implementation of companion
documents by the industry has been very — it has been non-standard as well, a
lot of different interpretations about what a companion document does and what
kind of instruction it should provide. One of the outgrowths of a lot of detail
in those companion documents have been because of the amount of variability and
flexibility in the base implementation specifications or guides that have been
published.

As I have begun to talk a little bit more to the standards organizations and
understand what happened in 2000, there was a very sensitive and analytical
view about what standards should do from the beginning which was provide
maximum flexibility with the trade off that that flexibility would reduce over
time.

One way to reduce that flexibility that health plans could communicate if
they felt that their flexibility was too great on the implementation guides and
they want to give specific implementation instruction how they handled that
situation rule. They would try to imbed that in a companion document and try to
provide some clarity around standardization that they had taken in their
interpretation of the guides and while that is helpful each plan did that on
their own and that is the non-standard standard that was identified earlier by
Lorraine and I think ultimately we want to be able to get to it. As I said it
is not a 12-year cycle where the plans are independently making these judgments
about where the implementation guides and the standards have flexibility that
is creating confusion and lack of good work process with the providers to
reduce costs to actually have that imbedded out of companion documents into the
implementation guides or standards.

I think that really is a consensus-based process that has to unfold with the
right people at the table so that we are working on the things that really do
drive the costs and you can’t necessarily have just technical folks trying to
assume what the business imperative is and you can’t just have the business
folks driving the technical work product. They have to be really working in
harmony with one another and that is where that I would say that move away from
companion documents which try to account for or limit variability where that
role comes into place. We are not talking about documents anymore. We are
really talking about process and the process to be able to get to consensus and
greater standardization.

DR. SUAREZ: Your implementation specifications include what?

MR. WALLACE: So our specs are dealing with content because content — I will
give you an example for 5010 for the eligibility transaction. The eligibility
transaction says in 5010 different than 4010 you have to give a primary care
physician in the eligibility response. For patients that have to have a
selected PCP provide that information. And it is not specific in terms of what
data elements have to be included that are useful to a receiver to say what do
I need to know about this PCP in order to drive further transactions or be able
to drive a referral, et cetera.

We want to answer that level of specificity to say if you want to return PCP
and here is the structural of the transaction where certain fields can be
returned, you must return these pieces of information that are valuable to the
provider to understand what you need to know about that PCP there and — number
there, their phone number. We wanted exercise of trying to figure out what does
the provider really need, what does the health plan actually have within their
core systems that they can provide and come up with negotiation of what can
actually be accomplished.

Ultimately review what is in that document and that specification that we
came up as a future version of the standard. That should go into the
implementation guide for consensus process of everyone at the table because we
think we have come up with a definition. It may not work for everyone. It may
not be achievable in the next version of the standard, but it should be on the
table.

And that level of variability or openness in what can be included down to
the detailed level is really critical because otherwise if I am just getting a
wide range of responses from my plans in terms of PCP then I have to build a
different process to each plan on what information to give about PCP and what
that means. I am going to pick up the phone and call. I am not going to rely on
the electronic transaction.

DR. SUAREZ: Thanks.

MS. TRUDEL: So obviously LINXUS started quite a while ago with a very
specific need and at some point in time did you give any consideration to
saying this is pretty consistent with what the CORE folks are doing? We are
just going to move over there and if you thought about that and decided why
not.

MR. DONOGHUE: We engaged in a conversation last July. We contacted AHAP and
CORE to begin the conversation because we thought as the deliberations were
taking place with regard to legislation of national health reform. It is a
really pretty good idea if plans and providers actually got their act together.
I think CORE had been involved in the conversations already which were doing
terrific work and there was lots of other activity and unfortunately those
conversations didn’t really get a chance to take off as the process last year
was — the process was what it was.

We have as we have been coming closer and closer to this we have — we have
reached down and tried to have some conversations. I believe that those things
could evolve in a good way, but I think it requires a blending of the views. I
think one of the reasons why we are here today is we do believe that that is
where this should go and we would like you all to create a framework in which
those conversations could take place.

DR. WARREN: Any other questions?

MS. DOO: Thank you. The same question that I had asked to Gwen earlier. For
you all I knew a meeting with your constituents, plans and the providers. What
did you do or what would you suggest we do as we move forward of getting more
people to the table participating in both the development and the actual voting
so we feel like the Federal Government is adopting something that for thousands
of organizations and millions of dollars that really is representative. What
are your recommendations?

MR. DONOGHUE: I will start and then Eric can jump on that. I think what we
were able to do in New York which was at the time was very helpful is that we
were able to bring together a group of leaders within the organizations that
became part of Linxus with a vision about how we could actually influence the
way that communications work and create value. Now what I think what we are
looking for here is for the same type of thing to happen at a national level
and that very senior leaders become part of the governance of the organization
that Karen just — again, in my vision of this I would like to see an
organization that is a non-profit organization governed by senior executives
from the plans, the doctors, the other providers and the hospitals. And that
those people are with a charge to say you as an entity are going to really help
shape the way the administrative simplification takes place in this country and
that there is enormous value there. That is a huge charge, but I believe that
is one that is actually capable of being achieved.

It will only be achieved if you have that kind of gravitas, if you will,
sitting there leading it and then directing the technical aspects of how it
actually takes place in the field because the work groups — people like me are
useless in a work group, but we can bring together the technical expertise
within our organizations to make all these work groups really effective and
give them guidelines and debate with our peers what are about the things we
should be focused on.

MR. WALLACE: In adding to that I think that is absolutely a hundred percent
correct. In order to get people to our table it was Rick and his ability to
bring the right stakeholders within his organization to the work groups and
frankly hold them accountable for the work products that are being developed.
It is absolutely essential.

I think we have heard in going back to problems that we have been hearing
about that we haven’t had enough provider participation in the work groups
going on at the national level and there are some real reasons for that. Even
within New York we have a broad range of providers who have different levels of
technical expertise because either they are going to be entirely developing
technology in house. They have an IT staff and they have built in all the IT
capability within their organizations or they fully outsource. They have the
full range even just in this New York membership where the IT function is
completely function as completely outsourced to a vendor and the other end of
the spectrum where the providers doing all the IT development on their own and
the question becomes from the provider’s perspective in being able to help set
a direction where do you send your people and if I don’t have the internal
technical expertise as a provider to go to a standards development type of an
entity that is predominantly engaged in technical speak, is my voice really
being heard and that is the issue.

There needs to be a place for those entities that regardless of how they
have decided to build their IT function whether it is doing it all internally
or whether they have outsourced to a vendor that those providers can have a
seat at the table and provide the direction and that is really what it came
down the decision that we made with Linxus was a board of the governance of the
decision making has to come from the payer and provider discussion, and then as
the folks who are responsible for their entities they have to bring their
people to the right technical work group discussions or in this case as we are
talking about to the right discussions for the operating rules and the
standards development at the national level and get them to participate there,
but if they are not at the table and if they are not helping set the direction
and this conversation is being driven by folks who are mainly technical, the
provider isn’t having a direct voice. There needs to be a direct voice to the
provider.

MR. DONOGHUE: If I can add one more piece about why I think the providers
haven’t been here, I think to a large degree each of the provider national
organizations have had different sets of priorities as the conversations got
engaged in. When we tried to reach out to the Healthcare Financial Management
Association and American Hospital Association and others, at times their
legislative agenda was very, very different than this piece even greater New
York. I feel I was chairman of Linxus during this process and I couldn’t really
get greater New York legislative agenda to kind of focus in on some of the
things that I would like to have done on this aspect of it.

At times I think people just — it is so hard. The work in front of you all
is so hard that people kind of says somebody has to work on that. Everybody
agrees somebody has to work on that, but they just don’t see how they can
participate. I really do think they have the chance of creating something that
can do that.

DR. WARREN: Let me ask one question and then Justine. What kind of hit made
with your presentation that I thought I should probably also ask Gwen the same
thing is that all of you are dealing with people that are in large metropolitan
areas. How are you going to engage the rural folks that are in this which
comprise the majority of the United States even upstate New York which is
incredibly rural?

MR. DONOGHUE: Absolutely right.

DR. WARREN: How do you see a responsibility and Gwen needs to answer too
after Richard and Eric do.

MR. DONOGHUE: I do believe that when you push the appointment of individuals
to the entity that I was describing. We have great examples of people from all
elements of our industry who participate on national committees and national
bodies and representing a kind of constituency that you are talking about. I do
believe you can get their voice into that governance function. I think it is
very hard for them on a technical basis. They can influence. They can send
input though. I would say to a large degree that is a group of entities, the
rural hospitals that are going to rely upon vendors. They are going to rely
substantially on vendors to give them a platform that works well.

I believe that one of the things that certification needs to do is go beyond
just the certification of the plans. It really needs to go to certification of
the providers which in this case is probably the vendors. If we move towards
that place, get leadership from rural at the table or the governance function,
but really drive through the vendors who are the ones providing this kind of
technical expertise up for them. NYU has a set of resources or Montefiore thank
you from I think later on today in our IT shops that are really quite
extraordinary, but even then we rely upon lots of vendors. We definitely need
to be making sure that those parties are involved.

DR. WARREN: Do you want to add anything, Eric? Okay, Gwen.

MS. LOHSE: I guess I look at three examples that I can think of at the top
of my head. Ohio, Texas and Colorado all had draft legislations about
administrative simplifications. We know this is not a unique conversation we
are having. It is an important one, but it is a national issue that is
happening at a regional basis across the country.

I think as we think about reaching out on a rural area, we really need to
think tactically A how to bring the leadership to the table, but B also make
use of the regional channels and distribution channels that exist. In Ohio, for
instance, they have a hospital association that was very involved in the
national debate or the state’s debate on creating state-based legislation.

Colorado obviously has a significant rural population and when we traveled
out there four or five times about this topic and they actually are about to
pass some legislation, they have thought of a number of tools they can use to
get out into the rural areas and I think Rick is right. There is absolutely a
critical role that the vendors play, but then also whether and this happened in
Texas as well and I was down there speaking with them several times about two
years ago. The national association for the providers has some great state
networks whether it is the AMA, whether it is the AHA, the AAFP, the MGMA, and
the AFMA. We have a whole list. We need to really take advantage of those
distribution channels that happen on the state level to reach out to the rural.

Additionally I would say the rec centers — they are going to be dealing
with the same challenge and how do we — I know that right now meaningful use
is very clinically focused. I think that ONC made it clear as they move forward
to the next stages of meaningful use, there will be administrative focus in
there. We should be taking advantage of those rec centers and how do we work
with them and learn from what they are doing to reach out to the rural
populations. We need to share lessons learned so we don’t reinvent the wheel.
There is going to be some value that comes out that process and we need to work
with it.

Finally, I would also say the Medicaid has a lot of challenges to reach out
to their folks because of the resources, a whole set of constraints, and I
think we have some lessons there that we can apply in the rural area as well.
It is a great question and it is going to have to happen through collaboration.

DR. WARREN: Since Kansas has 50 critical access hospitals which means 25
beds or less, it is one of the big challenges we have —

MS. LOHSE: Absolutely and if you do want the contacts from Colorado, they
spend a lot of time on a state level. We would be happy to share that.

DR. CARR: This goes back a little bit to the earlier discussion about two
groups working together. Is Montefiore part of both groups?

MS. LOHSE: Montefiore is of course certified and they have been fantastic
participants. You will see in the Phase I ROI study we did for CORE their CFO
is quoted and they really have been great.

MR. DONOGHUE: I think from our perspective we think CORE has done a lot of
really good things. We think Linxus had done a lot of really good things. We
approach things in different ways. I do believe that we have been working
within the framework that was there which was very limited and as we think
about the future we can see a way in which we have a truly integrated set of
activities where again I kind of harp on the governance aspect of this, but I
believe organizations are principally driven by the top. CORE is not a separate
501c3. It is a committee of CAQH. Which is principally governed by plans and I
think that that needs to evolve in a way that is similar to the way Linxus
evolved.

DR. CARR: Just to clarify. For Montefiore to be a part of both was it
because one provided something that the other didn’t provide?

MR. DONOGHUE: Absolutely, and Montefiore was part of CORE on the work groups
not the governance.

MR. WALLACE: Just to take on what I said earlier which is you have entities
that are doing tremendous amount of internal development of IT and others that
depend highly on their vendors. Montefiore is an example of an entity that does
a tremendous amount of their own internal development of IT. They are
participating in many groups. In fact, there is going to be a representative
from Montefiore testifying later as part of the reactor panel. They will be
talking a little bit more about that.

I think when you have an entity like Montefiore with a very large internal
IT staff given the problems that have existed with existing standards I think
what they are reacting to and participating in many different efforts is to
show good faith that they are trying move the process in the right direction
and move things in a way that solves the problems without being entity
specific, but at the end of the day we want to be able to have providers at the
table as Rick said. The governance is essential to make sure that not just the
providers carry the process or just the health plans carry the process, but
that there is a true consensus between the two groups in terms of what carries
the day on the prioritization.

DR. WARREN: Any other questions? Okay. It is break time. I have 10:32 on the
screen. If we could come back about 10:45.

(Break)

DR. WARREN: We are going to continue testimony and we are going to be
hearing from NCPDP, first with Lynne Gilbertson followed by Margaret Weiker
from X12. Whenever you two are ready.

MS. GILBERTSON: Good morning. As Judy said I am Lynne Gilbertson with the
National Council for Prescription Drug Programs. We are an entity accredited
standards development organization that services the pharmacy industry. We
bring together entities from all the different sectors involved in pharmacy not
only the pharmacies, but their vendors, the clearinghouses, the switches, the
health plans, the payers, key prescribing software vendors, key prescribing
systems. You name it. We try to bring together in consensus building. Sometimes
a little bit of varied discussion but that is what consensus is all about and
come together for standards for the sectors of the industry.

Some of our standards for the purposes of today’s discussion have been named
in HIPAA and our discussion today is on operating rules. This is the definition
as it came out of the regulations. The points we want to make on this piece is
that the rules recognize that business rules and guidelines may already be
present in the implementation specifications. There may be needs already met.

Operating rules may cover exchange not already defined in the implementation
specification. They are recognized that the SDOs govern the data content of the
transmissions and the business rules and reference documents that require
support of all that. And then operating rules cannot add, modify, or remove
requirements defined in the specs.

Some of the recommendations we are putting forth is that operating rules
entities must conform to the ANSI essentials. We have discussed already this
morning. It must be open consideration. It must be balanced, consensus. There
must be public review processes, appeals. All those standard practices are just
the right thing to do.

If there are multiple entities names, that is just fine. There should be
consideration on the collaboration of the artifacts and the processes and the
collaboration of actions when those requests come forward as part of the
regulatory process to the DSMO.

The collaboration must be two way: the SDOs and the operating rules
entities. They go hand in hand when appropriate. There would be new versions of
existing documents that must be updated and kept in sync, new transactions and
business cases that come forward whether they are in HIPAA or not and there
could be new methods of exchanges.

Later this afternoon we will hear from the DSMO. NCPDP strongly supports the
recommendations the DSMO will be making.

The operating rules recommendations. We are also suggesting that the
publication of the documents be in sync to the best that they can be and that
they will have to be in lock step as appropriate with the standards themselves.
There also may be considerations where the operating rules will address
problems that are outside the standards. They are just giving more guidance
that is going to be between the versions of the standards. There has to be
fluidity in allowing those documents to come forward as appropriate.

The recommendation is also that when operating rules come forward they must
use the existing processes. We are using today our submissions and to change
requests to the DSMO. The DSMO then recommending versions of operating rules to
NCVHS and NCVHS recommending rules to the Secretary. We have done a lot of
education especially in the NCPDP environment with making sure our participants
know of this process, know what it means, what it doesn’t mean and we would
hate to introduce a whole new process for a separate set of documents.

NCPDP related to operating rules. In our participation in HITSP we were
aware that there was some discussion at one of the technical committees of
looking at adopting the — recommending the CORE operating rules Phase I. The
pharmacy industry had not been involved at all so we really didn’t know what
this was all about. We took a look at the operating rules that handled
certification and exemptions, operating rules sections that had to do with
batch and real time and connectivity and availability, and then there were
sections on X12 270/271.

We somehow got together. I don’t even remember how but outreach with CORE to
say we are interested. We don’t know much about this. What is it all about? It
was recommended that we look at the Phase II operating rules instead of the
Phase I.

We created a task group and actually over discussions with CORE
representatives we build the NCPDP connectivity standard imp guide for the CAQH
CORE rule. This was addressing the connectivity only, the ISO layer that is the
interface with the user’s application. It was recognized that the NCPDP guides
already handled some of the other layers of the OSI.

What the task group did besides creating this document was also to look at
some payload data elements that were addressed in the CORE document and build
the data elements for use in the pharmacy industry. The document only handled
the real-time transactions based on the Phase II scope and there were some
recommendations that industry brought forward that CORE is looking at in their
Phase III.

Of note it just is the reality of the situation. There was limited interest
from the pharmacy industry in working with this mainly because they have lots
of transactions already being exchanged today and don’t really see a business
needs to change them. While we provided based on the HITSP recommendations it
did go forward. We provided this bridging the gap of what can be used if you
are asked to be CORE certified, what does it mean, and then the data elements
that could stay within the NCPDP standard environment so that as versions are
updated of our standards, we can provide the necessary qualifiers that people
need when they are exchanging the payload transmission area. That was the
background of where we have been.

Related to the actual rules for what needs to come forward right now for the
eligibility impact and timing. Prior to Medicare Part D you could count the
number of eligibility transactions pharmacies on your fingers and toes. There
wasn’t any real need. You could do the real-time claim and get all the
information you needed so why bother with eligibility verification.

With Medicare Part D the advent of a TrOOP facilitator, a true out-of-pocket
facilitator entity was built to allow the obtaining of coordination of benefit
ID information for beneficiaries in the Part D program. They appointed a
facilitator and we used a specialized eligibility verification transaction to
exchange that information. From RelayHealth 47 million of these transactions
occurred last year. You can see it is very important and very specialized use
of eligibility verification. We want to make sure that any operating rules that
would come forward do not negatively impact all this business exchange.

We are also a little bit concerned with expectations of operating rules. The
Telecom D.0 train has left the station. People are already getting ready to
test the transactions for D.0. They are not going to welcome going back and
trying to redo something if an operating rule introduces something new. I am
not saying that the operating rules are, but we just have to be mindful of
that.

The other use of the 270/271 subcommittee is very aware of is our favorite
ePrescribing. And we use the 270/271 from the prescriber point of view to
obtain the formulary and benefit IDs that they can use to check patients’
eligibility of their formulary and benefit files. We want to make sure that any
operating rules do not negatively impact this special use of the 270/271 as
well.

As reach out and guidance we talked yesterday about the pharmacy ID card and
in the ePrescribing environment there is a possibility, it may be remote, but
there is still a possibility when the prescriber wants to prescribe a given
medication, they do check the patient’s pharmacy benefits. I have my pharmacy
ID card with me. The medical environment is not very familiar with reading the
pharmacy ID card. We have created a guidance document that helps vendors say if
you happen to want to support in your system the ability for a prescriber
system to take on a pharmacy ID card, here is where the identifiers are and
here is where you put them in the 270 transaction so that you can use the
transactions you are used to with a card you may not be used to.

Some of the information that Karen and Lorraine brought up this morning
related to the situational requirements that are part of HR 3590. This is the
actual rule that comes in to play. The bolded section four is what I am going
to spend a little bit of time discussing dealing with apparent gaps or
problems. We are a little concerned with what it is and what is supposed to be
addressed and how it is going to be addressed.

We believe that NCPDP has met the criteria that are shown in section four.
We recommend we be recognized as such. If we have not met these criteria, we
seek clarification of what the problems are and what the statement was trying
to resolve. It is very disconcerting to see in regulations something that we
can’t fix, we don’t know about, we don’t know what the intent was, and that is
what the cyclical cycle of our meetings and the ability to submit change
requests and all that is all about. If there is a problem, we would like to
know about way before we found out in regulation. Some of this information is
detailed in the letter which was sent to the subcommittee in June.

One of the sections that is described is about data elements being
unambiguous. We believe we have the NCPDP data dictionary that gives you all
the fields and their descriptions and all that stuff. The External Code List
that tells you about the values and their descriptions. We don’t support reason
and remark codes, but we do work closely with one of our work groups and X12.
If there is an overlap on something perhaps that happens in the NCPDP claim
that then needs to be shown in the remittance advice that we get every single
lined up correctly. There is that collaboration as well.

With the unambiguous we also recognize we have spent many years building the
telecommunication D.0. Granted there are problems in the 5.1 world, but that is
old history and we have moved on. But if there are problems, we would like to
know what they are. We have spent a lot of time — we, the collective industry
because it is not me sitting on my high horse. It is volunteers who come in who
want to solve the business problems. The insides contain rules, guidance,
examples, situations or the transaction situations for the segments situations
for the fields. We are not quite sure what unambiguous or additional
conditions. We really seek some guidance on what this is all about.

We also have a freely available Version D Editorial document, which is
updated quarterly and contains frequently asked questions, Medicare Part D
needs that they put forth as guidance for us, questions, further
clarifications, things like that that the industry has available for reference
material for their use.

We also have spent time working with collaborative efforts. Some of you may
be aware of — Minnesota has been very active and working on guidance
information in that state and collaborated to the point where there were no
additional needs for regulatory requirements of the Telecom guide because they
felt that the guide met the needs of the regulation as it stood.

We also published something called the Payer Template Imp Guide which is
something that has been around since version 5.1. It is a guide that the payers
and plans can pull down and use a standard template for exchanging the payer
sheets we talked about yesterday to exchange their business rules, their
routing information, things like that. Once again it is a standard mechanism
for exchanging the very important information between the payers and plans and
clearinghouses, vendors, providers, et cetera.

There are also criteria that the data elements be required or conditioned
upon set values in either field. This statement is really disconcerting. It is
not possible that every conditional data element can be dependent on other set
value in another field. There are business rules. Business rules are not set on
a value that is in another field.

On the next slide I provide some examples. I am not going to read through
them, but one of the simplest ones that were explained to me is pregnancy
indicator if patient is pregnant. What other data element defines patient is
pregnant? You ask the patient. It is a business situation. It is not an element
situation.

The last statement is prohibit additional conditions except where necessary
to implement state or federal. We believe the Telecom Imp Guide has already met
this. It clearly stated the situations must be followed. Additional conditions
are not allowed. And where it is appropriate there is actual language that says
required if necessary for state, federal regulatory requirements to recognize
that we have situations where you just don’t have a business case. You are
being told to do it based on a regulation.

Finally NCPDP believes the requirements have been met. It is really
important to recognize that the efforts of any documentation that are created
by the industry are created by volunteers. We are concerned that if there are
gaps and errors or something that caused some of these statements to be put in
the regulation before we engage the volunteers, we need to know what it is we
are trying to fix. We seek guidance on that as well.

Based on the pharmacy industry, the Telecom implementation guide, our
Version D Editorial I mentioned, our payer template and other reference
documents that NCPDP members create and provide to the industry. NCPDP formally
requests to be named as an operating rule entity fulfilling the criteria
established in this regulation. We are not for profit 501c3. We have been
developing standards based on business requirements for over 30 years. We are
the ANSI accredited organization and have shown our collaboration with other
organizations over the years. We participate in the DSMO. We are publishing
industry operating rules based on collaboration with CORE. In addition our
documents and implementation guides are available for public review as part of
our ANSI accreditations.

The NCPDP bylaws and standing operating procedures support our becoming this
entity. And NCPDP work group supports task groups which are open to any
interested party whether you are an NCPDP member or not and much of our work is
done via these task groups which are held via conference calls. A project team
event at NCPDP will be created to add any new functionality to the NCPDP
environment to handle the operating rules entities.

Collaboration is very important to us. If multiple organizations are named
as operating rules entities, NCPDP fully intends to collaborate with these
organizations. We recognize the need for consistency of process. Our artifact
publication and coordination of recommendations for the operating rules and the
standards as we go forward, in versions and regulations. This recommendation is
forwarded with the commitment of NCPDP leadership. Thank you.

DR. WARREN: Okay, do we have any questions for NCPDP?

DR. SUAREZ: Thanks for this testimony. It was very helpful too. The question
I have is about the need and the type of operating rules that the pharmacy
industry will see are needed basically. You have the standard. You have the
implementation specification. You have several supporting documents that assist
in the process of conducting a transaction and defining and almost eliminating
a hundred percent any duality or any inconsistency or any interpretation in the
standard. What are the parts that operating rules will benefit in the pharmacy
transaction in the eligibility aspect and in their claims status — are there
any — one that I saw of course was the connectivity aspect was part of the
HITSP discussions incorporated into HITSP harmonized elements and then being
adopted I guess as part of the rules. What would the type of operating rules
that would be needed that you see would be needed for the pharmacy industry?
Are there any that you can point to?

MS. GILBERTSON: Well, obviously there is a regulatory charge if you are
doing eligibility verification and claims status which claims status is not
germane. In eligibility verification you have to have something called
operating rules. Part of it would be to bring it back to the industry and say
is there anything we haven’t addressed that we need to address or is there
anything that hasn’t been addressed in another document? Could we cite that
document? Could we cite that guidance? What becomes of the operating rules?
Then you open it up to what other needs are there.

If there really is a need to collaborate further on transmission that would
be something that we would bring forward and work on, but you really have to
ask the industry what problems are we trying to solve and if the problems that
are brought forward has themselves because of these other documents then that
is the proof that the criteria has been met. And we work forward on what the
next set are. Just because the regs named certain things and certain dates that
are due doesn’t mean that operating rules can’t be more overarching than just
individual transactions that are named on individual dates. It becomes where
are there gaps, what are lessons learned from partner organizations and things
like that that we can address that haven’t had a forum to this point. As of
right now I can’t give you a list of the pharmacy industry needs operating
rules in these areas because there has not been anything brought forward.

DR. SUZAREZ: You are recommending or requesting to be named as an offering
organization for operating rules. In my mind in the pharmacy transaction there
is a defined standard and there is the defined for implementation
specifications and then there is all these other supporting documents that you
brought up actually in this presentation that have not been explicitly defined
as required for the transaction. They are supporting documents that assist
organizations conducted for transaction. Would you see those kinds of
documents, those kinds of descriptions of how to conduct transaction and how to
quality the kind of operating rules that NCPDP as an authorizing organization
will bring forward to conduct pharmacy transactions?

MS. GILBERTSON: Yes, it definitely exists. We have the implementation guide
that uses the CORE Phase II rules. That could be brought forward as operating
guidance to bring forward. That is one of them now. Some of those reference
documents that I named that you are referencing are named by reference because
they are cited in our implementation guides so therefore because the
implementation guides are cited under HIPAA they are by reference also —

DR. SUAREZ: Thank you.

DR. WARREN: Any other questions? Marjorie.

MS. GREENBERG: I have to admit I am not quite sure to whom I am addressing
this question, but there is somebody equal in the room that I am sure someone
may be able to respond if not our esteemed panel and I do thank all of you this
morning. It has been extremely informative and helpful.

You commented, Lynne, on being a little fearless about what were some of
these — some of the language came from particularly about changes or
corrections that need to made by the standards organizations in the current
implementation guides and the question of whether something is conditional or
situational, et cetera. I got the same feedback that this discussion was very
active at the X12 meeting a few weeks ago and that everyone seems to be a
little unclear as to where did this come from, what do we need to do, where are
the actual problems and how do we correct them and how much time as you said is
it going to take to do so which you can’t really determine until you figure out
what it is exactly that you need to do.

Am I correctly hearing that from you and I think – X12- the same thing went
on, the same discussion with X12. Is there anyone who has a better
understanding of — it is not where this comes from because who knows where any
of us came from actually at the end of the day. What is really intended here
and what people do need to do to go forward because it seems like as you
mentioned in all of these environments there are a lot of volunteers even if
they are being paid by their companies, the government, who else, and even if
they do get cookies sometimes at breaks. I heard that is only at HL7 not X12. I
can’t speak for NCPDP as to the cookie situation.

We kept hearing from Lorraine how are we going to get more people at the
table and there is limited number of people at the table as spinning their
wheels trying to figure what is going on here. What are we supposed to do? Does
anyone have any insight on this and any guidance going forward?

DR. WARREN: At this point, Margaret, would it be good for you to give your
testimony because I think some of the things you have to say may answer
Marjorie.

MS. WEIKER: It may add some more questions.

DR. WARREN: Well, that always happens.

MS. GREENBERG: Because I really want to hear this testimony but
unfortunately because of the break – we were supposed to break at 11:30, I have
a teleconference. When I walk out, it’s not that I did not like your response.

DR. WARREN: We are going to try and get back on time. Margaret, why don’t we
have your testimony real quick and then we can finish up with any questions
both you and Lynne at the same time since it may help with Marjorie.

MS. WEIKER: Good morning. I am Margaret Weiker, Chair of the Accredited
Standards Committee X12 (ASC X12) Insurance Subcommittee. I am also a Director
of the Hewlett-Packard Business Exchange Services Product.

ASC X12 develops electronic data interchange standards and implementation
guides for national and global markets, and includes among its membership
standards development experts from health care, insurance, transportation,
finance, government, supply chain, as well as other industries.

We are strong supporters of the reform efforts under the Patient Protection
and Affordable Care Act to reduce the complexity and costs in health care
claims processing, provider collections and reimbursement through increased
standardization of common health care transactions such as claims, eligibility
as well as standardizing and simplifying these common payer-provider
communications are the cornerstones of reform efforts to reduce costs in the
health care system. X12 and its member organizations are committed to working
collaboratively in public-private partnership with industry and government to
find workable solutions that achieve the ultimate goals of improving access,
quality, and affordability of health care services for all Americans.

X12 has reviewed the language in Section 1104 and 10109 and offer the
following recommendations to the subcommittee. In regard to operating rules,
the provisions that impact the administrative simplification requirements under
the HIPAA were enacted. One of the provisions calls for the establishment of
operating rules for all HIPAA transactions standards. I am not going to read
the definition of operating rules. We have seen that before.

The goal of operating rules is defined as creating as much uniformity in the
implementation of the electronic standards as possible. ASC X12 supports that
intent. The health care industry’s previous methodology was that the
implementation guides should not control the business processes of every health
care entity, but it should be flexible enough to allow health care entities to
define their own business rules. The implementation guides currently mandated
under HIPAA which are the 4010 versions include a significant amount of
flexibility, or variability in the content of the electronic transactions.

As the industry experienced the difficulties of such flexibility in
implementation, the requirements in the implementation guides mandated for the
adoption of 1/1/2012 which are the 5010 were tightened up and contained
significantly less variability. Moving forward, industry consensus decisions
will be reached to ensure that implementation guides published by X12 will
include definitive requirements for each business function, eliminating
variability completely or explicitly defining that variability so that every
electronic transaction is implementing consistently across the health care
industry. Thus, X12 will be meeting the stated goal for operating rules within
their own development processes without the need for separate and distinct
operating rules.

If operating rules are to be developed separately, X12 recommends the
following. The definition of operating rules should be further explained in the
policy to clarify that standards and implementation guides developed by the
Standard Developing Organizations must control the data content of the
transmission and the business rules and reference documents required to support
the data content which are developed and approved by the consensus body of the
SDO. Operating rules may not violate the intellectual property rights and
copyright protections of the published IGs.

Operating rules must not duplicate, contradict, clarify or further restrict
the format, content or usage requirements of any electronic transaction defined
by an SDO standard and associated implementation guide. Such operating rules
shall not impose further restrictions on the electronic transactions as defined
in the associated implementation guide published by an SDO. Examples of
operating rules are response times, system availability, communication
protocols, hours of customer support centers, amount of claim history available
for inquiries and real-time adjustments in the NCPDP world in regard to
reversals, those types of things.

Effective dates for operating rules must coincide with the effective dates
of HIPAA mandated adoptions. Operating rules must follow the existing
DSMO/NCVHS/HHS processes.

I am going to go a little off script at this point in time and talk a little
bit about the DSMO and the process. Due to testimony yesterday, this morning,
and in reviewing the testimony that was posted out on the website there are
comments about the X12 standards and the implementation guides and the problems
associated with those. 4010A1 is by no means perfect. It had problems. There
was a lot of flexibility into that, but we have to remember where we came from
and where we need to go to. We came from an environment that had a lot of
proprietary formats, six formats, the NSF which is — there was always a joke
about what that meant. You had the UB format and as I said many proprietary
formats.

We went from that environment to trying to standardize into an X12 4010
transaction and there was a lot of angst just moving from there to — from
point A to point B. We allowed a lot of flexibility and we didn’t everybody at
the table at that point in time either which some people thought I don’t need
to go there. I am not going to worry about so they actually saw the guide and
needed to worry about it which became the fast track in the agenda.

We go back in time — one of the first times I was in front of this
committee was to demonstrate the DSMO website for the committee and at the same
time I was told during our lunch break to go on and figure out how to get these
changes. People were coming to the committee and saying we need to fix this
guide. We need this and this. I was tasked at lunch to come up with some
process so we can incorporate these changes into the X12 guide so they were
more workable hence the fast track.

The process still exists today. The DSMO website is up and running. Changes
that I have heard people say they have put in operating rules. They have
mandated the data elements. That was situational. Therefore, now it is
required. Every time I finish transaction it is required. There is no more
situation. I don’t have a DSMO request that says for this data element please
make it mandatory. We have done blah, blah, blah and have found that it
improves return on investment by whatever or it is a whatever. And guess what?
Those go through a process. There are provider organizations in that process.

There are also other SDOs in that process. It is a process that is very open
to the public. Anybody can go out and look at a change request. They can see
what status it is. There is even an appeal process. The person let’s say
submits it and for some reason the DSMO rejects the change. There is an appeal
process even for that person to say wait a minute. I didn’t explain that well
enough. I now see what I should have said. They can go in and appeal it.

I would highly encourage everyone that this is a problem with the X12
transaction to please go in to the DSMO website and submit your changes. We are
working on the next version of the guide, 6020. Now I don’t know if those are
the ones we will bring forward for adoption at this point, but we are working
on the next version.

It is critical that we get these changes in at this point. I don’t want to
be sitting here knowing two or three years and hearing the same thing how 6020
doesn’t meet my business needs. We need to get those business needs in now. And
if for some reason you aren’t comfortable with the DSMO website, by all means
send them to me. I will get them into the appropriate work group and to the
appropriate process or I can submit them through the DSMO website myself. I
digress though.

Now I will continue on with my prepared text. In review and recommendation
of operating rules X12 is supportive of naming NCVHS as the entity to review
and recommend operating rules to the Secretary. In regard to effective dates of
adoption requirements the effective date of January 1, 2013 for eligibility for
a health plan and a health claim status operating rules, X12 believes this date
will be disruptive to the industry.

The industry is actively involved in the analysis and development of the
2012 HIPAA regulations. Operating rules interjected during this time would
force another development and testing cycle. Vendors would have to develop
software for HIPAA regulated transactions and then a year later, remediate the
software to include operating rules or potentially remediate. Providers and
payers would have to analyze, implement, and test on version and then
immediately start another implementation cycle.

The timing of these new operating rules could not be worse, as the industry
will be fully engaged in the development and implementation efforts for ICD-10.
Requiring operating rules that have yet to be developed and not even known to
be needed, will introduce a significant distraction to the work being done in
preparation for ICD-10.

In the future, effective dates for any named operating rule must be
coordinated to coincide with the effective dates for the new versions of the
transactions.

As policies that are developed for the compliance and certification
provisions, the policies must recognize that the developing SDO is responsible
for determining what is or is not in compliance as it applies to the data
content and structure of each transaction defined. X12 will expand the criteria
that define what being in compliance with our standards and implementation
guides mean to assist in such compliance determinations.

X12 is supportive of the expedited and interim final rule making provisions,
as this will allow us to bring forward new versions that support industry
requirements on a more frequent and predictable basis. All three named SDOs,
ASC X12, NCPDP, and HL7 international, have presented to this committee the
need for a streamlined, timely and predictable process for several years, which
we believe this provision addresses.

Now I am going to go off script to say a few more things. X12 also has the
same concern in regard to the data values and the situational rules that Lynne
mentioned in her testimony where a field is predicated on a value that is in
another field. X12 has the same concern and as Marjorie mentioned we did spend
some time at the last X12 meeting doing some analysis of the impact if you take
it literally of what that would mean.

In regard to companion guides for version 5010 we are working with WEDI to
develop a companion guide template. That should be approved fairly soon I hope.

A lot of people think the people at X12 are very technical. That is not the
case. There is a subcommittee that I would point to and say is very technical
and that is our communication and control subcommittee. We do have technical
experts that are in that review to make sure we aren’t violating the design
rules of X12, but most of the people that participate in X12 and I would say
are business people versus technical. If we ran a poll and asked them which
side of the house they fell on, I think most of them would say they are
business people. They are not the CXOs or anything like that. They are worker
bee types.

Also, I would like to state that X12 supports the written testimony of the
DSMO and X12 supports NCPDP being named as an operating rule entity not only
for the pharmacy industry, but for the entire health care industry.

Now, you may ask me why did you go that route X12. One of the items on that
we truly believe an operating rule entity needs to be ANSI accredited. There
are essential requirements that an ANSI organization follows. It is consensus
building. It is open. You don’t have to be a member to participate. If there is
a hardship to participate, that has to be addressed.

The infrastructure for NCPDP handles the operating rules in the associated
workgroup task group without any modifications to procedures of processes. The
NCPDP members also use a lot of the X12 standards. Now, it is true, claim
status is really probably not germane to the pharmacy industry, but it is
moving forward into real time more and more: real-time eligibility, real-time
claim status, real-time submission of claims beyond pharmacy. Who better to
assist the industry in moving there than NCPDP, who wrote the book on real
time? X12 supports NCPDP begin named as an operating rule entity for the entire
health care industry.

Thank you all for allowing me to speak today and I will welcome any
questions you may have.

DR. WARREN: Questions. I am going to limit questions so that we finish at
11:45 so we can get lunch.

DR. SUAREZ: Just a quick clarification. Thank you very much for that
testimony too. You are not requesting that X12 be named an authoring
organization of operating rules. Are you?

MS. WEIKER: Not at this time. At this time we are going to work jointly with
X12. I mean we are X12 – with NCPDP. Sometimes that hat gets confusing. No, we
are not at this time. We are going to work jointly with NCPDP on that.

DR. SUAREZ: If I may, I think you delineated exactly the kind of issue that
I have been so thinking about concerning – Lynne’s, one of the slides that
she had brought to me some of the concerns about administrative simplification.
We create standard. We have implementation specification, implementation
guides. We have operating rules and now we have an implementation guide for the
operating rules which makes it — it is hard to imagine.

There is clearly something that the standards and implementation guide will
define and as you pointed out very well more and more so the implementation
guide itself is reducing the interpretability if you will and certainly the
flexibility too in many respects, but it is reducing the ambiguity of
interpretation of — this and that. In fact even in the situational elements as
I read them in the guide, the situational element is required if. It is not a
situational but they require is rule input. But there are still areas where and
this is a question. Do you believe that there are still going to be areas where
additional standardization of certain processes that are not this part of the
scope of the implementation guide itself? It is the data content and the data
structure, but processes that would be best benefited from establishing
standards and that is where the operating rules will sit.

You provided a few samples of what operating rules would be, but those
examples point to things like response time system availability, hours of
operation, but are there more complete business processes that can be harder to
standardize of all dealing with implementation guides provide — for example,
the eligibility transaction. The scenarios for eligibility information and the
subscribers — the subscriber dependent or the patient going to respond —

MS. WEIKER: They show up with an ID card. They show up without an ID card.
They show up with the wrong ID card.

DR. SUAREZ: In many places those have been seen as undefined in some cases
as best practices and common approaches that the industry in that particular
area agree to follow, but are those the kind of business operating rules that
you see an opportunity to standardize? And beyond the X12 role.

MS. WEIKER: I think so. If you think about it and we will use the
eligibility and I show up to the doctor’s office and I don’t have my ID card
and I think have Aetna. Wait a minute. They changed and I think it is CIGNA now
this year or whatever they may be. I think as far as best practices and
offering what do you do then provider when Margaret shows up. She doesn’t have
her card and she thinks she has Aetna, but Aetna has 50 plans or 50 different
types of lines of business of whatever. I am not even sure which Aetna she may
have. What to do.

I think those could be an operating rule. You need to find out her date of
birth, gender, name, and use that to then inquire on the eligibility
transaction and if you wanted to cross reference it to particular fields and
loops and segments, you could even do that type of thing.

And then if you are coming up with use cases like that which is in my
opinion use cases, you could come up and go there is something wrong here. We
need to make a new data element for her shoe size or whatever because she needs
orthotics. Then we can go okay now we need to go submit a DSMO request. We need
to get this moving and what is a predictable cycle of every two years. Now you
don’t have to wait forever to get Margaret’s shoe size unclaimed. It could be
done in a couple of years.

I think those types of things where you use cases. You do this cross
reference because you may find holes in both standards if need be.

DR. WARREN: Actually I think that example helps me a lot in trying to put
all this stuff together in a hole where operating rules support standards
because I was getting a little nervous when I was hearing that operating rules
were requiring elements that weren’t part —

MS. WEIKER: I get nervous about that too, Judy.

DR. WARREN: But then I grew out of an SDO. Anymore questions from the
committee?

DR. FITZMAURICE: Thank you all for your testimony. I am trying to get a hint
of a grasp of what we are facing here. People say that clinical medicine is
complex. I think the way we pay for health care is very complex as well. I
think we have a lot of different silos and those silos are served by standards
developing organizations. Are silos justified by different business situations?
So far yes. They have been justified by business situations.

I see the threat of government encouraged action, laws, and regulations
first by the signs that X12 want to work with NCPDP to get things just right. I
would be more encouraged if there were HL7, if there were the ASTM IEEE working
together to fill in part of an architecture that I don’t think has been painted
yet about how do things fit together and whose responsibility is it.

I think it is an accumulation of use cases that eventually who blanketed the
field or maybe we start this up and define business situations responsibilities
and out of those comes a use case that make that across some of the silos.
Force the silos to move together. I don’t have an answer. It is the lack of
being able to see how everything will fit together at the end that drives me
crazy.

MS. LOHSE: Michael, I would just support that statement very much so. In the
written testimony we provided from examples where — can support the standards
and more and more even the written testimony we provided some examples where
the operating rules can support the different standards. I think we are going
to see more and more whether it is in the clinical side or it is in the
administrative side.

The interdependencies are significant and we do have them all complement one
another whether it is between the standards or between the communications or
among the entities exchanging data and that is definitely going to drive the
principles the approach that CORE has taken to date. I really think we need to
think about that as an industry your comment because it is critical and
hopefully some of the examples we provide in the written testimony are useful.

DR. FITZMAURICE: I would rather see the recognition of interdependencies
because of not considering those raises cost to everybody and for a long time
we have not considered the interdependencies. It is looking at the top of the
Washington Monument down being able to see — this is how it is, this is how it
should be, and here is who should take responsibility. I don’t see so many
saying the government should be the standards czar, the czar for how people get
paid, but I don’t see somebody coming up by default saying here is how we are
all going to fit together. It is a gap that I see. Maybe that is just a comment
and it is not a question.

DR. WARREN: Okay. It is almost 11:45. In fact two minutes shy. What I would
like to do to get us back on time is have everybody come back at 12:30 and I
know that gives people only 45 minutes. If you feel a need to bring your lunch
back with you, please feel free to do that, but I don’t want to miss any of the
reactor panel or short them on time. Thank you very much.

(Whereupon, at 11:45 am, the meeting recessed for lunch)

 

A F T E R N O O N S E S S I O N (12:30 p.m.)

DR. WARREN: Please remember we are giving you 10 minutes. You need to be very
mindful of people who follow you so we are going to cut you right off. We are
going to have five of you present and then we are going to have a brief time
for questions. The first five because we had to make a couple of changes here
are Patrice Kuppe, Peter Cutler, Jeanette Thornton, Jan Estep, and Tim
McMullen. We will start with Patrice.

Agenda Item: Panel B2: Reactions and
Perspective

MS. KUPPE: Good morning. Thank you to the committee for allowing me to come
testify today. My name is Patrice Kuppe. I work for Allina, a large hospital,
clinic, home health, ambulance, DME, pharmacy and lab provider in the State of
Minnesota. I am also a member of the AUC in Minnesota, a member of WEDI. I have
been a past member of X12. I am a member of CORE. I have been a past member of
HL7. My life has been devoted to administrative simplification. We have to save
some money people.

Today my testimony is not going to talk about pharmacy. It is going to focus
on operating goals with X12 and also forms. I want to mention in 1104 it says
not only operating rules for transactions, but to minimize and reduce the
amount and complexity of forms. I think that final goal is to get to EDI.

What I am about to say is based on my opinion I vetted it with some people
around my community, but I am wearing the hat as Patrice who has worked on this
for many years, in fact, with welfare at the Minnesota Center for Health Care

Why do we need operating rules? We want to clarify ambiguous terms we use.
We want the rules to use X12 interpretation requests to help clarify things and
in these I put in a lot of examples, but I am not going to read those because
of my time constraint.

What we also believe we should clarify medical codes. In Minnesota we
clarify medical codes also meaning that if there is a G code that mean you gave
somebody a shot and an A code that means you gave somebody a shot. We all pick
the same code.

We also believe that rules should be coordinated across all transactions. We
did that in Minnesota when we created our rule/state implementation guides and
we found a lot of inconsistencies as data was slow.

We need to clarify code uses by transaction. There is a bunch of codes
called claims status remark reason codes and if you look at that code set there
are millions and millions of codes in there and you have to figure out how you
are going to use and map those per transactions. Right now our state laws are
requiring us to do acknowledgements. The 277 claim acknowledgement is one that
we are working on. We have 700 codes we have to walk through. We are only
through 150 so far, but out of 150 79 do not make any sense for that
transaction. It would be a travesty to have every provider in health plan do
that on their own in this nation, and create their own maps for that. We need
one way to map the message.

In the remittance advice we were the first place in the nation that mapped
over 230 adjustment codes that group them with the right group and remark codes
so when the provider gets a remit, I can automate what is going to happen
because I know that that means the same thing to health plan A to B to C and
what I need to then as a provider.

We believe instructions of usage should be there. The first example should
be obvious, but always isn’t to providers. That is an instruction for
providers. Or instructions about if you are spending a birthday segment, what
is it? It is the patient date of birth when the dependent is the patient.

We believe there should be technical rules. I think we can learn a lot from
NASHA and also what CORE has done, but we need transmission standards and we
need things like response times and obligations. It doesn’t do any good to
implement full-time electronic eligibility if the payer system is down all week
and every weekend.

What should be in the rules? I believe we also should work on best
practices. Minnesota said there are certain things we are not ready to write as
a rule, but we are going to create a best practice and we are going to test it
out. We have things around sending attachments because they are not ready
electronically. We made rules around how to fax things in a standard form and
all that kind of fun stuff.

I fought forever at X12 to get my data needs met for eligibility response. I
said we need to have co-pays. We need deductibles. I need the 270 allow me not
to send a member ID. That is why we have to go write a rule in Minnesota. And
then again we have form rules as labeled there.

The timing of rules. The timeline really makes me afraid that we are going
to waste millions and billions of dollars in our system. I am hoping that NCVHS
can make some recommendations to fix the timing. I know it is in statute, but
so was the health plan ID. We had to have by 18 months after 1996 and we did
it. I have a feeling we can alter things that make business sense.

We also should do things in the order of the food chain. Eligibility should
be our first rule because if we get that right then I will be able to send a
claim correctly and then I will be able to get my remit advice. I showed this
picture to Dr. David Blumenthal and he was so surprised he actually got it
electronically and I said these red arrows are making me very nervous. This
happens to be a Minnesota standard, but all the rest of these are what we are
about to try to implement. Does it make sense to put in 5010, then a health
plan ID, then a rule on this thing that we just did, and then put in ICD-10?
Now we are going to go add a new transaction with its rule and then we are
going to go claim attachment. The order of the transaction is sort of bizarre
and the fact that the rule comes after the new version of the standard.

My theory is we already waited 12 years for 4010 and we are pretty
automated. If we really want to increase EDIs, we need rules so we can show the
value and people will then implement. I would propose we take a good look at
the order of this.

And then by the way down here is meaningful use Stage I which I didn’t put
on this slide but I have it and meaningful use Stage II.

How often should we have rules? I think it should be often, frequent, and a
minimum of at least once a year. That is how fast Minnesota has been doing it.
To do our first rule it took six to eight months. This you can’t probably read
up there, but this is how we decided to approach our rule writing. We laid out
all of our transactions and we did them in the order of I call it the food
chain and then this is all of our voting steps and public comments and then the
state register goes on and it becomes final.

Who should make the rules? I am not going to name an entity, but we need one
place that is led by the users, providers and health plans. If you look at the
makeup of X12 or CORE, you are going to see very low provider participation.
Although they might have a lot of provider association, no lack of respect for
the associations, but you don’t live and breathe the world that a provider does
and my staff does in trying to conduct it. The data needs are known by the
people who have to get the data out the door and then get the data back in.
Providers and health plans should have equal representation. Only members can
vote. We do rely on the experience of clearinghouses, vendors, and security,
folks who help us write the rules, but their scheme in the game is to help us
implement not to make up the rules.

The entity should have a clear mission, guiding principles, and membership
requirements. We need to eliminate barriers to participation. I can’t afford to
go to X12 anymore. You have to travel. You have to be in person. We need the
entity to have web-based meetings. Minnesota rules are done over the web and
the Internet. We have participation from national health plans that don’t
reside in Minnesota because we offer this method. In fact, we only have two
people that support all the work in Minnesota and they are from our department
of Health.

We need to expedite decisions. We need to have representation requirements
and we need the liaison that is government and standards bodies. This is a
quick picture of how we are organized. I believe people mentioned earlier the
strategic steering committee is where our executives are housed. The work is
all done here by operations and TAGS as we call them, Technical Advisory
Groups. They vote at this level. It has to be vetted at ops. If we can’t come
to consensus then it goes to our executives who know that they have to get the
job done.

Why do we need rules? I think you have heard this before. I am not going to
read it all. We need to achieve simplifications.

Specific requirements about eligibility. You know it should be based on the
data provider or patient can read from their card. We do not check eligibility
when you walk in the door. We try to do it before you are at the door if it is
not an emergency room visit. We need whatever that health plan ID is to be
clear on a card so my registration person can figure out what plan to access
and get the information back.

One of the examples is in the 5010. Member ID is allowed to be a requirement
from the health plan for a provider. And I am like if they don’t have their
card, I don’t have a member ID so how am I going to be able to check
eligibility. That is why I am checking eligibility. That is an example where
our rule in Minnesota says to the health plans don’t require member ID.

Claim status. I pray that we don’t write a rule around 276/277. That is a
provider having to go to the plan. What is the status of my claim? And then the
response. The 277 claim acknowledgement is what I should get back when I sent
my bundle of claims. I shouldn’t then have to go ask later what happened to my
claims. If I have the hand shake when they threw them over the wall, I will
know exactly what happened to them.

Other ideas. I do believe in certification. We need to coordinate with
clinical standards. In our discussions in Blumenthal we said guess what. In
Minnesota we are finding out if CCD is in fact standard. We have to write the
rules around how we are all going to hook up and exchange CCDs. We need to see
how what administrative transactions do with that.

Certification should include that if payer is compliant with their web
portal not just your EDI. We want to expand scope of simplification. Eliminate
multiple bodies. I am sorry to say it but we are faced with turf wars in this
industry and so much confusion. I have been doing this since 1995 and I can’t
figure out where the goal for data needs. As Minnesota’s AUC is trying to get
fixed, there is a CARC/RARC code committee that is a website seeing that
exists. There is NUBC who is now in conflict with HIPAA standards on a recent
change on July 1. The NUBC and Medicare decided that this code was based on
this charge date. X12 and HIPAA says no. It is based on transaction date. I
have five and half million dollars in claims as of last Monday denied because
the industry now wrote some weird exception that one level that we are not even
aware of.

We need one place to own all these codes. Providers cannot participate
because I don’t have the money or the time to go do external committee, NUBC,
NUCC, X12 and now in operating rules. If we forget all this data needs in one
spot and then write X12 format syntax standards we might able to achieve the
simplification.

Right now we are trying to create a model to bill medical homes in the State
of Minnesota. We had to jiggy rig eligibility because when they checked the
benefit for a medical home there is no way in the HIPAA 5010 or 4010 to tell me
they are a member of the medical home. We can’t wait until 6020 version to be
able to be able to see that benefit. It is the new world and models are
changing. There are other standards we need, for example, around provider
enrollment.

I would like you to consider re-establishing timelines and maybe start with
eligibility, write an operating rule then let’s go do 5010 on that. Write an
operating rule for claims then let’s go implement that. There is no such thing
as a big bang. Let’s all go to 5010 at once. We should do it transaction by
transaction.

I think I am repeating most of my — that is it.

DR. WARREN: Pete Cutler from Washington State.

MR. CUTLER: As the chair said my name is Pete Cutler and I join you here
from Washington State where I am employed as a special assistant for health
care administrative simplification for insurance commissioner Mike Kreidler. I
want to begin by thanking you for the opportunity to participate in today’s
discussions. I think it is really an important issue, a really important time
and I don’t have to remind you we have both a great opportunity and a great
challenge ahead of you with a very tight timeframe. I am pleased and frankly
honored to be able to be a part of this in any way and be a help to the
committee.

It is great to follow Patrice because in many ways Minnesota was the
inspiration for our legislation that was enacted just last year to tackle
health care administrative simplification. Minnesota has been a great leader in
this area and I agree with many of the points you just made.

For the past two years my primary, work responsibility for Insurance
Commissioner Kreidler and to support health care administration simplification
efforts and specifically by working on a number of work groups that have been
created to develop best practice recommendations for several health care
trainer’s actions and processes including those dealing with eligibility and
benefits, transactions, claims status transactions. Several letters and the
first and my favorite coordination of benefit processes and timeline.

As I said last year a bill was enacted to accelerate the administrative
simplification work in our state. The new law created both a framework in terms
of public role, private sector roles, deadlines which basically required best
standards be set in four areas by the end of this year 2010 and potential
enforcement mechanism that the structure of the bill basically provided a
framework for health plans and providers and I think we share their view from
Minnesota that those are the two key players to come together and develop
agreements on standards or standardized processes for dealing with these four
areas and to do that by — to get agreement widespread adoption of those
standards by the end of this year or if that was not happening then the bill
authorized the insurance commissioner to basically establish those standardized
processes or standards using this rule making authority.

I can tell you that last provision not only put the fear of God into the
health plans and providers in our state, but also of me. It has generated quite
a bit of work group activity in the last 14 months.

The four areas that the statutes speaks to though with the establishment of
a system to collect data to be used for provider credentialing, hospital
privileging, and other health care system needs, enhanced eligibility
transactions, eligibility and benefits and that required standardization on
both batch process and in web-based delivery of information. A standard coding
initiative and initiative provided to pre-authorization and a request or report
dealing with potential for standardizing medical management practices.

The work on these initiatives have been carried out by I think four work
groups which are composed to senior systems and business operations staff
employed by a total of about 20 different health plan payers and provides about
10 of each roughly who are voluntary. Their organizations are volunteering
their time.

Our office has an oversight role and is directed by staff to make sure that
the process in terms of who is included in the work groups is inclusive and
broad based. We created a partner with a private sector organization that
actually provides the staffing for the work groups.

Insurance Commissioner Kreidler also has created an executive oversight
group to advise him regarding the work of the work groups and the progress that
is being made and that executive level group consisted somewhat with what the
gentleman from Linxus mentioned is composed of the CEO level or senior vice
president for operations for several major health plans. Some of are the
largest clinics and hospitals and health systems in the state and also our
state agency has purchased health care. The goal has been to make sure we have
the top level senior engagement and commitment to the work.

The funding for the staff work which is being paid out actually by an
organization, some of you may have heard of, called OneHealthPort which is a
private entity as being funded by on a voluntary basis by health plans and
large provider organizations.

I have given subcommittee staff copies of reports that have been prepared by
our office and by OneHealthPort. For those of you who would like to see the
details and specifically the best practice recommendation documents have been
developed for request and receiving coverage information regarding eligibility
and benefits or claims status can obtain that from the website.

Now, in addition to our work group activity I have also since about October
and November of last year been participating on a couple of the CORE subgroups
specifically the ones dealing with eligibility and claims status. The
eligibility and the claim status, and to a lesser extent on CORE rules work
group. I have the opportunity and I thought it was really frankly important to
stay aware of what was developing with Phase III of those different operating
rules to inform our work on our best practice recommendations.

We have been relatively limited in our involvement because we don’t process
transactions and I am the first to believe that you get much better products
when you have folks who actually deal with the nuts and bolts of the operations
on a day-to-day basis doing the work and having the discussions and making the
decisions. I would be amiss if I didn’t note that CAQH staff has been very open
to our engagement and in fact encourage us to offer input even probably more
often than I was inclined to do so, but there was certainly — I would have to
stress that it was a spirit of inclusiveness and openness in their approach to
working with us.

The three points that we would like you to consider as you go forward with
carrying out your mission is we think there should be a sense of urgency about
moving ahead that our view is that there are basically the payers of health
care, patients, lawyers. They all pay. They all bear administrative burdens,
but especially health care providers suffer under a huge burden and huge costs
related to our inefficiencies of our health care systems administrative systems
and really think that it is important to keep that in mind that the status quo
is not neutral. The status quo means that the providers continue to waste huge
amounts of resource on activity that does not add value to patients.

We believe that by developing operating rules that we increase the
possibility of the opportunity for the HIPAA transactions to become something
that is actually attractive for a much wider number of providers to be using.
Right now there is obviously less complete take up on the use of electronic
transactions and we believe that one of the necessary preconditions to getting
greater engagement will be to have operating rules that work from a provider
perspective.

In terms of Washington State we think collaboration, inclusiveness,
transparency are three critical principles for a successful process related to
developing operating standards, our best practice recommendations in our case.
That it is going to be very important and challenging to solicit and actively
recruit the provider input that as a practical matter providers don’t have the
resources and financial know with all to have staff dedicated to long-term,
ongoing projects unrelated to carrying out their operational duties. In
Washington we have experimented with different ways of using technology and
outreach and everything and Starbuck cards and all sorts of things to motivate
attendance.

And last but not least we think that is to actually partially flow from the
press release from the recent meaningful use regulations. National operating
rules should set standards that are both ambitious and achievable and that are
a constant tension. We believe this is where we may be a little bit on the
outlier group. Beliefs they should be permitted to establish higher standards
that meet the needs of the providers and payers in their states so long as the
state enhancements build upon, are completely consistent with the national
operating rules.

I think the best example I can give is for eligibility and benefits we want
a whole lot more detail than if it requires for even CORE Phase I or II. We are
fairly in alignment I think with CORE Phase III. I think it is good to have
space where they have that engagement and motivation to work on efforts to keep
moving the administrative simplification, work for it, creating some beacons
for the national work and for other state work so we would think that that
should be permitted, but encouraged with while completely accepting that base
standards have to be adhered to and they can’t be having obviously X12
standards vary state to state.

And last but not least we would — we are glad to see the increased emphasis
on certification, auditing, all the different steps that are going to be taken
to make sure that the standards that are adopted really effectively getting it
graded into the health care and delivery system for those entities who have
invested quite a bit of money into developing systems that are compliant. It is
a great source of frustration for them has to deal with — that don’t and as
you know right now it is trying to deal as nothing. Most organizations don’t
feel it is worth the time or effort.

In closing, if there is anything we can do to stay in Washington to support
your work, just please let us know. Good luck.

DR. WARREN: Thank you. Jeanette Thornton.

MS. THORNTON: Good afternoon. Thanks so much for having me. My name is
Jeanette Thornton and I am with the America’s Health Insurance Plans which I
suspect most of the committee are familiar with what we do. We represent
approximately 1300 health insurance plans nationally.

I am very pleased today to talk to you about operating rules. We believe
that they are essential to really get us toward automating key business
practices in the health care industry and really making sure that we are
getting rid of fax machines, that we are getting rid of phone calls, and really
moving to robust electronic communications that mean things both to the health
plans and to the provider organizations.

We are definitely supportive of the provisions of PPACA to implement
operating rules for the HIPAA transaction standards. As has been said this
morning, everyone is aware that the HIPAA standards originally led to a lot of
variability and implementation and I think we all recognize that it is time to
move past that and achieve more uniformity in how we respond to the HIPAA
transactions.

When I talk to provider organizations and some of the projects that we have
been doing at AHIP, they continually come to me and say we have heard about
that CORE work. We really think that we wish more health plans would implement
it. It has really provided a lot of value for me in the plans that have
implemented the CORE operating rules. I heard loud and clear the importance of
more uniformity in the HIPAA standard transactions.

We believe that the implementation of development of operating rules by an
entity separate from the Standard Development Organizations is an effective
model. It is proven value. Value has been proven. The development of operating
rules really does require a separate type of expertise from the development of
standards.

As a result of this, we do recommend that the operating rules will focus on
addressing business practices and the business needs while the Standards
Development Organization really focuses on the more technical aspects of the
standard.

We ask that the committee think about some common principles as it relates
to the defining operating rules and are as follows. I think there is a lot of
confusion out there about what the role of standards is and what the role of
operating rules is and I think it is critical for the NCVHS to provide some
recommendations in this area.

We all know that HHS should implement updates to the standards at a much
more frequent basis. I think that would eliminate some of the need for
operating rules, but certainly not all. There is still always going to be a
need for operating rules.

We believe that operating rules should address both standard business
practices, as well as business constraints on how a standard is used.

Operating rules can also fill important gaps that are not addressed by the
standard at a much more iterative process. I think while it is important that
the implementation cycles are started(?) up as has been mentioned, there also
may be a need to implement operating rules once you have implemented the
standard and said oops. It doesn’t quite work as it was intended.

Also it is very important for there to be a public review process and
comment process when it comes to operating rules to make sure that we really
are taking for account all the various business needs.

One of the key aspects of the admin’s imp legislative language was this
whole concept of operating rules should not conflict with the existing
standards and we think that this is a key point. There needs to be a much more
defined process for both the operating rule entity to bring issues forward to
the standards developers and vice versa.

And finally, operating rules can also address standard business practices.
Things like response time, security, et cetera.

It is really critical to us that NCVHS only select one entity to develop
operating rules independent of the recommendations by the pharmacy industry
this morning. We think having more than one entity is just going to add chaos
given the interdependencies of all the standards.

We believe that CAQH through the CORE initiative has brought together key
stakeholders to implement rules that are providing value in the community
today. As such we strongly support the designation of CAQH as the entity to
develop operating rules under PPACA.

This process has been effective. We certainly don’t want to throw the baby
out with the bath water. We want to build on what works. We certainly
acknowledge there needs to be — we need to build on these efforts and make
some enhancements to the processes.

First, we applaud CAQH for revising the CORE bylaws to have a much more
inclusive process of providers, vendors, health plans, and the SDOs. They
already have demonstrated leadership in updating the rules to be compliant with
the 5010 standards and additional updates may be necessary.

It is also going to be key for the operating rule entity to partner with the
Office of National Coordinator as the rules given to more of the clinical data
exchange like referral and authorization and claims attachment are developed.

Now we understand that change in the health care industry can bring some ink
and so as such we think that it may make sense to recommend for the
implementation of the eligibility and claims status rules as a trial
implementation period. Then we come back. Then we think about what works, what
didn’t work, and make refinements to that process going forward.

As my previous speakers have mentioned, there is a lot of work going on in
the states and Lorraine asked me to speak to some of this specifically. What we
don’t want to see is a proliferation of state-specific operating rules and
companion guides. We need a health plan that has to operate in many states and
follow these separate rules it just becomes very problematic.

They provide some examples in the testimony in some of these state-specific
activities which are all doing great work and they actually all demonstrate the
need for operating rules because they have all said we need these standards to
do more for us to meet business needs of providers. While they demonstrate the
need for operating rules, they can’t going forward a proliferation of
state-specific operating rules. I think it is really important for NCVHS to
make some recommendations and how it can fold in the state activities which
have all done some really great things into the national process for operating
rules.

What we don’t want to have happen is and through the certification process
health plans be certified at the federal level, but then that means that they
are not compliant with state operating rules which they are required to
implement through regulation. We are certainly willing to help facilitate some
of these discussions at the state level.

I want to briefly talk about compliance and penalties. I think I will use
the word significant. The $20 per member per day penalty in the legislation is
significant. We really think it is important that NCVHS begin convening
discussions on this as soon as possible.

I like to use the analogy of building a bridge. I think having the
requirements only on health plans that use certifications is like building half
of a bridge. We have health plans that are going to make significant
investments in implementing these operating rules, but there are no
corresponding requirements for vendors as well as providers to have to use
electronic transactions if administrative transactions were deferred for the
meaningful use. And we think it is critical that there be corresponding
implementation requirements on providers and vendors as well as looking at how
the certification applies on that as well. Without this we may not achieve the
cost savings that the fees administrative simplification provision is really
intended to achieve.

It goes without saying that we are very supportive of the operating rule
provisions and really believe that they can really get at administrative
simplification. It just needs to be viewed in the light of all of the other
implementations, things that are going to be occurring at the health plan level
to implement all of the health reform provisions as well as ICD-10 and to have
to maintain a medical loss ratio of 80 or 85 percent. I would like you to
consider that as well.

In summary, I would like the committee to think about the following points.
NCVHS should recommend the designation of CAQH through the CORE initiative as
the entity to develop operating rules under PPACA with the enhancements that I
discussed earlier in my testimony.

The implementation of operating rules must be designed as a strong
partnership between the Standards Development Organization and the operating
rule entity. If not, this effort will fail.

The definition of operating rules should be developing to include both the
standard business practices like response time, but also include constraints on
a standard. The areas of the CAQH rules that provided the greatest value in
terms of cost savings are things related for fighting constraints on standards.

The Office of the National Coordinator for Health IT should be involved very
closely at the beginning of future phases of operating rules that get at more
the clinical data exchange like claims attachment.

As I mentioned with regard to the state initiative, the NCVHS should
emphasize the importance of having common national rules. At a minimum, the
operating rule entity must be directed to take into account all the work that
has been done at the state level.

There is much more deliberations and input that needs to occur throughout
this process. I didn’t even begin to talk about items like certification which
is going to be a significant change for the industry. I definitely recommend
that we will look more into both certification requirements as well as the
impact of significant penalties and compliance on all sectors of the industry
and the implications of this.

With that I wrap up my testimony and look forward to questions later.

DR. WARREN: Okay, Jan Estep.

MS. ESTEP: Thank you for the opportunity to be here. I am Jan Estep, CEO and
President of NACHA, the Electronic Payments Association and today I was asked
to give a perspective on operating rules from a financial services industry to
provide perhaps parallels to health care. I submitted a very detailed written
testimony on July 9 and I will only speak to highlights of that today.

I do believe that the operating rules that govern the ACH Network are
relevant models for health care, and when faced with the goal of health care
administrative simplification it is a yeoman’s task ahead.

The ACH Network is an all electronic funds transfer payment system. It is
used by over 14,000 financial institutions, more than three and half million
businesses, at least 160 million consumers to make and receive electronic funds
transfers or EFTs.

In essence, the ACH Network enables the direct movement of money and
information from one bank come to another. It is most easily recognized by the
direct deposit application that which allows employees across the United States
from any employer to have their payroll received automatically at the financial
institution of their choosing.

The network also supports direct payments of bills, business payments,
electronic data interchange, ecommerce payments and international payments. In
2009 there were almost 19 billion network payments worth over 30 trillion
dollars and the size and scope has well as a variety of uses of the network
therefore necessitates that it functions as a state and secure network and is
inclusive of all participants.

NACHA then is the non-profit association that is responsible for writing and
administrating and enforcing the operating rules of the ACH Network, the NACHA
Operating Rules. We bring together thousands of financial institution members
both directly and through our 18 Regional Payment Associations. More than 450
other companies are directly involved through industry councils and affiliate
membership programs.

Our core competencies are inviting operating rules and bringing diverse
parties together. In addition to the NACHA Operating Rules NACHA also develops
and administers the QUEST Operating Rules for electronic benefits bringing
together the federal and state governments as well as the private sector and we
also provided support to CAQH during its development of the CORE operating
rules.

To provide a context the NACHA rules which are developed via an inclusive
private sector rule-making process provides the framework for all ACH Network
transactions. All participants in the network are required to follow the rules.
By entering into an agreement that comply with the rules the participants
become subject through a network rule enforcement mechanism. It ensures
compliance with risk mitigation processes as well as ensuring standardized data
content and errors really are not tolerated.

I would like to speak first to the distinction between operating rules and
standards at it applies to the NACHA Operating Rules. In the simplest of
explanations standards are the technical formatting requirements while
operating rules delineate the roles and responsibilities of participants and
the data requirements.

Standards address how you do it or the technical specifications while
operating rules focus on who does what establishing the roles, rights,
responsibilities and requirements of parties exchanging data and/or values.

Both operating rules and standards work together to establish certainty
around the transactions, facilitate broad applicability and use, and really
finds value to all participants.

This is a hierarchy and an interrelationship between operating rules and
standards as standards and sometimes multiple standards are just one component
of the rules.

Because the operating rules incorporate standards, changes or even updates
to the standards and often new standards may not require changes to the NACHA
Operating Rules. For example, our rules incorporate data format and
requirements for all ACH transactions. This interweaving of rules and standards
ensures that NACHA transaction regardless of who initiates it can be processed
in an identical manner by anyone in the network. In particular, ASC X9 and X12,
UN/EDIFACT and XML messages or data segments are all carried through the ACH
Network.

Government-related mandates are supported in this way such as remittance
information that accompanies tax withholdings or child-support payments.

The ability to evolve with the needs of participants is a critical benefit
in private sector rule making. Essentially the operating rules can support
innovation, efficiency, interoperability, security, as well as certainty.

I do want to take a few minutes to explain how the NACHA Operating Rules
support these attributes and then speak a little bit about my perspective its
applicability to health care. First, private sector rules do foster innovation.
It provides the ability to adapt quickly to the evolution of the industry and
its needs. During the past nine years, a number of consumer ACH payments
initiated via the Internet have gone from zero to 2.2 billion because the rules
have been adapted to technology. The ACH rules were first developed in 1974 and
they have evolved tremendously over that time period.

Private-sector rulemaking does enable efficiency through broad reach and
scalability. Because a common set of rules as developed with the input of the
industry, we can connect virtually all financial institutions throughout the
United States. This broad reach as well as adoption is key to efficiency.

Private-sector rulemaking also enables interoperability. The network in
combination with the rules provides for uniform movement of the value, dollars,
and the information regardless of the technology being used.

To the ability to both adapt and amend the rules to improve risk management,
the rules also generates security. Over time the rules have been proved to
manage risk management reducing the rate of unauthorized transactions to
consumer accounts to an all time low and we have increased the enforcement of
the rules.

Private rule making also creates certainty through the rules, network
participants, and their customers have certainty in the way transactions are
being processed.

The NACHA Operating Rules are amended through a deliberative and transparent
and inclusive process similar to that used by federal agencies under the
Administrative Procedures Act. All participants in the network, commercial and
community banks, credit unions, large corporations, small businesses, consumer
advocates, and industry vendors, all have the opportunity to comment on
proposed rule changes. When rule changes are made there is a methodical,
prescribed process by which options are considered, impact is assessed, and
voices of all participants are heard.

The voting process also includes checks and balances so that broad-based
support is accomplished and to insure that proposals can’t be blocked by just a
few members.

Our Regional Payments Association members vote on rules directly so that the
voices of smaller community banks and credit unions throughout the country are
represented collectively representing over 10,700 member financial
institutions.

As part of this inclusive rule making NACHA also includes government
entities to drive nationwide adoptions and since its inception NACHA has worked
closely with the Federal Government. Today the Federal Government is the larger
user of the ACH Network and we work with them closely.

In addition, the rules incorporate laws and regulations which continue to
change. For example, the Treasury Department is currently in the process of
adopting changes to how codes of federal benefit payments will be more readily
identifiable to financial institutions to help them comply with a garnishment
order. The formats held within the ACH Operating Rules make this possible. It
is this responsiveness, balance, and adaptability, inclusiveness and an
iterative process that has made this all possible.

Let me speak to three lessons learned. The first is that the balance and
adaptability and inclusiveness are essential. If rules are raised at the
national level through an inclusive process, you will achieve broad reach which
is a requirement for efficiency. The rules require systemic solutions and data
formatting for all participants that can facilitate straight-through secure
processing with certainty.

The second lesson is to start early but recognize that you need to be
adaptive over time. We certainly did not know everything in 1974 when we
started. We have learned to adapt through opt-in programs and we also had added
and regularly amend processing guidelines that are part of our rule book. The
ACH Guidelines provide information similar in scope of information that could
be contained within a single health care companion guide making it accessible
and applicable to all participants.

The third and last thing is to be inclusive in rule making as well as in
education. I would be remiss if I did not call out that education is a key
piece of operating rules. Participants of financial services are as diverse as
those in health care. They need to have training to understand the roles,
rights, and responsibilities. Education is also a venue for innovation and for
discussing business practices and with mandatory adoption in health care
education and outreach will be important.

Lastly, there are very meaningful parallels between the efficiency and cost
savings achieved in the ACH Network and those which may be achieved in health
care. The US Department of Treasury’s Financial Management Services indicates
that the Federal Government saves 92 and a half cents for every ACH credit
payment made instead of a check. For 2009 this translates to $1 billion of cost
of the Federal Government simply by moving to electronic payments. The
implications for health care are really vast.

In establishing operating rules and standards I do believe that they can
drive efficiencies and significant cost reductions, but achieving this goal
will require stakeholders to work together to take advantage of existing
oversights and to leverage existing infrastructure and processes.

NACHA does have expertise in rulemaking that has been applied in many venues
and we are poised to apply our core competencies as we can to the health care
arena to ensure strong solutions. Our members believe that health care industry
can obtain meaningful efficiencies and cost savings by processing health care
payments and electronic remittance advices using existing rulemaking process,
infrastructures and networks. The health care industry along with financial
institutions can adopt operating rules that will drive administrative
efficiencies and savings.

Thank you and I will also answer any questions.

DR. WARREN: Tim McMillan.

MR. MCMILLAN: Thank you and good afternoon. My name is Tim McMullen and I am
the Executive Director of the Cooperative Exchange. I would like to thank NCVHS
for holding these important hearings today and inviting to participate.

The Cooperative Exchange is the recognized resource representative for the
clearinghouse industry for the media, government bodies, and other
industry-related entities. Our mission is to provide open access for
organizations to promote electronic transactions for that health care industry
by ensuring optimal quality, value and functionality.

We have a nice mix of national and regional clearinghouses including ACS EDI
Gateway, Availity, Capario, Claimsnet, ENS, which is an Ingenix Company,
Gateway EDI, GHN-Online, HDM Corporation, Health-e-Web, Jopari Solutions,
RealMed Corporation, Secure EDI, and The SSI Group. We also have as members two
important organizations: the American Medical Association and the Health
Billing and Management Association and also an industry partner CareMedic
Systems.

We have been involved on a number of partnerships with CAQH CORE and also
our members sit on — all of our members sit on some WEDI task force or
committee. We are very involved with the industry.

The clearinghouse’s role is to be flexible. That is the value we bring to
the health care industry and we intend to adapt to whatever operating rules are
adopted. We support the concept of standardizing operating rules as a means to
make what we do more efficient and of course the entire process more efficient
thereby reducing the costs.

There are two areas which adopting operating rules would be useful for the
clearinghouses and that include data content and infrastructure. For us
standardizing data content both brings value and reduces cost. Data content can
certainly help the industry move to more efficiency by requiring certain
information be included in transactions such as, and this is just a for
instance, patient deductible amount remaining and including the calculated
allowed amount in the AMT segment of the A35.

While we implement patients, specifications provide the majority of format
and data content standardization, we see semantic interoperability, that is,
assuring that we attach the same meaning to data as one of the issues that
operating rules need to address. As Patrice so eloquently put where
clearinghouse is the issue, is the data coming back because different plans and
provider groups interpret the codes differently. The code usage and their means
have to be standardized. The claim adjustment reason codes are a prime source
of confusion.

We feel also that if the operating rules are enforced that actually the
companion guides can be something of the past.

I want to thank you for inviting the Cooperative Exchange to participate and
we look forward to your questions.

DR. WARREN: With that we will open it up to questions from the committee and
we have 10 minutes.

DR. SUAREZ: This has been very helpful but a very good panel. I think I
heard consistently across the board number one yes we do need something for
operating rules. It sounds like we do need something like that. It seems to me
that there is a variation in what it means based on what standard transaction
we are talking about. For certain transactions like eligibility there is some
things that the operating rules can do and for certain other transactions those
kinds of things are not necessarily the same and the level of operating rules
perhaps might differ. I wanted to ask if that assessment or that sense is
correct. In other words, the concepts around operating rules are different
depending on which transaction we are referring to.

I especially like also the concept or the recommendation from Patrice about
think of the code set element when looking at operating rules. It sounds like
code set could be enacted around operating rules. Those two questions.

When we are thinking about operating rules, are we thinking certain things
specifically by transaction and then secondly the code set parties is that
something that you all agree that should be considered within the operating
rules.

MS. KUPPE: This is Patrice. As the Minnesota group went through transaction
by transaction, there was more need to assign certain definitions of data in
some verses others. The operating rules to me are also technical things. I
think that need is for everything because you have to talk about am I hooking
rule time, batch, how often should that person be able to accept transactions.
I think that is needed for all the transactions.

We didn’t find the need in NCPDP transactions. We did in their old version,
but when we went to look at D.0 they are already are sort of operating rules
standards first body. NACHA is the same. I am just hoping they all get on the
same playground someday. The AHIP person was like God forbid. We have 50 rules.
I totally agree. I don’t want anybody to think we are here Minnesota wants to
keep writing rules. We don’t. We want it at one spot because I have 400 ways.
Now they don’t want 50. We all just want one.

You have to define the data. At AUC we had to sit down. I worked with a
health plan person who said if Sheila and Patrice get along to figure this out,
anybody can because we are both Italian, strong headed. This is my data needs.
But we had to keep saying the data is the data. A doctor saw a human being.
What do we know about the human being? The provider knows their hair color and
their gender and their data of birth and what we did to them or prescribed for
them. Why is that data so different on a claim to payer to payer to payer? The
same thing with the remit.

The remit is somebody deciding to pay you something and there are different
benefits whether you are going to pay 50 bucks or 100 bucks, but the reasons
behind why you paid are varied, but what does the provider really need to know?
We don’t need all 700 reasons because my action is I have to write it off. I
have to bill the patient. That are some examples of everything sort of needed
some definition, but there was different amounts.

The 999 transaction that Minnesota is implementing and it is an
acknowledgement, we opened up the 5010 version TR3 and we wrote to our
department of health people. We don’t need to write a guide around this. It is
that black and white. It is a handshake.

MS. THORNTON: I definitely think there is a need for operating rules across
all the transactions separately, but I think one of the reasons why that you
hear a lot about eligibility is because the CORE operating rules have been
around the longest and also the eligibility transaction is one of the more
highly utilized HIPAA transaction standards besides the submission of the
claim. We have a lot more experience eligibility. Transactions like the
referral transaction and the claims status are just not as widely used. I think
if we were to see greater implementation there would be a similar need for
detailed operating rules for those transactions as well.

MS. ESTEP: I am going to make a quick translation to the financial services
world because I am not pretending to understand all of the health requirements,
but I did mention direct deposit of payroll and something that I think a lot of
consumers need in the United States and hopefully many of you in this room
understand, but that is in NACHA operating rules terminology is one application
of an SCC code. I am speaking language you don’t know, but it is PPD credit to
the extent that it is a payroll deposit it can also be a Federal Government’s
benefit statements. I mentioned benefit payments are not subject to garnishment
which is a very unique requirement of a federal payment versus a direct deposit
of payroll, but both of them use the same FCC code within NACHA, but they have
very different uses.

To the extent that the operating rules are malleable and they can change
when a regulation like that changes. We have literally said because we know the
data format of the FCC code there is a field within there that can be valuable
to financial institutions to help them comply with a garnishment order.

All of a sudden as regulation changes we can use an existing format. The
operating rules can comply and that is the adaptability. Now it doesn’t mean
everybody needs to change, but if you understand how you can infuse flexibility
in different ways then you can do it different ways for different needs. I
think that is part of the reason everybody is coming to the table saying what
is in an operating rule and what is in a standard. The fact is it may vary and
it probably changes over time. Again, when I say adaptability is key, it really
is.

MS. KUPPE: Walter, one point my neighbor reminded me of claims status I
brought up earlier. I think 1104 says we are going to write a rule for claims
status. I was promoting let’s not write one for the 276/277. We only want the
277 CA because that is sort of the flow.

DR. SORACE: From the financial services world, how do you document at
entities in compliance and is there some sort of certification process that
they go through and is there an economic model for that?

MS. ESTEP: There is not certification per se. It is an interesting question
to ask, but because everybody is bound by the rules and if you don’t use the
rules and if you don’t use it consistently you are subject to a network
enforcement rule and therefore subject to fines and NACHA administers those
fines. It is really one where private rulemaking says the network is bigger
than any individual organization and everybody has to comply.

There are processes all across the country that supports small and large
organizations and the way to think about this is that complying and conforming
with the rules, is there a ticket to entry? If they don’t conform with the
operating rules, they can’t be valid participants in the network.

DR. SORACE: But there is no formal process.

MS. ESTEP: There is none.

DR. SORACE: — fail and so two quick questions. Is there some federal or
legal authority for that?

MS. ESTEP: No, it is all private-sector rulemaking. It can be done without
mandating it at a government level although I would have to agree it helps from
time to time — but it can work.

DR. WARREN: I think I am going to call an end so that we can stay on top.
The next folks that we are going to hear from are Jim McNiff, George Arges,
George Langdon, Jerry Killough, and Barbara Mayerick.

PARTICIPANT: Is Jim on the phone?

MR. MCNIFF: (on phone) Yes, I am on the line.

DR. WARREN: You are up first, Jim.

MR. MCNIFF: Thank you. I first want to thank — for giving me the
opportunity to discuss — because I am in the trenches of what they call the
revenue cycle that these transactions effectively will revolutionize and should
— revolutionize how we conduct business between payers and providers.

Currently I am the head of what they call the revenue cycle at Montefiore
Medical Center and it is important that I define a little bit the history of
the term revenue cycle. The professional itself within all providers is changed
as the field has expanded and our accountability has grown. If you have
mentioned revenue cycle I guess seven years ago you may have not heard it that
often. You would have heard the billing department, the admitting department.
It was very segregated the departments. It was recognized at that point that
the full process needed to be managed from the beginning point of registration
all the way through the settling of the account. The term revenue cycle was
defined to take in that full span of processing.

Even today which I think I heard in the first session about providers not
being as active in some of the committees is that you may still have
organizations where it may be called a revenue cycle, but the front end of the
operation be it registration which is if you want to put a box of 270/271
transaction eligibility it is maintained by that staff. It may report to a
different person. For the billing and collection which is some of the other
transactions may report to a different person. As providers you may not have an
integrated management structure that gets a sense the provider of the full
scope of what all these transactions mean and the benefits that they can get.

At Montefiore I am in charge of all of the front operations, the
registration, the emergency room, mandatory surgery with in patient and I am
also responsible for the tail end for the billing collection, patient
communication — that deals with bringing in the cash into the institution. I
have been doing this now for approximately 25 years at the medical center. I
have been here 37 years, but it was also the control at one time and it was a
great opportunity to make a contribution to Montefiore.

That it has evolved in Montefiore I think is a written testimony, but to
kind of highlight certain points about Montefiore is that we have grown. We
have now about 98,000 in-patient discharges. I have close to about 3.7 million
out-patient services. That has grown from about 600,000 visits to 3.7 million
out patients in the last 10 years.

It causes a tremendous push on the providers to deal with higher volumes of
activity and pressures to reduce cost at the same time. In the revenue cycle’s
field we were looking to increase and improve our cash flows at our medical
centers and in my particular case I manage all of the hospital during
collection which is approximately about $1.8 billion a year I am responsible
for. I have been increase cash flow, but at the same time during these periods
of time with the budget constraints we have had we have not been allowed to. It
is best to support that increase. We had to be very creative in how we go about
that. Many providers have outsourced. Many of us use collection agencies where
some of the hidden costs that are in the administrative costs.

In order to do that which recognize and again from the vision that we at
Montefiore was we needed to transact business in a different way and HIPAA gave
us that stability to — and create our own vision of how we can see this
meeting our particular goals and as a result also evolve the industry that we
are all committed to the same goals.

I can tell you as being in the trenches and doing this and I have been doing
it for a number of years and I will describe the transactions we do run. It has
been exciting and at the same time it has been slightly disappointing in that I
haven’t seen it used quickly as I would like it to. As I see it in ’97 we had
these transactions and as of today there isn’t payer or provider that I work
with that I can handle all the transactions. That part of the discussions and
meetings that you have had is learn how to expedite that and what is best
structure to move that forward which is great to hear.

For example, for Montefiore to move forward we actually worked with CMS. I
think it approximately four years ago and we were the pilot site in the United
States that completed the attachment, 275 transaction and it was a success. As
of to date that yet hasn’t been fully implemented on either side, but we are —
institutions to do that. We have already done the 278 authorization with one or
two payers. Rightfully so it is not completely and as the discussion as you
have talked about here of strengthening the data that we get and the amount of
data we get. We can drive our business — is critical to us.

The more I have and the value which I would explain to you slightly
different. Most people when they read administrative simplification, there
seems to be a real focus on reduction of cost but being in the trenches for
seven years now and I have been doing these HIPAA transactions there is
tremendous other value that is tangible and intangible to doing these
transactions.

For example, one that is critical to providers is that one of our main
problems in improving our cash and payer’s note as well is that we have denials
because we haven’t collected the correct information to make a claim free. We
will send out claims that have the wrong insurance and therefore we get denials
for eligibility and one of our values that we have seen in doing the
transaction is that we have actually reduced their denials and separately
improved already by doing these transactions. It is not only a cost factor, but
also in addition to the other which I think is a major intangible and hopefully
continues based on these discussions is the relationship between the payers and
the providers.

Speaking from New York’s perspective when we went into deregulation and you
had individual contracts, it got very to the point where payers and providers
— you were spending a lot more time talking about the rates and negotiating
them and at times the communications for the adjudication of claims was put to
the side. What I found working with payers on these transactions is we are now
more closely related to a paradigm we have ever been because we are all trying
to attempt the same goal and process and looking at enough that you used an (?)
or you don’t send the right claims. It is not picking out the issues. It is how
do we improve the process for both us because I think each side has recognized
the value in getting all these transactions working and not only to the
individual institutions be it payer or provider. The one that is in the midst
of all this is the patient.

By having clean data or good data, quantity data, quality data, timely data
makes the provider more effective and as a result we don’t have as many bills
going to patients that shouldn’t be going to patients and therefore our
customer calls are greatly reduced. Our patient saturates are higher. There are
very few going complacent. The more that we get integrated with payers for both
sides we improve that patient experience at our medical center.

There are a lot of tangibles that are — we are making that as reflected as
much to the technical side of the administrative cost raising.

DR. WARREN: Can you wrap it up in about two minutes?

MR. MCNIFF: Sure. As far as from a provider perspective, minus that we all
as a group have a sense of urgency, and that if it is one agency or one entity
and its operating rules or standards that need to work together which I believe
they do because we have the same issue. We developed Linxus in New York is we
recognize that — entity really needs to be a complete partnership between
payers and providers. I do think there has to be enforcement on both sides of
the payer and provider to make this successful. They need to be a committed
vision between all parties that we are going to work on this and set some
strict time tables.

DR. WARREN: Thank you, Jim. George Arges.

MR. ARGES: Thank you. I am here today both for the DSMO and the NUBC, but I
am not going to speak for the NUBC. I have already written NUBC statement and I
just assume you read it. Suffice it to say that the NUBC supports the DSMO
framework that has been written.

Also, after following Margaret and Lynne’s recommendations of the written
DSMO statement I better not go off script as Margaret — and just read the
statement so that I do not upset the DSMO and other members here.

Again, on behalf of the DSMO I want to thank you for the opportunity to
comment. The DSMO is created by regulation for the purpose of maintaining the
Health Insurance Portability and Accountability standards adopted by the
Secretary. With the passage of the Patient Protection and Affordable Care Act
it included provisions that affect the administrative simplification
requirements under HIPAA. As such the provisions called for the establishment
of operating rules for all HIPAA transaction standards. These operating rules
are to be developed by a non-profit entity or entities through a
consensus-based process and then subjected to review by the National Committee
on Vital and Health Statistics and the Department of Health and Human Services.

The DSMO would like to offer our recommendations for the establishment of a
process that can foster collaboration and coordination between the DMSO and the
new entity or entities charged with the development of operating rules.

Since its inception, the DSMO has established a proven framework for the
review and maintenance of HIPAA mandated standards. Initially the focus was to
incorporate modifications to the original HIPAA mandated transaction standards,
beginning with a fast-track effort resulting in the Accredited Standards
Committee X12 Version 4010A1 and the National Council for Prescription Drug
Programs NCPDP Telecommunication Standard Version 5.1 and Batch 1.2.

Once the fast-track review was completed, the DSMO turned its attention to
other changes that have been or will be incorporated into future versions of
the transaction standards. Each year the DSMO presents a report to the NCVHS on
changes adjudicated by the DSMO review process. The DSMO process allows any
interested parties to submit or view change requests and to view DSMO
recommendations.

It is vitally important that the entity or entities responsible for
developing operating rules coordinate with the DSMO to ensure that the industry
recommendations for modifications and implementation timelines are consistent
with HIPAA mandated transaction standards.

Coordination is needed to help identify changes to future HIPAA mandated
guides and to ensure that any operating rules criteria being developed are
supported by the applicable standard and are consistent in its interpretation.

Additionally, PPACA also seeks to establish an expedited process for
introducing new HIPAA mandated standards; this too will require coordination
with the DSMO, as new standards and underlying operating rules are being
contemplated.

The DSMO recommends a framework for coordination and collaboration as
follows. One, the entity or entities responsible for the creation of operating
rules for each for each of the transactions must adhere to the consistency and
conformity in each of the standards.

Two, the entity or entities’ membership must represent expertise in the
standards and demonstrate balance and consensus in their processes.

Three, if multiple entities are selected, they must all apply similar
principles of consistency and conformity when approaching the creation and
support of operating rules.

We recommend that the operating rules entity or entities develop and
maintain an approved process for updating the operating rules. This can be
accomplished by requiring this entity or these entities to become accredited by
the American National Standards Institute.

We recommend that if multiple entities are selected and there is overlap
with the HIPAA-named transaction expertise, that collaboration must take place
within the entities for a single set of operating rules for that specific
HIPAA-mandated transaction. The industry cannot effectively support multiple
operating rules for the same HIPAA-named transaction. For example, we do not
recommend multiple operating rules form multiple entities for the same X12
270/271 transaction.

Number four, the entity must work closely with the HIPAA Standards
Development Organizations such as ASC X12 and NCPDP and HL7 as new standards or
versions of the standards are being developed.

As industry requirements are being brought forward, standards need to be
evaluated as to their appropriateness in the implementation specification or in
the operating rules. For example, data content rules would be brought forward
to the appropriate SDO for consideration of inclusion in the implementation
specification.

The updates for the operating rules must be in coordination with the
implementation specifications referenced. The schedule for operating rules
updates must, when appropriate, be coordinated with updates to the
implementation specification version in the regulatory process. The
recommendation for operating rules updates must come through the DSMO/NCVHS/HHS
process already in place today.

The DSMO also recognizes that the deadlines in PPACA require adoption of
operating rules to the standards already be adopted. As such, the DSMO is
suggesting four recommendations as a starting framework.

All operating rules must comply with the HIPAA regulatory language. The DSMO
is offering assistance with evaluating potential operating rule entity or
entities. The DSMO would participate with the operating rules entity on a
rotational basis. This is especially true as DSMO representatives are industry
participants today.

Coordination from the operating rules entities with the DSMO for upcoming
rules to existing or new HIPAA mandated standards would require the DSMO review
and approval process in existence today be used for the operating rules brought
forward for consideration to the NCVHS.

A formal regulatory framework for handling the introduction of new operating
rules for other transactions existing and future versions also be coordinated
and collaborated with the DSMO prior to the rules being brought forward to the
NCVHS.

Again, finally, coordination between the DSMO, the SDOs, and the operating
rules entities is vital to provide the industry with a known, repeatable
process capable of providing a consistent and timely process for updates to the
HIPAA mandated transaction standards and the accompanying operating rules.

As the current DSMO Steering Committee Chair, I want to extend our thank you
for being able to present this statement today. We will answer any questions
later on.

DR. WARREN: Thank you. George Langdon.

MR. LANGDON: Hi everybody. Can you hear me okay? I am George Langdon. I am
the Vice President of Engineering of GE HealthCare IT for — thank you for
giving me a chance to talk about the administrative standards here. GE’s
perspective in this regard comes from five different areas that my team has had
experience with over the past 20 years or so, but first as a software vendor
for revenue cycle, physician and hospital revenue cycle solutions out in the
market place has been serving sites out in the world since the 1970s.

Second, from our outsource billing operations I spent a couple of years in
the trenches that one of our speakers was talking about earlier using our own
software to do that collection — into the use of it.

Third, in the clearinghouse industry we do have a large clearinghouse where
we integrate into those other applications or familiar with what has to be done
to wire things end to end.

Fourth, as a software vendor to insurance companies for adjudication systems
and that sort of thing. We also have a stake on the insurance side of the
transactions.

Lastly, in health information exchange business which we started on top of
our clearinghouse platform back in 2006 and the first thing we started doing
was carrying insurance eligibility transactions. We have a lot of experience
with that.

I am going to cover quickly the scope of operating rules. I think the scope
discussion ought to be — we ought to at least consider expanding it a little
bit. Second, I am going to give you our feedback on the applicants we heard
about this morning. Third, I am going to make some remarks on governance and
then we are going to wrap up.

When we started implementing eligibility after the HIPAA deadline hit, we
discovered that there was a lot of variability in the field payer by payer. You
can only get certain levels of coverage information. We have as a private
player in the industry dealing with the implementation of the standards as they
were. We had to develop guidelines for how to get the most out of what
eligibility you could get in a particular market. We don’t with the variability
ourselves by cataloguing what the knowledge was.

One of our speakers earlier talked about the need for a 277 transaction as
the most important transaction. My customers don’t have that problem because we
spent years reverse engineering in existing non-standardized acknowledgement
reports for every payer in the country into a standard. Our customers are
experiencing life as if it were B, once that 277 standard is implemented, we
have had it for five years.

There are things that we can do as a vendor to compensate for this, but when
it comes to a particular specialty not being able to get the coverage
information they need from all of their insurance companies and therefore not
being able to use eligibility to figure out whether they can service a patient
or not, that is something that we can’t do without help.

When it comes to customers refusing to use the electronic transactions
because the payers are putting up websites with better information than is in
the electronic transaction, the payers are getting the cost benefit by shifting
their administrative cost to data entry on the physician side instead of
eliminating it on both sides. We can’t eliminate that without a change in
operating rules which goes beyond transactions. It talks about what kinds of
information parity you are going to need in how insurance industry and the
physicians interact.

A third example of this is payer operating cycles. There is at least one
state Medicaid program that the eligibility you get for the first seven days of
the month is invalid because on day seven they then load last month’s new
eligibility changes so they have to go reprocess eligibility for the first
seven days. It is another example of an operating rule which is beyond the
transactions but timeliness about the data that is accessible electronically a
very important element here.

Lastly, somebody mentioned down time. In a typical physician’s office payer
system, up and down time for eligibility not that important. Some of my
customers are academic medical center emergency departments. You know Saturday
midnight is like peak hours. You got to have eligibility available.

Establishing operating rules which include the availability of the
information with up time of that information, refreshments of the information
extends beyond the other remarks would have been made today. I want to make
sure people at least have that in their minds as you think about the
commissioning of a group to you to clarify operating rules.

The second thing I would like to talk about is the applicants. At GE we are
involved in all communities. My interpretable being admission today is for us
to react to the applicant this morning. Our experience with CORE — we have a
lot of experience with CORE. We see it as a great place to have broad cross
functional representation and we see these operating details.

The downside of CORE from our perspective is it needs even more physician
representation than it has especially from the very small end of the market. We
can talk about how one goes and gets one into that group feedback because we do
that in the product development cycle.

From a CORE perspective we really like that broad representation of the
practicality of the progress that we have been able to make. At the
clearinghouse I will say it has taken me years and millions of dollars to get
to CORE certification standards because of a couple of details of how we
initially architected a product, but we are really close in that part of the
product.

From a Linxus perspective, I and my team do sit silently in the Linxus
meetings. The Linxus meetings kind of run themselves. Montefiore is a customer
of ours and a partner running our billing software for many, many years, but it
is very autonomous and chooses how to work. We monitor the Linxus and a number
of other local pseudo standards organizations, communities of practice which
come up to take the complexity out of a local community because business is
largely practiced locally.

As a promotional vendor in the market, we need to stay on top of what is
going on but it is expensive for us to do it. Our review of the Linxus group is
it is very effective locally, but it is one of many effective local
organizations and the issue is really about national scope and how to deal with
a national standard to supplant regional fees. I believe that is the mission
that you all have.

Lastly, in terms NCPDP which is I think the third applicant here. We are of
the mature standards in the pharma industry. My question would be given the
aggressive timelines that your organization has to provide proposed rulemaking
I think that it is probably a long putt to get the right level of domain
expertise — really stood up with the NCPDP. If I am in your shoes, I am
definitely looking for a single entity as you do on the clinical transaction
side. We have a nice clean model. HL7 handles the standards and then IHE
handles the implementation specifics as a vendor and all the things GE is. We
have been engaged neatly with those and so can our customers in a broad — to
deal with that. We would like to see something similar happen on this side of
the house. We are hoping that you will pick a single entity.

I loved Jeanette’s suggestion of trying CORE on a provisional basis. I think
this is really — it is more your decision than mine about what is going on. I
spoke to the experts at GE engaged with X12 and NCPDP and Linxus and CORE at
lunch to find out their pros and cons here. Our overall recommendation is in
line with Jeanette’s.

Lastly, in terms of governance I think Mike’s comments earlier about the
need for an overall framework to help everybody see who is responsible for what
and how they can engage effectively to influence things. That is something that
is a little bit bewildering for us now. We are really working with a whole
bunch independent standards and trying to create toolkits to rationalize that.
As you can make it clearer, we can go to that standard very quickly and we can
go faster and faster.

Let me recap. I think it is very important for the organization to think
about broadly about operating rules. You probably want CORE if you want to hold
the timelines, but you can have this — I don’t know how well they meet the
requirements but it is your decision not mine obviously. And then broad
engagement is best.

There was one comment, the Linxus group and I think Patrice also recommended
that you add more providers to the process. I love that part. But the Linxus
group also was proposing a cutting out the vendors and the clearinghouses and
kind of other stakeholders from the proposal. I think we bring a perspective
especially as you think about it. I work with a lot of one and two doctor
groups and I handle their support cases. We really do what aggregator of that
kind of experience with obviously with our own agenda as well. We are not a
perfect antenna, but we are one way of getting what is going on in that part of
the market.

Thanks again and I look forward to the questions.

DR. WARREN: Thank you. You helped us make some time up. Now it is Jerry
Killough.

MR. KILLOUGH: Thank you. My name is Jerry Killough and you have pronounced
it wonderfully well. I am the Founder and CEO of Clinix Medical Information
Services otherwise known as Clinix. I have been involved in software design,
support development and management for 33 years including the last 28 years in
the health care industry. I also served with the government. I was on the
President’s commission for Manpower policy and the advisor many years ago and I
am not even going to tell you which President it was.

My company Clinix, is probably the oldest company in health care delivering
software as a service, aka, formerly known as ASP to providers and billing
companies. We have been delivering SASS(?) since the 1980s, way before Al Gore
invented the Internet.

Our Clinix PM, practice management system currently processes over 2 billion
dollars of health care provider charges annually. We serve about 10,000
providers in 46 states. We are not quite the size of GE, but we are also
privately held and we like it that way.

Our Clinix MD EHR system serves 23 specialties. It has over 3000 users
across the country and is also deployed as a software as a service. We believe
that and I think that our business philosophy and our deployment model of using
software as a service gives us a unique introspective into the challenges of
EDI.

Today I am representing the Healthcare Billing and Management Association
because I am a member of the HBMA ICD-10 5010 task force which is across
industry group of participants and stakeholders who collaborate together and we
review and comment on proposed rule making.

HBMA just for your information although testified before this group several
times as recently as December represents about 700 billing of revenue cycle
management companies across the country, employs about 25,000 personnel all
were member entities to employ those people and perform billing and revenue
cycle management services for several hundred thousand providers that file 250
to 300 million claims a year. It is a fairly substantial representation of the
industry.

Because I am culturally incapable of talking fast enough to read my
testimony I am going to request that that be inserted into the record and I am
just going to go through a summary to highlight a few things. I don’t want to
catch Lorraine’s evil eye — she was holding up a little card — I thought she
was giving scores — then I realized it was —

NCPDP — presentation was one of the problems and that is actually probably
what I will focus on. A lot of the presentations have been more on the 30,000
or 20,000-foot level. I am probably going to be on the one-foot level because
what we do is really where the rubber meets the road, what HBMA and its members
and us as a vendor to many of those members as well as others in the health
care industry we deal with the day to day realities of what you decide to do.

First of all on the state of the industry ANSI 4010 adoption — it has not
yet been achieved. I am sure you know that at least on a visceral level, but on
a practical level it is just not there. Widespread adoption of the 837 claims
process has taken place for reasons I will get into later and the 835 standards
are in place, but they are not universal. In fact we have tremendous day-to-day
issues with dealing with problems that come in the 835 remit files. We are
pulling these from payers all over the country to putting them out there for
our customers because what we are all trying to do is reduce cost and you can
reduce cost through efficiency system, EDI code set, whatever can create
efficiencies. That is really why we are all here today I think.

Very few players have adopted the 270/271 or the 276/277 transaction code
sets. What we have seen happening in the industry is that — I will get back to
that in a moment also.

The eligibility piece. You have providers’ staff checking eligibility one
patient at a time on payer websites. This increases operating costs. There has
been a lot of discussion about real time and while real time is necessary on
the one-off situations, the walk-ins and so forth, you can really have more
efficient use of the transaction code sets by clearing through batches. If you
are in an office-based environment obviously it is not the same for an ER or
for some other specialty, but for an office-based environment if you have
appointments and you can check the eligibility before the patient presents.
Front desk people are very busy. They don’t have time to do eligibility checks
or to do some of the other transactions that we are discussing today.

The batch inquiries are not compliant today. Actually your own line, your
website inquiry capabilities are more compliant and more standardized really
than your batches are. You have multiple varieties of inquiry format
requirements and the response vary greatly in content format. I characterize
them as one payer may give you a simple yes/no. They are eligible or they are
not and another one may send you War and Peace in a free form text document
that doesn’t allow you to extract any kind of meaningful data.

The lack of standards in payer’s efficiency — it increases costs and we
know that. Companion guides — I am sorry. I disagree with a lot of the people
that have talked about those today. I agree with others that agree with me,
that they are actually used to circumvent standards. By doing that you have a
technical adherence to a standard, but you have a nonstandard use of the
standard if that makes sense. To say okay we are going to have this data
element that represents X, but we are going to put N in it because that is what
our system allows us to do better. That defeats the whole purpose and that is
what we see all the time day in and day out.

We have adopted the approach that we do perform batch inquiries on the
eligibility so that the providers and their front office staff can know in
advance before the patient presents. Am I eligible? Am I not? What is my
co-pay? What is my deductible? Some payers provide it. Some payers don’t. Some
payers provide it in ways that you can’t in any fathomable way extract in a
meaningful way to present to your users, your customers. I don’t have any
strong feelings about that, but I wanted to share with you.

Just as an example on the eligibility inquiry requirements, this is a study
that my company did. It is a year or two old but it is still representative.
This is just selected Medicaid states: Delaware, Florida, Indiana, and Kansas.
You will see that these are the various combinations of data elements that you
can use to perform an eligibility inquiry and the intent is that if one doesn’t
work then you can —

DR. WARREN: That is okay. You made up for it because you have Kansas on
there.

MR. KILLOUGH: I studied the members of the committee. The idea is if one
doesn’t work, you can resubmit with another set of criteria and another and
another and every state is the same. If you look at it from a software vendor’s
perspective, who is actually the eyes of the provider and the provider staff,
unless you have millions of dollars like my friend down here from GE has, it is
really hard to prove for every state, for every payer that you want to submit
inquiries to. And you talk about cost. That is where your cost increases come
in because ultimately somebody else has to pay for that. I guess it is the
Reagan trickledown effect.

A couple more examples of Medicaid: Louisiana, New York. Look at New York.
You have a subscriber member ID of 8 bytes or of 13 bytes or of 19 bytes or you
can use the subscriber social security number, last name, first name and their
date of birth. Just as an example I think it kind of points out the shape we
are really in.

Industry impact. A lack of full adoption on the claims status. Claims are
typically submitted in batches at the end of the day. Very few providers, very
few systems file for claim in real time. As a matter of fact in the real world
in a doctor’s office in an office-based environment, very few practices
actually post charges as the patient exits the office. They batch them up, post
them at the end of the day. The system creates a claim and sends them out.

The idea of real time claims status acknowledgement is a little — maybe it
sounds good but is it really that beneficial. Payer response reports give
somewhat cryptic information. I am being nice there on acceptance or rejection
of claims. The accepted claims then they could really — they go into a black
hole because the payers aren’t submitting regular updates to the providers and
their staff or the billing companies on what is going on with those claims.
That kind of goes back to the comment Patrice made earlier that the 276/277
really might be unnecessary if we just had a process to update the providers on
what is happening with their claims. Think about the staff time and the cost
associated with following up on claims.

People are still calling today on the phone to get a claims status inquiry.
Some payers, I am not going to mention who, will limit you to only three
patients at a time and then you have to hang up and dial back and do another
three patients and hang up. I am not kidding. The process of claims status
really is unnecessarily cumbersome as it is.

As with eligibility process above staff doing inquiries manually one at a
time. I have already mentioned that. Usually the phone increases cost. Provider
billing system should be able to transmit standard format batching inquiries,
receive standard format responses as well as real time individual claim
inquiries to all payers. I think personally the National Health Plan ID is an
important element of this process.

To digress as Margaret did earlier, but hopefully not the same way — that
was not a negative — think about from a system perspective if GE loses a
client then I pick them up and the customer wants to convert their data from
that system to mine. Typically they are going to convert at least the
demographics which include the patient’s insurance information which has to be
supported by the insurance master and is dependent upon the code set that that
local vendor has decided to use to say that this is CIGNA of Connecticut or
whatever. The National Health Plan Identifier standardizes that, reduces the
cost of conversions, reduces the cost of interfaces with hospitals and in
particular their insurance code masters are very difficult to deal with.

The National Health Plan ID — I know that was yesterday’s topic. It really
has a major impact on all of these things.

Summary since I have run out of time, payers implemented 4010 has been
through the most which meant that they did first 837s and then the 835s kind of
trickle along and we are still struggling with that. Most of them pretty much
stopped without addressing the 270 and the 276 — that is where we are today.
The point being the 4010 is incomplete. Health care consumer costs are impacted
the cost of providers to run their business. The things I have discussed all
impact the cost of running a business and it eventually adds up to the national
health care budget.

Provider administrative costs determine eligibility and track claims status
directly affects the consumer. Lack of adoption via companion guides force
higher costs to consumers. Companion guides are the bang of our existence.
Absolutely positively.

Somebody made a comment about they wanted to do — I think Margaret did. Do
templates to standardize the companion guides. All you are doing is
standardizing the format which kind of legitimizes the companion guide, but it
is still is what is in there not the form in which it is presented. It is still
not a standard. Companion guides are companion guides. I don’t care how you
address them.

We are tempting to implement 5010 when 4010 implementation is not complete.
Cooperative exchange. Tim McMullen spoke earlier. We had extracted some summary
data to show the percentage of adoption of 837 versus 835 versus 270 versus 276
supports what I said earlier. Payers did the claims first then the remits and
then the rest got ignored.

And then finally, recommendations. Set individual deadlines for each code
set or group of code sets. Somebody else recommended let’s not do the big bang.
Absolutely. Don’t do the big bang. Make them each distinct and identifiable and
what specific and unique deadlines for each code set. Establish penalties for
non-compliance. Stagger the deadlines which I already mentioned. Allow a
working 4010 code sets to be used prior to their respective 5010 deadline.
Don’t say that 4010 has to end the day. Say that 4010 for the 270/271 has to
end on the date that its 5010 version has to commence.

Disallowing companion guides. That is a shocker, isn’t it? Do not allow
implementation of a code set prior to the established implementation — that is
probably controversial, but one of the big issues we have with MPI and some of
the other changes that have occurred in the last few years were people
pre-implementing and there was no way for everybody to know that they were
pre-implementing. You had to find out the hard way by trial and error and
getting things rejected. I would suggest kind of a national database that says
for 5010 837 here the payers are ready. My company has been ready to test 5010
for months and we can’t find anybody that will come in and test with us yet
because the payers aren’t ready.

Thank you. I appreciate it. Questions for me afterwards I will be glad to
answer them.

DR. WARREN: We have one more speaker and then we will take questions.
Barbara Mayerick.

MS. MAYERICK: Good afternoon, I am Barbara Mayerick with the Department of
Veterans Affairs. I am the Director of Business Development within the health
care line of business and I am responsible for the EDI infrastructure.

The Veterans Health Administration as a provider of health care supports and
applauds the focus on creating operating rules that augment and support the
full complement of revenue cycle transactions. While we as an industry have
been conducting the HIPAA electronic transaction set standards for several
years now, we continue to need to accommodate individual trading partner
variability. AS a national health care system that interacts with nearly all
health plans in the United States, this variability adds complexity and cost.

A broad base of industry stakeholders, providers, health plans, vendors,
regulators and standards organizations are essential to developing operating
rules by consensus-process rulemaking and voting processes that are inclusive
and representative of a broad spectrum of these stakeholders and are also
transparent and flexible.

Stakeholder participation in operating rules likely will be a different set
of individuals or expertise than those that participate in the technical
development of the standards organizations, as operating rules are the fabric
that ensures the business needs are met. Operating rules pick up where the
standards leave off in that the rules should define the roles, the rights, and
the responsibilities of trading partners.

NACHA, as we heard earlier today, provides an excellent model where the
operating rules are largely standards neutral, which has provided for great
flexibility and large scale iterative and incremental business changes.

The use of trading partner specific companion guides should be eliminated by
the adopting of operating rules, and the electronic transaction standard
implementation guides should incorporate the operating rules in order to
provide a single source of documentation. Data content and technical
infrastructure of the electronic transactions should be standardized.
Additionally, the covered entity certification process should require
compliance with the operating rules.

In terms of VHA’s experience, VHA achieved CAQH CORE Phase I certification
for the 4010 eligibility transaction approximately three years ago. We made
internal system changes which enabled the receipt of more than the minimal
eligibility data that was required and this additional information allows VHA
to increase the percentage of clean claims that we submit to payers.

VHA assisted CAQH CORE in testing the Phase II operating rules certification
process, and we are currently making additional systems modifications to
support the CORE Phase II Operating Rules.

Our experience with CAQH CORE initiative has been positive. Additionally,
while VHA is not a member of NACHA’s Operating Rules process, it has benefited
from the mature infrastructure and rule making processes that exist. VHA
implemented the Electronic Funds Transfer, which utilize the ACH Network, as
part of our original implementation of the 835 Remittance Advice transaction
set.

I would like to jump on the bandwagon here and also support what Patrice had
to say earlier about the 277 claim acknowledgement transaction. VHA — when we
implemented our initial 4010 transactions, we implement, vetted, and our
clearinghouse already had available to us non-solicited status messaging. That
is what we did. We have been receiving — we send our claims out and we just
get responses from the payers that participate in that. I believe the
clearinghouse has an incentive for the payers to provide that data. We have
been doing that from the get go and that is beneficial. The thought of having
to go back and do a mother may I and ask for that transaction isn’t very
attractive to us.

I would also like to echo the standardization of the code sets, the claim
adjustment region codes. We at VA have been grappling to map and standardize
how payers use these codes differently and then to put that in our system
nationally. Minnesota has done that. We have done that. It has been
time-consuming process. We have also tried to get the industry together to make
some advances in that way and I know WEDI has a work group trying to get that
done as well, but if we could have operating rules that address these things it
would be a benefit to all of us.

I think that is all that I have. Thank you very much for the opportunity to
comment.

DR. WARREN: Thank you. We are going to have another 10 minutes of questions
and then everybody gets a break. Mike, since I cut you off last time, do you
have a question? We will let you be first.

DR. FITZMAURICE: I am thinking.

DR. WARREN: In your testimony, George, you mentioned the use of IHE in this
process. Can you give us more information on how you see them as a player?

MR. LANGDON: I was trying to use the reference of how IHE works with HL7 as
an analogy to how I would like to see this decision-making process work. In our
health information exchange business you work with the HL7 transaction
standards analogous X12. Then we and the rest of the industry work with the IHE
for implementation and all the specifics with that of how you really make it
work. We would like to see a single entity named who would be aggregating
feedback from the regional stakeholders and vendors and very broad
participation to play that kind of analogous relationship to X12. IHE plays to
HL7. I wasn’t suggesting IHE — I don’t think they put themselves forward as a
nominee this morning.

DR. WARREN: I had not thought of that before of having constructing profiles
to be tested through the IHE process.

MR. LANGDON: There may be other analogies that might be applicable to help

DR. WARREN: But it is that testing piece of the standard and making sure
that everything works that you are suggesting.

MR. LANGDON: It is the relationship, the clarity of the governance framework
that I am suggesting — comments in the earlier part of the day. Part of the
problem is how many different bodies does my team need to be engaged in order
to guess where we are going to go from a standards and how much variation to
deal with to the extent that it was as clear as — it is X12 plus one and you
are either dealing with X12 or you are dealing with the plus one and those two
work well together. That would be magical in this arena.

DR. SUAREZ: Actually before and after that IHE work on profiles which in
general describe they are not a standard development organization that
describes how standards can be executed. It is a kind of one example of the
concept of rules for implementation for standards because it applies more to
the clinical arena with HL7 standards and all that. Having lived through the
HITSP harmonization of standards process in which standards were vetted and
selected and then profiles were identified as the mechanisms to implement those
standards. I think that is an interesting perspective. I wanted to ask the
panel if it is something that could be perhaps considered as a model for the
adoption of these operating rules, a process similar to what HITSP had in
place.

The Office of the National Coordinator is about to unveil a series of
selected contractors to implement 11 different technical task orders for the
standards, the next version of HITSP, the standards, harmonization
interoperability framework in which that is very much part of the concept is
how do we have — we have the standards but how do we really make them happen
in the industry by having agreement on how to implement them not just at the
technical level, but at the business level. Would you consider that a good
model or reflection of how these operating rules can be put forward, a HITSP
like process, a harmonization like process? Is that totally different?

MR. KILLOUGH: Personally I would have to think about that a while. I don’t
really have an opinion right now.

MR. ARGES: I am going to go back to what Margaret basically said when she
said she was going to go off script and I am going to go off script here, but
reiterate I think what Margaret was saying here in terms of the importance
those who are engaged in trying to make the standards work, really
communicating back I think to the standard development organizations through
the DSMO and others what they are finding out. And either we look to improve
the implementation guide with more narrative, change the standard for future
version as part of their process. The idea is to communicate that. If you don’t
communicate it, you have another layer who is basically doing something that is
disconnected from the standard development process.

DR. SUAREZ: So the — and it has been consistently mentioned as the thought
is really we have right now the DSMOs, the committee, and the department of
health and human services. That is sort of a sequence of how this process come
and operating rules whatever the origin is should also flow through that
process as well as your —

MR. ARGES: Right, it is interesting to hear everybody doing — use
interesting things here, but unless they communicate it and some have. I am not
going to say that some haven’t, but we need to have more of that and unless we
have more of that you are not going to be able to improve the standard or its
implementation. You don’t know what you don’t know in terms of problem areas
until you begin to see it surfaced.

DR. SUAREZ: Is that because the DSMO process itself is something that
necessarily a lot of people are aware of —

MR. ARGES: It seems to be the biggest little secret right now and through
the last few years because we haven’t gotten a whole lot of changes
surprisingly and yet there seems to be a need for this. There is a big hunger
out there for trying to improve the standard and you have various states doing
various things and that is all interesting, but what they need to do is
communicate to the DSMO process.

DR. WARREN: I would just like to comment. One of the things we start looking
back in history because I was on a subcommittee when we lived it. Everybody has
talked here about 10 years to get 4010. It didn’t take that long to get 5010
because the DSMO and NCVHS got together and started looking at the timeline and
then made recommendations to shorten it. Now in this particular act we no
longer have to go through an MPRM to make these changes. We can go right to it
and — that should streamline this a lot better.

Maybe part of what we need to do is let people know. It no longer takes 10
years. We are on a much — timeline and that may help people coming back to
DSMO and making requests. Part of it could be an educational thing.

MR. ARGES: Absolutely. Sometimes we also entertain questions that may be
don’t involve the standards, but it may be a comment and maybe needs to go as
far to the HIR and to a frequently asked question sort of thing. That would be
very helpful if we can get that sort of reminders to people.

DR. WARREN: Mike.

DR. FITZMAURICE: Thank you Judy. I liked Walter’s discussion and I liked any
sort of discussion where everybody is speak away from script — I saw some
people giving very pointed things that they liked and things that they didn’t
like — some people don’t at least. The IHE I saw as a test bed. I have been a
great fan of IHE for providing that test bed purposes. I wanted to get strong
feedback to the SDOs to improve their standards and to vendors for exchanging
uniform content which goes on the inside.

I see things go from — normally with an exchange between two partners here
at IHE exchanges by PDF and then recently start putting in variables in
exchange to variables, maybe a simulated Word document. And then pretty soon
they get to EDI. I see improvement along the way. I want to see the same kind
of — recognized by standards to become tighter. Congress recognized when they
put out the most recent health reform. They want to move toward it. I am a
little uncomfortable that maybe health plans need more encouragement to adopt
even the original HIPAA standards. And maybe states need encouragement to
become more uniform in the content of their HIPAA standards. I don’t know if
Medicare needs encouragement or not. I didn’t hear that here.

I suppose you have to look at what is the payoff for becoming more uniform.
Yes, there is a payoff. There is efficiency. Do we need to have it someway
distributed so that those who are lagging behind have an incentive, a plus
financial incentive to pick up the ball and run with the HIPAA transactions and
then to keep improving them.

As we get not too far down the road, we move to ICD-10 and we start thinking
about how do we think these data elements or claims data get built up from
clinical information. Maybe it is through SNOMED’s codes or through something
else so that clinical and medical get immersed with administrative transactions
when it comes time to pay and to judge quality at the same time and pay you
more for getting quality. I am seeing that down the road and I am seeing how
hard it is just to get the financial transactions and the eligibility done and
there are lots more people working on it. I guess we have to hope the smart
people don’t retire and they will keep training the younger ones coming up to
tackle these problems that refer smart people.

Does anything I say resonate or is it just — no, it doesn’t make a whole
lot of sense but the words sound nice. I see some good things that were done. I
see so much more that needs to be done.

MR. LANGDON: I would like to give a specific example of this. In 2005 my
team implemented 276/277 at Washington University in St. Louis with United
Healthcare and Aetna. It took us about six months to get our standard
implementation to match those two payer standard implementation because all
three parties interpreted the same standard differently. When we were done, the
turn study showed an 80 percent reduction in labor for the customer when the
customer was trying to do collections to the payer community because they only
have to look at the exceptions. We check everything at night and they look in
the one in ten. It really needed follow up with the insurance companies.
Insurance company benefits. The physician group benefits.

From our perspective the level of difficulty was such that we put the
project on the shelf. Washington University in St. Louis had this function
running. They are the only one in the US for us who has it running because we
are waiting for critical mass of standards around the payer community to be
ready and we can really take cost right out of the system as soon as it is
ready.

I don’t know whether it is a — I think there are ideas about changing the
enforcement guidelines. I think your ideas about staggering the transaction
implementations and then having very top standards and auditing of that process
will help us all move as an industry, but there is tremendous opportunity just
sitting there. We have referral authorization as well, electronic referral
authorization sitting waiting for a good market to get the standards going. It
is all built. It is ready to go. We are just waiting for the right magic to
happen.

MR. KILLOUGH: The payers -– I don’t want to sound like I am being
totally critical of that segment of the industry, but they work on what
benefitted them the most and that was getting the claims process going. And
everything else that really affects the cost of health care doing business day
to day in a physician’s office is what is lacking. I echo what George said. We
have had similar experiences with development of eligibility or claims status
in isolated instances, but the level of effort required wasn’t just —
investment. It wasn’t something you could propagate system wide. It just can’t
happen under today’s environment.

MR. ARGES: The other thing here — it is a mindset change that I think is
beginning to see things, but it hasn’t really quite happened yet. You have some
people who believe that if there is a code list that is used within the
standard and they only care about let’s say there is a code set that contains
codes A, B, C, and D. They only care about codes A and B — the systems around
it and when you get codes C and D, they reject it. They are valid codes. They
need to be able to know how to handle it. They need to be able to know how to
process from that code list. The point is that you don’t cherry pick the
standards. You basically need to operate and learn to operate from the standard
as it was laid out as part of that process.

DR. WARREN: With that I am going to let us all go on break. Please be back
at 3 o’clock.

(Break)

DR. SUAREZ: Go ahead and get started again. I have been handed the gavel,
which means for a few minutes which means probably I won’t be able to ask
questions. We are going to go to our next round panelists and I think we are
going to start with Dan Powell.

MR. POWELL: Good afternoon. My name is Dan Powell. I am the Assistant
Director for Operations at the VA Health Administration Center or the HAC in
Denver, Colorado. I would like to say thanks again to the committee for
allowing us to make these comments and be part of the discussion. I don’t see
Lorraine right now but I am going to make her day by saying my comments will be
pretty short.

HAC administers a variety of health benefit programs for the VA; most of
these are Veteran dependents, programs, for instance, Civilian Health and
Medical Program of the VA or CHAMPVA. One of our programs is Veteran-centric
which is the Foreign Medical Program.

HAC is aligned with the Purchased Care operation of the Veterans Affairs
Chief Business Office or CBO. CBO Purchased Care operation serves as the payer
and/or provides administrative oversight for the payment for all VA health
benefit programs for Veterans and their dependents, i.e., it pays for all
health care services purchased by the VA in the commercial sector which amounts
to approximately $6 billion worth of care. It is considered a covered entity
per HIPAA.

Other programs under the Purchase Care operation include the Fee Basis and
Project HERO which are Veteran-centric programs.

I would like to briefly address the following six topics: the need for
broad-based consensus over operating rules, a consolidated source for
requirements a question regarding administrative simplification. The VA’s
experience with operating rules, our future plans, and implementation timeline.

In terms of consensus we see our broad based efforts that provide for
equitable representations from all industry groups, for instance, providers,
health plans, vendors, regulators and standards organizations is essential to
operating rules development. A consensus view must be reached that accommodates
all parties. This will limit extremes from any one group. Much of this has to
do with equitably distributing the costs of implementing standards and rules
that really work for all. No one group should be burdened unduly with excess
requirements or costs.

Electronic transaction standard implementation guides should incorporate the
operating rules in order to provide a single source of documentation. It would
be an extremely complex undertaking to implement using more than one operating
rule entity and for each entity named to issue its own documentation.

Certifying compliance to standards benefits everyone in the industry and
will prevent some of the downstream issues associated with non-compliance. But
one certification should include one consolidated set of standards, both
transaction standards and operating rules, governed by one consolidated set of
documentation and one administrative entity to deal with.

The VA Health Administration Center which is directly where I work fully
supports administrative simplification realizing that sometimes there is an
upfront cost and complex implementation to achieve a longer term result that
brings true simplification and reduced costs. HAC has made every attempt to
keep its EDI implementation standards based and simple. We have never issued a
companion guide and by the way no provider has ever asked us.

VA Health Administration participated in the CORE III Health ID Card work
group, which was really a very good experience for us overall. The VA payer
voice was present at the table. Based on the reports I got it seemed like the
group was slated somewhat towards the provider community in this particular
case. With regard to the work on the Health ID card this did not seem to really
cause any problems, but from our perspective which is just a cautionary note,
it seems like every effort needs to be made to make the operating rule
discussion again broad based and ensure that all groups are equitably
represented.

It also seemed clear that this work group pursued a very aggressive timeline
in order to complete their work. It wasn’t just our VA representatives but
other people on the work group a change to struggle keeping up with the
timeline.

While the work on Health ID card did not particularly suffer in this case,
it was clear that aggressive development can lead to ill-considered decisions
from participants that did not have time to review work or proposals thoroughly
and perhaps overlook complex, but hard-to-see issues, because they lack the
time to dive into the details.

The VA Health Administration Center is seeking funds, either FY10 end of
year funding or FY11 funds, to actually gap its current transaction
functionality against the CORE II Operating Rules. HAC realizes that it will
need to begin its upfront monetary expenditures in order to meet this ongoing
requirement.

In terms of the implementation timeline, we feel like the 2013 deadline
seems pretty aggressive given 5010 and D.0 and ICD-10 mandates adding both ANSI
operating rules into the same timeframe will cause issues for VA payers. Again,
this gets back to the ongoing effort to centralize IT functions within VA the
relative lack of IT resources at the program level and the frequent need to
undertake two contracting cycles; one for formulation of business requirements
and one for IT development.

Listening to some of the comments today there was a variety of comments that
alluded to the idea that what we really need to do maybe is re-sequence our
implementation effort by transaction needs; first, eligibility and then
building on that foundation. And rolling in the operating rules related to the
transaction at that time. Actually that has some appeal to us. It sounds like a
pretty reasonable approach to the whole thing, but it really would require
retooling of our implementation effort at VA which would be pretty difficult if
not almost impossible at this point given the environment in which we have to
implement.

The other thing I heard today was the issue of expense and there was a
little joke about millions going around and VA does have millions to spend
though a lot of it is going to the clinical side right now. It is not going to
the administrative side. Again, I appreciate the ability to make these
comments. Hoping we are pushing your schedule ahead just a little bit here and
I look forward to questions later.

DR. SUAREZ: You are indeed. Thank you very much. Nancy.

MS. ORVIS: Good afternoon members of the committee. My name is Nancy Orvis.
I am the Military Healthcare System and represent information management. I am
pleased today to present testimony regarding the Military Healthcare System’s
current perspectives on the topic of common operating rules as identified for
implementation in the Public Law 11-148.

Just as a place marker on where the Military Health System is as a federal
health care organization, we are a global medical network within the Department
of Defense that provides health care to US military personnel worldwide. We
have 59 hospitals, 364 health clinics, numerous shipboard medical facilities
and mobile medical care facilities in theater, and areas of humanitarian
systems. We deliver health care worldwide to a beneficiary population of more
than 9.6 million service members, retirees, and family members through both
military clinics and hospitals that we staff as well as through a civilian
health network plan of providers across the United States and through parts of
Europe and South Asia and South America.

The MHS is both a payer and a provider. As we may offer one of the unique
perspectives here as a managed health care program with associated health plans
we provide a health maintenance organization type benefit called the TRICARE
Prime. We offer a Preferred Provider Organization plan called the TRICARE
Extra, and we offer a fee-for-service plan called TRICARE Standard. As a payer,
the MHS contracts with managed care support contractors and their fiscal
intermediary sub-contractors to administer the networks of providers in
purchase care and adjudicate the TRICARE purchased care claims.

As a provider with the associated, individual, and organizational provider
identifiers, the MHS delivers direct patient care in our hospitals and clinics
and in austere environments such as battlefields and ships.

At the MHS we understand the concepts and the intent and potential benefits
of identifying and employing common industry-wide operating rules between the
defined entities. Our managed care component understands that the common
operating rules are intended to provide the standardized and commonly applied
constraints expected to reduce reliance on the HIPAA administrative transaction
companion guide.

In addition, we understand that common operating rules, which provide
external constraints to the HIPAA Technical Report guides, may be much more
flexible in terms of frequency of updates that may be applied against the
transactions. We support that.

We understand too that the rules are the only constraints to broader
allowances that exist in the X12 transaction reports and the NCPDP guides. The
common operating rules may tighten tolerances and place limits on options while
not loosening or going against what is in the higher level guidance. I am
saying this because there may be some who believe that using common operating
rules to make interim and pseudo fixes to the implementation guide and probably
people earlier today mention that, but that belief is incorrect and we know
that we can see where approved and ongoing use of common operating rules may
drive future changes to the transaction guidance. It should because why keep
non-used options in the guides if it is certain that operating rule constraints
to the guides will be permanent.

In addition, the key points that we want to talk about — implementation
costs of common operating rules will likely be incurred across the specter of
entities, providers, payers, plans, et cetera that use the transactions.

Software used by the providers has to be modified for the initial
implementation and potentially on an ongoing basis as new common operating
rules are released and mandated. Changes to this software at the provider level
may also drive user interface changes for data input choices and along for
those providers.

From a payer/plan perspective that function of applying common operating
rules across these two entities and both are internal to us may limit
flexibility that entities may wish to employ in terms of frequency of updates.

We want to have the committee consider that once common operating rules
become a normal ongoing process there will have to be a very defined control in
the number and frequency and management and much more complex rules for
managing the updates.

The expectations are that the implementation guide versions will be updated
and released more frequently compared to the last seven years and that
operating rules have to stay in sync and be timely. There are budget and
implementation impacts on federal health care entities as well as the broader
industry when making decisions about how and when these updates are to be
promulgated.

Part of the issue that I would like to bring today for the Military
Healthcare System and the TRICARE plan is that there is no current baseline and
common operating rules with which to compare or use planning or budgeting. We
all as health care entities have to deal with that. It is going to be uncertain
what those impacts on costs will be in the next few years and how to plan
logically for that.

One of the issues for us is modifying eligibility software today in our case
would be costly and benefits to MHS and military personnel might be limited due
to the transportation of unused data payload. If we are the provider as well as
the payer in the plan, those are internal transactions to us. We have found
over 85 percent of our beneficiaries just have TRICARE health plan exclusively.
It comes down to a very small percentage of transactions where we are checking
for other eligibilities where it is actually necessary.

I will come to another issue though where other health plans do come to
TRICARE and the Military Health System to check their eligibility, for
instance, state Medicaid plans.

Right now one of the issues we are looking for is perhaps an exemption to
compliance with common operating rules for HIPAA standard transactions of
exchange between two covered entities within appropriate entities. And the
problem is that one of these transactions doesn’t necessarily deal with
plan-to-plan exchange, and when Medicaid checks against TRICARE benefit to say
first of all is this Medicaid applicant already under TRICARE, are they
eligible, vice versa. There are issues related to that.

One of the things is under CORE Phase I eligibility and response transaction
operating rules as written that apply to transactions from providers to plans
not plan to plan. The MHS uses HIPAA eligibility transactions for an annual
Medicaid and DoD eligibility reconciliation which is plan to plan. We recommend
that NCVHS look into excluding operating rules that are intended for
provider-to-plan/payer transactions and exclude the payer-to-payer
transactions.

To summarize, the MHS understands and appreciates the projected benefits of
common operating rules, while we are aware of initial and ongoing operational
and technical costs. There are some unknowns, such as no current HHS directed
industry wide common rules in place which makes us somewhat concerned about how
big changes might be in the fiscal environment.

We have two requests that NCVHS consider a specific MHS exception to
operating rules when transactions are between MHS programs areas, such as
between the DoD provider entities and the DoD personnel systems. And two when
the NCVHS adopts common eligibility transaction operating rules that the common
operating rules not apply in federal to federal or state to federal
payer-to-payer transactions.

The MHS is and has always been committed to being compliant with the HIPAA
transactions code sets and identifiers and has been since the inception and
they are not asking for relief from the HIPAA requirements but we ask that you
consider this MHS perspective on these two areas of transactions as you make
recommendations on operating rules.

Thank you very much for your time today and if there are any questions, I
will answer them.

DR. WARREN: Thank you. Nancy Spector.

MS. SPECTOR: Thank you. I am Nancy Spector. I am Chair of the National
Uniform Claim Committee and I am also Director of Electronic Medical Systems as
the American Medical Association. The NUCC thanks the subcommittee for inviting
our input on operating rules.

For those of you who don’t know the NUCC is a national, multi-stakeholder
committee. Its members represent providers, payers, designated standards
maintenance organizations, public health organizations, and vendors. The
mission of the NUCC is to support and advocate for the development,
maintenance, and adoption of uniform data content and standardized
administrative transactions in the health care industry and specifically we
maintain the layout of the 1500 paper claim form.

The NUCC has reviewed the language in Section 1104 of the Affordable Care
Act is it pertains to operating rules and because the NUCC maintains the NUCC
Data Set for the professional claim, our comments are going to speak more
directly to the professional claims.

The purpose of the NUCC Data Set is to present a single data set intended
for use by the professional health care community to transmit related claim and
equivalent encounter and coordination of benefits transactions to and from all
third-party payers. The focus is on data content standardization. Two of the
principles that underlay the NUCC’s goals and implementation are
standardization requires broad-based consensus among key parties and the
professional uniform data set and associated attachment requirements to
constitute the full extent of the data required by any public or private payer
to process a claim.

The end product of the NUCC’s efforts is one standard data set, with
complete and unambiguous data definitions for use in an electronic environment,
but applicable and consistent with evolving paper claim form standards. The
NUCC Data Set serves as an accompanying document to the 837 professional claim
implementation guide.

From our work as the maintainer of the NUCC Data Set it is our opinion that
the NUCC Data Set contains the data content of the professional claim standard
and the data content includes the data and associated reporting and usage rules
developed by standards development organization as published in the
implementation guides.

Business needs related to the standards that are not data content would be
addressed in operating rules. The NUCC does see great value in the development
of operating rules to address variations in such business processes as response
times to transactions and lack of uniformity in the communication of
transactions. The operating rules have the potential to make these processes
more efficient, decrease complexity that exists today, and decrease costs for
maintaining multiple interfaces.

The role of the operating rules — Affordable Care Act explains the — that
the adoption of standards and operating rules shall seek to reduce the number
and complexity of forms and that the Secretary shall adopt a single set of
operating rules for each transaction. The NUCC supports this intent as it
aligns with our efforts for administrative simplification and uniformity and
standardization of data content and reporting.

The NUCC sees the intent of this language as addressing the current issues
with hundreds of companion guides that we have today and we have talked about
that already quite a bit today. The added complexity brought on by companion
guides will hopefully be decreased if not eliminated by the introduction of one
set of operating rules per transaction and the implementation of the updated
HPAA standards. The NUCC is very supportive of any efforts to decrease the
number and size of the companion guides as they exist today.

The introduction of operating rules for each standard will also add a layer
of complexity. Today, organizations need to obtain implementation guides for
each standard they are implementing, and organizations will now need to obtain
the necessary documents for the operating rules. There is no central repository
or access point through which organizations can obtain the documents necessary
to comply with the HIPAA standards. The costs for each organization
implementing and conducting the standards will increase as they need to locate,
purchase, and integrate all this into their processing logic for the operating
rules, in addition to the implementation guides.

The added expense may deter adoption of electronic transactions. The NUCC
asks NCVHS to recommend to the Secretary to develop a funding process so the
SDOs and operating rules developers can provide their implementation guides and
operating rules to the industry free of charge or at a nominal cost.

There will also need to be close coordination and collaboration between the
SDOs and the operating rules developers. The NUCC is aware of the DSMO proposal
and we support that as you have heard from a few of the other DSMO
organizations today. We do recommend that NCVHS establish a formal process for
coordination between the SDOs and operating rules developers. We see the
coordination between the SDOs and the operating rules developers will provide
the opportunity for organizations to resolve any conflicts that may occur
between standards and operating rules before each is finalized and before they
are presented to NCVHS for adoption.

The Affordable Care Act includes language about the operating rules
developers and the NUCC is supportive of the criteria that have been outlined
in the law for the requirements of an operating rules developer. We would also
like the subcommittee to consider a few additional criteria when evaluating the
candidates.

First, the entity or entities should be accredited by ANSI and accreditation
by ANSI would ensure that the entity meets the criteria in the law and ANSI
accreditation establishes requirements for due process by the organization, and
due process the way ANSI describes it includes the practices of openness, lack
of dominance, balance, coordination and harmonization, consideration of views
and objections, notification of development work, consensus vote, appeals
process, and written procedures and I think you have heard using various pieces
today in other testimonies.

We also think that ANSI accreditation would enhance credibility of the work
being done by the operating rules developers and could later deflect any type
of criticism that may come about regarding the operating rules development
process and the resulting work.

Consideration should also be taken of the costs associated with
participating in the operating rules developers’ work, such as dues and
meetings. There does need to be balanced representation of the stakeholders,
and so costs need to be minimized in order for the largest number of
organizations to be able to participate. Costs and staff resources to
participate in the work are an added strain to the industry and do have a
potential to limit participation.

Finally, the NUCC does not believe there should be any mandatory
certification requirements for operating rules separate from the certification
requirements that are outlined in the law for health plans. Once the operating
rules are mandated, it should be assumed that all organizations using the
associated standard are compliant and the current complaint/enforcement process
would then be used to address any issues of noncompliance with the operating
rules.

Another recommendation the NUCC would like to make is that the operating
rules developer entities be required to notify the industry of their intent to
begin development on operating rules a minimum of six months before or begins
and this would alert the industry and the standards development organizations
of that upcoming work and give everybody a chance to participate in that work.

The NUCC is very supportive of the naming of NCVHS as the entity to review
and recommend operating rules to the Secretary. We see the importance of a
single body reviewing the standards and operating rules to ensure they are
consistent with one another and do not conflict and we also see NCVHS’ current
role reviewing regulations related to standards and other HIPAA requirements
means that one entity will be able to identify various regulatory initiatives
and evaluate the significance of each and determine the best timing for
compliance based on industry needs and resources.

In terms of the timeframes outlined in the laws, the NUCC does support them.
We do recommend that NCVHS consider whether or not pilot testing is necessary
for all or some of the operating rules. Conducting pilots that are fully funded
and include a wide range of stakeholders, as quickly as possible into the
development process would provide a quantitative and qualitative evaluation of
their functionality and value.

The Affordable Care Act established an expedited rulemaking process and we
are very supported of this change. We do recommend the need to have a
predictable cycle for the adoption of updated standards and operating rules and
today’s process is much too slow and I know others have already spoken to that
today.

We recognize that the adoption for setting operating rules will be done
based on the dates identified in the law, but for future versions we would
recommend that the standards and operating rules for the same transaction be
brought forward for review and consideration at the same time. Coordinating the
review of the standard and related set of operating rules will allow for better
evaluation of consistency and uniformity between them.

Again, the NUCC is pleased to see that the NCVHS will be serving as the
review committee for recommending future updated and new versions of standards
and operating rules. Although the law allows for the adoption of updated
standards and operating rules every two years, we would recommend that NCVHS
review the update frequency for the most appropriate timing. The review
committee again can play a critical role in evaluating the industry’s need and
capacity to move to a newer version.

In summary, the NUCC appreciates the opportunity to participate in these
hearings and present our recommendations. We do feel that the introduction of
operating rules is a new concept into the administrative requirements and will
be a significant change for the industry. We are pleased to see NCVHS playing
such a key role in this and we look forward to providing further input in the
future. Thank you.

DR. WARREN: Thank you. Tammy Banks.

MS. BANKS: Good afternoon. I am Tammy Banks, Director of the Practice
Management Center at the AMA. The AMA would like to thank the subcommittee on
standards for inviting our input on the adoption of operating rules to increase
the value of the HIPAA standard transactions.

The AMA strongly supports the provisions in the Affordable Care Act which
are designed to fix the problems associated with electronic health care
transactions. These problems have significantly hampered the ability of the
health care industry to fully automate its activities. The AMA supports the
work that X12, WEDI, CAQH CORE have undertaken to identify and remedy the
hurdles that have been encountered today and urge NCVHS to implement the
Affordable Care Act administrative simplification provisions in a fashion that
leverages and enhances both these efforts.

Toward that end we believe it is critical that NCVHS ensure that operating
rules that as the necessary business rules and guidelines to be electronic
exchange of information that are not defined by a standard or implementation
specifications made all of the following six requirements.

Number one, we develop through a standards’ process that engage in total
quality management. We encourage a continuous process improvement loop be put
in place that includes the testing of alternatives and best practices prior to
the adoption of mandatory standards. This approach will assist to the
transaction too and enhance the value of the next version of the standards.

Two, be developed in coordination with all the bodies involved in managing
and updating the transaction code sets and standard identifiers. For electronic
health care transactions to really work all four aspects of the transactions
must be integrated and optimized as a cohesive whole. There needs to be an
established system of communication and synchronization of all these efforts.
In particular, there must be clear understanding of the issues that may be
addressed in operating rules in which may only be handled by the transaction —
identifiers.

Presumably there is no question but that an operating rule may not change
the definition, data content or use of the data element or statement in the
standards add any elements or statements to the maximum defined data sets, use
any codes or data elements that are either marked not used in the standards
implementation specifications or are not in the standards implementation
specification or changes the meaning or intent of the standards implementation
specifications, but in an operating rule have an impact on the content of the
standard or must a mandatory operating rules be limited to service level
requirements and other rules that do not affect implementation specifications
or other data content requirement. What is the most efficient way to get to one
comprehensive uniform set of standards and operating rules that meets the needs
of all the trading partners?

Three, be developed in complication with representations of all industry
stigma. For electronic health care transactions to really work they have to
meet the needs of patients, employers, health insurers, public payers,
hospitals, and other health care facilities and physicians and other health
care professionals. For this end we support the ANSI accreditation of any
organization involved in establishing mandatory operating rules.

Four, be flexible. With that flexibility does not undermine the goal of
administrative simplification. Health care transactions are extremely complex.
Where it is possible we strongly recommend similar to NCPDP and X12 creating
situational rules that apply only when a particular situation requires them
rather than burdening everyone in every transaction with unnecessary mandates.

For example, today there is very small number of claims in which the amount
recorded is in a foreign country. The situational rule in the 5010 version of
the HIPAA claims transaction states that information indicated which currency
is applicable is required to be recorded only when the amount is in a currency
form other than the US dollar. This is a clear concise situational rule. Where
all transactions are considered US dollars, unless a foreign currency is
reported. This type of flexibility creates no obstacle to automation as it can
be programmed and operationalized in administrative system, but this may
warrant a clarifying regulation to permit this type of situational rule. It is
in the Affordable Care Section Act 1104.

Number five, be clear and not permit variation between payers with respect
to those situations in which they do apply. From the standpoint of a provider
community which must interact with multiple, public and private payers it is
virtually impossible to deal with all the variations that exist today except
through auspices of one or more clearinghouses that can afford to program all
the variations in their roles as aggregators.

Six, be developed in a timely fashion. The current standards setting process
is a remarkable testament to the dedication and commitment of countless
volunteers who work without pay except to the extent that they are employed by
an organization that allows them to use paid time to work on these activities.

We have significant concern, however, as whether this purely volunteer
effort is adequate for this task at this point. Affordable care lays out a very
ambitious time schedule. We urge NCVHS to determine whether it may be necessary
to augment the volunteer work force in some fashion to accomplish this critical
objective. Indeed to fully automate the administrative processes of the health
care system there are numerous challenges that must be addressed through some
combination of refined X12 standards, operating rules, and our best practice
guidelines where testing alternatives makes sense before a mandatory rule is
adopted.

Among the outstanding issues facing the health care community are all of the
following: operationalizing the national health plan identifier, streamlining,
(?) forms and processes for initiating various electronic transactions,
optimizing the electronic funds transfer and electronic remittance advice loop,
analyzing and implementing the claims attachment standard, and fixing the
deficiencies in the current 278 standard transaction that is intended to
automate the sending and receiving of referrals or authorizations. This
transaction in itself holds tremendous potential to reduce the current manual
effort and hassle incurred by physicians and their practice staff to obtain
prior authorization of medical services and to make referrals or send
prescriptions or other orders on behalf of their patients.

Finally, we must emphasize the importance of enforcement. We are ever to get
to the fully automated health care system envisioned by the Affordable Care Act
even though compliance mandated by the Affordable Care Act. Even though
compliance with the HIPAA transaction code set rule became mandatory for all
health plans in October of 2004, many health plans remain out of compliance.
This lack of compliance is slowly the adoption of electronic transactions by
the provider community as a value of these transactions was dramatically
reduced to the extent that they cannot be implemented consistently across all
payers but which a physician or other health care provider does business.

It is extremely difficult for organizations particularly smaller practices
to implement multiple workloads unless all of the practices’ trading partners
use electronic transactions that meet the practices needs. The practice will
likely find it more efficient to continue to use manual processes which could
be used consistently and effectively.

At the moment, problems with the current enforcement process is the fact
that it depends on complaints. Physicians typically do not have time to file
and are willing to file in any event due to fair retaliation. Moreover, the
penalties even if they were to be applied are smaller than the cost of computer
programming or clearinghouse fees that the health plan recurs to become
compliant.

We believe the fastest way to increase the use of electronic transaction in
health care is to simply ensure that all health plans are indeed compliant
coupled with the addition of the continuous process improvement loop to
identify efficiencies through multi-stakeholder pilot testing and ongoing
refinement of the standard transactions to ensure they meet the provider as
well as the payer community needs.

Physician compliance with the HIPAA standard transactions on the other hand
is self enforcing. If physicians do not submit transactions in a compliant
manner the payer does not respond. As a result physicians that want to use
electronic transactions generally contract with the billing services and
clearinghouses to ensure the submission of compliant claims and other
transactions. Health plans that are unable to update their legacy systems or
otherwise meet that the requirements should similarly be required to outsource
these activities to clearinghouses or other intermediaries that have this
capability.

We look forward to working collaboratively with NCVHS and respected
stakeholders to bring about administrative simplification for physicians and
others in the industry. Physicians will adopt additional electronic standard
transactions when it makes economic sense for them to do so. The medical
professional looks forward to the day they can leave the paper-based health
care process for a fully transparent, fully electronic system. Such a system
would dramatically reduce cost and complexity of the business of the medical
practice resulting in increased time and resources that physicians can devote
to their patient’s care. Thank you.

DR. WARREN: Thank you. Michele.

MS. DAVIDSON: Thank you. I am Michele Davidson. I am the Manager of Pharmacy
Technical Standards for the Walgreen Company. I am also a member of the board
of trustees for NCPDP. I wanted to thank you for the opportunity to speak to
you today on the operating rules. I will give you a short introduction and then
explain to you a little bit about Walgreens and the current use of the
transactions, the eligibility claim, and the claim transactions within
pharmacy. I am going to try to spend the majority of my time on my
recommendations for the panel.

As of June 30, Walgreens operated 8038 locations in all 50 states, the
District of Columbia, Puerto Rico and Guam. That includes 7541 drugstores. We
also operate worksite health centers, home care facilities and specialty,
institutional and mail service pharmacies. The Take Care Health Systems
subsidiary manages more than 700 in-store convenient care clinics and worksite
health and wellness centers. I am not going to spend any time talking about the
rule because I am sure everybody is very familiar with it by now.

As for as the eligibility NCPDP transaction, we have two different ways to
determine eligibility using NCPDP standards. Using the Telecom Standard any
version D.0 or 5.1 claim is basically adjudicated real time to the payer.
Eligibility of the patient is checked by the plan processor and this is one of
many edits that is informed on the claim. All this is done without the pharmacy
after the claim is sent from the pharmacy to the plan. The claim is then paid
or rejected in a real-time fashion. The editing is not part of the NCPDP
standards. Only the response is part of the NCPDP standards.

The E1 or the eligibility transaction is another story. This is an NCPDP
standard and a stand-alone transaction. This is how pharmacies actually can
determine a patient. Medicare Part D eligibility pharmacy industry worked very
hard with CMS in order to come up with this transaction, and Lynne talked about
this earlier today. This is extremely useful when the patient does not have
their insurance card or has recently changed Part D plan. The E1 transaction
will return the patient’s current Part D information within seconds, usually
about one second.

The NCPDP E1 transaction — we talked about business rules and how the imp
guide maybe is not clear, but as far as the eligibility transaction on the
NCPDP side especially with D.0 there, it is extremely clear and we worked very
hard to ensure that we clarify everything especially with D.0. We make sure
that the business rules were clearly defined in the implementation guide.
Reviewed the fields clearly defined situations. If you look at it — I wasn’t
going to put it all up on the screen. We painstakingly removed optional fields
marked others as not used. The operating rules for the NCPDP E1 transaction by
my opinion have no further need to be improved unless additional business needs
are identified.

We also do use the 270/271 and if used in conjunction with formulary and
benefits transactions the scripts standard by the prescriber on the prescriber
side and we used it in order to determine patient eligibility information. It
basically determines which plan the patient is enrolled in integrated health
for pharmacy because if the physician uses that then if you get the plan
information it would end up we don’t have to then send back. Perhaps it could
stop a call from the pharmacy. They may choose the right drug, the formulary
drug because they know what plan the patient is actually enrolled in. That way
they can do a formulary search and all that. It is very helpful if the
physician does actually use this particular transaction in the script.

We also use this transaction when we process Medicare Part B as in boy
claims to check for patient eligibility on the Medicare file.

Issues. We do have some issues with the 270/271. I would question whether
the 270/271 on the pharmacy side can handle the pharmacy claim volume based on
our experience with Part B claim because it’s not always been a smooth one. For
example, this particular year as you know we had a very active flu season and
Walgreens in particular we process extremely large number of immunizations. In
February the 270/271 was down almost the entire month. We could not get any
eligibility transactions through the entire month. That is a problem if we were
to ever need to use that as our main transaction plus the response time is
usually less than 15 seconds which is not up to our normal pharmacy’s standards
which is less two seconds.

Claim status. NCPDP transactions do not use claims status transactions.
Telecom Stat. Does standard actually — the status of the claim is returned.
Real time and response to the pharmacy claims. The only time we would possibly
use it would be when we use an 837 which is rarely used in pharmacy. Medicare
Part B claims do process using the 837 which would be a nice thing if that
changed. Occasionally we do use for DME; however, we really don’t use the claim
the status even when we do process 837. It just doesn’t apply.

Now to the recommendations. Pharmacy is unique since its on-line
environment. It should not be treated the same as the rest of the industry.
That is the way I feel. We have been conducting business on-line real time for
15 years and ask that you take that in consideration when adopting these new
standards.

Consolidation of standards could lead to administrative burden for pharmacy;
for example, we will require to adopt the 270/271 which would be a separate
transaction instead of the NCPDP standard which is currently part of the
Telecom standard or instead of the E1 standard could place significant workload
on our pharmacy plus it would also increase costs due to the additional
transactions.

It is essential that you consult industry when adopting standards used by
others since they may have industry’s specific guidance. In this particularly I
am talking about the 835. This I pointed out because we actually have a
specific 835 guidance. If we were to use say the 835 X12 companion guide, there
are a lot of fields there that do not map to the NCPDP format. It would be a
disaster for pharmacy. We have specifically taken and have an NCPDP standard
835 guidance. It is very important to take that into consideration. The same is
true as you consider rules for the machine readable ID card, follow the NCPDP
and WEDI imp guide.

Walgreens would recommend or would welcome the expansion of the NCPDP E1
transaction to commercial plans that facilitate the look up for all health care
recipients under health care reform. Since all patients should have coverage at
time would be better enable pharmacists to serve this new population that may
not be used to carrying an ID card. It is just a thought.

Also, payer sheets. I know there has been a lot of talk about this and
everybody else — all the other health care people in this room disagree with
me but I am going to say do not eliminate payer sheets because the pharmacy
industry has to have payer sheets. We need payer sheets to do our business. We
need multiple payer sheets. That is how we delineate the type of business that
we use. One companion guide does not do it. If we had one companion guide, you
would put pharmacy out of business. We could not bill. We have to have multiple
payer sheets in order to be able to bill the different types of plans. That is
how we determine if primary or secondary and all that. It is essential for us.
And as I mentioned before I would love to see Part D processing pharmacy claims
using an NCPDP telecommunications standards. Michael, they would be following
HIPAA guidelines.

Developing rules. Basically developing of operating rules so hand in hand
with business rules already established in the NCPDP standards. I showed you
the example of that earlier. Operating rules should be brought forward and
developed in the early phases of the standards development process to ensure
compatibility with the standard and associated implementation guides, provides
timeliness of industry participation and business requirement input. Adoption
of standards could be done more effectively by accelerating and better
organizing the regulatory process. We have also talked about that. It is
essential.

Transmission. Transmission rules under operating rules. Pharmacy has been
transmitting claims on line real time using NCPDP standards for 15 years;
therefore, pharmacy should be protected under the Safe Harbor Act. Should be
exempt from this requirement.

Situational rules. Lynne spoke to this in depth. I probably don’t need to go
in depth anymore about this, but once again we have well defined business cases
throughout our implementation guides. I don’t think there is any reason to say
anymore. We are especially proud of our well laid out payer sheet template. I
can’t say anymore about that, but that really — we worked very hard on that.

With that I will end with I hope that my presentation has helped to assist
you in better understanding the unique needs of the pharmacy industry as you
work to develop operating rules. If I can be of any further assistance, please
let me know.

DR. WARREN: Thank you for everybody. Open for questions.

MS. TRUDEL: I want to go back to the payer sheets too because I am wondering
when people say companion guides are terrible and we should get rid of them
whether we might be throwing the baby out with the bath water. Is there
something of information that is included in an X12 side companion guide that
is actually necessary and how does it map to your payer sheets?

MS. DAVIDSON: I was thinking about that. I think part of the reason they say
— the rest of the industry maybe doesn’t want multiple payer sheets. They are
not real time online. Part of the reason that we have to have the multiple
payer sheets is first of all we need it for the BIN/PCN where to send it and it
delineates the business also. Maybe at the point where the rest of the industry
and I am sorry catches up with pharmacy or gets to the point where they are
real time online then they will understand they may need those payer sheets to
be able to distinguish how to bill those plans and delineate the billing of
those plans, but they are not there yet. Be careful what you ask for.

Right now the way they are doing business they don’t necessarily need it but
we do absolutely need it because we have distinguished where — I am going to
pick on Annette. Medco. Like she has a Part D plan and one may be Part D or it
is the regular Part D and then to bill a secondary is the same BIN, but the PCN
is different because that is how we bill for secondary and looks identical. The
only difference is how to bill the COB portion and the rest of it is exactly
the same, but we set it up in our system as two separate plans. It is like that
throughout our system, but I have to have two separate payer sheets in order to
do that. They go to two different places within her system.

MS. TRUDEL: Can I direct the same question to Nancy and Tammy? When you look
at a traditional companion guide, is there any information in there that is
specific to the plan that you would continue to need?

MS. BANKS: Well obviously there will be individual information and contact
information and — and some of the infrastructure information. That will be
needed but I am definitely not an expert on companion guides. I would have to
defer to —

DR. SUAREZ: This is a question for Nancy. I just to want to confirm — your
testimony you requested or recommended exceptions in two instances. One is
within a legal entity where I would say is an area would be that unorganized
health care arrangement in which there are multiple covered entities on the
inside there organized health care arrangement and they are exchanging
information that those operating rules don’t apply in that circumstance ever.

MS. ORVIS: As I said one of our covered entities is our personnel
eligibility checking entity which is DEERS eligibility enrollment system and
the other is our own clinics and health care delivery hospitals that would be.
They already have a lot of this information so having to go and do the fully
compliant operating rules it would slow down our transactions in checking
because we already have a lot of that information. We don’t need to go back up
and get the full set that would be coming back.

DR. SUAREZ: You just made me think about elevating that scenario into what
HIPAA calls organized health care arrangement structures and inside those the
co-entities which conduct exchanges and transactions and the application of
these operating rules in there would also be —

MS. ORVIS: There might be other entities where there are employers who give
health care to their own employees or there are staff models perhaps where that
might be applicable too.

DR. SUAREZ: Then the other exception that you requested or recommended was
when there are exchanges between payers, a payer-to-payer exchange. It sounded
like you qualify that by saying operating rules that are —

MS. ORVIS: We would be leery on putting operating rules on that kind of
exchange because that would cause — the standard transaction works in there
though it is not the — but adding operating rules where the operating rules
force one to be a provider and one to be the plan is not going to — we can no
longer use that transaction in other words.

DR. SUAREZ: But if an operating rule can be written that is directed to do
two payers. In an eligibility situation probably then play very well, but in a
coordination of benefits situation which is one of the standard HIPAA
transactions there could be potentially “operating rules” that help
define how payer-to-payer coordination of benefits is executed. Would that be
possible in your mind? Because if I read your statement correctly, you said if
it is a provider-to-payer directed operating rule, an operating rule that
applies when the transaction between a provider and a payer don’t make that
apply to payer-to-payer relationships. That seems to make sense in mind —
transactions that are payer-to-payer coordination —

MS. ORVIS: Yes and there is more clearly that, but there is — this one is a
little — I don’t want to use the word kluge — one idea would be to go and
make a clear transaction that is directly for those. It doesn’t currently exist
that way. I have said recent the 50 Medicaid plans may often query us in this
annual reconciliation to make sure are these people in fact actual TRICARE
beneficiaries, yes/no, because we do some exchanges, filings and other things
along that way.

I can see that two ways. You can go and make a new transaction that is
specific to do that kind of thing and then you don’t have to worry about
operating rules that supply to that or you can just give relief in certain
cases where that is being used. I think that is the cost benefit issue of how
many new transactions do you really need to have to do the business. Are there
problems or not in the way it is and so on?

DR. FITZMAURICE: Walter took one of my questions about the exemptions that
DoD was asking for. I am not sure I fully understand them, but maybe it needs
to sink in a little bit.

Let me go to Nancy Spector’s testimony. You say that one of your
recommendations is that there be no certification requirement and I looked back
on that testimony to see why and the answer seems to be because the money is
first spent the complaint and enforcement. Once you have the standard it should
be followed. Why certify something that they have to follow instead make sure
it is enforced? Is that kind of the sense of what you were saying?

MS. SPECTOR: Yes, we were just looking at it from the perspective of today
with the implementation guides and the VAGSAL(?) transactions. There is no
certification requirement. There may be some entities that do that voluntarily,
but a function is if you are using a transaction, you are using it correctly.
You are compliant and if you are not compliant then a complaint could be filed
against you.

DR. FITZMAURICE: Next, NCVHS should consider whether or not pilot testing is
necessary for all or some of the operating rules. I guess that means that NUCC
thinks that maybe some of them should be pilot tested. Am I reading into that
correctly?

MS. SPECTOR: Yes, this actually came up late in our discussions with pulling
together the testimony, but we did have a couple of people who, one person in
particular who spoke very much about the need for more pilot testing of all of
those different transactions, the operating rules, all these different pieces
come out in these requirements and there is nothing that is done in advance to
test to make sure that the intent of what is being implemented will actually
achieve what the intent is. We settled on the idea that maybe there are some
clear understanding with some of the operating rules coming out, but on others
maybe the pilot testing would help us better understand if there is value in
bringing that out.

I think we heard this morning or earlier in the day some of the different
transactions where they didn’t think operating rules would be necessary and
that would be an example of — it would be good to pilot test that and know for
sure before there is just this requirement that really doesn’t have any meaning
in the end.

DR. FITZMAURICE: That makes it clearer. Thank you. One recommendation is
that future versions of standards and operating rules for the same transaction
be reviewed and considered for adoption at the same time. And others if the
standard covers more than one transaction, we would like to see all the changes
that that transaction be done at the same time even if say five months later a
different transaction under that same standard then will become mandatory. You
want to focus on the transaction being implemented. Everything dealing with
that transaction being implemented at the same time as opposed to a standard
which may cover more than one transaction being implemented at one time.

MS. SPECTOR: The way we were reviewing the language with standard is there
is a standard that has been named for each of the transactions. It wouldn’t be
that there is one standard that would encompass multiple transactions. Each
standard of itself is a transaction. If you bring up claims and you know you
are going to bring up operating rules to bring together. As you are reviewing
them, you can see this operating rule is going to conflict with this part of
the transaction or there is a gap and we still need something in the operating
rules to address that gap or something. You are looking at them together and
you can pick out those inconsistencies and fix that before adoption takes
place.

DR. FITZMAURICE: Thank you. I appreciate that clarification too. Thank you.

DR. WARREN: Any other questions? Thank you very much for your testimony. The
last panel of the day will be Janet Jackson, Randy Miller, Susanne Powell, Don
Bechtel and Joe Miller. While they are coming up, I would like to explain to
people a little bit about how we are going to handle tomorrow. Tomorrow morning
we again start at 8:30. The first thing we are going to be doing in the morning
is while we have all this wonderful talent in the room, we would like to as a
group develop some use — for using the health plan ID so that we can get a
better handle on the granularity that needs to be identified and to exactly
what the role of the health plan ID will be used for. We are also taking a look
at possibly trying to put together and end-to-end graphic that will help people
understand where it is used.

Following that and at this point I have no idea how long that conversation
is going to last, but we have some time, a couple of hours probably on that.
After that we have extended another invitation to CORE and NCPDP to present to
us one of the operating rules and to give us some more information about that.
They are going to be doing that. We have then asked Linxus to be a reactor to
those two presentations and then again we are going to open it up for more
dialogue. What I would like to be able to do if we have time, I am going to try
to make sure we do, is we will put an open mic up so that people in the
audience can also ask questions either about the ID or about the operating
rules.

If anybody has any other creative ideas, please let Walter or Lorraine and I
know so that we can account for those, but I think that is going to move us the
furthest down the road in trying to get this task done.

With that we will start our last group of testifiers and Janet, I believe
you are first.

MS. JACKSON: Thank you. Good afternoon. My name is Janet Jackson. I am the
Director of Electronic Solutions at Blue Cross and Blue Shield of North
Carolina. I am responsible for implementing, enhancing, and supporting our
HIPAA solutions for providers. I am speaking today on behalf on our plan, an
independent licensee of the Blue Cross and Blue Shield Association. We are a
leader in delivering innovative health care products, services, and information
to more than 3.7 million members, including approximately 900,000 members
served on behalf of other Blue Plans. We provide health care coverage for
nearly one in three North Carolinians. We appreciate the opportunity to offer
our comments on the operating rules.

Blue Cross and Blue Shield of North Carolina have a history of participation
in CAQH and CORE. We have actually participated in creating and are in support
of the industry’s collaboratively defined and voluntarily adopted CORE Phases
I, II and draft Phase III operating rules.

The overall resource requirements, front-loaded costs, changes to business
processes, and potential implementation of new technologies all of which will
be necessary for health plans to implement federal mandates 5010, ICD-10, new
benefit provisions, new standard transactions, operating rules, and
certifications within the next five to seven years will be significant for
health plans of all sizes. I echo concerns stated earlier on the operating rule
timeline and order of implementations.

To reduce overall administrative costs, simplify the interaction between
health plans and providers, and obtain a return on investment, it is critical
that the operating rules are limited to those that have demonstrable business
and financial value, while understanding that the cost and benefits of
implementation may vary greatly from one organization to the next. For those
transactions for which CORE operating rules currently exist and of which many
in the industry are already adopting, it is important that we not spend
additional time or resources creating new and different operating rules.

All stakeholders must partner together in this process, health plans
implementing the standards and operating rules, providers implementing and
expanding their use of electronic transactions while also working with their
software vendors to integrate the resulting information into their systems.
Otherwise, we will simply add costs and complexity to an already overburdened
system, with no realization of the potential reduction in the administrative
cost that health plans and providers share, which is ultimately passed on to
the consumers of health care.

I am going to go off script here for a minute to borrow Margaret’s term from
earlier today to give you all an idea of where are with the HIPAA transactions.
We have approximately 14,000 providers submitting 44 million electronic claims;
however, we have less than 35 percent of our providers who receive 835
remittances. Approximately 15 percent who do an EFT with us, 30 percent receive
electronic eligibility, and 25 percent of them execute claims status in the
HIPAA transactions. We have the engine running and we need everybody. We all
need to get on the same train and that is to borrow a line from my friend Harry

It is helpful to think of operating rules as documented best practices
gleaned from many sources including business, standards, and technical subject
matter experts, and health plan companion guides. Existing operating rules are
useful because they go beyond the standards and address data content usage,
what types of data to use in common business scenarios.

They also address performance requirements and connectivity and security
methods, none of which are addressed in the current HIPAA standards. Under the
status quo, sans operating rules, connectivity and security methods are
generally addressed individually in health plans’ companion guides; therefore,
they do not offer the cross-organizational uniformity of operating rules. It is
important that operating rules be seen as a minimum level of what a health plan
may return on a transaction versus setting an absolute level of what a health
plan can return.

With the existing implementation of CORE operating rules, providers and
software vendors have a level of certainty of how information is being
processed and returned to them. Therefore, they are able to set up rules based
processes to map responses from all CORE certified entities in a unified manner
into the provider’s patient accounting or practice management systems. This
allows for the information obtained in the eligibility response to be used in
other transactions, for example, ensuring that the member ID and demographic
information is correct on the original claim; thus reducing the number of
claims that reject for invalid member information. This increases the
provider’s claims first pass rate, which helps to shorten the accounts
receivable days related to an episode of care for the provider. It also reduces
the number of calls to the health plan for assistance with the rejections, and
reprocessing of the previously submitted claim.

Additionally, with the implementation of operating rules, trading partners
are not dependent on individual health plan’s companion guides to give them the
information that they need on what connectivity or security protocol to use, or
to map information differently for each health plan. This increased uniformity
encourages higher levels of adoption, thus improving the timely return on
investment for each of us.

The main reason I traveled here to testify is to share Blue Cross and Blue
Shield of North Carolina’s experience with implementing operating rules. From a
business perspective, our providers needed and were demanding more detailed
benefits and financial information at the point of patient care. We knew that a
real-time robust eligibility response would meet their business need.

At project initiation, although we found it difficult to attribute a direct
return on investment based on a quantifiable decrease in call volume or an
increase in claims first pass rate, our senior leadership was forward thinking
and committed to advancing interoperability via CORE Phase I adoption.

Prior to implementing our eligibility project in 2007 to become CORE Phase I
certified we offered a basic HIPAA 271 eligibility response which included
member demographics, the effective dates of the member’s coverage, and general
coverage information related to deductible and coinsurance. We did not have a
real-time 270/271 capability, could not meet the CORE connectivity,
availability, and response time metrics required for certification, and needed
to add more data content regarding benefits and patient financials. In other
words, we had a lot of work to do.

As part of the project, we significantly enhanced our HIPAA 271 eligibility
response using the CORE Phase I and most of the then draft Phase II operating
rules related to eligibility for data content, financial performance,
connectivity, and security. Our technical solution provided near 24 by 7
real-time availability and standard connectivity requirements for our local
trading partners. The implementation costs for this work exceeded $2 million.

During the first six months following our implementation, we processed 1.2
million real-time eligibility transactions. By contrast, the first six months
of this year we have processed over six million transactions. We forecast that
we will increase our monthly volume to 2.5 to 3 million transactions per month
by the end of this year. Lynne spoke earlier today about an average of a 24
percent transaction growth. We have experienced 200 to 300 percent per year
which proves that the information is valuable to our providers.

Our experience of increased transaction growth we believe is a direct result
of implementing real-time capability using the CORE operating rules, a delivery
of more robust content, one connectivity method, standard hours of
availability, and expected response time. All the rules work together to allow
clearinghouses and patient accounting or practice management vendors to build
the capability into their applications to that an eligibility inquiry is
automatically kicked off each time a provider registers a patient, or even the
night before using the provider’s scheduler. The information that is returned
in the eligibility response is mapped into the provider’s claims system
resulting in claims being submitted with correct member ID, name, data of birth
and faster claims processing and payment, which ultimately leads to higher
member and provider satisfaction.

Do we believe that this success story will occur for us on every
transaction? No, we do not, unless a measurable return on investment and
business process improvement based justification is used during the operating
rules development and vetting process. We believe that there are some
transactions in which operating rules will have significant positive impact and
show a return on investment. The operating rules requirements for 2013 include
eligibility and claim status, which will benefit from the current Phase I, II
and draft Phase III data content and usage rules, real-time availability and
performance standards. The operating rules requirements for 2014 include
remittances, which will benefit from data content and usage rules; for example,
consistent mapping of health plan proprietary denial codes to claim adjustment
reason and remittance remark codes.

Some of the transactions identified for 2016, authorizations and premium
payment, will not show a return on investment for our health plan. We are not a
referral-based health plan. Both of these transactions have low or no volume
within our health plan, so achieving any return on investment will be difficult
at best.

We currently receive 94 percent of our claims electronically; therefore,
operating rules for claims would not drive significant transaction growth for
us. However, if the operating rules were to include the 277CA as the standard
acknowledgement for claims, then the clearinghouses, vendors, and providers
would have one version of error reporting for claims that fail implementation
guide or payer specific business edits, instead of the many different
proprietary versions that exist today. Thus we will achieve industry-wide
administrative simplification of this error reporting.

In summary, Blue Cross and Blue Shield of North Carolina supports the
existing CORE operating rules, development process, and voluntary
implementation in independent certification process. From an interoperability
perspective, we believe it is important that a single entity, knowledgeable and
experienced with business processes be responsible for defining the operating
rules and that CAQH CORE is qualified and well positioned to serve in that
role.

It is important that the rate of adoption of standards and operating rules
be structured so that the entire health care ecosystem can absorb and adjust to
the changes. If all impacted stakeholders especially health plans and providers
work together to carefully consider improved business processes and expected
return on investment early in the opportunity selection process, and be
committed to an increased exchange of information electronically, there will be
significant opportunities to move the industry towards the interoperable
capabilities that will prove to be one of the cornerstones of administrative
simplification and cost reduction. Thank you for the opportunity to meet with
you today.

DR. WARREN: Thank you. Plus I had forgotten to announce that Bill Alfano and
Jean Narcisi have turned in their testimony as written testimony only. They
won’t be presenting. Just so you know we have let everybody speak that is on
the list. Randy Miller, are you on the phone?

MR. MILLER: Yes, I am.

DR. WARREN: It is your turn, Randy, whenever you are ready.

MR. MILLER: Thank you very much for the opportunity to speak today regarding
the operating rules. The National Medicaid EDI Healthcare Workgroup recognizes
the value that adopting operating rules will have in advancing the existing
standards for information exchange. However, we do have to consider some
specific facts that are impacting the Medicaid program today.

First, state Medicaid programs are experiencing financial strain due to the
current economic conditions and increased enrollment in the programs. A Kaiser
Family Foundation report recently indicated that at least 29 states were
considering additional mid-year cuts in provider rates and program benefits.

The Patient Protection and Affordable Care Act also include multiple
requirements for which Medicaid programs need to comply. Those resources to
allow Medicaid programs to comply are becoming increasingly scarce to work on
the efforts that Medicaid needs to comply with other portions of the care act.

State Medicaid programs’ Medicaid Management Information Systems vary in
size and many of them are old systems that needs significant revision and many
states are in the process of going through revising and replacing their current
Medicaid information system that processes their claim statements for
eligibility verification. Many of those states are doing that as an effort for
the ICD-10 compliance which is due October 1, 2013. While we support the move
for administrative simplification the January 1, 2013 date is simply a little
bit earlier than the October 1, 2013 date which would require states that are
in that process to make an investment for nine months’ return on investment in
their existing systems to be complying January 1, 2013. Anything that the
committee could to do to address that and to help states have some leniency in
meeting that date would be appreciated.

Other things that we believe need to be considered — we would like you to
consider is ensuring — a broad-based group of stakeholders are participating
and are well represented in the development in the review of the operating
rules.

Additionally, we need to consider that broad-based group of stakeholders
were also available for the refinement and updates that go into the rules as we
move forward into the future. We do need to make sure we work out the processes
as we go through this to ensure that we have a standard process for actually
updating those rules and in all that process going forward.

We also need to make sure we consider very carefully the scope of the
operating rules. For example, I heardr several responses in today’s
conversation that have differing levels of scope if you listen to the
responses. Some were even considering eligibility timelines for how fast and
quickly Medicaid updates for eligibility information. We believe that going to
that depth would be expanding these to the scope of what would be in the
operating rules and we think that we need to make sure we keep that scope as
clear as possible.

We also mention as an example — somebody mentioned the companion guides. I
have heard that several times. As most state Medicaid programs do have
companion guides and those companion guides were necessary in order to
implement the HIPAA standards or at least for the time were considered
necessary. While I think the operating rules can move forward to help reducing
the need for companion guides, we want to make sure that we are very careful
and that we don’t mandate the removal of companion guides at least for the
first phase of the implementation. That may be a long-term goal but we want to
make sure that we allow some ability for plans or even Medicaid programs to
have some exceptions. Standardization is great, but it is not the overall goal.
The overall goal is administrative simplification and reduced costs through
efficiency. We need to make sure that we consider that as we move forward with
implementing these operating rules.

The example that I can use from the HIPAA implementation where we
standardized but also didn’t exactly help for the efficiency is with the
removal of explanation of benefits for health plans. Everybody uses now
adjustment reason codes that are standard among the HIPAA transactions while
that actually helped and simplified and add administrative things for automated
posting, the inability of states to actually report their more details
explanation of benefits actually add administrative burden for providers to
identify the issue with the claim that is specific to that Medicaid program and
to fix that claim and resubmit that claim.

I want to make sure and I think Janet just before me and I like the way she
said mentioned and said we need to make sure we set a minimum standard not a
maximum standard. I think that is the approach that we should take is to say
this is the minimum that we would expect from operating rules, but that we
don’t reduce the ability for health plans and specifically state Medicaid
programs to address unique circumstances to that state and then over time we
should see to reduce the number of exceptions that we have in place so that we
can move forward with the administrative simplification as we move forward year
over year.

With that I want to thank you for the opportunity to address the committee
and I am available for any questions. Thank you very much.

DR. WARREN: Randy, we are going to take them at the end of the panel? Are
you going to be able to stay on the line?

MR. MILLER: Sure.

DR. WARREN: Okay. Next we have Susanne Powell.

MS. POWELL: Good afternoon. I am Susanne Powell, Director of Government
Affairs for Emdeon. Again, in consideration of the late hour I am going to try
to abbreviate my comments and really focus on a couple of specific
recommendations. You do have our written testimony which speaks to many of the
issues that have already been discussed today.

I do want to note though before I go to the recommendations the fact that
Emdeon has had extensive experience dealing with operating rules and is really
pleased to have announced recently our compliance with CORE Phase II. We
certainly had a very positive experience with that and if there are questions
about our experience with that, we would be glad to address.

Given the limited time in an effort to try to advance the discussion I do
want to focus on two key areas and maybe go a little further than some of the
conversations so far. One is really around collaboration and defining a
collaboration model. The second one is really around cost and ease of
implementation of a set of standards and now a set of operating rules.

First we will talk about collaboration. I think there has been unanimous
agreement among all of those that have spoken today that it is critical that
there be a level of collaboration and that there be broad stakeholder
involvement in the process for developing operating rules and for moving
forward and advancing them.

One of the areas that Emdeon in particular is concerned about and I know
others have raised it is in thinking about how we move forward with all this is
how do we avoid confusion between operating rules, between standards, and how
do we work through how those different organizations are going to work
together.

One example of that is specifically the process for requesting updates for
changes to standards which there is process in place for now and then adding
operating rules on top of that.

We recognize it is going to be very important to have a way to make requests
but also to think about how those two sets of requests really have impact one
another. How does an update to a standard impact an operating rule and vice
versa? We recognize the fact that the DSMO is already in place and has a
process in place to address those kinds of requests. We would like to
acknowledge that and go a step further and actually make the recommendation
that the role of DSMO be expanded to coordinate the efforts not only as the
standard organization but also of the entities associated with creation of the
operating rules. That they work to actually help to work to define that process
and really define the interaction between those organizations.

Beyond that, we also want to just address another important point that was
made about the DSMO and that is the fact that perhaps that the process that is
now available for requesting it may not be widely known. We would certainly
support and see an opportunity to more broadly market that to even think about
a direct outreach program to make sure that all the entities understand what
that request process is particularly now if we look at adding operating rules
on top of that and thinking about how that process comes together.

Finally, as we think about all the things that impact the cost of
implementing those standards and operating rules, there are lots of different
implications and a lot of those have already been discussed, but at a really
very basic level one thing that we think would be beneficial to stakeholders as
we move forward is at a minimum trying to have a central location, a central
repository for all the documents associated with standards and all the
documents associated with operating rules so that there is a one-stop shop for
accessing that information easily and cost effectively.

Emdeon has had a very good experience with the development of the tools, a
website called HIPAA Simplified which makes a number of HIPAA resources
available, reference tools available, and we found in doing that that there is
a very good response and that folks have gone to that resource very readily. We
recommend a similar approach in trying to make the tools that are going to be
needed to comply with standards as well as operating rules available in a more
central location.

Given also the fact that the DSMO had made reference to a website that
already exists, I know that there may be a number of options for creating a
single location for that, but given that that already does exist that might be
a logical place to begin to look to have that information in a central place.

Again, the goal as we thinking about implementing these things as we think
about the amount of work will be required for all of us to comply with the
pieces of their outline is trying to make sure that they are delivered as
easily and cost effectively as possible.

Thank you very much to the committee for your time today and I would be glad
to answer questions later on.

DR. WARREN: Thank you. Don you are next.

MR. BECHTEL: Thank you. I am Don Bechtel. I work with Siemens Medical
Solutions where I am a Privacy Officer for their Health Services Division. I am
also a chair elect for Workgroup for Electronic Data Interchange, otherwise
known as WEDI. I again would like to thank you for the opportunity to present
testimony today on operating rules.

WEDI convened a small work group to discuss operating rules through which
the following thoughts have been developed. However, we believe considerable
discussion and evaluation still needs to occur within the industry due to the
varying needs of the different stakeholders.

From our perspective the concept of operating rules needs to be defined in
the context of a broader framework that includes standards, business operating
rules, and their relationship to certification.

We offer the following. Standards include the definition of transaction
technical structures, business use case, data elements, and business rules
associated with the data content within the transaction structure. The
responsibility of these activities needs to reside with the existing standards
development organizations.

Business operating rules would include technical and logistical procedures
for any two specific stakeholders to exchange transactions in accordance with
their defined standards. The regulations state that is not defined by a
standard or its implementation specifications. This might include but is not
limited to communication protocols, service level or performance metrics,
security interchange procedure and so on. We also heard from George Langdon
several more good examples that might be used.

The specific scope of business operating rules needs to be defined and could
be assigned by the industry under the auspices of Health and Human Services to
specific industry groups for final recommendations. Development of operating
rules must be coordinated with the SDOs responsible for the transactions.

Regarding certification, if the Secretary chooses to use certification as a
method of compliance documentation, we believe entities selected for this role
must be stand-alone that as separate entities from those developing those
standards or operating rules under these provisions.

We also have the following concerns. One, the introduction of any new
processes or establishment of new organizations to support the implementation
of standards cannot lengthen the implementation process. As many of you know
WEDI as the SDOs have been working to streamline the adoption of updated
standards and the recent health care reform bill has offered a solution that
might actually do that with the interim final rulemaking process and our
mandatory three-year update cycle. I guess my point on that is we wouldn’t want
to see that good work again lengthened by adding another process to this is
what I was really trying to say.

The second concern is a goal of these new processes and development entities
should be to minimize additional costs in order for industry stakeholders to
participate, that is, participation fees or the published document purchase
fees. Broad industry participation in these entities should be encouraged by
minimizing the costs of participation. However, we are also concerned in having
to participate in numerous additional entities is in itself costly to the
stakeholders.

Third, we also believe that subsequent implementations of operating rules
should be aligned such that the standards and operating rules can be
accommodated in a single implementation. We understand that the 5010
implementation in operating rules may be disjointed. We hope going forward this
doesn’t happen. It is costly to the industry to have multiple implementations
like this for the same standards.

Fourth, the industry needs to leverage organizations and capabilities
already in place today and avoid additional layers of activities that will
further extend or contradict the current consensus building processes. Again,
the DSMO suggestions that we heard today from George Arges I think described
what our thought process was here.

Fifth, the existing SDOs are accountable for the definition and maintenance
of technical standards through their existing processes, which serve the
purpose of satisfying business use cases between participating health care
organizations. Any fragmentation of this process among multiple organizations
will result in needless resource/time expenditures, incremental costs and
confusion to affected health care organizations.

Sixth, the companion guides could be used to establish the foundation for
operating rules. Utilizing a companion guide template, such as the one being
developed jointly by WEDI and the ASC X12 will insure uniformity industry-wide
and would reduce stakeholder risk of violating copyrights.

Also, I would like to note based on some comments made earlier today that
this particular template would not allow for changes to be made to the content
or the definition of that content of usage of that content. We are really
focusing on things we mentioned earlier in this testimony.

In conclusion, we recommend that HHS take the following actions. One,
reaffirm the advisory role of WEDI to HHS under the Health Insurance
Portability and Accountability Act. Two, reaffirm the role of current SDOs in
the industry and the oversight role already provided by the Designated
Standards Maintenance Organization or the DSMO and this committee as well. And
third, develop the process that will define the scope of operating rules
because stakeholders need a clear understanding of the scope in order to
address operational implementations between two stakeholders that are
exchanging established transaction standards, and the work of the operating
rules cannot as I have mentioned address data content or the rules around
content usage. We support the comments that were made earlier today by the SDOs
and feel that more frequent updates of the transactions may help the industry
bring forward much needed changes in a more predictable way.

WEDI looks forward to the next steps of HHS and NCVHS and offers to provide
assistance where appropriate. WEDI, in its advisory role, is ready and willing
to provide information as warranted to HHS and NCVHS on these matters. WEDI is
also ready to collaborate with the entity or entities identified to develop
operating rules to provide the education and outreach arm to the industry.
Again, we thank you very much for the opportunity to speak with you today.

DR. WARREN: Thank you. Last guy.

MR. MILLER: Thank you. I am Joe Miller, Director of eBusiness for
AmeriHealth Mercy. We focus our efforts on delivering health care to the
underserved, but today it is my privilege to represent 30,000 other health care
IT professionals who work every day to leverage technology to improve the
quality and access and efficiency of health care through an organization called
HIMSS. With HIMSS I have been over the last year privileged to work as the
chair with HIMSS of the financial system’s steering committee which is HIMSS’
major group that tries to address topics of administrative simplification,
revenue cycle, and those areas.

I won’t go through all of my slides in any detail today. HIMSS — 30,000
individual members, 85 non-for-profit organizations involved with HIMSS, and
450 corporate members, many of those who are presented are vendor community. A
lot of people think that health care IT is kind of a recent phenomenon. As you
can see, we will be celebration our 50th anniversary this year. I am
not sure if that is a good statement or a bad statement and it has taken 50
years to get us to where we are, but in any case we will be celebrating.

A lot of folks when they think about HIMSS think about the work we do on the
clinical side that in fact there is a lot of work we do in the administrative
transaction side. In 2007 AFEHCT came on board with HIMSS and we formed our
financial systems committee. In 2010 the medical banking project came with
HIMSS. This rounds out a lot of our organizational focus on administrative
simplification.

We do a lot with educational programs in this area and a variety of work
groups: 5010, ICD-10 task force. The list of 5010/ICD-10 activities I think
covers several different pages and many different projects. A lot of webinars
and symposium and of course we are very much collaborators in this space,
collaborators with WEDI, with X12, with eNet, and of course CORE.

When we think about HIMSS, we think also that our focus in HIMSS is around a
provider community and that is the asset working with providers that we bring
to this partnership with NACHA and CORE, the connection to the provider
community and I will talk a little bit more about that later.

From our work in the administrative area we focused a lot around the medical
banking project. This is an effort that is developed across industry,
educational venues, and it is really linked two kinds of groups that you didn’t
normally think of working together: banking and health care. These are
important groups that have come together to look at opportunities particularly
opportunities around EFT and ERA. The ERA element is really a key one for us
and for this I think community. If I value where the potential for the high
value it can deliver to our providers, but also the challenge that it provides
in terms of its complexity and how problematic it is to deliver that
transaction in a usable form and have providers use it effectively. I think
from the North Carolina standpoint 94 percent of claims are submitted
electronically, but only 35 percent of the remittances go back. But an
interesting juxtaposition there and that is one of those transactions have
enormous value for us. This has been a key focus around medical banking
project.

Earlier it was also mentioned the work around HITSP and HIMSS is a key role
player in the whole HITSP effort and the use of HITSP to develop some — not
quite operating rules but some instructions for how the standards would be used
and HITSP was very involved. HIMSS was very involved in that through HITSP. And
I think that maybe it’s not an exact model or what we are looking at in terms
of the operating rules, but there is some parallel there that I think we can
certainly learn from not just bringing together the 900 users but around how we
take those transactions maybe a little bit to the next steps so that they are a
little bit more usable.

And then of course IHE as well. In IHE the group that was focused around and
it continues to be focused around IHE and many of you have probably been to
HIMSS conference where you see this enormous section of a conference where you
have vendors and as an important point vendors demonstrating how these
transactions can be effectively used.

One of the key points I think that has — I am probably echoing some things
from some other folks today but there is a penalty I think in the act for a
dollar per member if a health plan doesn’t comply with the operating rules. The
fact is that the last nine yards which is the provider is one of the key
elements in this and providers will only look at and implement a transaction if
number one it is going to deliver value to them and number two they have a
vendor product that will offer that. And vendors will only implement a product
with capability. Vendors will only implement a product if they know it is going
to have value to the provider, but if it is clear for them of how they
implement it — the last thing a vendor wants is to have confusion over how to
implement a particular feature of their product. IHE has provided that
opportunity for vendors to work together to share collaboratively information
to prove and then work out issues so that they can make these transactions work
together. I think it also provides a nice parallel model potentially for
operating rules.

What else is HIMSS doing? Of course many of you know HIMSS as an educational
organization delivering great education through our annual conference, virtual
conference, e-learning academies and so forth. You can see all the things that
we do here, but I would emphasize too that this slide does not even show all
the educational activities that occur through HIMSS through our 48 chapters and
communities that are out there. I have spoken at many of these around
administrative transactions and in fact when you think about health care and
you think administrative transactions, you have to think there is a lot of
localness for this, local plans, local clearinghouses as well as local
providers who are trying to look for ways and find ways to share information
effectively and those chapters do a great job around that type of education.

What are some of the success factors? Certainly a neutral platform where we
can collaborate together is key to align a value proposition across all the
stakeholders. We will certainly going to support that effort with NACHA and
with CAQH CORE.

The second area of key success factors we believe is education. Education is
a requirement for adoption widespread adoption. We will utilize all the HIMSS
resources that we can in this effort to deliver the education that is required
to the provider community our focus as well as to the vendor community where
appropriate to support the initiative.

Third, membership support — strong volunteers. We talked about that today.
We need to broaden out the community of volunteers who work around operating
rules as well as standards, and we have a lot of communities within HIMSS who
can contribute to some of that support.

And then last I would just say that we need to recognize that there are
competing priorities particularly in the provider community. There is
meaningful use, ICD-10, and 5010 as we well know. One of the things that I
think we have help with is to help our stakeholders develop strategies that
look at the synergies between all of these efforts as opposed to each of them
being a disparate or stand-alone type of item.

I think we also have to recognize and you can’t quite see it on this slide
that we have business change going on today. Accountable care organizations,
medical homes. Even health information exchanges or health plan exchanges are
new models of doing business in our community and to be responsive to those
models we are going to need to see change in how we deliver some of these
transactions in the future. A real key here again is going to be the
operational rules, flexibility and the ability to deliver those to respond to
these new business requirements that we probably haven’t even imagined how they
are actually going to play out over the next three to five years.

Thank you for your time today. I will be glad to take any questions.

DR. WARREN: Questions? Margret, you have been real quiet. Do you need any
clarification or questions?

MS. AMATAYAKUL: No.

DR. WARREN: Michael.

DR. FITZMAURICE: Janet Jackson. You said with implementation of operating
rules training partners are not dependent upon individual health plans’
companion guides to give them the information they need on what connectivity or
security protocol to use or to map information differently for each health
plan. Do I read into this that you are saying that pretty much opinion guides
are not needed if the operating rules will supply that information?

MS. JACKSON: I will not go on record as saying the companion guides are not
needed — get fired when I got back —

DR. FITZMAURICE: We wouldn’t want that.

MS. JACKSON: I do think that it certainly simplified especially the
connectivity methods. It has helped our providers and clearinghouses and
software vendors tremendously that we have one connectivity method for our
real-time eligibility transactions. It has simplified that for them.

DR. FITZMAURICE: Fair enough. Don Bechtel, in your testimony on page three
at the top about existing SDOs are accountable for the definition and
maintenance of the standards, et cetera. Any fragmentation of this process the
kind of standards process among multiple organizations will result in needless
resource/time expenditures, incremental costs and confusion. Do I read that to
mean that the operating rule entity could be an ANSI accredited standard
developing organization to reduce resource use and to reduce confusion and to
keep coherence in the standards process or is that not what you meant?

DR. BECHTEL: That is not exactly what I meant? Yes, I think in part that is
what we are talking about. I think the statement that is being made in that
point is we can’t have more than one organization defining how the use of a
standard is to be employed where it is defined in one place and then redefined
somewhere else. If we have multitude entities besides two that becomes even
more fragmented and more confusing. When it comes to implementation, which one
do I follow? The one from the primary standards organization, the one from one
of these other entities. We don’t think that is what the industry needs. We
think we need to have very clear concise direct rules that help us know how to
do this. In part they come from the standard. In part they come from the
implementation specification accompanies that standard and then part of it
comes from operating rules, but they can’t contradict each other. We can’t have
them defining the same thing as far as trying to get there.

DR. FITZMAURICE: The second paragraph, the bullets underneath that.
Companion guides established a foundation for operating rules. Could I say that
operating rules are simply companion guides with blanks to be filled by a
profile of an organization?

MR. BECHTEL: That might be part of it. Yes. I think there are more things
than we might traditionally find in a companion guide today that could be found
in a companion guide if we include operating rules, but I think the companion
guide template that WEDI is working on in conjunction with X12 establishes a
framework for which those guides are written and sets the rules for how those
guides should be developed so that we are not running into contradictions and
we are not doing the things that either organization, the operating rule
organization or the standards organization want to abuse.

DR. FITZMAURICE: Thank you Don. Joe Miller, does HIMSS have a position on
companion guides? Should they be kept or should they be folded into operating
rules and eliminated? Does HIMSS have a position on whether this operating rule
entity should be an ANSI-accredited organization or not that is consensus
process and all that goes with it? Thirdly, an opinion on whether
clearinghouses can continue to fill the gap between providers, HIPAA standards
and maybe operating rules and payers or should business software be certified
somewhat like electronic health records might be certified.

MR. MILLER: HIMSS does not have a position to my knowledge on any of those
or an official position on any of those topics.

DR. FITZMAURICE: Fair enough. I think you are off the hook for now.

DR. WARREN: Marjorie.

MS. GREENBERG: Thank you to all of you and everybody today for your
testimony. Susanne, I was just seeking a clarification and I probably have your
testimony here. It might have been in yesterday’s testimony. I think I left
that at home. If you could clarify. The role that you are proposing for the
DSMO is as a coordinator of operating rules or were you actually recommending
that they should be the single entity responsible for operating rules.

MS. POWELL: No, I was simply suggesting that there is already a process in
place. It was in the context of talking about the process or requesting updates
and since the DSMO is currently playing that role, we recommended that that
role be expanded to include not only the standards organizations but also the
operating rules’ creators so that there would be one process that would address
updates to both types of organizations knowing that there needs to be close
connection between how those flow together.

MS. GREENBERG: So whatever entity or entities are responsible for the
operating rules should actually serve on the DSMO.

MS. POWELL: We believe — this is a new idea so we have not discussed it in
detail, but I think there could be an opportunity or it is worth looking at
them under the DSMO in the same way that the standards organizations currently
do.

MS. GREENBERG: One thing that was a little unclear to me and I guess it was
from several different — there seems to be an enormous amount of agreement
that I heard today, but it seems that everybody agrees that you shouldn’t have
more than one entity coming up with operating rules for any given transaction
if you didn’t hear any support through competing operating rules. What a
nightmare. It seems that if you stuck to that principle and you had some
organization coordinating all the operating rules, I am not quite sure what the
downside is to having some distributive approach to developing the operating
rules if that is a way to get the right people working on the right rules. I
don’t know if any of you have any thoughts about that.

MR. BECHTEL: Not to preempt anyone, but yes. I think I was speaking to that
in my comments as well. I think having multiple entities even if we had one per
standard or transaction becomes problematic and the reason I believe that
becomes problematic is how many of these organizations can we participate in.
They are going to have meetings at different times. It is people going to those
meetings or even dialing in. Cost of publications. Now I probably have another
publication I am going to have to purchase instead of maybe just one for all
the standards of an operating rule. It just raises the cost of participation. I
think it is going to actually drive down participation if we have too many of
these. I think there is significant concern there.

MS. GREENBERG: The operating rules as I understand it most people at least I
don’t know if anybody recommended it otherwise would be incorporated into the
appropriate implementation guide.

MR. BECHTEL: Not necessarily.

MS. GREENBERG: I actually thought I heard several people suggest that. If
that was a suggestion — so then you would — but you could have that in
alternate ways — purchase them from different people.

MS. DOO: Thank you all again. Joe, this is a question for you since you are
the voice of the provider in many ways. Back to my beating on the drum question
this morning, how would you then engage providers in all of this process so
that they really are at the table?

MR. MILLER: I think that there is not an easy to that, but I do think that
the more that we can move the discussion from a technical perspective to a
discussion around the value proposition that providers can benefit from with
respect to these operating rules and the more we are going to be able to
attract them into that conversation and to put the resources into it. Let’s
make it more practical to them. I think we have an opportunity to do that with
operating rules maybe a little bit more than we have to standards and standards
are enormously important. They — technical and cover the whole nine yards of
what could happen in many possible situations and God bless the people who —
that problem. I think the operating rules could have a little bit more of an
opportunity to look at the value proposition and that may create some more
interesting —

DR. WARREN: Walter, last words.

DR. SUAREZ: Thank you very much for the testimony. I am coming out with a
number of thoughts about this of course that are trying — I think after all
the discussions and all the perspectives are considered it is going to be very
important to make sure that the operating rules as we see it continue the path
of administrative efficiency as I like that term — administrative
simplification.

I think we have heard a number of areas where operating rules can help and I
clearly see their role in a number of places. I have worked on companion
guides. I have worked on areas to try to help expand the simplification that
the standards under HIPAA provide and they are in a number of areas.

My perspective and this is what I wanted to test with this particular panel
is my perspective is we can constrain for the first round the areas of where
operating rules should focus on to the following fact. The first is performance
and that includes system performance, system availability, and those kinds of
things.

The second one is connectivity and transport. It has been said time and
again that one of the benefits is ensuring that we all agree on a way of
implementing the connectivity and the transport. The third is security and
authentication and all the things related to there.

The fourth one is now getting into some of the specifics where the first
round of operating rules, the eligibility in particular is that disentangling
the various scenarios for eligibility queries and the responses that we get and
then this is not the inquiry respond in it 270/271 situation but the scenario
that we talked about before on the policy holder or I am the patient or I am
the beneficiary and dependent and then the patient — what to respond and those
kinds of situations which significantly benefit from having some
standardization. That is the fourth area.

The fifth area is on some of the things that are containing companion guides
such as the definition of some of the elements that occur in implementation
guides don’t provide enough direction or definition. And more and more those
areas are becoming a lot limited reduced because 4010 provide a lot of
flexibility and now 5010 is very tight and probably 6030 will be even more so.

One area that I think we have to and I want to be very pointed to that and
that is a question to the panel too is one area that we have to be very careful
about is data content. It has been said several times and one of the benefits
because of the lack of a current transaction providing that information that
the CAQH score provides additional data content that everybody lost that
because providers now have more information to determine the eligibility of
patients and how much they are going to be paid on those things or expect to be
paid.

If we jump into that area now we are risking the process of defining the
content standard from what it has been in the past. The content is defined by
the standard of the organization. Why isn’t that — the content is brought to
the standard of development organizations be incorporating into the transaction
rather than creating another level of standard of data content.

I wanted to test if those are the five areas or are there any other areas in
which you see concrete value of an operating rule and trying to constrain the
purpose and the focus of operating rules. That is number one.

Number two, data content should not be really part of an operating rule
process. That is the second element. That is it.

MR. BECHTEL: I concur.

DR. SUAREZ: That is easy.

MR. BECHTEL: Yes.

MR. JOE MILLER: There were some examples given today and I don’t have my
guide with me here to know what is in the standard versus what might be under
CORE Operating Rules. One example was given that a health plan should return
primary care provider’s name and information potentially if one does exist the
persons under the plan. That certainly seems like a good thing for health plan
to do and maybe that is something that standard might not cover and maybe it
does that it is required if it is there, but there may be other instances that
we discover as we try to drive the value proposition that we say let’s try that
as an operating rule and if it is incorporated into the standard at some point,
but that is where — I think that I wouldn’t want to see us not look at those
opportunities I guess.

DR. SUAREZ: It is a great point that you bring up because if I am today
following the law, I would be prohibited from sending anything above and beyond
271 or not.

MS. DOO: Not if it is situational.

DR. SUAREZ: It isn’t included in the standards.

MS. JACKSON: 4010 allows you the capability to say yes they are covered or
no they are not. You can return that minimum of a — does it provide —
business need. No, it doesn’t. I think that is the — health plan can meet the
letter of the law by saying yes they are covered. No, they are not.

DR. SUAREZ: Absolutely. I am saying if we want to know the color of the eyes
of the primary care providers which is not a data element in the current data
content standard for 271 and I send it, where do I put it in the 271 or if I am
replying using a non-271 transaction structure but a web based, I still have to
comply with the data content component of the 271 which doesn’t show we were to
put the color of the eye of a primary care provider. In that sense we are
certainly constrained to some extent or great extent of this data set that we
need to use in the data set defining the standards. If we want to add to it or
send, we will have to send something else or supplement that with some other
place. If we open the door to those kind of expansions of data and provide
those as operating rules, what are the risks of doing that and certainly what
are the values of doing that?

MR. JOE MILLER: Continuing your example, there is a service code in the
transaction. We are not saying throw the service code out, but to the degree
that it requires a health plan to deliver the more specific service code if one
is available of the series of service codes. That is a good thing for our
provider. A provider has a better idea about what is in fact covered as opposed
to sending the 30 code which is the generic the other covered by the plan. Are
they covered for emergency visits or vision or pharmacy or so forth? I think
that is a great opportunity for an operating rule to try to enrich the
transaction and ensure that the information expectations on the part of the
provider are met consistently by all health plans as opposed to the provider
wondering maybe this one is sending it and maybe that one is not.

DR. WARREN: I am going to step in. We are late almost five minutes ago so
not too bad. I want to thank everybody for what they have done. What I would
like to ask people to do is think about Walter’s comments so that as we have
discussion tomorrow about operating rules and we will give you a chance to
process because I think we are all getting just a little overloaded at least I
am today. I think those are good questions as we start looking at operating
rules tomorrow.

I want to close with two items. One, today we had a hallmark activity that
showed the absolute successful implementation standards. It is called Facebook
now. It has 500 million members. Build it and they will come — put that as a
goal for our standards.

This is another unique day and I have had several comments on it and want me
to share it with the group, so I would like for you all to help me wish Walter
a happy birthday. We are now adjourned.

(Whereupon, at 5:20 pm, the meeting was adjourned.)