[This Transcript is Unedited]

National Committee on Vital and Health Statistics

Subcommittee on Standards

Review Committee

Hearing on Adopted Transaction Standards, Operating Rules, Code Sets and Identifiers

June 16, 2015

National Center for Health Statistics
3311 Toledo Road
Hyattsville, MD 20782

CONTENTS

P R O C E E D I N G S

Agenda Item: Welcome and Introductions

MR. SOONTHORNSIMA: Good morning and welcome to the NCVHS Review Committee, our inaugural meeting. Over the next few days, we will have — you see the agenda. We are going to go over that briefly. It is going to be very interesting, but important feedback session from the industry and all the stakeholders.

Before we begin, we are going to over the introduction. There are a number of people that are participating. Here is what we are going to do. We are going to go around the table and introduce ourselves, members and staff of the National Committee on Vital and Health Statistics and a member of the Review Committee. For those people who are here as well as people on the phone as well as our staff. Then we are will ask the folks who are not going to be on the panel, people who are not panelists to also introduce themselves because later on the panelists themselves can introduce themselves. Hopefully, that will work. If we are missing anything else, just let us know.

My name is Ob Soonthornsima. I am with BCBS Health, member of the full committee of the National Committee on Vital and Health Statistics, member of the Subcommittee on Standards and no conflicts.

MS. GOSS: Good morning. I am Alix Goss. I am from the Pennsylvania eHealth Partnership Authority. I am a member of the full committee of NCVHS as well as the Standards Subcommittee and the Review Committee. I have no conflicts. I don’t know if we are supposed to say those or not.

MS. DEUTSCH: This is Terri Deutsch. I am the lead staff of the Standards Subcommittee and the Review Committee.

DR. SUAREZ: Good morning everyone. My name is Walter Suarez. I am the executive director of Health IT Strategy and Policy for Kaiser Permanente and a member of the National Committee and a member of the Standards Subcommittee.

DR. CHANDERRAJ: Raj Chanderraj on the phone, member of the Full Committee and member of the Standards Subcommittee. No conflicts.

DR. SUAREZ: I should have said no conflicts. This is Walter Suarez again for the record.

DR. MAYS: Vickie Mays, University of California Los Angeles faculty and I am a member of the Full Committee and I have no conflicts.

MS. WILLIAMSON: Michelle Williamson, NCHS and staff to the Standards Subcommittee.

DR. BURKE-BEBEE: Suzie Bebee, ASPE, staff to the Standards Subcommittee.

MS. PICKETT: Donna Pickett, NCHS, CDC, and staff to the Subcommittee.

MR. SOONTHORNSIMA: Are there any member on the phone besides Raj? Any staff members on the phone? Let’s go around the room.

(Introductions around the room)

Agenda Item: Overview of the Review Committee and Purpose of the Hearing

MR. SOONTHORNSIMA: Thank you. Let’s get started. Let me direct you to the slides. Over the next ten minutes or so, we are going to cover the following topics. We are going to talk briefly about the Review Committee and what we are going to be doing today and tomorrow. And some background information about the processes and the standards, operating rules, code sets and so forth that we are going to be reviewing. And the third part is we are going to talk very briefly about our evaluation model, what we intend to do with information that you are providing us today and tomorrow. As I said, this is going to be a pretty grueling two days, but this is a very important topic. I know the industry is very interested in listening on how we are going to take the information. That evaluation model will be a very important thing to note. Lastly, we will talk briefly about logistics.

The Review Committee background. The Affordable Care Act stated that the Secretary of Health and Human Services appointed an organization and she named NCVHS’ Subcommittee on Standards as the Review Committee. Our job is to assess effectiveness and the usage of adopted HIPAA health care transaction standards, code sets, identifiers, and operating rules.

One of the things that we will have to do after our meeting is to report back to the Secretary in terms of our findings and feedback.

Lastly, it is our job, as a Review Committee, to hold hearings no less than biennially, every other year.

The objectives for the hearing today are as follows. We want to review the current adopted standards. Note the word adopted. These are things that the standards development organization and the operating rules, authoring entity and the code set have put out and adopted for the industry to embrace and use. We want to find out based on what has been adopted whether or not to what degree they are being used and how effective and what opportunity exists for us to improve these standards.

We identify transactions, standards, operating rules, code sets and identifiers used in administrative simplification that require changes, deletions or new versions in order to meet industry needs. These are a very specific set of guidelines for us to follow.

You have, as you were coming in, the agenda for the next two days. I am not going to read through these panels. There are seven panels that span two days. We will have breaks in between. Later, Terri will talk about the logistics for the day.

The Review Committee. For those of you who are not familiar with NCVHS and the work that we do as a national committee, the Review Committee fits in very well with our mission. At the highest level, the national committee sets the strategic agenda, focusing on population public health, focusing on data as a strategic asset for the country. From the strategic agenda that we evolve over the years, we also have activities that are assigned to us or really the work that has been assigned to us as part of the HIPAA admin simplification such as things like attachments and operating rules. There are also proxy and security work that committee does. And of course, data is a critical asset, as I mentioned earlier. Those are the standards, code sets, identifiers and so forth that we involve ourselves with.

Then of course, we have ACA, admin, simplification requirements or mandates that the committee is responsible for evaluating and make recommendations. And then when it comes time for us to implement, as an industry, we as the committee monitor and advise the secretary on the progress, challenges, and issues such as the upcoming one is ICD-10 in October, as an example.

Lastly, this Review Committee. It is a nice bookend to the overall life cycle, if you will, of the national committee, where we look at adoptive standards, code sets, operating rules and identifiers and say how effective are they. That is the life cycle of the whole national committee and the alignment with the Review Committee.

MS. GOSS: I am going to talk about the next couple of slides. But before I do so, I want to acknowledge that I believe Linda Kloss has joined us on the phone as a member of the Full Committee and the Standards Subcommittee and Review Committee. Do you want to go ahead and introduce yourself, Linda?

MS. KLOSS: Yes. Good morning. This is Linda Kloss, member of the Full Committee, member of the Standards Subcommittee, and co-chair of the Privacy, Confidentiality, and Security Subcommittee.

MS. GOSS: Thank you. I am really appreciative that Raj and Linda are able to dial in and participate in today’s event. We are going to go ahead and talk a little bit more about the flow of transactions to set some contexts today around what scope we are going to be looking at. A lot of the people that are sitting here in audience probably could do the same overview, but we really want to make sure that we just put the context out there for those who may not be as intimately involved and understanding the business process view that would start with the health plan, benefit enrollment, and premium billing.

These are really the 834 and 820 transactions that are used both in the administrative simplification HIPAA transactions as well as the health insurance exchanges. But we want to make sure that we note that the Medicare files and also the Medicaid processes do differ a bit from the processes used in the commercial private sector.

Another way to look at this is that once someone has insurance and they have paid their premium, they then would go as a patient, they would go to their doctor’s office. They may need a prior authorization and from a service that happens. There would be the ability to do coding and billing that would result in a claim being submitted, potential for claims editing to happen and then pricing and adjudication steps. This is also represented on the right hand side of the slide, including the payment remittance advice that would happen after the adjudication process.

The graphic on the right really represents the flow of the transactions that starts with everything from eligibility inquiry with the 270 and 271 inquiring response functionality, the pre-authorization with the 278 transaction, the claims transaction of 837, use for initial submission or coordination of benefits, claim status, another X12 transaction with the 276 and 277 inquiring response followed by in the end of the process the remittance and payment transactions with the 835.

Another way to look at this revenue cycle perspective of electronic data interchange is displayed on this graphic. We wanted to include a couple of different views since people may view the process differently.

The Review Committee leadership did some consideration of how are we going to evaluate all the various pieces that we are going to hear from the testifiers over the next couple of days and also in the written testimony that we are going to receive. The key is to balance our evaluation of adopted standards, operating rules, code sets and identifiers, by gathering inputs from multiple perspectives of stakeholders, business processes, and standards. That is the top of this evaluation model.

The next dimension represents the things that we are going to be evaluating related to value, barriers, alternatives, and opportunities. We are going to hear different perspectives from the stakeholders, the business processes that those stakeholders use and considerations regarding the base transaction standards, operating rules and identifiers that enable the business functions to happen for the various players in the health care continuum of administrative simplification.

We need to identify through the testimony of the value of the barriers and alternatives and opportunities across the various panels that we hear.

What we want to be considering as committee members is the degree and likelihood of current and future successes based on the feedback we received today and tomorrow. The consistency and uniformity in the use and adoption of the transaction standards, operating rules, and identifiers. And whether or not we achieved the intended benefits and effectiveness that was forecasted by all of this. By hearing the testimony, hopefully what we will do is identify opportunities for further enhancements and also considerations for how time has evolved and maybe there are new options out there for us to consider.

We know that there is likely to be value and a few barriers. The various perspectives will have to be balanced in the end of what we produced for the secretary.

To that end, we will take the testimony verbally today and then we will also look at the written testimony. We imagine with over 75 testifiers today, 77 testifiers plus the written testimony that we have received, it is going to take us some time to get through that process. We want to make sure to give you a perspective on what we are doing here today and where it is going and how you can stay engaged in moderating the process. We anticipate that once we have finished drinking through the fire hose that we will be able to provide some kind of framework in September on where we are headed.

We are not sure how long this is going to take. It is the first time we have been through this hearing process as the new Review Committee responsibilities. It will also be an opportunity for us to apply our own lessons learned and think about how this experience can inform the hearing in two years.

We will also produce the report at some point later this year and go through the process with the Review Committee and then elevating that to the full NCVHS for approval and then final submission.

MS. DEUTSCH: As you all have learned, coming early is probably helpful and especially tomorrow we are going to have 44 presenters. We encourage you to all come in early so you can check in and sign in.

To be able to ensure that we have the transcripts and to also ensure that everybody is aware of who is speaking, we ask that you speak into the microphone and introduce yourselves especially in the question and answer component so that everybody will know who is speaking if they are not present here on sight.

We ask and I know you all have heard it so I am going to repeat myself five minutes. And we do have a clock here. Five minutes will be showing. When it turns yellow, it means you have one minute. If it turns red, you have to stop because that means you are over. I know that everyone has said that they will comply with this so that we can all leave at a reasonable time. To that end, we have received a large amount of written testimonies. Thank you all very much for sending that. When you do your oral presentations, if there is additional information that everyone to look at, you can refer to the written testimony and that is very helpful.

We also have begun receiving a great deal of written testimony from individuals who are not presenting. That will also be added into the deliberation. The staff has been very busy until very late last night and making copies of everything so it is available. They will be on the website. The testimony that is not for the presentations from the presenters will be on the website later on. Everyone will have access to that.

There also will be at the end of each of the panel’s time allocated for public comment. That will be from the public in the audience. We also have Michelle monitoring on the website if there are any questions so that she can present those questions as well. That will be followed by questions and answers from the Review Committee members.

We also ask that you return to the audience once you are done doing your presentation and that the next panel gets ready to make that exchange in a timely manner.

We also ask that at the end of every break and at the end of lunch that you please return on time because we will be starting on time.

We will not be presenting any written testimony at the hearing. It will be only — testimony.

We have had some plane issues. Some of our speakers may not be able to get here in time. We are seeing if we can ask them to do their presentations by phone. If they cannot, we are going to ask for written testimonies so that we will be able to have that available to everyone.

Also if there is a delay. Apparently, there is some problem on the trains. We will try to make movement on each of the panels. We may ask that you not follow the order that we have here because we want to accommodate those that are having difficulty in getting here.

I just also want to say that we ask you all to please silence your mobile devices and move them away from the microphones. I already talked about speaking directly. Restrooms are located to the left towards the lobby. Take your belongings with you at the end of the day. Leave your visitor passes at the security desk.

I also want to alert you all that there are going to be fire alarms being tested throughout the day. Do not leave. They are just being tested. We may have to take some pause as the fire alarms go. I apologize, but that is the fact that we have no control over. We just had one of our subway delays come on time so we don’t have to do any movement.

Thank you all very much. I just wanted to let you know on behalf of the Review Committee, we greatly appreciate your input and your perspective on these important topics. We are looking forward to it. Thank you.

DR. SUAREZ: For those on the phone, this is Walter Suarez. I just wanted to say a couple of very brief words. As a new incoming chair of the National Committee, it is truly very exciting and incredible opportunity for the National Committee to take on this new role and start this journey. In reality, this is a journey to looking to how to improve the effectiveness and the efficiency of the efforts that we all have undertaken over last 15 years on administrative simplification and make that a real two-word action rather than anything else. It is very exciting.

As I think Ob and Alix mentioned, we are starting this journey with this very extensive review of all the transactions. In many ways, this will serve as the baseline for what we will be doing over the next several years as the National Committee acting as a Review Committee.

I just wanted to say a few words and thank everyone again for your involvement and participation. I know this has been one of the most exciting and interesting areas in which the National Committee has engaged. And the interest in the industry has been quite overwhelming to say the least. Normally, we would have to look hard to find testifiers in many ways to come to do this. This time I think they found us. Thank you very much. I will turn it back to the chairs.

MR. SOONTHORNSIMA: Okay. Thank you, Walter. Thank you, Terri and Alix. Very briefly, I do want to acknowledge and recognize Walter and Terri for their hard work, leading up to this point. I have participated in some of the planning, but between Terri and Walter, they really helped shape the Review Committee activities as well as panelists, especially Terri, who has been spending the past — is it two months or two years now in preparation for this. Thank you both very much. Of course, my co-chair Alix for being here and being my sidekick and helping us along here.

Without further ado, we are going to start right away. If you hear the fire alarm, it is not reflection on your testimony. It is not planned. Without any further ado, let’s start with Panel 1. We will go down the list with Don from — could you introduce yourself?

Agenda Item: PANEL 1: Health Plan Enrollment/Disenrollment and Health Plan Premium Payment

MR. PETRY: Good morning. My name is Don Petry. I am the program manager for Health Care Reform with Blue Cross Blue Shield of Tennessee. We will refer to it as BCBST. I am providing testimony in cooperation with America’s Health Insurance Plans, AHIP.

My testimony is going to address BCBST’s experience of the adoption of the health plan enrollment and disenrollment 834 transaction and the premium payment standard, the 820 transaction, with a focus on our experience on the Federally-Facilitated Marketplace, FFM, and the Federally-Facilitated Small Business Health Options Program referred to as FF-SHOP. We do not participate on any state-based exchanges. We have participated on both the FFM and FF-SHOP since open enrollment started on October 1, 2013.

The use of the 834 and the 820 standards in the exchanges is an interesting, evolving paradigm. The implementations were required to be able to pass or exchange enrollment information between the exchanges and the issuers. As depicted in the overview, that starts the whole process flow.

On the FFM and the FF-SHOP, all normalized enrollment and disenrollment transactions are done via the 834. The FF-SHOP currently supports the 820 premium payment transaction and the FFM is scheduled to implement that 820 payment functionality. Currently, it is scheduled for January of 2016.

The use of the transactions is mandatory. If you participate on the exchange, you have to adopt and use these. There is 100 percent participation.

The biggest barrier that we have seen or challenge from the issuer perspective is how to integrate the data that is being conveyed from the exchange to the issuer and how it reflects the regulatory or the business processes of the exchanges. That has varied dramatically from what our normal commercial or other lines of business those requirements.

As we saw on the overview, the accurate and timely membership and financial information is critical to the consumer’s access to health care. It starts the whole flow. And it feeds for all the downstream exchanges that support that whole continuum of health care service delivery.

But again, the differences between the exchanges and our normal business practices has been rather dramatically different. It requires issuers to track and reconcile data that is unique to the exchanges. That includes data for IRS reporting now.

These transactions have been used in addition to approximately a dozen different tactical proprietary file formats that have been developed to handle shall we say nonstandard issues as the exchanges have come on line and business processes have sprung up and been evolving.

I am going to go through just a few quick differences. One of the things is the exchange coverage includes financial data with the enrollment. We now had to track advanced premium tax credits, cost-sharing reductions, user fees, things that we normally would not see in a standard 834.

The FFM does not generate maintenance transactions at this point. It opens up a whole process of having to do an enrollment, termination, enrollment again, termination to add even the simplest change such as a phone number or correcting a typo in your name.

Also, the process — normally, when we get enrollments from a group or an agent broker or through a portal, we don’t have a return function to have to generate effectuations, terminations, cancellation transactions back to the originator. This requirement forced issuers to have to save all of the data on the original transactions in order to be able to generate those back to the exchange.

As things are evolving, the roadmap is being developed and it is a long-term development process. We would recommend that any formal assessment, revision or recommendations on the policies, processes, or transactions be held until we have an entire year operating with a stable set of policies and procedures from the exchange. At that point then we have the information to truly go back and look at efficiencies. Thank you.

MS. KOCHER: Good morning everyone. My name is Gail Kocher and a director in National Programs for the Blue Cross Blue Shield Association. We are a national federation of 36 independent, community-based and locally operated Blue Cross and Blue Shield companies that collectively provide health care coverage for more than 106 million members.

You have our written testimony so I will skip through some of the general information.

I did want to mention in this section that one contextual observation that we have is that there is a barrier that is applicable to all transactions due to the inherent distinction within administrative simplification of who is a covered entity and who is not. That is, where the health care provider is a covered entity only when they choose to conduct the standard electronic transactions. We also run into this with the 834 and 820 transactions because many of our group customers are not covered entities as well. With respect to providers, they can continue to utilize paper, telephone, and other non-electronic methods.

We also found it difficult to separate opportunities, barriers, and alternatives because in many cases, they really directly relate to each other.

With respect to the health plan enrollment and disenrollment and premium payment transactions, we think this is one set of standards where the value is not as directly related to the opportunities and barriers of the other standards to contradict what I just said.

Plans in general indicated that the value proposition would increase simply by a greater adoption of use by their trading partners. A significant barrier here is that many group health plans are not themselves a covered entity and therefore moving them to the use of the 834 and 820 standards is achieved only through the contractual portion of our relationship. It is not surprising that these employer groups do not have the technology infrastructure within their entity to implement an EDI transaction and spreadsheets or proprietary flat files are often more efficient for their business model. Many of these groups have no other business functions, which utilize the X12 formats, and so development for an 834 or 820 is not prioritized for implementation.

Plans have indicated that the value of these transactions would increase simply by more trading partners adopting them. We encourage NCVHS and HHS to examine approaches, which would increase adoption, thereby avoiding the maintenance associated with multiple channels of data input into enrollment systems. Multiple input channels often result in increased customization of vendor tools, which increases costs as well as impacts resources needed for implementation.

Use of the HIPAA-adopted standards by all trading partners regardless of covered entity status, enables the member data protections afforded by the HIPAA privacy and security rules to flow with that data as it moves through other hands and into other uses.

Data stewardship is rooted in the concept of managing the member’s and consumer’s expectations of confidentiality. Those expectations are set and defined when the data is collected, created or possessed by a covered entity through the use of the HIPAA privacy notices. That these defined and explained privacy protections and permitted uses would continue being applied as the data moves through the health care information continuum is a reasonable expectation on the part of consumers and one that is better achieved through broader usage of the standard transactions through EDI channels.

The introduction of the 834 and 820 into the insurance exchange environment has been helpful, but it has also presented additional challenges due to the differences between the business of traditional group enrollment and the individual marketplace enrollment processes. The greater standardization that can be utilized across all enrollment processes will enable improvements to downstream processes such as eligibility claims, et cetera.

That is our comments on this particular panel. Thank you.

MS. STRICKLAND: My name is Debra Strickland. I am with Xerox Health Services. Xerox supports a number of different entities. We have a fair amount of commercial business that we are a clearinghouse for. We also are in government health services and that makes up nine MMIS State Medicaid’s. That is the processing system. Four PBMs and two other. In the commercial, we are processing about 83 million transactions per year and on the Medicaid PBM side, we are processing about 386 million transactions a year. There are a lot of transactions that are going through.

I went through and I asked our staff about our enrollment participation. And what I noticed was from a commercial perspective, we had — this is processing the 83 million transactions — zero enrollment transactions and zero payment transactions on the commercial side.

Interestingly enough, on the Medicaid side, I was actually very surprised to see that we actually had 34 million HIE enrollment transactions. That was on the exchanges. We have a lot of our Medicaid’s doing exchange work or exchanging 834s with their MCOs. It is a very interesting thing when you talk about the impact of these transactions. The 51 million premium payments also were an interesting statistic. It is actually more than the enrollment transaction.

They are in use, but these are the exchange transactions. This is the 834 with the CCIIOO guide and the 820 HIX guide.

From a traditional use perspective and we have heard this. The enrollment transaction is generally used between employer groups to a payer for the purpose of enrolling their members. It is easy. Deb Strickland. Here is her social security number. She is going to go in a group health plan with a whole list of other people.

Generally, also spreadsheets can be used and other things. At one point, I heard one payer had 400 different formats that they were able to receive enrollments, which of course is unruly, which is probably why this transaction was created in the first place. The downfall to that is that the enrollment sender is not a covered entity. If you don’t have someone who is obligated to send it then they are not going to. To Gail’s point, they are not well equipped to do so as far as the EDI transactions.

Some payers I have heard through my solicitation for this panel actually use third parties or TPAs that they have hired to collect all those different peripheral types of enrollments, turn it into an 834 and then send it to them which is actually a pretty good model if you have a lot of disparate formats.

The traditional model uses the HIPAA standard 834 transaction with the standard 820 transaction. Then we come upon the health care exchanges, which boosted the transaction flow considerably because all of the exchanges started using the 834 with the layered CCIIOO Companion Guide on top of that. This is in addition to your normal 5010 834 transaction. There was a companion guide that was worked on that had a lot of different other features and components to it that everybody had to abide by in order to interact with the federal exchanges. And also then they used the 820 HIX guide. That was because it was designed for this purpose.

To the point made earlier, these transactions that are being exchanged in the federal exchanges or from a Medicaid to a qualified benefit health plan or an MCO, there is a lot of different information that has to be communicated through the transactions. It is not just Deb Strickland, her social security number, and what group they want you in. There is the deductibles, co-pays, cost share, lots of other things that have not evolved yet in the transactions that it needs to. There is an 834 HIX guide that should be considered and to see if that makes up for any of the gaps that we have in the industry today.

From a HIPAA perspective, is it HIPAA or is it not? We have the HIPAA transaction that does not have a lot uptake because the fact that the other entity — sending it is not a covered entity. But it isn’t a HIPAA requirement. But if you want to participate in the exchanges, that is a backwards requirement. But interestingly enough, that has actually had a larger impact than actually making a HIPAA regulation. The motivation to participate on a marketplace resulted in higher yields and many people are participating and exchanging these transactions.

As far as the HIPAA next suite and all of the work that on the payers’ plates as we move forward maybe to the next version, I think consideration should be to consider whether the 834 HIPAA transaction is worthy to state within the suite. Payers have a lot of other transactions that they need to focus on. There are a lot of changes in this next group. Is it worth putting forward another version of the 834 that does not have a lot of adoption? But I would say that consideration should be done to see if the 834 HIX guide is a better match for the exchanges and may lessen the need for some of the additional tweaking and things that the industry has done on the marketplace.

That is my testimony. Thank you.

MS. BARBER: Good morning. I would like to thank the committee for inviting ASC X12 to present. As you are aware, most of the transactions adopted under HIPAA are developed and maintained by ASC X12.

Once again, I am Stacy Barber, ASX X12 chair of the Insurance Subcommittee. From an overall value perspective of the adopted HIPAA transaction is the one that I am going to address initially. We feel that the transactions both enrollment and premium payment meet the majority of the needs of the industry. ASC X12 itself has not conducted any studies to determine the overall use so we cannot comment on that specific question.

From a barriers perspective and I think Gail has hit on it and Debra hit on it as well, there is a group that are not covered entities under the transaction. It causes issues with the adoption of the transaction.

There are different difficulties and ease based on the fact that they are not covered entities and a lot of proprietary formats being used in many different formats.

Where we see some opportunities is that through change requests brought forward to X12, we have made significant changes in some of the transactions and being able to automate the matching between the two transactions, between the enrollment and the premium payment to allow for a better exchange of the information and data.

We have also created the group enrollment, allowing for specific focused on individual markets enrollments.

Again, there have been changes that have been made to allow for data matching between the two transactions. As previously stated, expanding the mandate to include all health enrollments and premium payment use would improve the efficiency and effectiveness of the transactions.

ASC X12 has a change request process in place that allows for online submission for the industry and the stakeholders to submit change requests. ASX X12 bases improvements and enhancements based on change requests that are brought forward. We can incorporate those into later versions of the standards, which may be adopted under HIPAA.

From the exchange perspective and the specific question, every enrolled individual in the FFM and the small members in the FF small health options program were enrolled using the enrollment and disenrollment transactions. Most if not all of the state-based marketplace enrollments also used the enrollment and disenrollment transaction.

Some of the small business marketplaces and the FF SHOPs use the actually premium payment transaction developed specifically for the health insurance exchange, the HIX 820. The FFM scheduled date for implementation is January 2016.

That includes ASC X12 testimony on the premium payment.

MS. GABEL: Good morning. My name is Annette Gabel. I am here representing NCPDP, which stands for National Council of Prescription Drug Programs. I am going to give a brief overview of who they are so this way you don’t have to hear this for every panel that we present for.

NCPDP is a nonprofit, ANSI-accredited standards development organization. They have approximately 1500 members and they were named in the HIPAA transaction standards regulation as an entity that would create transaction standards for the pharmacy industry.

They represent a number of entities. We have drug manufacturers, chain and independent pharmacies, drug wholesalers, insurers, mail order prescription companies, pharmaceutical claims processors, pharmacy benefit managers, physician services organizations, prescription drug providers, software vendors, telecommunication vendors, service organizations, government agencies, professional societies, and any other parties that are interested in electronic standardization within the pharmacy sector of the health care industry.

We surveyed our membership with the questions that were presented from NCVHS. I am going to go through some of the responses. As far as the 834 transaction, for the NCPDP community, the pharmacy benefit managers and the payer members use the X12 834 benefit enrollment standard, but it is not really being used for enrollment purposes. We are using it or getting it from some of the health plans in the Blue Cross Blue Shield agencies to provide their eligibility information. They do that because they are using the 834 for other purposes so it makes it easier for them to submit the information in a standard format that they are using for the rest of their business.

As far as the 820 goes, there is very little use of the 820 in the pharmacy industry. Some of the entities that were participating in the Medicare Part D program are using the 820 for premium payment. But the majority of that is being handled by a vendor. It is not being handled by the processes and PBMs who have enrolled as PDP.

The 834 from a processor, pharmacy benefit manager perspective is received from employers and from Blue Cross Blue Shield organizations. As stated earlier, some of those entities are not considered covered entities. While we get the 834, it is not a required transaction for the purpose and because some of the individual companies are not considered covered entities.

Going through the question, as far as the value of the 834 and I am going to speak specifically to the 834 because there is not a lot of use on the 820. For the most part, the pharmacy industry, those that are using the 834, believe that it meets the pharmacy needs. Any additional changes that we needed, we have submitted on behalf of the pharmacy industry and they are being accommodated in future versions.

As far as the volume goes, the entities that did respond and I have to say we had a low response on this survey, but the entities that did respond say that they were receiving anywhere between 26 million and 28 million transactions per month, but that is a transaction. It is not a total file.

As far as barriers, most of the trading partners again the barrier being that they are not considered HIPAA-covered entities. It is not a standard that is used across the book of business. Again, it is an enrollment standard. It is not specifically to provide eligibility, but we do use it to get the eligibility information.

As far as alternatives, they did see any additional alternatives to the 834.

Opportunities. They said that they were not aware of any additional opportunities.

As it relates to changes, as I said earlier, if there were changes, they have already been submitted to X12 for any changes that needed to be made. They will be accommodated in the next version.

And then you asked the question about enrollment and disenrollment and the premium payment as it relates to the health care exchanges. Really what is going on here is that those entities that are sending the 834 for their commercial business are also sending it in for the health care exchanges because they don’t want to change the format that they are using for the health care exchanges.

That completes my testimony. Thank you.

MR. SOONTHORNSIMA: Thank you. We are ahead so that is great. Let’s open up for public comment. Are there any public comments? Are there any questions? Members?

Agenda Item: Review Committee Q&A

DR. SUAREZ: Thanks so much for those really great testimonies. It is very telling of the slide that is on the screen right now. It is the slide that tells enrollment transactions chose commercial business. Zero enrollment transactions. Zero premium payment. And then when it comes to MMIS and PBMs and others, there are a lot of health insurance exchange transactions being performed, enrollment and premium payment transactions. I think, as it has been said, it was partly of course because that is a required transaction really in most insurance exchanges. Compared to the fact that in the commercial market, as has been said, one of the two ends of the transaction is not entity.

My question — a couple of questions about that. Number one, into the future, do you see the continued separation between the enrollment and premium payment standard for the commercial business versus the standard that has been developed for the insurance exchange. I think Stacey mentioned the possibility of bringing the two together. Do you see the opportunity into the future consider that the 834 — there should be one 834 for the entire industry rather than one for commercial and one for insurance exchanges. That is one question.

And then the other question is for X12. What would be the timeframe for the next version of the transactions that have been referred to as there are several improvements and enhancements being made to the transaction? What would be the timeframe for those?

MS. BARBER: We are currently in the development process. Stacey Barber, ASC X12N chair. ASC X12 is currently in the process of working to change requests that we have received and to our change request system, evaluating the change request and developing business requirements and technical solutions. We have selected the next version for development, which will be 7030 at this time. That base standard will be published at the end of this year at which time we will be able to load that standard into our development tool that we use for creating the TR3s and start applying the changes that have already been developed through the process.

We are taking a look right now at our timeline that we had created for the next version, looking at the different milestones that are necessary, what has already been completed within that timeline, what still needs to be completed. We have not revised the timeline yet so I cannot give you an exact date, but we are working on it. And hopefully coming out of the fall standing meeting, we will have made the revisions that were necessary to that timeline to give a date of when we would be able to publish the next version, which is 7030 targeted at this time.

MS. STRICKLAND: Deb Strickland from Xerox. I just would like to make a comment that just because Xerox isn’t seeing transactions coming on the commercial side do not mean they are not happening. Again, they could be on a bar napkin. They could be on an Excel sheet. They could be being faxed so they go around our processing.

To speak to the Medicaids and the way that the transactions are being used similar to eligibility. So a Medicaid that does business say with an MCO, they would want to send that information about all of the covered members that they have within the Medicaid to the MCO and say you are going to administer the plan on behalf of these people. It is almost like an eligibility, but it is an enrollment. It is almost like a cross between them. I am almost thinking it has a different business use because of that nature because it is going from a payer to another payer to communicate additional information about what members, what deductibles, what types of plan attributes they have. Are they indigent in care? Are they foster? There is different information that has to be communicated from a payer to an MCO or a payer to a QHP versus just an employer group who is just — to the payer to say enroll my employees. Perhaps it might be an interesting thing to take a look at whether or not we need a different guide for the business. Maybe the HIX guide is that guide that does the business of both HIX and the unique business of payer-to-payer sort of enrollment, eligibility, what have you.

MS. KOCHER: Gail Kocher, Blue Cross Blue Shield Association. I think from the perspective of can we do it in one guide, I think that is a question that has yet to be answered. The business processes are different and exchange enrollment is always going to have a slightly different business rules than traditional commercial enrollment. Whether meeting those needs can be accomplished through one guide or it is easier to do two guides is something I think the standards organization will need to take a look at and I think they are prepared to take a look at that if I am correct.

I don’t know if it is as simple as saying can it be one guide or two, but I don’t think we are ever going to see the business processes and the real rules behind it. They are never going to be completely the same because enrolling an individual through a marketplace is very different than enrolling a group through a traditional group market.

We may see more alignment on the SHOP side, but definitely that straight FFM individual market is never going to completely align with how we do business in the commercial world.

MR. PETRY: Don Petry, Blue Cross Blue Shield of Tennessee. I would echo Gail’s comments as far as the business requirements being different and especially FFM versus state-based and even the state-based requirements being unique depending upon on how the states have implemented those as well.

To Debra’s point regarding the commercial, we do see 834s on our commercial business. Predominantly it is on the large group side. To the points that Gail raised earlier, your small groups are not going to do an 834. They don’t have an infrastructure in place. EDI transactions are not something that they would do. That would be a barrier if that was imposed on them because they may be two people as a small group.

Definitely the question regarding is it an 834. When we actually wrote the 270 and 271, the eligibility transactions back in the mid ’90s, we did that with the thought that there was an eligibility roster functionality. But that again is not what is now needed. It is a bit of a hybrid between an enrollment and an eligibility roster. It is somewhere between those two transactions. I do agree with you there that those needs are present to send additional information that you just don’t see in a commercial type of business with subsidies and other values. Thank you.

MS. GABEL: Could I just say one thing? Annette Gabel, NCPDP. One part of enrollment that we are not talking about here because they don’t use the X12 standard is on the Medicare Part D side. They created their own requirements for eligibility. They have a standard that all of the PDPs have to use similar to what CCIIOO did for the exchanges.

Some of the information that is being required for the exchanges is very similar to what was required for Medicare Part D because there is all low income subsidy and very similar. CMS created their own eligibility file for the prescription drug plan. If we are going to take a look at standards, we need to look at that as well and see how we can bring all of this together.

MS. GOSS: This is Alix Goss. I have heard some perspectives about covered entity dynamics, how do you motivate people to come to the table, some incentives are better than others to get compliance and use. But I am not really clear from the commentary that I have heard from you whether you think you are looking for new regulations, clarifying regulation or if it is more about industry guidance to create if you are doing this, go down this path, if you are doing this, go down path. Does anybody have any commentary on that?

MR. PETRY: Don Petry from Blue Cross Blue Shield of Tennessee. The one concern I would have especially as it pertains to exchanges is they are evolving given the fact in two weeks they could be changing dramatically with the Supreme Court ruling. It is going to be a number of years before all of the functionality is built out, implemented and has had a chance to settle.

Through this right now, mandating anything on that is going to just make it more difficult because the business rules — that is why we have those tactical proprietary files that are being used right now until they can formalize and implement standard procedures to address how that data needs to be conveyed.

There is a lot of — they say don’t shoot the messenger. The 834 and the 820 are just the messengers. They are just conveying all of the data. It is the business processes and the regulations and the policies on either side that are needing to come into alignment. The transactions that may need to have some additional code values or some functionality to add an additional looping structure, et cetera. But it is settling all of the policies and the regs on either side is really what needs to settle out and then you can look at how can the standards be most efficient whether it is an implementation guide specific to the exchanges or there is actual transactions and changes that are necessary or possibly even a hybrid transaction, a new transaction that addresses some of the needs.

(Fire Drill)

MS. STRICKLAND: As far as the end game and what we are looking for from my perspective, I would like to not burden payers with the transaction that perhaps is not exchanged or being proven to be much value from a HIPAA mandate perspective, but rather —

MR. SOONTHORNSIMA: Let’s take a break, but we will come back. Debra, I think we owe you for your comments. We will come back — five more minutes before next panel.

(Break)

MR. SOONTHORNSIMA: Thank you very much for your patience and allowing us to shake you a little bit. Let’s get back to our panel.

MS. STRICKLAND: I have just a brief comment. I don’t want to hold anybody up. I think we need to consider whether or not transactions are worth being pushed forward as the next HIPAA standard. Is the enrollment transaction, the normal HIPAA enrollment transaction worth its value or should it be adopted on a voluntary type of perspective? If it is worth your while, you will do it voluntarily. If you are doing it now, it is fine to continue to do that voluntarily. However, on the HIX side, I would advise that we don’t make any large turns at this point because there are a lot of things in regulations and policies and so forth that are still evolving.

But once those things are set, we do need to do a survey in an understanding of the things that are not working with the current transaction. What with the transaction that they are using now is not working and what has to change. And then perhaps give that information to ASC X12 in order to decide do the transactions that exist today meet the need or do we need another transaction that serves different business needs that might be a hybrid to align with what the industry is demanding at this point.

MS. GOSS: With regards to that, it sounds to me like if industry really has issues that they need to be participating in the business process or business requirement definition at X12 now to make sure that if they want the changes from their experiences although it sounds like we have some experiences to go through until this all settles out, but the industry needs to participate in the standards development organization efforts if they really want to make 7030 meet their long-term needs.

DR. SUAREZ: Thank you. This is Walter Suarez. To that last point, I just wanted to ask this question because it has been in the news, not so much lately, but a few months ago the concerns and some ways strong concerns that industry-to-industry was expressing about the enrollment transaction in the health insurance exchanges with respect to yes, we have a very large amount of individuals being enrolled in plans. The front end seems to be working now of course the websites for enrolling people. But in the back end apparently, the enrollment transaction was showing some issues and health plans were having to resort to some manual processing of some of those and obtaining information by phone and very fine information that was not being reported. I just wanted to ask what is the perspective of the panel on the status of the use of 834 in the insurance exchanges. Is it a much better experience now? Is it improving? Do you see still issues with respect to the use of that transaction in the insurance exchanges?

MS. STRICKLAND: From my experience — this is Deb Strickland from Xerox again. We are seeing gaps in the transaction. There is data we cannot communicate because of the structure of the transaction. One example might be that a foster child is a covered member under our plan and they are the subscriber because all of our members are subscribers. But I cannot identify that child as a foster because that qualifier does not reside at the subscriber level. Logistically, things of that nature have been found and there is different creative ways being done to get that information to the health plans and to the marketplace. Applying a little creativity, you can get the data needed over to the entities, but that is not the spirit of the transaction. That is where we need to take all of those things and say where did we make these little one off changes and where did we put things that could just go into INS or something that is a very generic segment and what other information do we need to support in these transactions because there are gaps in the transactions. And then it results in the plans not having the data they need at the end of the day. There are gaps.

MR. PETRY: Don Petry, Blue Cross Blue Shield of Tennessee. To the point, there are some gaps in the transactions. As mentioned earlier, that is something that can come through and go through the standards process to make recommendations for changes. Where we have seen issues have been with either the business processes or the systems upstream from actually creating the transactions. An example of — if a consumer has filed an appeal and they are eligible for coverage with a retro-effective date, the 834 can convey that retro-effective date for an earlier date of coverage. That is not an issue.

The front-end systems being able to populate that date in the eligibility system. That is where there may be an issue. That creates a gap in that you get an enrollment with a 7-1 effective date that should have been a 1-1 effective date. There are alternate, tactical approaches that have been created to be able to convey that information so that we can get the consumer with the correct coverage, the correct dates, et cetera. That is part of what I was speaking to earlier as it is evolving and you have regulations. You have policy. You have systems that are all in a state of development and flux that once that settles out then it will be able to truly look back and say is it transactional. What do we need to address? Is it an operational issue we need to address?

MR. SOONTHORNSIMA: To that end, let me follow up with just one more question. Relating to CCIIOO of folks who are actually defining the upstream rules and capabilities of the exchanges, how are they engaged? How do they engage with X12 or the stakeholders to make sure that those changes are affected in the standards?

MR. PETRY: Don Petry, Blue Cross Blue Shield of Tennessee. I am not speaking on behalf of CCIIOO, but just from our experience. They are involved with the issuer community. They hold regular industry-wide calls with exchange participants. They have individuals within their organization that do work with X12 as far as Mike Cabral(phonetic) and others, that are knowledgeable in the transaction sets and bring that to X12.

And then they also work with a smaller group of issuers to help bounce things off of and look at what is an appropriate solution or approach as well as they work extensively with the associations and the trades of the Blue Cross Blue Shield Association, AHIP, as far as that to have industry participation and input working with them. That is from our perspective as to what I have seen.

MS. KOCHER: I think they have done an excellent job of really engaging with the stakeholders that are going to conduct the transaction. Then they have also been able to participate in the standards work moving forward. I think they have done a good job of that given the timeframe in which we have all had to implement these things. For many years, we had policy and regulation. Then you had time to figure out how you wanted to implement that. The exchange world is not that. Policy decisions are being made during implementation timeframes. We have all had to adjust to that. I think they have done a good job of engaging with the stakeholders.

To address one small piece from Alix’s earlier question, we are not asking for any additional regulation. But what we are saying is we need to figure out a way that we can talk about engaging all the stakeholders whether or not they are covered entities. And that message if it comes from NCVHS and HHS is always more powerful than if it is in the hands of the health plan to the small group or one trading partner to another to engage and encourage that adoption.

MR. SOONTHORNSIMA: Linda, go ahead.

MS. WILLIAMSON: She wrote that looking out five to eight years, what steps should we be taking now to really advance administrative simplification?

MS. KLOSS: This is in the spirit of Ob’s opening comments about keeping an eye on our goal.

MS. WILLIAMSON: Looking out five to eight years, what steps should we be taking now to really advance administrative simplification?

MS. KOCHER: Gail Kocher from Blue Cross Blue Shield. I think, again, it is that message of engaging with the stakeholders, engaging your trading partners, having the education come from HHS who, again, always carries more weight when someone sees something even when it is not a regulated item, just knowing that the encouragement is coming from the federal agency is always helpful to the stakeholders in the community as we try to engage our trading partners especially when they are not covered entities themselves. Education and communication is key.

MS. STRICKLAND: Deb Strickland from Xerox. I think that we need to have evaluation criteria that would really concentrate on the return on investment for the transactions that are mandated and any other transactions that we might throw at the payers as a whole.

From an industry perspective, when we ask the industry to move from one version to another, that is not a small thing to do. There are always other regulations. There are other states that are throwing additional state-level regulations at payers. We have to understand that from a landscape perspective, we need to make sure that is a return on investment for what all of these payers and the industry is being asked to do before we have them do it.

MS. GABEL: Annette Gabel representing NCPDP. What we typically hear from the membership is it is not so much about moving to new transaction standards, but the amount of time that it takes to adopt new standards. When the business need is identified, you don’t have six years to wait for the standards to be enforced so that you can move to a new standard for the process. If there is anything that can be done to shorten that timeframe, I think that is really what we should be looking at.

MS. GOSS: Just to clarify, you are talking about the Administrative Procedure Act and the process for adopting regulations in addition to the standards development time, collaborating with the industry.

MS. GABEL: Because once the standard development organization puts forward an updated standard or even a new standard, the process for it to go through the whole NPRM. It is a very long process before it finally gets mandated.

MS. GOSS: If memory serves, X12, HL7 and NCPDP presented to NCVHS a series of recommendations based upon collaboration with the designated standards maintenance organization, which also includes NUBC, NUCC and the data content committee regarding what could be done. I think that Margaret told me — take me back in time. When was that done? 2004 to 2006 timeframe?

MR. SOONTHORNSIMA: Thank you very much panelists. Before we move on to Panel 2, Bill, could you announce your presence?

DR. STEAD: Bill Stead, Vanderbilt University, member of the full committee and co-chair of pop health.

MR. SOONTHORNSIMA: Are there any other members that need to be announced. We are going to take about two minutes and begin our next panel. We will have about a half an hour. We are half an hour ahead. Let’s use that time.

Welcome to Panel 2. Let’s start with WEDI from Laurie Darst. Good morning.

Agenda Item: PANEL 2: Health Plan Eligibility, Benefits Inquiry and Response (Part 1)

MS. DARST: I am Laurie Darst, chair-elect of WEDI Board of Directors and Revenue Cycle Regulatory Advisor at the Mayo Clinic. I want to thank you for the opportunity for testifying today on behalf of WEDI.

As you know, WEDI represents a broad industry perspective of providers, clearinghouses, payers, vendors and other organizations in the public and private sectors that partner together to collaborate on industry issues. WEDI was also named as an advisor to the secretary under the HIPAA regulation.

Just to provide a little background, there continues to be a need for greater adoption of the HIPAA transactions and compliance with requirements and consistency of data. WEDI feels that the adoption of standards, code sets, identifiers and operating rules are important tools that can help aid the industry in moving forward with health IT. To date, many of the implementation standards, code sets, identifiers and operating rules have provided benefits to the industry. However, significant barriers and challenges continue to remain before full adoption and full potential can be realized.

To support our testimony today in these panels, WEDI conducted a national survey of health plans and clearinghouses in collaboration with the cooperative exchange between May 12 and May 27. The survey measures the adoption, use and impact of standards, code sets, identifiers and operating rules, and some of their associated challenges, barriers and opportunities. Responses received were from 137 organizations, including 68 health plans, 12 Medicare/Medicaid plans, 17 clearinghouses, 21 software vendors and 17 clearinghouse software vendors. The survey asked 31 questions around the ten standards that you inquired on.

These comments are specific to the eligibility standards. Based on our findings from the survey of health plans and clearinghouses and also from a multi-stakeholder input received from our Board of Directors Executive Committee, we would like to make the following observations.

Summary from the survey findings. Feedback from the health plans and clearinghouses suggests that the 270/271 transaction could be enhanced to contribute more value and better achieve the intended benefits. Comments indicated that the eligibility standards and transactions are difficult for stakeholders to use and often times confusing to interpret. While data content is already complex, many stakeholders urge the transactions to better reflect current business needs and evolving insurance plans, products and benefit structures. Opportunities for improving eligibility should balance the need for more granular, accurate data supplied by expanded customer and provider functions with the need for more transparent data that is easier to interpret.

Your question on volume. Adoption and use of the eligibility standards and transactions could be more widespread. Survey respondents perceive varying degrees of usage by health plans of the eligibility operating rules, including 34 percent indicated significant use, 34 percent indicated moderate use and 16 percent indicated slight use. In addition, survey respondents reported a variability of the perceived or qualified usage of eligibility transactions and operating rules, with 8 percent of the respondents reporting extremely variable, 33 percent reporting moderately variable, and 31 percent reporting slightly variable. Seventy-one percent of the survey respondents reported moderate to significant use of non-batch operations for eligibility requests and responses.

From a value perspective, respondents indicated that the eligibility transactions are difficult to use and interpret, and slight variability in adoption may be hindering the return on investment for stakeholders. Eligibility is reported to be meeting the industry needs by 64 percent of the respondents, again, health plans and clearinghouses. And 69 percent believe that the transaction and corresponding standards, code sets and identifiers are achieving their intended benefits. While 72 percent of respondents believe that operating rules are meeting the industry needs, 38 percent believe that the intended benefits are not being achieved.

Since the survey was conducted with health plans and clearinghouses only, some of the WEDI board members representing providers indicated that member-specific network benefits based on the contracted provider agreement would be of substantial value. In addition, reporting of specific procedure codes and diagnoses requiring prior authorization would provide more value to providers. They also reported greater data information was found when accessing some health plans’ web portals than found using the transactions.

Other barriers and opportunities. In order for the definitions to be universally interpreted, data requirements and content needs to be more clearly defined. In addition, we could use additional transaction capabilities, such as identifying the patient’s primary care provider, health plan product information and estimating co-pays and co-insurances.

WEDI providers also indicated that reporting a provider-specific network benefit, but also the notification of the patient in a health insurance exchange grace period would also be beneficial.

I can see that I am running out of time so I will stop here. You can read the rest of the comments that are in my testimony are across all transactions.

MR. ARGES: Thank you. I am George Arges. I am a senior director at the American Hospital Association. On behalf of our member hospitals, 5000-member hospital’s health systems and other health care organizations and our 43,000 individual members, the AHA is pleased that this committee is basically taking this opportunity to evaluate the extent to which the HIPAA administrative transaction support claims related routines.

We have written testimony. I gave that earlier. I don’t want to read from it. I want to focus in a little bit on each of the specific items as we go through the various panels. With respect to the eligibility benefit inquiry in response, I think it is important to basically note that there was a CAQH index report that showed the extent to which the transaction standards are widely used. The claim has achieved about 92 percent. All the other transactions seemed to have fallen significantly behind that. I think the eligibility has about 65 percent utilization rate.

In terms of dollars, lost opportunity dollars, there is about $8 billion that could be gleamed if those percentages were brought up to the same or level beyond what the claim is at. The opportunity for improvement is there. The question and it is interesting to note that the first panel basically discussed a lot of the information with respect to the enrollment process. But there are common themes I think that are going to be developed throughout the day over here.

In terms of the adequacy of the eligibility transaction, clearly the lack of consistency and the information reported within the transaction is something that has to be dealt with.

Often the minimum amount of information is provided and many providers use health plan web portals as an alternative to obtain more information. That is the cost of your approach and using the transaction standard itself.

Many health plans do not provide let’s say complete patient responsibility rules and amounts, the deductibles, remaining deductibles, co-pays and out-of-pocket limits. We heard from the first panel a number of reasons why that may be. Maybe there is a lot of non-covered enrollment information that is not flowing through as part of that process.

Vendor products are not always up to speed with respect to the standard. That is another issue that our members tell us. And the complexity of health benefits that lack standards to determine the health service is covered is another monkey wrench to the amount of growth that could take place within the eligibility transaction.

Improving the understanding is one of the things that we hope this committee can basically take away from the hearing today. We think it is important that there be a work group of multi-stakeholders to improve the understanding of the transaction standards and operating rules.

There should be improvement goals that are established based on the CAQH index. If we are at X percent today, we should target a higher percentage in the next two years. What can we do to basically hit those goals?

Clearly, one of the things is to make certain that operating rules that can measure the utilization of the transaction standard for consistency and completeness and timeliness is an important first step. I think certification programs that measure compliance and conformance to the transaction standards and operating rules is another step. It is important to encourage vendors to demonstrate their product can indeed support the standards in operating rules as part of that process.

From that perspective, those are the key things I think we want to convey with respect to what needs to be done. I think whether the transaction standard can support the information I think the answer is probably yes. But I think what we need to know is really what the business routines that need to be firmed up have to be and what can we do as an industry through better education, through better front end matter in the transaction standards and also having ways to test compliance in terms of tools that could demonstrate that people are using the standards as intended. I will stop there. Thank you.

MR. TENNANT: Good morning. I thank you for the opportunity to present testimony today. I am on so many panels. I have to make sure which one I am going to talk about. I think George raised a lot of good points and there is going to be some overlap I think clearly between different provider testimonies. I also apologize in advance for speaking like an auctioneer, but I will try to get through as quickly as possible.

MGMA represents over 33,000 practice executives. I wanted to focus my testimony over the next two days based in part on two surveys. One we conducted with the AMA and the ADA and that was focused on electronic payments. And then in response to the call from NCVHS, we put out a survey to our members that just closed last Friday. We had 547 respondents.

One of the things we wanted to find out is exactly how do practices verify insurance eligibility. You can see here that it is really interesting that a large percent still use facts and phone, but an overwhelming number use the web portal. I think that is one thing we found. And these are not typically small practices. These are usually medium to large sized practices that respond to these surveys. You can see there are always or frequently only 47.9 percent use the 270/271 transaction. I think that gets to George’s point that although a lot of folks are using the claim, as we will see, a lot of practices still are using the old technology.

Similarly, we ask why exactly is it that you don’t use the 270/271. The majority of the respondents, 43.3 percent, said we don’t really get the information back from the health fund that we need. They also talked about that the lack of explicit information regarding medical services. A pretty substantial number said that their PM system does not have the capability to conduct these transactions. It goes down the line. Ten percent or so say the fees that are charged for the transactions by the clearinghouse are excessive.

We also asked how valuable would it be if, for example, there was additional patient financial information or the indication that the patient had not paid the premium, patient out-of-pocket maximums, and specific benefit limitations and maximums. You can see here that overwhelming the respondents said yes. That would actually make the transaction more useful.

In terms of concerns that practices expressed, as George said, there is so much variability. There is certainly more concern now that more and more patients are presenting with high deductible health plans. It is very important to establish the patient financial responsibility.

I think what we are seeing is because of the variability because they are not getting back the information they need, they are forced into these payer portals. That may be wonderful for the health plan, but it is certainly not a good workflow for the practice.

I think as well we are not getting the information in the timely manner that is expected within the 20 seconds or next day for batch. And of course, not all PM vendors support use of the transaction.

I won’t go through all the comments. You can read those. There were a number of expletives that I deleted from the slide. They are clearly not happy with the transaction. The promise of 270/271 simply has not come about.

George alluded to this as well. CAQH index has identified some really significant potential savings of $3 plus. They are reporting about 65 percent usage in the industry.

In terms of recommendations, we clearly as practices want an automated simple approach. It has to be low cost. We should be encouraged to use the transaction, not the portals. Clearly, we need a clear picture of the patient financial responsibility.

In general, I will make these throughout the two days; we need to have CMS increase its education. We need to support what is out there now, which is the WEDI/EHNAC Practice Management System Accreditation Program. That is the only way we are going to ensure that the software can do what it needs to do. There needs to be additional collaboration with the SDOs. I would argue that the SDOs need to go to provider meetings and learn firsthand what is going on.

We need to proactively audit health plans for compliance with the transactions. If the provider gets a 271 back and it says no problem, the patient is eligible. They should not be on the hook for the financial cost if down the road, the health plan decides that the patient was not eligible.

Finally, similar to meaningful use and the Medicare shared savings program that we are all familiar with, CMS should explore potentially sharing the savings. If we can move providers to these transactions, there will be significant savings. Perhaps there could be some of those savings shared with providers. Thank you.

MR. NICHOLSON: Mr. Chairman, members of the NCVHS, my name is Dave Nicholson and I am chair of the HBMA’s Care CORE Workgroup. First, we cannot undertake to respond to the many questions you proposed without taking note that in 2016, we will celebrate the 20th anniversary of the enactment of HIPAA. It is striking that nearly 20 years after the health care industry was promised administrator simplifications that we are testifying about the status of some of the most basic transactions.

First question, do the operating rules meet the current business needs of the industry. As has been testified before, the vast majority of claims being submitted or received using an 837/835 standards to meet the industry needs. Beyond those key transactions, the others, eligibility claims status prioritization, et cetera are being utilized to a much smaller degree.

For example, in regards to eligibility, in Maryland, health plans are regulated by the state have certain balanced billing restrictions and providers are obligated to adhere to those limitations. However, ERISA plans are not bound by these state laws. If we make an electronic inquiry to verify eligibility, we are told that the individual is enrolled. We were not told that the individual is an ERISA plan.

Thus, our providers will believe that must adhere to the state balanced billing requirements when in fact they do not have these limitations. Because we are not getting the full picture, we have chosen to go to the web portal of the insurer to get the complete information instead of using the 270/271 transactions. While the web based option is technically in compliance of HIPAA, this is time consuming and often we still do not get the full picture.

Next question. Explain the adoption trends of the operating rules. Despite the widespread and successful use of the 837/835, we see far less use of the other transactions. Why is this so? There is a widely held perception that the lack of adoption remains the fact that information is not easily obtainable or the information is not complete or proves to be unreliable. However, my colleagues believe that this is due to the unwillingness of the payers to make these services easy and reliable. Unlike the 837/835, which can generate tangible savings to the payer as well as the physician, the principle saving benefit of these other transactions occur almost exclusively to the provider.

For the payer, it represents a cost with very little in the way of financial investment. For example, what tangible savings is generated for the payer by providing and paying for an up-to-date, real time eligibility verification process? Little. The same can be said for claims status and prior authorization.

Next question. What is the degree of usage of web portals for eligibility? Very high. The vast majority of health plans that we interface to use web-based portal. Health plans use portals on their website or direct physician billing companies to a third-party vendor retained by the plan for this purpose.

Some services provided by these vendors are free such as pulling EOBs. However, some services come with a charge like batch eligibility for 270/271. It is our sense that the free services are used extensively, but the charge services are less so.

Finally, next question. Are there any areas for improvements? Enforce the HIPAA standards with the same level of aggressiveness that we have seen with respect to the HIPAA privacy standards. As you know, providers are very publicly fined for even minor self-reported transgressions of the privacy requirements. Even when no data has been breached or disclosed, providers have been fined.

The purpose of these fines is to send a message that failure to comply will not be tolerated. Why isn’t there a similar attitude or approach when it comes to administrative simplification with regard to HIPAA?

Mr. Chairman, I would like to thank you again for the opportunity to present here.

MS. PHELPS: Ruth-Anne Phelps representing the Department of Veterans Affairs as a provider. These remarks are organized in two sections. First, VA’s successes and challenges with the operating rules. And secondly, VA’s view on the efficiencies moving forward with future operating rules.

First, our successes and challenges. As the largest integrated health care system in the US, VA sent and received over 65 million health care transactions in 2014. Of those, 19 million were real-time eligibility transactions. VA was compliant with the 270/271 transactions before most payers and clearinghouses.

In fiscal year 2004, VA received roughly 325,000 271 transactions compared to the 9.4 million that we received today. With implementation of the operating rules, the transaction volumes soared.

One of the greatest benefits of this transaction is the amount of time, measured in seconds, in which we can now verify insurance as opposed to spending significant amounts of time on the phone or digging through payer websites.

Another major success VA had with the implementation of the operating rules was the ability to get payers to actually use the transaction. The operating rules state that if a provider requests a real-time response to the 270, a payer is required to do so. This language in the rules improved payer connections for us. VA made the decision during the 5010 development efforts to adopt real-time transactions only. While the industry waited for the operating rules to be finalized, it was a struggle to get payers to connect. Once the compliance date passed, payers were much more responsive to requests for those real-time transactions.

One of the greatest challenges continues to be readiness across the industry. In order to tackle challenges faced with readiness, we began a very aggressive payer outreach campaign to assess whether payers were ready and aware and able to implement this new standard.

Starting in September 2011, VA reached out to nearly 100 of our top payers that were not currently using the transaction to gauge their readiness. Over half of the payers were non-responsive. When this occurs a noncompliance letter is sent to the CEO of the company. After two attempts, if we still do not receive a response or a movement to comply, a formal complaint is filed with CMS. To date, VA has submitted 13 CMS complaints for the 270/271 transaction. Currently, VA is active with 277 real-time payers, with more added every month.

With regard to the efficiencies moving forward, generally, we consider the operating rule implementation to be a success and to be helpful, but some roadblocks continue. One is the compliance issues and payer discretionary issues continue to remain the largest challenge. While operating rules may not fix all of the issues, VA does suggest that the industry define stricter enforcement standards with future implementations that do not depend on provider reporting to CMS.

Another challenge is education on the standards and compliance. In our extensive payer outreach, we find ourselves first teaching payers the law, and then asking them to implement it. Education is improving every day, but we do think that more can be done.

Finally, the last efficiency is specificity. We have found with this operating rule, there is still some room for interpretation and discretion. We constantly find ourselves having discussions with stakeholders about differences in interpretation. Our position is the more specificity, the better.

I hope these remarks have been helpful and I thank you for the opportunity to address the committee.

DR. MILLER: Good morning. My name is Ben Miller. I am the director of the Farley Health Policy Center at the University of Colorado School of Medicine and the Department of Family Medicine. Thank you for the opportunity to talk today.

For decades, the challenge of addressing mental health has been profound. In fact, it does not take too deep a read into history to see that our society and our health care system has not truly understood mental health and what to do with it. Consider how in 1963, when President Kennedy signed the first piece of federal legislation on mental health that established community mental health centers, there became a need to define what a mental health benefit was and what was not. This struggle to bring these often inadequate benefits to a place where they could help those who needed it the most was a battle fought for decades until the passage of the Affordable Care Act, which included mental health parity.

However, much of what we know about mental health has drastically changed in recent years. We have learned that treating people for mental health is much more effective when done so in the community that addressing the whole of health is far more effective than just the part. That separating out the mind and the body is an impossible reality due to their interconnection and interdependency.

Yet our systems in health care, no matter how much they have changed, have struggled to reconcile these facts. To be clear, we perpetuate this false dichotomy of mind and our body every day through our clinical care delivery, financing of health care, and our training and education programs.

Today, I offer up insight and testimony to the challenge of looking at mental health through a different lens. It is simply impossible to consider health plan eligibility, benefits inquiry and response without first having a grasp on the state of mental health in health care and where the field is going.

For decades, research has shown how more mental health is seen in non-mental health settings than anywhere else. In fact, if one breaks down these data, it is clear, primary care has become the de facto mental health system for the vast majority of the United States. One cannot have a conversation on mental health eligibility without first acknowledging that many individuals with a mental health condition who show up in primary care either a) do not get help or b) do not follow upon on their referral.

Integrating mental health providers into primary care holds the promise that patients will have more instantaneous access to a mental health provider, which is greatly needed. Consider for example that two-thirds of primary care physicians when surveyed indicated they could not get access to specialty mental health services for their patients. This survey was in response to the 2008 passage of mental health parity, which was meant to help patients better receive mental health services and have benefits that were at parity with medical benefits. The problem, as highlighted through this study, is that most primary care providers do not have the ability to connect to the specialty mental health system in ways they can help their patients in the moments their patients need it most.

To offer another example, consider how patients often do not initiate or complete treatment when referred. In a recent study, researchers found that families, when offered mental health interventions onsite in pediatric practices for children and adolescents, were nearly seven times more likely to complete care than when referred to specialty mental health.

This rigorously designed study found that of the 321 children involve, 160 were randomized to receive mental health treatment in a primary care office and 161 were randomized to receive treatment in a specialty mental health. The families offered integrated mental health initiated care 99 percent of the time and 76 percent completed treatment fully. Compare these data to the 54 percent who initiated care who showed up for their referral in a specialty mental health with only 11 percent completion.

An integrated model approach, which has been shown to be more effective, and just as I have highlighted, efficient. This scenario may often lead the primary care clinician to a place where they may be making the eligibility inquiry on behalf of their clinic or an integrated delivery system or even the onsite mental health clinician. As some efforts are starting to show, new payment models will also impact the way we think about health plan eligibility, benefits inquiry and response. For example, if a primary care practice is under a capitated arrangement for their patients, which includes patients with mental health diagnoses, they may want to treat that patient in their practice rather than refer out. In this scenario, the benefit may not even be enacted as their mental health service is just another part of the primary care delivery. Alternative payment methodologies and new risk contracts may mean something very different for mental health plan eligibility, benefits inquiry and response for mental health.

I encourage the committee to see such critically important issues like health plan eligibility, benefits inquiry and response in the context of a much broader view of mental health in health care. Medical providers, like primary care physicians, often have to decide what to do with patients who have mental health needs daily. As data suggest, even if a patient has the benefit, they are not likely to show up for their mental health referral even if the practice is told the benefit is there.

We may consider moving away from the notion that one size fits all for mental health and reflect that in some cases, what our patients are eligible for is a service they do not want to use. We should also how new payment methodologies that better support the inclusion of mental health services in primary care will change the need to know who is eligible for what. The entire notion that mental health will predominately be a separate service is changing in deference to a more population-based model of care that allows for more timely access at the point of identification, often in primary care settings.

These emerging models will change the way we think about eligibility and in many cases, change the entire structure of a benefit. Since the majority of the research has been done on the clinical aspects of these integrated approaches to mental health, more study may be needed to understand the complex interactions of integrating mental health more seamlessly into a benefits design. Future operating rules and standards may wish to assess the differences in eligibility and benefits inquiry when mental health is provided instantly onsite rather than through a traditional referral mechanism to a different provider and system.

For example, one might compare health care clinics and systems that have mental health services as a part of their overall delivery model, an example being not carved out or a separate line of service, and how these benefits are designed and eligibility is assessed to those clinics that have traditionally treated mental health as its own separate entity.

In closing, to be clear, in many cases, the integration of mental health into primary care will not replace specialty mental health system and function, but in fact complement it in several different ways, including the more appropriate referrals enhancing operational efficiency on the specialty end. For those patients who do need more specialty mental health services, the traditional aspects of health plan eligibility, benefits inquiry and response are indeed necessary. However, the direction in which the majority of the country is going pertains to more instantaneous access to mental health, in primary care, whereby the patient can have a more seamless comprehensive approach to their care. This integrated approach is growing and I encourage the committee to consider how this will impact health plan eligibility, benefits inquiry and response for mental health. Thank you again.

MR. SOONTHORNSIMA: Thank you very much. Annette.

MS. GABEL: Annette Gabel representing NCPDP. One of the I think important notes that I want to make before I provide this part of the presentation is back in 2009 when the updated standards were adopted, there were some clarification put out for what transactions pharmacy was responsible for. Besides the health care claims and equivalent counter information, we were also doing the eligibility transaction. We were doing prior auth, coordination of benefits, and we had created a Medicaid subrogation standard.

When I talk about the eligibility transaction, I am going to talk about it from two perspectives. One from the 270/271 X12 transaction, but also from the version D.0 eligibility transaction E1. This is a transaction, which is sent from the pharmacy provider to the processor to obtain eligibility information for a specific patient and also they get planned parameters. This transaction was adopted for use under the Medicare Part D program. It is used to determine eligibility as well as other benefits. If the patient has coordination of benefits, it provides information as to whom the patient is enrolled through for both their primary and their secondary benefit.

There is a Part D transaction facilitator who has been identified by CMS. They are the entities that provide the information back on the E1 response when the pharmacy submits the transaction.

In the 270/271 transaction, that is also used by the pharmacy industry, but it is used for supplying information related to electronic prescribing. The physician either directly or through a vendor submits the transaction to obtain formulary and benefit pointers. Benefit pointers being the BIN, PCN, Group and Cardholder information as well as getting the formulary ID, the alternate List ID, the coverage ID and the copay ID. That information. And then the cardholder information can then be sent on the new SCRIPT prescription transaction from the prescriber to the pharmacy to assist the pharmacy with the billing. The X12 270/271 transaction can also be used to obtain medication history as the response can contain claims and fill data as well as the eligibility verification information.

Since the implementation of the version D.0 standard, we have — NCPDP has created 15 new versions of the telecommunications standards. That was basically because there was a requirement from the industry to add 33 data elements. There is information about clarification on controlled substance reporting. There is a number of information, new reject codes, and so on. I don’t want to go through all of them because they are provided in the written testimony.

Again, we surveyed our membership and they provided the following information about the value of the transactions. For the most part, the version E1 transactions from the D.0 standard and the 270/271 transaction met the pharmacy’s needs for basic eligibility and benefit information. There have been some work arounds that have been developed to support the business requirements that are not currently being met in the adopted versions.

In addition, there have been some requests from the pharmacy industry to add some new values for the 270/271. There is a work around in place that is being used to support the additional values that were required in the 270/271.

As far as volume is concerned, the information that we received is the E1 transaction. It has about 18 million to 48 million transactions occurring a month. And on the 270/271, there is approximately 50 to 80 million transactions that are performed a month.

As it relates to barriers, the barriers that have been identified are typically being addressed through work arounds and there have been some requests to provide updates to the standard.

Quickly, one of the opportunities that I just wanted to mention because this came through. There have been some requests for workers’ compensation, which is not currently a covered HIPAA — they are not covered under HIPAA. But some of the states are now mandating the use of the HIPAA versions of the standards for workers’ compensation. There is going to be a need based on the workers’ compensation needs from the states to add some additional values and fields into the standards so that it can be appropriately used. Today they are modifying the standard to accomplish what they need to do.

I am not going to go through the rest of the testimony since I am out of time. The information is contained. Thank you.

MS. WILSON: Members of the Subcommittee, I am Sherry Wilson, president of the Cooperative Exchange, representing the National Clearinghouse Association and executive vice president and chief compliance officer of Jopari Solutions. I would like to thank you for the opportunity to submit our testimony today on behalf of the Cooperative Exchange membership. Thank you.

A little bit of background on the Cooperative Exchange. Our 26-member companies represent over 80 percent of the clearinghouse industry. We support over 750,000 submitter provider organizations. We maintain over 7000 plus payer connections and over 1000 IT vendor connections. We are processing over 4 billion claims transactions annually with a value of transactions of $1.1 trillion.

Our support of our testimony today is my colleague Laurie Darst from WEDI and had mentioned. We did a collaboration, a survey with WEDI to health plans and clearinghouses between May 12 and May 27. In addition to that survey, a second joint WEDI Cooperative Exchange transaction survey was conducted of the clearinghouses specifically to help us to identify further submitter and payer transaction usage, volume, form and application between May 12 and June 10. The survey results conveyed through our testimony today are focused on the second WEDI Cooperative Exchange transaction survey results, representing over two-thirds of our membership. As you can see from the table, over 88 percent of the clearinghouses support the eligibility transaction.

In terms of value, we strongly believe the eligibility transaction is key to the success of being able to automate end-to-end workflow processing. Unfortunately, as we reported this morning, the expected benefits have still not been realized by the stakeholders.

In terms of barriers, there were four key identified issues that we found from the clearinghouse perspectives. Payers, the issue of disparate systems impede real-time processing and are sending incomplete information at the time of inquiry, again, impeding adoption and providers seeking other methodologies to obtain information.

The second barrier. The current transaction does not support the emerging business needs. Patient benefit plans are becoming more complex and that complexity is not always communicated and/or supported in the eligibility response.

The third barrier that we identified is although the transaction supports the ability to send a request at the granular level, most payers do not respond at that level of detail, which again impedes adoptions providers seeking other methodologies to attain information.

And the fourth barrier is that many practice management systems do not support the transaction capability and/or integrated user interface to enable automation of the eligibility workflow process for the provider community.

In terms of our response to opportunities and recommendations, many of the content barriers today have been addressed in the next iteration of the 270/271 transaction. I have been actively involved over the years with X12 in this and it is very exciting and to Annette to address your concern about property and casualty. The future transaction does address those data content elements.

There are four specific key recommendations we would like to make to you. One, encourage payers to respond to the granularity of the eligibility request. Second, encourage practice management systems to become HIPAA-covered entities. It is critical to automate the end-to-end workflow process. We require the capability to be able to send and receive eligibility transactions and automate this aspect of the workflow.

Third recommendation is we recommend WEDI to facilitate the industry forum, for stakeholders to address identified barriers and strategies for remediation. Lastly, a recommendation is further research be completed to confirm that the next HIPAA version will remove industry identified barriers and ensure ROI before adopting and again as other members have already recommended that there is a staggered approach to the transaction, but also that you take into consideration the interoperability of the transactions ensuring that related changes are not negatively impacted by such an approach.

Thank you for the opportunity to testify this morning.

MR. SOONTHORNSIMA: Thank you. Since we have a few minutes, let’s go ahead and open for public comment even there is still Part 2 to this.

MS. WILLIAMSON: We have one comment. They do not indicate who they are directing this to, but the question is how does your survey differentiate between the responses for clearinghouse versus 270/271 for eligibility. I am guessing it may be for Laurie or Sherry.

PARTICIPANT: Can you repeat that one more time?

MS. WILLIAMSON: How does your survey differentiate between the responses for clearinghouse versus 270/271 for eligibility?

MR. TENNANT: I think what we found is there are a lot of our guys sent all of the transactions through the clearinghouse, let alone — I think, George, you mentioned 90 plus percent of claims comes to the payer electronically, but they certainly do not start electronically in the 5010. I am going to talk about that. We have more data on that for tomorrow.

What we found was there is many ways that providers get that information. Fax, phone, web portal, clearinghouse, and direct to the health plan.

PARTICIPANT: Just to note, that question was from Jim Wicker.

MS. WILSON: Sherry Wilson. Just to add a comment, what is very important when we look at further study that we are recommending in the transaction, all of us have pieces of the puzzle. We understand the methodology that we can measure through our survey on the web portal, the use of X12 transaction or facts. But what is missing is the utilization by phone. I thought, Rob, your survey when we began to look collectively at information, there is a high value of phone utilization. Again, are they getting more value from the phone or the web versus the transaction itself? Again, a further study can help us identify that information. We really don’t have a complete picture.

MR. SOONTHORNSIMA: Before we continue, are there any questions from our members? We have one from Walter.

DR. SUAREZ: I have a couple of questions and comments. One is for the various testifiers that provided survey results. I am hoping that we will get a copy of a more detailed description of those results in addition to all the information you provided here. I understand that the industry has actually done a lot of surveys in preparation for this review committee hearing. It will be very valuable to receive the report of those results.

One lingering theme I guess that I heard through a few of the testifiers was the need to have or consider a new eligibility transaction based on the transformative changes that we are experiencing in the industry particularly the integration of care delivery and payment reform. I wanted to ask a little more about that. What do people see in terms of the future of eligibility under this new forms of integrated care delivery and payment reform in which potentially there would be not be eligibility too much because the integration of the systems and the expected bundle payments, for example, and population-based analysis of information and reimbursement mechanisms that are not based on volume, but on value, will potentially move us away from having to do a lot of eligibility process. But I wanted to ask that question. How do you see the future of eligibility in light of these new changes in the industry?

MS. DARST: This is Laurie Darst representing WEDI. One of the pieces that I did not get to in my testimony — and this really goes across all transactions. This is one of our recommendations. I think it is a whole new world out there for all transactions and we need to step back, stop thinking about fee-for-service and start looking for fee for value. We need to look at every single transaction. We need to do it now.

MR. TENNANT: Rob Tennant at MGMA. Never to go against Laurie here, but the macro law clearly is not getting rid of fee-for-service. That is first. Fee-for-service is not going anywhere. There is still going to be a need for these transactions.

But the transaction is really two parts. It is patient financial responsibility and eligibility for services, which are two different things. Certainly, the financial piece may change if they are in a bundled payment situation, but it is not going to change in terms of will a service be covered under the agreement. I think that is still going to be key.

We also alluded to the fact that part of the new world of health care is these high deductible health plans. I think what we have seen is if you don’t do an eligibility request at the time of service that bad debt essentially skyrockets. Instead of they didn’t pay a 20-dollar copay, now they owe $500. What we found in the industry is it is almost impossible to get the money once the patient has left the office. Days in AR or accounts receivable skyrocket. I think it is even more critical quite frankly that we have not only a real time eligibility, but one that gives back to the provider the information they need.

MR. ARGES: I want to support Rob’s comments. I think he did an excellent job of basically summarizing the purpose and need despite new models that are developing.

I want to echo the growing trend towards higher deductibles because that is something that providers really need to have good information when they do an eligibility inquiry and expect a response.

I don’t see the need going away. I do think it will change. I do think that there are other variables that may need to be considered and may be explored. But by and large, I think there needs to be just a deep dive in terms of how to improve the existing transactions so that they meet the current needs as well as tomorrow’s payment model needs.

MR. NICHOLSON: Dave Nicholson. I would like to add one point to that and that is when you do the eligibility verification for the payment, many times you will get back that the person is covered, but you don’t know where in the payment window or the benefit window they are. If they have paid in the first 30 days, the provider gets paid. In the next 60 days of the 90-day window in some of the new exchange products, the provider is on the hook for the fee. It is important to get the full information when you make the request.

MS. PHELPS: Ruth-Ann Phelps, Veterans Affairs. I just want to make a comment that VA does not build the same way community hospitals bill for care. We have what we call reasonable charges for episodes of care. It is not an itemized invoice that comes from the patient stay.

I just want to comment that even though we have a different kind of billing model still the 270/271 is very useful and will continue to be useful. I think it will be useful even though there are different payment methods.

DR. MILLER: I appreciated the question. This is Ben Miller of Colorado. I think because we are dealing and often times with mental health, with legacy systems that silo out that mental health benefit eligibility and looking at future alternative payment models really are going to have to do a lot of catching up to where I think practices already are. Practices are doing this daily and there does not yet exist payment reform or benefits that support that. However this group and this committee continues to pursue looking at alternate payment methodologies, looking at the role of mental health and seeing how it has been so isolated will be a big challenge.

MS. WILSON: I wanted to comment on Dave’s comment about the transaction and the need for more transparency on payment. The AMA a few years back had addressed, Dave, some of the considerations and more transparency on the payment, the different contracts as we have up on the board there. Very important to be able to mitigate the financial impact and understand who the contracts are and the secondaries and the intermediaries.

I highly recommend that a lot of work has been done to really meet the business needs. Many change requests have gone into this transaction to address some of the comments that we have made today. Again, looking at WEDI and working with NCVHS to do a gap analysis on what is needed again. Workers’ comp has been addressed in these new transactions and that we do a gap analysis to again identify the functionality that does not solve the issue of business process with real time response.

DR. MAYS: Let me thank the panelists for a lot of very good information. I appreciate the testimony we have received.

I want to actually go to Dr. Miller because I want to interrogate just a little bit more some of the mental health stuff. One of the things that you talked about is wanting to see a transformation. I am wondering if you could give us some more specific details in particular around what you have in mind.

My second question is and I am trying to understand what you might suggest, which is quite often one of the things that happens in terms of mental health is that the billing and some of the code sets really don’t come from us, the mental health providers, but are within ICD. And then what happens there is that when there is billing, you become invisible. I am trying to get a sense of in terms of the clinical data that we need, if you have any suggestions about what problem is then created.

DR. MILLER: Bill Miller, Colorado. Thank you for the question. Again, I do want to applaud the committee for addressing mental health. This is something that having listened to some of these, I have not heard very often and so I think it is an appropriate time to bring this up. With regard to your first question around transformation and what this might look like, I think what we are starting to see at a rapid rate are practices assume risk for certain conditions like mental health, medical practices that they historically have not done before. I can give you examples from states all over the country.

What happens though inevitably is that to make that work from a financial perspective, they have to have enough penetration of a particular payer to make it worth their while to manage those patients that they are seeing. Transformation really gets rid of the referral, the R word, and makes the care for mental health often times seamless in the context of that visit in a primary care setting.

We are also seeing in a much more macro scale regionalized where regions might look at ways that they can hold practices or systems accountable for patients that have comorbid mental health conditions. Therefore, attribution and accountability is at a much more grander scale than we have seen previously.

With regard to your second question around billing, this is fundamentally I think one of the flaws. I will address this a little bit later in another testify. It is foreshadowing in some ways. But the mental health system as a whole has been relatively behind in its ability to look at electronic transactions. Some of the medical records that have been purchased are not as mature or sophisticated as those on the medical side for multiple reasons. But your point about being relatively obscured and somewhat invisible I think stands. In future testimonies, I will address that.

MS. GOSS: I would like to defer to Linda Kloss to make a comment.

PARTICIPANT: I don’t know if Linda is still there.

MS. KLOSS: I am here, but I have no questions at this time. I think it was terrific —

PARTICIPANT: We seem to be having a little bit of background construction. We did not really hear that.

MS. WILLIAMSON: The comment she posted that they were very clear and that things were emerging.

MS. GOSS: Actually, I had questions on price transparency, et cetera. I think they tackled my question without me asking it. Thank you.

DR. SUAREZ: This one is about one of the themes that the National Committee has been working on for a few number of months now and it is the theme of convergence and convergence in the sense of how much the world of EHRs and clinical standards, clinical data and information exchange standards are beginning to in some ways, many ways, converge with the world of administrative transactions. Eligibility is one of those areas.

The question I guess is to what extent do you see into the future the EHR systems having actually the capability of firing out an eligibility transaction rather than depending so much directly from the practice management systems. In many places, there are still those two worlds. In some places, there is already a convergence of the two worlds into one system that provide both the EHR side as well as some of the administrative transactions. I wanted to get a sense of your perspectives on that, which actually probably will apply to many of the other transactions that we will be talking about in this hearing. Eligibility is certainly one of the ones that in fact had been considered by ONC to be part of the standards that EHRs would be expected to meet as a certification criteria. Your perspective would be very appreciated.

MR. TENNANT: Maybe I will start. I will work backwards, Walter. They certainly did suggest in the stage one meaningful use proposed rule that the 270/271 and the 837 be included, but quickly realized that they have nothing to do with the EHRs quite frankly. They pulled back on that.

When we think of integration, what we have heard are a lot of practices run one vendor EHR, another vendor is PM and they don’t always interface well. But even when they are running the same product so vendor A and vendor A in terms of EHR and PM, they still don’t interface well. I don’t think we have quite reached the point where they have created one product. We have not heard that. There is still a very distinct need for the administrated data.

But I think your overall point though is spot on and that is a lot of the transactions, prior auth, the claim, certainly the eligibility require clinical data t support the transaction. We have to think about as an industry what is the best transport mechanism to get that clinical information to support a prior auth or support that. Obviously, the claim attachment standard, 275, is probably an obvious solution to some of these problems. I know later on we recommend moving ahead with that.

But even if it were direct, using the direct methodology, any way that automates the transfer of the clinical data to support the administrative, we would be in favor of because right now it is all faxed. That is just very burdensome.

MS. WILSON: Just to lead on that, the clearinghouse industry has been very much engaged and what we refer to as interoperability. The convergence of clinical and administrative transactions continue to be — and to further that adoption and property and casualty as you have heard from prior testimonies from me is that the industry requires an attachment with each claim. It is widely used and it has been used for many years. The convergence we see is already there. We are already using it functionally in workflow process. However, further adoption having attachment standards will help indefinitely improve adoption. But it is actually being used today and very heavily within the clearinghouse industry.

MR. SOONTHORNSIMA: Very good. Are there any other comments? Hearing none, thank you very much panelists and thank you for bearing with the background noise. It is 11:38. Can we come back at 12:40? We will start. That we can buy us some time.

(Lunch Break)

A F T E R N O O N S E S S I O N

Agenda Item: PANEL 2: Health Plan Eligibility, Benefits Inquiry and Response (Part 2)

MR. SOONTHORNSIMA: We will continue from our morning discussion on the second part of Panel 2, health plan eligibility, benefits inquiry and response. Terri, can you kick us off briefly?

MS. DEUTSCH: Absolutely. For those that were not here this morning, we just wanted to go over some more of the logistics. We would like to remind you to do your five-minute presentation and supplement it with your written documentation or written testimony. We have the five-minute clock here. When it turns yellow, you have one minute. When it turns red, you need to stop. Make sure that you please identify yourselves when you answer comments or questions and also when you begin your presentation so that as they record the testimony, they will know who is saying what.

We had fire alarms this morning. We should not have them this afternoon. We had drilling this morning. We should not have them —

At the end of the panel, we will have about ten minutes for the public comment and then we will follow that with the subcommittee asking questions. The next group, which will be Panel 3, please get ready to come to the table as soon as we start doing the questions and answers and we will quickly change the names and then we can just proceed from that. Thank you.

MR. SOONTHORNSIMA: Thank you, Terri. Let’s begin with Merri-Lee from Aetna.

MS. STINE: Hi. My name is Merri-Lee Stine. I am a senior project lead at Aetna. As one of the nation’s leaders in medical, dental, pharmacy, group life and disability insurance, we have over 23 and a half million members. I am here today to provide testimony on behalf of Aetna and coordination with America’s Health Insurance Plan.

AHIP’s members provide benefits to more than 200 million Americans and they process millions of claims, eligibility requests and payments along with other administrative and clinical transactions on a daily basis.

My discussion today will be regarding the ability of the currently adopted standards and operating rules to meet the current and near-term needs of the industry specifically from the perspective of a health plan.

The currently adopted EDI eligibility transaction provides a rich transaction that has the ability to describe many types of plans and the benefits in those plans. In addition to that transaction and that is the 270/271, the CORE operating rules have added specific requirements around data content that create a consistency and support of the 270/271 across our industry. Unfortunately, the transaction and its associated operating rules were written before many of the plans and benefits that we are communicating today were developed.

Some examples of benefit types that we struggle with today in communication within the transaction and their associated operating rules are things like the order of financial responsibility. What applies first? The copay or the deductible? Do we apply co-insurance if we have a copay? Multi-tiered benefit plans. Those are benefit plans that can change with usage. Plans with multiple and network levels of benefits. We have talked today already about the challenges of the federal and state exchange benefit information specifically that delinquency grace period for subsidized exchange members.

There are other complex plans or network arrangements too that have been developed in more recent years that the transactions struggle with. Now, we participate and commend X12 on working to enhance the implementation of these standards to address many of these issues. We do anticipate that many of them will be addressed in the next version of the 270/271.

One example that we see being addressed is separation of some of the code lists from the transaction implementation guides themselves, things like a product type code or a service type code being separated from the guide allows it to be updated on a more frequent basis to keep up with our industry and the plans that we are trying to communicate. They are handled by separate committees and can be updated three times a year so that we can communicate more up-to-date things like in a service type code. Telemedicine is an example. That did not exist when these guides were written.

One of the things that I would like to really communicate and it is in my written testimony is that we need to move forward. X12 is drafting new guides. Once those guides are drafted, certainly, we need to look at the operating rules around the guides, but we need to get forward, get to those next versions so that we can all benefit from the important changes that are being made in the industry.

AHIP surveyed its member plans as well. And the respondents agree that the transaction generally meets the needs of the industry, but there are opportunities for improvement in the areas that I mentioned previously.

Another area though that the plans noted, the member plans noted is that the providers would like to see more specificity in the details on the 271 response. I think we heard that in Part 1 of the testimony on this panel. The things that they would like to see is benefit details for specific services, benefit details based on location of the service.

Ultimately, the transaction meets the needs, but it can use some updating. We support and participate in both the development of the standard and the operating rules around that. We believe that the industry has come together with the development of the operating rules. We have gotten to be more consistent in the transaction that is being used today, but more work needs to be done around that. We just need to keep moving forward. That is a message that we would like to convey today. Thank you and thank you for the opportunity to testify today.

MS. KOCHER: Good afternoon. Gail Kocher from Blue Cross Blue Shield Association. I won’t repeat our beginning remarks, as you all have heard that this morning. With respect to the health plan eligibility, benefits inquiry and response, our plans find that this transaction is of significant value to them as well as provider customers. Use of the eligibility transaction is high across all plans, even smaller plans. We believe that there is a relationship between lower volumes of inquiries by a phone and higher volumes of eligibility transactions. Although it is not going to be a directly inverse relationship.

Plans do find some providers conduct a 270 inquiry several days or more ahead of a member’s scheduled appointment and then another check the day before or day of a visit. Some plans are finding that clearinghouses are sending eligibility requests prior to claim submissions in order to assist with ensuring member data on a claim is more accurate or results in a cleaner claim.

Even with significant use, plans have identified that the current standard is being enhanced for future versions to address newer models of networks and products, for example, tiered benefits. Without the ability under the current versions to better codify new products and benefits, plans must use more free-form text messages to communication information, which is more difficult for provider systems to consume. In some cases, this drives up follow-up call volumes due to the limitations in the current standard. In the future, the ability to react more quickly to new products and benefits through the use of external code sets and more flexibility in the standard is a significant opportunity for the eligibility process.

Plans are also seeing greater use of the standard for non-HIPAA purposes such as member out-of-pocket estimation. However, the standard is currently not as conducive to greater use for consumer solutions. Consumer tools enable the member to electronically request their benefit information and often use the 270/271 to move the request and response from the tool to the health plan and back. But the standard was designed for use between covered entities, the providers and the health plans, not between a member and a health plan. Consumer uses of the standard and the ability to more readily accommodate them in future development is an opportunity that might be considered. I alluded this morning to also the concerns of data stewardship in the information as it moves between consumer tools, the health plan and back.

While plans have been able to work with the current standard for the consumer tools, they have indicated that the operating rules in some cases present challenges related to system availability since the same channels are used for both purposes. Those are the remarks that we have with respect to the eligibility.

MS. EADES: My name is Stephanie Eades. I am here on behalf of AHIP, specifically the long-term care member companies at AHIP. I would like to speak for a few minutes about the challenges faced by the long-term care carriers as it relates to the 270/271 eligibility standard.

The presumption under the standard is that as the information is passed back to providers that they have meaningful information that they can then use to determine patient co-insurance, financial responsibility, as well as coverage under the product, the benefits under the product.

Long-term care is a unique product in that that fundamental assumption is flawed because there are certain eligibility provisions that have to be satisfied prior to communication of actual benefit eligibility. For long-term care, we start with having to determine the insured’s eligibility, which is dependent on plans of care, certain benefit triggers that have to be satisfied. We have to establish that individual insured’s eligibility. Then we have to look at the provider’s eligibility and specific plan of care, which speaks to the specific type of provider, the kind of service that might be provided in the context of the inquiry. Those dependencies have to be established before then can provide benefit information.

The current standard transaction does not contemplate the communication of anything of that level of specificity. As a result, when long-term care is providing a 271 response, we question the meaningfulness of it to a provider.

We can provide you with a plan name. We can provide you with a status of the plan coverage. But that really does not tell you if that individual is really eligible for benefits and we don’t have a mechanism in the current data content to even communicate to you where we are in that process.

In addition, things like real-time response are not really meaningful because unfortunately, there is a life cycle that has to happen before we can provide benefits under the coverage itself. That is one of the challenges is this dependency and the lack of the ability of the data content to really address that.

The other item that I think is unique to long-term care speaks to the patient financial responsibility components. The idea of co-insurance deductibles and copays don’t really fit with the product model for long-term care. While many plans do have a component where the patient is responsible, has some financial responsibility, we don’t have a mechanism where we can really communicate that.

I will give you an example. Many plans what is called an elimination period where there is a certain number of days that the individual is responsible for. There is not a mechanism today for us to communicate that. We are basically sending back zeros or null values and again not very meaningful to the provider because it does not accurately reflect that there is patient financial responsibility.

Those two elements provide some real challenges I think with the meaningfulness of the data that is provided in the standard today as well as the value of the standard to the provider.

We would also like to highlight that most long-term care benefits are paid directly to the insured. And obviously, this standard is about the communication between the provider and the carrier. Because long-term care is so infrequently actually assigned to a provider, we see no utilization of not just this standard, but really any of the EDI standards. As a result, we don’t have a lot of opportunity to really even vet the value of the transaction. We find ourselves in an environment where we are spending money to be compliant with a standard that we really question the value of it as well as we have no utilization of it in practice.

In that context, we would just encourage the committee to consider the uniqueness of the long-term care product as well as other similar types of supplemental health products. The specificity of the information that is contained in the standard itself, in the data content and how that applies to the long-term care products and focus on the meaningfulness of that exchange of information and also we would appreciate the opportunity to talk about the lack of utilization within the long-term care segment.

Thank you very much for the opportunity to testify.

MR. SOONTHORNSIMA: Thank you. Rich, Medicare. Rich Cuchna. Melissa, let’s go to you.

MS. MOOREHEAD: Hi. Thanks. I am Melissa Moorehead. I am representing the National Medicaid EDI and Health Care Operating Standards Sub Work Group, which I will refer to as the NMEH OS in the future. We would like to thank you for the opportunity to offer testimony to this committee as you are seeking to review the adopted HIPAA standards, code sets, identifiers, and operating rules, which is a very large task before us.

NMEH OS is an informal voluntary group, which seeks to educate primarily, educate state Medicaid agencies about HIPAA administrative simplification EDI regulations and to offer SMEs formed to collaborate on implementation issues.

We allow participation from state employees and vendors who support the agencies and participants are generally quite involved in implementation projects. By and large, our membership support attempts to standardize EDI and have found benefit in the standard transactions as they have been implemented under 5010 upgrades.

However, there is some tension between standards and operating rules and their applicability as commercial insurance industry and the way that they play out in state health plans. NMEH often wonders whether the standards development process may need a little more flexibility to consider the differences in Medicaid business model.

We would like to share the experiences that we have had in monthly calls with our stakeholders since 2011 when the workgroup formed to raise awareness of the changes that Section 1104 would bring in the operating rules. And in addition to prepare for this testimony, we solicited some direct feedback with the questions via email and also did field a survey to try to capture qualitative information per question from the survey. Where I have quotes in my written testimony, I refer to them. Those were lifted from comments made on the survey.

Regarding the 270/271 eligibility transaction, this is a standard transaction that is very widely used although several states reported that they have web-based portals that are often more useful to providers because the information available on the portal is not constrained by the operating rules and is therefore more robust for the providers.

Some believe that increased volume since 5010 and operating rules is due to clearinghouses making large batch inquiries fishing for eligibility or predetermining eligibility and have identified a few problems with the transactions itself and also had some difficulties interpreting how to implement operating rules in the Medicaid environment. I do note earlier that we have discussed to some extent the different between the financial eligibility component and the service eligibility component. Both of these are also problematic in the Medicaid arena.

From the beginning, we had implementers who believed that some requirements of the operating rules were incompatible with X12 transaction implementation specifications as well as with the Medicaid processes. There are several state Medicaid agencies that whose eligibility processes reside in agencies in IT systems outside the state Medicaid agency, which necessitated much discussion as how to apply the operating rules as that agency was not thought to be covered by the mandate and any funds available to implement changes were specific to Medicaid transactions. That was problematic.

It also tends that the eligibility process for Medicaid is highly manual. More than one state referred to it as a shoebox process and can change over the course of time both upstream and downstream from the eligibility request and the service provision. There was a great deal of angst about how to return specific patient financial responsibility at the time of the eligibility response and a recognition that that determination of financial responsibility may not hold over time and concern that the beneficiary would either be denied services or required to make payments when it was inappropriate as well as concern for the provider. Obviously, it is much easier to get the payment that the point of service is trying to follow up later.

The operating rules intensified the tension there as it required financial responsibility response on the 271 and the 271 transaction standard was found to not be flexible enough to allow for a range of possible financial obligations. The result is that many states implemented a compliant transaction with unreliable data, which is not felt to help the provider.

The inclusion of the multiple service type codes on the eligibility response was also problematic for states that had no need to use some of the codes since their health plans were not that explicit. Again, having to create a compliant transaction created the use of codes that did not have any meeting for that particular eligibility transaction, which increased call center volume.

Actually many commented that the service type codes were themselves not well defined enough to make progress towards uniform responses. I was very glad to hear also the theme of convergence come up earlier and with the new payment models. Over the course of the years, the difficulty in applying standard transactions and operating rules in a managed care arena, which is where a lot of state Medicaid agencies are going that we find it difficult for Medicaid to fill in some of the standard transactions under the new operating rules in a managed care environment.

However, there were no specific recommendations for improvements in those areas possibly because an overarching theme is a desire for less turn in certain standard transactions and operating rules to allow for more complete implementation.

MR. SOONTHORNSIMA: Thank you. Chris, Practice Management.

MR. BRUNS: My name is Chris Bruns. I am the president of the Healthcare Administrative Technology Association or HATA. We are the national association for the Practice Management System Industry. I am also the head of product development for MedInformatix, a certified EHR technology. On behalf of HATA, I would like to thank NCVHS for the opportunity to present testimony today.

A quick background. HATA. We are nonprofit trade association. We incorporated just a year ago last week. We are very young. We provide a forum for the PMS industry and other affiliate stakeholders. Our mission is to serve as the representative voice to advocate and influence key stakeholders and government representatives on PMS software vendor issues. A few of our members include ADP AdvancedMD, HealthPac, InMediata, MDSynergy, Medinformatix, NextGen, Optum, PracticeAdmin, SwervePay, TransFirst and WorkCompEDI. We represent more than 250,000 providers.

On the 270/271 eligibility transaction set, HATA notes that it generally meets needs of our customers who are providers, but should provide more detailed benefits information in the consistency actionable format.

We generally feel that expected benefits have been not been attained from a provider perspective and they continue to check eligibility frequently by way of payer websites directly and/or telephone in conjunction with doing 270/271 transactions at the same time. It is just like a back-up system that many of them seem to implement.

General areas of improvement that we would like to see in the 270/271 transaction set and its implementation, which is equally important. How do members report that? Some plans tend to base their responses based on the NPI and taxonomy code submitted instead of relying strictly on the inquiry type as specified in the 270, which requires cumbersome extras on the 270 that restrict level of benefit response such as place of service type of service and provider’s zip code. We ask that the committee consider enhancing the available inquiry types and that 270 responses be based strictly on those inquiry types submitted in the 270.

On the implementation side of this, we would like to see real-time responses improve. As noted, they are often not as useful as we would like them to be as opposed to submitted in batch. Due to the discrepancies between eligibility of databases maintained at the different points where the 270s and 271s are submitted.

Third, we would like to see consistently including both participating and non-participating copay, co-insurance deductible and out-of-pocket maximum benefit information as well as the patients’ met amounts for those dollar amounts.

We would like to see support for all service type codes beyond the health benefit plan coverage, which are just 30. Most payers support the full list of available inquiry types. We find somewhere we have to submit 30 to get any type of response. We would like to see better support and expanded coverage of those inquiry types.

Fifth, we would like to see all plan product types included in the response files including names and descriptions and the associated provider networks.

Sixth, we would like to see the PCP NPI return in the 2100C Loop of the EBL. Providers increasingly must coordinate with specialists inside and outside of their practice. Clear identification of the patient’s PCP if it is available will allow providers to better coordinate across specialties.

Seventh, we would like to see the referral requirements information in the 271 response to reduce referral-related denials and phone calls that end up having to occur after the office visit.

Eighth, include prior authorization requirements per service type code in order to reduce denials related to benefit coverage, pre-certification and preauthorization requirements.

Lastly, accept inquiries for HCPCS Codes in the EQ02 segment to determine coverage and patient financial responsibility.

Thank you for allowing me to speak on this topic.

MR. SOONTHORNSIMA: Thank you. Let’s go back to Rich.

MR. CUCHNA: Can you hear me? Okay. Good afternoon. My name is Rich Cuchna. I am the acting director of the provider communications group within the Center for Medicare at the Centers for Medicare and Medicaid Services, CMS. I would like to thank the National Committee on Vital and Health Statistics for inviting me to testify and the opportunity to provide information on the currently adopted standards, operating rules, code sets and identifiers used in administrative patient transactions to the degree to which the affirmant meet current industry business needs.

Today, I will be presenting from the perspective of my area of responsibility within CMS. The group that I manage is the business owner of the Medicare Fee-For-Service health plan eligibility benefit inquiry and response transaction. With regard to values specific to this panel regarding the eligibility inquiry and response transaction, we believe the adopted transaction and standards and code sets and identifiers do meet the current and near-term business needs of Medicare Fee-For-Service. Medicare Fee-For-Service is achieving the intended benefits from the transaction, corresponding standards, code sets and identifiers.

Quoting from a September 2012 United States Government Accountability Office Report, comments from users of the Medicare Fee-For-Service eligibility inquiry response transaction we refer to as HIPAA eligibility transaction system “has to provide faster response times as well as more complete information and reliable service in the other beneficiary eligibility verification systems they use.”

Medicare Fee-For-Service has not conducted any studies, measurement or analysis that documents the extent to which the transaction and corresponding standards, code sets, identifiers have improved the efficiency and the effectiveness of the business processes.

With regard to volume, Medicare Fee-For-Service usage of the eligibility transaction is 100 percent real time. PEPs(?) transaction volume was approximately 907 million in 2013 and 1 billion in 2014. Medicare Fee-For-Service daily average transaction volume in 2015 is approximately 3.3 million including weekends.

For comparison, in 2014, Medicare Fee-For-Service internet portals eligibility transaction volume was approximately 53 million. Interactive voice response, IVR systems, eligibility inquiries was approximately 12 million. And eligibility calls to customer service representatives was approximately 900,000 through our Medicare administrative contractors.

With regard to barriers, the X12 standard and the operating rules at times conflict. An example of this is return of historic financial accumulators. The operating rules prohibit this while the X12 standard encourages it. This could lead to different interpretation and implementation by stakeholders.

The operating rule requirement to return financial information for every request for service type code or procedure code within the X12 standard. While the X12 standard had not been modified to accommodate resulted in the doubling in size of most Medicare Fee-For-Service 271 responses. For Medicare Part B, a 20 percent co-insurance usually applies.

It has been Medicare Fee-For-Service experience that the SOAP and MIME connectivity rule within the operating rule has a high degree of complexity for trading partners to implement.

With regard to opportunities, efficiencies and effectiveness could be gained by a limited number of testers, testing at the payer provider and submitter level to serve as proof of concept and better understand impact before industry adoption.

With regard to changes, the existing X12 business process meets the Medicare Fee-For-Service need. Medicare Fee-For-Service has submitted multiple change request X12 and the majority of these requests have been addressed. Collaboration and continuity between the X12 standards and operating rules could be beneficial. It creates a challenge for stakeholders if the next standard does not incorporate operating rules.

When making changes to either the standards or operating rules, we believe it is important to consider the return on investment impact versus process improvement and the complexity for each stakeholder. Thank you.

MR. SOONTHORNSIMA: Thank you, Rich. Gwen.

MS. LOHSE: Good afternoon. I am Gwendolyn Lohse from CAQH CORE and we are delighted to be able to testify today. You have written testimony so I am just going to highlight some points from that. Those points come from a number of sources. Examples of that is multi-stakeholder input we get on a daily basis such as 14,000 individuals that have participated on polling webinars in 2014, a survey we conducted specifically for this testimony, over 170 certifications on eligibility from a range of entities on a voluntary basis, and then the CAQH index, which tracks about 4 billion transactions on an annual basis.

You had asked CAQH CORE as the author, to do an overview of what is required by the rules. There is data content, specifically patient specific financials like copay, yearly deductibles, some of the service type codes that Chris was talking about and then also infrastructure rules like turnaround time, system availability, and a host of things to have the flow of the data. We have had reports and you will see in the documentation of the benefits of those specifically around reducing labor costs and improving collections for providers. There are case studies that have been done. Also, patients understanding their financials, which is a very important thing. I think you heard earlier today. More and more patients have bigger responsibilities. And then plug-and-play connectivity for some of the entities that are large volume users, trading partners. And then aligning learning around security practices with the clinical side so around digital certificates. Those are some of the benefits.

You had asked about usage and volume trends. Within the index, we have seen for the first year tract where that is 2013 of the mandate. There has been a 13 percent increase in eligibility inquiries. Previous years within the index if you look at the years where it is voluntary, which was there was a lot of early implementers within CAQH CORE before the mandate. There was over 105 percent increase. You will see that data.

The CORE certification before the mandate had about 60 entities that were CORE certified. Since the mandate, there is now over — I had mentioned 170 certifications. Most recently, good news is in the last few months, there are eight Medicaid agencies that have either completed their certification and their application is in.

You will see the majority of the projected cost savings for the eligibility and the operating rules goes to the providers about 88 percent and we have some estimates in there.

Challenges and opportunities. We focused on three things. Obviously, you have heard a lot today. One is vendor adoption. There are suggestions that the non-HIPAA covered vendors, especially the practice management system. Some of them are lagging in their adoption of the data content and the infrastructure. That may be due to the providers not knowing this additional data and infrastructure is available. They are not asking their vendor system for it. Also, because of the contracts are actually for a certain version and they would have to pay for an upgrade. That also is a challenge about real-time availability because if a hop is not included, it loses the real time from hop to hop.

We did outline some suggestions such as voluntary CORE certification for these non-HIPAA covered entities. For you as a committee to look at non-HIPAA covered entities and whether or not they should be HIPAA covered.

Health plan web portals. I am not going to go into detail. There have been reports that there is some more rich information on the portals especially around enrollment status and premium payment status. The CORE Board is looking at whether or not there could be voluntary operating rules in those areas.

Competing priorities is the third challenge. I think we have all heard that there have been so many HIT efforts out in the marketplace. There is a lot of competition. We did outline some recommendations about aligning HHS efforts around this and also incremental maintenance. CAQH CORE does promote incremental maintenance rather than a complete overhaul actually implementing maintenance on an ongoing basis. There is some more detail in the testimony.

For improvements otherwise, there were quite a lot of comments about data content, specifically more patient information. Patient-specific information both financial as well as the status of coverage. I think you have heard a lot about that today.

Additionally, COB information and there is some information in our testimony that there is demonstration that this information can be delivered at eligibility versus waiting until the collections afterwards.

Finally, addressing those growing services like long-term care, hospice carve outs. How do we get to that and make sure we are delivering very specific eligibility for those services including mental health.

On the infrastructure side, there is not a need right now from the majority of participants to increase the real-time requirements because not all the hops are covered. Until those hops are covered, you cannot time stamp. Let’s get all the hops done. There is interest to increase the security.

The process you asked for about updating the rules. There are three things. One is substantive updates that require a very balanced approach, multi-stakeholder voting. That means substantial changes to the implementers. And then next is non-substantive. And then the third is ongoing maintenance.

You will see there is a statement from the CAQH CORE executive multi-stakeholder board about their commitment to delivering content, infrastructure and also maintenance and the support for this ACA Review Committee.

To just wrap up on lessons learned, we did outline some lessons learned for CAQH CORE around continuing the voluntary core certification aligning with the other industry stakeholders. Whether the content is done by CAQH CORE or X12, we want to get it out into the market place and then some lessons learned for the federal agencies to look at such as the definition of non-covered entities and also when will certification and more focused on non-punitive enforcement occur because there are compliance issues and how do we address them not about finger pointing, but about adoption and moving forward. Thank you.

MS. BARBER: Good afternoon. Stacey Barber, ACX X12N chair. Thank you again for the opportunity to provide testimony. I think what we have heard so far this morning and this afternoon picking back up with eligibility is the 270/271 does meet the basic needs of the industry. However, we do realize and know that there are barriers to the current transactions that are being addressed with — have already either been addressed within the transaction or are being addressed in the next version that is being implemented.

We know that tiered benefits are a very large issue and the current work around for that is very manual. It cannot be codified and is hard for providers to interpret when they get the information because it is not easily automated within the response.

We have also heard this a lot today. We are going to start getting into the broken record thing. There are consistency issues in how the transaction is implemented. It is not that the transaction cannot support what people have brought to the table. It is an issue of how it is implemented and to the level of detail that it is implemented. Basically, it allows for general response, but when a general response is given, it degrades the information that is provided to the provider. But we do support service type code level specificity.

Coordination of benefits is handled within the transaction. PCP information can be reported. A lot of these things that we are hearing — the transactions already support. It can give you eligibility information to the procedural level. It does identify referral information. We do know that there are some gaps in there that are being addressed in future versions to more fully identify when a referral or an authorization may be necessary. We know that there are barriers that exist.

We also know that as a direct result of that is some of the alternative methods of using web portals or first response systems are even calling provider services at a health plan are used to fill some of those gaps.

But some of the opportunities that are in the future is we do have change requests that are in process that will address the tiered benefits and being able to marry different types of benefits together. There is enhanced error code reporting.

One of the key things that we will be taking place in the next version is the service type codes have been moved to an external code set, which allows for more flexibility of new codes being added and used within the transaction before a new standard or implementation guide is named.

Another gap that has been identified and is being addressed is the support of the dental industry needs and the reporting of dental benefits.

I would love to talk to Stephanie about what we can do for the long-term care so that we can address those needs as well.

I mentioned the additional functionality for peripherals and authorizations.

Again, the inquiry response transaction could be more efficient if stakeholders use more of the full functionality of the transaction. And we realize that some education may need to take place around how to implement that functionality and we are willing to work with the industry to ensure that that happens.

Another item that we see is that many implementers are building on XML-based solutions. X12 offers TR3 schema and if that schema were adopted, there would be more consistency and efficiency in XML-based transactions.

Again, we have the change request system that if you have a need, please come forward and enter your business need into there.

As far as the specific questions around operating rules, ASC X12 believes that data content should be addressed within our TR3 transactions. If there are gaps that exist that need changes that those be brought forward as change requests so that permanent solutions can be addressed within the transactions and not have to be addressed within operating rules.

There is also the thought that it does not work in real time, but it does work in real time and I think that a lot of people have proven that fact that it works in real time. Again, the level of response data may not be to the full extent of the transaction, but it does support and will support real time. Thank you for the opportunity.

MR. SOONTHORNSIMA: Thank you, Stacey. Are there any questions from the committee?

Agenda Item: Review Committee Q&A

MS. GOSS: Just a quick question for you, Chris. You had a very specific list and I am hoping that that list was something that X12 was already addressing in their current standards. I was trying to do a quick on the fly reconciliation. I am not I could do that. Have your business needs been brought forward to the SDO is my question.

MR. BRUNS: That is a good question. I don’t think I can say yes or no right now. I am going to guess no at least from HATA, the organization itself versus our members who may or may not have done such a thing.

DR. SUAREZ: Thank you very much for the testimony. I think with this panel we heard a lot of consistent support certainly for the value that this transaction provides. We also heard and I think to Alix’s point, we also heard a lot of issues with respect to the data content of the transaction. As Stacey points out, some of the data content might be not an issue with the standard itself, but an issue with the way the transaction is being used. Yet there are some data content improvements that can be done. I have a list of 25 different data content questions that have come out across. It has been very valuable in many ways.

One of the purposes of the hearings is to allow people to hear what others have in terms of questions or concerns and create the opportunity to exchange. For example, long-term needs now really being an important element to be considered. My question is really about the degree to which or not the degree, but more the timing and the speed at which this transaction could be adopted in its new version and particularly a question about the sequencing and the transitioning to new transactions.

It has been argued that if we try to move the industry into a new version for all transactions, it will be a relatively massive effort to really do all the new transactions at the same time. My question is more about the sequencing. To what extent this particularly transaction provides an opportunity to move earlier, faster with a new version or whether there is still a sense that we should all try to do the updating of the next version all together? That is one question.

The other question is about the idea I heard it a couple of times about externalizing code sets, a concept of — instead of embedding data code sets in the transaction, which locked them basically to be able to be updated when the transactions are updated. Rather having it be established and be maintained external to the transaction. Those two questions.

Is it possible to consider in a transition process to new versions as one of the early steps? And then the externalizing of the code sets from the transactions.

MS. BARBER: To answer the question about how fast a new version can come out, I think in a way we address that a little bit this morning with where we are within the development process. ASC X12 did complete a 6020 version of the transactions, but we have no intention outside of the attachments in recommending those because we know that there are still gaps that exist that we are addressing within the 7030 version right now.

From the timeline of how soon we can get a guide together, again, the underlying base standards 7030 will not be published until the end of this year. Once that is published, we can begin applying the changes. I don’t want you all to think that we are starting from scratch at that point. We have been working all along. We have been developing what the technical solutions are going to be hopefully at that time. It is a matter of getting the data entered into our development tool from our documentation that we have created.

As for many of the items that have been brought up that I jotted down, a lot of them are already supported even within the 5010 standard. Again, it is just a matter of people implementing a more meaningful response on the transaction. Now we do know that there are some gaps like with the tiered benefits and some authorization and referral information that is being addressed. I am hearing about the long-term care right now for the first time today. I would love to have the opportunity to talk to Stephanie to see what we can work with. We have technically cut off acceptance of change requests for 7030. However, if we identify something that can be addressed within the 7030 standard that is critical to the industry, we are open to addressing that.

As for the external code sets, today we have just mentioned the service type code, but ASC X12 is moving more and more to externalizing code sets so that they can be maintained outside of the standard to allow for external code sets and being able to update those on a more frequent basis. I don’t have a full list, but there are several other code sets that have been externalized. We are working on a process of creating a process within X12 that X12 will own those code sets. It won’t be a third party that will own the code sets like with the claim adjustment reason codes and some of the other code sets. X12 will own them. We are working through the process right now on that.

MS. GOSS: I am just curious. Do you have a thought process around big bang theory versus incremental transaction rollouts?

MS. BARBER: This next update I think will probably be big bang for some of the transactions. And then hopefully once we get this major set of changes that we have in the pipeline in, it would be more incremental.

MS. GOSS: So take 5010 up to 7030 and then maybe after we have done that overhaul then maybe a more sequenced approach I think is the word.

MS. MOOREHEAD: Melissa Moorehead, NMEH Operating Standards Sub Work Group. Regarding the speed of implementation for new standards, particularly if they are a mandate, I would caution that state Medicaid agencies IT resources are stretched very thin and I think tend to operate in a more reactive mode because of a variety of different HHS regulations specific to Medicaid.

We do hear that the Medicaid relationship with their providers identifies that providers still have lots of barriers to EDI in terms of connectivity, technological resources, and cost barriers to implementing EDI. Since the HITECH Act, one of the primary relationships between Medicaids and their providers has been the promotion of the EHR kind of IT resources, which takes up more provider bandwidth in the IT realm. As we do move into meaningful use, we do hear from providers that the long-term IT investment just in the EHRs has been more challenging than they realized. The addition of the practice management, the administrative transaction layer on top of that I think would be quite problematic for Medicaid agencies than the Medicaid providers.

MS. LOHSE: I know as the committee, you all have a very specific rule that you could issue recommendations and have a regulation within 90 days so taking that into consideration as I make these comments. CAQH CORE fully supports the X12 standard. It can deliver a lot of content. As an industry, we should consider the tools that we have available. The operating rules right now could incrementally add on 5010. A number of the content requirements that you heard before asking for a full overhaul into the next version. It is something that again a big responsibility as a committee 90 days. They were supposed to issue a regulation as HHS. Think about the investment that is made in 5010 and the additional value that is can already bring via the operating rules. That is the first comment.

The second one is the external ongoing maintenance. I fully support what Stacey had said. There is definitely value to have ongoing maintenance in some of these areas especially the codes that we are seeing. We see it in the CARC and RARC codes. With that said, it is very resource intensive. As we think about how to do this, which we should be doing as an industry for a lot of these areas where it is incremental maintenance and ongoing approach, how are we going to resource it? I know within CAQH CORE, just the CARC and RARC alone has been significant resources, which I am going to go over tomorrow. We should be doing that. We should build off of 5010 now before we overhaul. We can use the operating rules as a tool.

And then the ongoing maintenance of the code sets. We absolutely should be doing that and the process that CAQH CORE used or X12 could use just making sure they are appropriately resourced.

MS. KOCHER: Just wanted to comment. With respect to sequencing, staggering, whatever term we are going to use today, I think that I know that we did not have extensive discussions with our plans related to that for this round. I believe the NCVHS has previously made recommendations to the secretary. I think you will find there are pros and cons on both sides. I think that it is perhaps something that we might all want to reengage and discuss again because things have changed in the last few years. Health plans have exchanges, which the implementation times are very different than what we were experiencing before. Providers have meaningful use. I think we need to really perhaps have some discussions specifically on that before we start saying whether we should do one standard now and another standard next year and then there is the whole thing to consider related to the volume of changes. I think that perhaps — I know we are not prepared to say this would be the better approach versus we prefer it not this way. But I think that is something that we are all going to have to engage in over the next coming months or year or so.

MS. STINE: I would agree with Gail although that was not what I raised my hand to speak about. One of the things — once we do move to this next version of the 270/271 to blend the two concepts of future incremental changes as well as the externalization of some of these codes, we may find that with that new version and some of the externalization that is happening, we may find the pain points being somewhat less because of the fact that we are able to react to changes in the industry somewhat faster by having those code lists being external. Getting to this next version may help us to stay up to date and reduce some of the pain and need to incrementally update as quickly, not to say that we won’t, but it may help us take the bite out of that next step.

MR. SOONTHORNSIMA: Thank you. Are there any more answers? We have a question from Linda.

MS. KLOSS: My question is for Stephanie. I am wondering if her comments apply to other forms of post-acute care, home care, hospice or are they limited to skills and intermediate long term only. If they don’t apply then do we need also to understand these other unique perspectives?

MS. EADES: This is Stephanie Eades. My comments are generally applied to all the benefits that are typically provided under the long-term care insurance product. It includes an array of benefits, including those that you mentioned. We find that the challenge is consistent whether that is facility or home care, skilled nursing. The standard simply does not allow us for a mechanism to effectively communicate the true eligibility that might be available under the product.

MR. SOONTHORNSIMA: Are there any public comments? Hearing none. Thank you very much panelists. Why don’t we come back at two? We will come back at two and we will move to Panel 3.

(Break)

Agenda Item: PANEL 3: Prior Authorization

MR. SOONTHORNSIMA: Let’s go ahead and start our Panel 3, prior auth. Let’s start with Sam from WEDI.

MR. RUBENSTEIN: Member of the Review Committee, I am Sam Rubenstein. I am vice chair of Administration and Operations of the Workgroup for Electronic Data Interchange Board of Directors. I am also the chief architect for Revenue Cycle, Care Management and Business Solutions at the Montefiore Medical Center. I would like to thank you for the opportunity to present testimony today on behalf of WEDI concerning the adopted standards, code sets, identifiers and operating rules related to the Service Authorization/Referral transactions.

WEDI represents a broad industry perspective of providers, clearinghouses, payers, vendors and other organizations in the public and private sectors that partner together to collaborate on industry issues. WEDI is named as an advisor of the Secretary of Health and Human Services under the Health Insurance Portability and Accountability Act regulation and we take an objective approach to resolving issues.

Our comments on prior authorization and transactions. To support our testimony, WEDI conducted a national survey of health plans and clearinghouses that was previously summarized in prior panel testimony. Based on findings from that survey and from the multi-stakeholder input received from the Board of Directors Executive Committee, WEDI makes the following observations and recommendations.

Summary of findings. Feedback from the health plans and clearinghouses suggests that 278 service authorization and referral transactions are significantly challenging and are not contributing enough value or achieving intended benefits. In the absence of widespread adoption and use, the return on investment for prior authorization will remain low.

The 278 standards and transactions are difficult and frustrating for stakeholders to use and often times confusing to interpret. Stakeholders suggest defining minimum data content and potentially adding data elements and/or additional transactions to support business requirements, including but not limited not limited to attachments. Opportunities for improving prior authorization include educating users to reduce confusion and enable automation.

Adoption and use of prior authorization standards, transactions and operating rules could be more widespread. Compared to others measured in the survey, there is a high variability in usage of 278 transactions and operating rules, with 47 percent of respondents reporting extreme variability, 14 percent reporting moderate variability and 8 percent reporting slight variability, which may be causing confusion and inconsistency. Moreover, survey respondents have the greatest degree of difficulty with prior authorization, with 64 percent reporting moderate to extreme difficulty with the prior authorization transactions and operating rules.

Transactions have limited use in the area of actual authorization of services due to requirements for additional clinical and administrative documentation as well as other limiting factors. Forty-four percent of survey respondents reported moderate to significant use of non-batch transactions, such as the use of web portals for prior authorization and referral transactions.

Prior authorization transactions and operating rules are not providing value nor achieving intended benefits. Among the transactions measured by the survey, the prior authorization and referral standard ranks last in terms of value. Thirty-four percent of respondents believe that industry needs are being met by the prior authorization transactions, and 35 percent believe the transaction and corresponding standards, code sets and identifiers are achieving their intended benefits. Several organizations have indicated that they are getting value from the use of 278 as a means of electronically processing Notices of Admission transactions thus avoiding manual efforts.

Data must be more consistently available, accurate and complete in order to achieve the greatest benefits and address industry needs. Data requirements and content need to be clearly and consistently defined and utilized. Reporting of required data could be more comprehensive by requiring additional transaction capabilities such as supplemental loops and data elements, electronic attachments; identifying a patient’s primary care provider and health plan product information; or estimating copay, coinsurance and deductible costs. Survey respondents suggested improving prior authorization by adding business processes that support transactions such as the 278 Notification and 278 Review Inquiry/Response; and updating systems simultaneously to prevent technical barriers.

While lack of sufficient clinical documentation may be a common complaint, more specificity and granularity won’t necessarily lead to more value and benefits. Information must be integrated into workflows and avoid redundancies with other data provided in transactions to avoid overload and fatigue. Currently, efficiency is already a common complaint for transactions and more data will not necessarily alleviate the burden. Various application software must be enhanced to produce referral/authorization functionality at the appropriate strategic points for clinicians, reviewers and other support staff to facilitate effective, efficient clinical and administrative workflows and provide real-time responses.

Survey results suggest that significant cost savings could be achieved if manual processes are reduced and/or eliminated from the use of transactions and if interpretations are facilitated with clearer explanations of codes.

In conclusion, in recognition of the value of the electronic transactions, operating rules, standards and code sets discussed in today’s testimony, we would urge the Subcommittee to strongly consider the items noted above. Thank you again for the opportunity to testify. WEDI offers our continuing support to the Secretary and the health care industry.

MR. SOONTHORNSIMA: Thank you. Rhonda Starkey.

MS. STARKEY: Good afternoon. I am Rhonda Starkey, director of Ebusiness Services at Harvard Pilgrim Health Care, Boston, Massachusetts. Today, I am providing testimony on behalf of Harvard Pilgrim Health Care in coordination with America’s Health Insurance Plans.

The need for a reasonable and functional referral authorization and notification capability is critical within the industry. Current needs for effective prior authorization processes are not being met. At the same time, we are faced with the challenge to address the evolving nature of managing medical costs. Innovative clinical and administrative arrangements such as accountable care organizations, bundled service arrangements across provider types, and shared risk models continue to be designed, tested, and redefined. Efforts such as these push both the payer and the provider organizations to be flexible and responsive to rapid changes in prior authorization needs.

As a health plan that has implemented the real time 278, our strongest recommendation going forward is that the 278 inquiry and response transaction should be encouraged. In 2009, Harvard Pilgrim, a large multi-specialty medical group and the group’s application vendor established direct 278 request and response capability to support the medical group’s referral arrangements.

At the time of implementation, we as the plan, strongly recommended implementation of the 278 inquiry and response as well, in concert with the request and response. However, the vendor and provider chose only to implement the 278 request and response.

Less than nine months after the services were implemented in production, the medical group terminated the use of the 278 services. A high volume of duplicate transaction request has resulted in suboptimal user experience for the medical group. Use of the 278 inquiry and response transaction would afford the requesting provider the opportunity to identify whether a duplicate or conflicting request already exists and then act accordingly. But I think more importantly in addition, the transaction affords the servicing provider the opportunity to confirm the clinical and administrative scope of the referral before the first patient encounter.

Our second recommendation is notification capabilities to the service and provider be developed. The notification transaction could be an active outbound notice informing the service and provider a referral exists before or at the time of the patient encounter. A subsequent notification could also be utilized to inform and confirm any changes in the referral scope.

Because the notification capability would overlap portions of the 278 inquiry and response, use of at least one of the two could be utilized to more effectively provide information for the receiving and servicing provider.

From an additional industry perspective, AHIP recently conducted a survey of its member plans to solicit broad industry perspectives on the status of adopted standards and operating rules being evaluated by the ACA Review Committee. Twenty plans responded to the survey representing major medical carriers, dental carriers, Medicare, Medicaid health plans as well as plans offering long-term care, behavioral health or vision benefits.

Thirty-three percent of the plans who responded to AHIP’s survey indicated that the prior authorization standard does not meet current business needs while 44 percent indicated it only somewhat met their needs.

Health plans provided a number of barriers preventing successful use of the transaction. Nearly a quarter of the respondents attributed this to the need for multiple stakeholder adherence for the transaction to be successful. Several health plans reported that they have not received any 278 transactions from local providers or have received extremely low volumes.

A quarter of health plans who responded indicated that the current standard is not specific enough to meet current business needs of all the stakeholders involved in the transaction. Specifically, plans commented that codes are too generic and data content operating rules need to be developed so that providers can send more specific clinical information and a response.

Plans have found that the standards are not designed to support a conversation between clinical end users and thus plans and providers resort to alternative solutions such as portals, phone calls, and faxes. As a result, health plans often return a generic response that the provider should contact the plan. This has led to low adoption of the standard because providers see a direct phone call or fax as a faster alternative.

Plans responding to the survey emphasized that the standard needs to support more detailed clinical information from providers and when plans need additional information, they need a better mechanism for follow up.

Twenty-two percent of health plans also responded that alternative electronic solutions, specifically the provider portals, are a more robust solution to better meet business needs and result in a more complete and timely approval process.

Plans commented the portals allow for more fluid back and forth clinical discussion between providers and plans and that portals allow for the authorization referral process to be real time whereas not all 278 requests allow for an automated real time approval response.

In closing, industry action is needed to improve prior authorization requests and supporting business processes that can be fully utilized by the industry. Few industry stakeholders are afforded value from the transaction in its current state. Barriers to the industry, industry wide use of the transaction include the lack of vendor applications and lack of clinical application integration. Utilizing other prior authorization related transactions would benefit the provider business process and experience and would improve the value and success of the transaction across industry stakeholders.

Thank you for the opportunity to provide this information today.

MR. SOONTHORNSIMA: Thank you, Rhonda. Gail.

MS. KOCHER: Good afternoon. Gail Kocher, Blue Cross Blue Shield Association. The prior authorization is actually one transaction where our plans have reported little to no use by providers and that the value proposition for implementation is therefore much lower. The barriers they identified to adoption include complexity of the transaction and lack of an attachment standard. Prior authorizations often require a more conversational approach to exchanging clinical information between the provider and the health plan. Initial requests may follow up questions, which are not readily exchanged in the EDI environment especially when providers use a batch approach. Even when the real-time approach is used, plans find that some inquiries respond to this, which are not accessible for approval in that automated real-time fashion because again there is a medical review need.

While a real-time prior authorization can be a little more conversational, plans do indicate that providers find having the exchange through a web portal more convenient to their office workflows. The 278 has a greater clinical data content and therefore necessitates greater involvement by clinical staff than administrative staff to see greater benefit.

Flexibility to use newer business technologies to exchange the information, for example, XML schema through a web portal, would accommodate the need for a more iterative process for authorizations due to the need of additional questions and follow up between the clinical staff and the health plan. This would enable the focus of EDI resources on other transactions with much heavier use by providers.

Plans also indicated that they believe the adoption rates would increase if the health claim attachment standard were adopted. We have previously testified to the Subcommittee on standards that adopting standards for attachments that automate today’s largely manual processes, does have the potential to generate significant savings for all stakeholders.

MR. SOONTHORNSIMA: Thank you, Gail. Connie. Is Connie on the phone? Connie, you may be on mute. Why don’t we come back to Connie? Let’s go to Melissa from Medicaid.

MS. MOOREHEAD: Thank you. This is Melissa Moorehead representing the National Medicaid EDI and Health Care Operating Standards Sub Work Group, a voluntary organization made up of personnel of state Medicaid agencies and their support vendors, working on implementation projects for HIPAA 5010 standards, operating rules, transactions and code sets.

Together our testimony for this particular review committee, we did also a survey asking the questions of our membership on a list serve and collected largely qualitative responses. But as we discussed at the February Subcommittee on Standards Meeting and again to repeat what I think everyone has been saying. The general information I have about the 278 is that it is a standard and a transaction with very little uptake. Prior authorizations are considered very difficult to conduct electronically in a standard way. Web-based tools are more advanced again because of the iterative nature or the interactive nature of an actual prior authorization request.

Other web portals have been developed in order to help initiate and help providers access the 278 itself. But it was reported that many of these initiations resulted in suspense and required manual intervention as well.

Again, it was felt that in general the electronic 278 was too complex for providers to really understand and still did not address the need for clinical evidence. But there were a couple of specific recommendations for improvement. One because it is a single standard for a lot of different possible needs for prior authorizations. It was pointed out that it is trying to be all things for all people and it might be more useful if it was more focused on the four or five things that can actually capture well in a standardized fashion like medical transportation. It could in that case become optional for other transactions that are hard to capture in a very standard spaced way.

There was also — I think Rhonda actually delivered all the testimony. I could offer as well that there needs to be some more human-based approaches on some of the elements like medical necessity and that those could possibly be addressed in operating rules.

Thank you for the opportunity to address this committee.

MR. SOONTHORNSIMA: Thank you, Melissa. Let’s go back to Connie. Are you on the phone?

MS. LEONARD: I am. Sorry about that. I had the wrong number previously. Thank you for the invitation to discuss the CMS’ Provider Compliance Group’s efforts to reduce improper payments through the use of prior authorization programs. The administration is strongly committed to reducing the rate of improper payments and ensuring that our programs pay claims in an accurate and timely manner.

Prior authorization is used by many insurers to decrease utilization and unnecessary services and to make sure proper payment is made prior to services being rendered. Medicare Fee-For-Service prior authorization is a process through which a request for provisional affirmation of coverage is submitted for review before a service is furnished to a beneficiary and before a claim is submitted for payment. Prior authorization in Medicare helps ensure that applicable coverage, payment and coding rules are met before services are rendered.

In Medicare Fee-For-Service, prior authorization does not create new documentation requirements. It simply is a review of required documentation earlier in the claims payment process. The prior authorization methodologies used today are administered by the Medicare Administrative Contractors, the same contractors that currently process claims and conduct medical review. Clinicians complete the review of the prior authorization requests. Requests can be submitted by the Medicare provider or supplier or beneficiary through mail, fax, electronic submission of medical documentation or esMD system, or submitted through the MAC provider portals where available.

CMS has tried to implement a prior authorization process that is timely for providers and beneficiaries and allows sufficient time for reviewers to make accurate determinations. CMS has implemented a ten-day response time from the date of receipt of an initial complete prior authorization package. In addition, a prior authorization request can be resubmitted an unlimited number of times. Each non-affirmed decision is accompanied by detailed reasons for the non-affirmation. As these programs are for non-emergent services, CMS expects requests for expedited reviews to be extremely rare.

CMS currently has three prior authorization demonstrations or pilot programs ongoing today. They are the Power Mobility Device Prior Authorization Program, the Repetitive Scheduled Non-Emergent Ambulance Transport Prior Authorization Program, and the Non-Emergent Hyperbaric Oxygen Therapy Prior Authorization Program. All of these are in pilots or demonstrations so they are only in a few states outside the PMD, which is the 19.

CMS has learned many lessons from these programs. We have learned that there tends to be a steep learning curve from Medicare providers and suppliers when they first began submitting prior authorization request. This has led to CMS allowing additional time prior to the official start date of the program for submitters to correct and resubmit incomplete requests. CMS has learned that in addition to those provider types directly affected by the prior authorization program, education should also be provided to related provider and supplier types such as ordering and referring providers.

CMS aims to continue reducing improper payments. Prior authorization is proving to be effective in lowering expenditures and improper payments. The programs are helping to make sure coverage and documentation requirements are met before services are rendered and before the claims are submitted for payment. These programs are also helping to make sure the beneficiaries are receiving reasonable and necessary services.

Standards and requirements put into place for prior authorization need to be flexible and allow for Medicare Fee-For-Service’s definition and process. Strict guidelines regarding timeliness or decision timeframes could impede the Medicare progress and make it difficult for providers to respond to requests from all payers electronically. In addition, Medicare providers come in all sizes and have varying degrees of sophistication as it pertains to electronic submission. In order to be able to use prior authorization to its fullest extent, Medicare needs to be able to offer different solutions to providers. This may mean submission through a portal, submission through the esMD program in a PDF format, submission in X12 format and submission to a secure email as well as paper and fax submissions. The future needs to allow for the inevitable change of technology but not forget about also servicing the providers who have not upgraded yet electronically. Thank you.

MR. SOONTHORNSIMA: Thank you. Let’s go to George.

MR. ARGES: Hello again. My name is George Arges and I am with the American Hospital Association and again on behalf of our member hospitals, I would like to thank the committee for their opportunity to be part of this panel.

The prior authorization standard is the one that today probably is the least used among all the transaction standards. Yet it is probably the transaction standard that has the highest potential in terms of return. If you look at the CAQH index report, it indicates nearly $13 per transaction. It could be saved if this were utilized the way it was intended.

Why isn’t the transaction working the way it is supposed to? We have heard some people indicate here that perhaps it is too complex, that the providers need to have additional information submitted by them as part of that process.

There seems to be a maze of confusing rules and approaches around prior authorization protocols. I think it would be helpful if there could be some way that the health plans can get together to basically try and standardize some of those protocols so that it isn’t as confusing for the providers to figure out exactly what it is they need to provide and when they need to provide it. They often get this through a web portal or by talking to someone on the phone.

There also needs to be a way to basically bridge the health plan internal workflow so that the time that it takes to receive a request and respond to it is much quicker. Timely review, responses for authorization is completed in a more timely manner.

We do agree that there is lack of vendor support, but here again there seems to be the chicken and egg sort of thing. People are not using it and therefore why build a product that nobody is going to use. The lack of vendor support seems to be another driving factor in terms of allowing authorization routines to move electronically, using the standard.

Our recommendations. Obviously, we do think there needs to be an improvement in the understanding. Again, we will say — convene a multi-stakeholder work group to flesh out the understanding, the purpose, and the work routines that are a part of this process. Set out goals that indicate that there will be 10, 20 percent improvement from the current level of the utilization from the CAQH index.

The stakeholder work group needs to basically come with some recommendations that are open in terms of design changes if any to the transaction standard or business routines as part of that process, and to incorporate new operating rules that implement the best practices in the utilization of the standard.

The addition of adoption of the attachment is another important first step, I would agree with Gail on that, as part of the process. Modification of existing standards should be part of that only when we know based on the multi-stakeholder’s findings what those might be. Better operating rules for the standard to ensure that all parties are using them in the same way or provide information in the same consistent manner.

The additional education of users needs to also happen so that all parties to this process understand what they need to do, when they need to do it and the importance of the standard in terms of how it works.

But it does require a cultural, operational and policy change that furthers better working relationships among the trading partners to improve and remove the barriers associated with the existing low levels that currently exist with the prior authorization. I will stop there. Thank you.

MR. SOONTHORNSIMA: Thank you. We will turn now to Heather from AMA.

MS. MCCOMAS: Hi. I am Heather McComas from the American Medical Association. Thank you so much for the opportunity to be here today and talk about this important subject. Our physician members are very concerned with this topic. In fact, we had two resolutions on this very issue at our AMA annual meeting last week. It is very much on our members’ minds.

Overall, the AMA believes that prior authorization is over utilized currently in the industry and it should be restricted to outliers. However, we are realistic. We do recognize the fact that it will be continued to be used for the foreseeable future and as such, it should be streamlined and automated to reduce the burdens on physicians and practices.

Of all the functionalities that we are talking about today, I think that PA is really ripe for automation, if we think about how it impacts all the stakeholders’ industry. First of all, we know that prior authorization delays patient care. It prevents patients from getting timely access to the treatment they need to improve their health.

We also know that it poses time burdens on physicians and their practice staff as referenced in this literature cited on my slide. And of course, those time burdens translate into cost burdens for the physician practice. Finally, the process is costly and burdensome to health plans as well.

Our federation of medicine and AMA survey from 2010 revealed that this process is very manual. Most survey respondents indicated they did the process via fax. I always think that is kind of weird because we don’t use fax for most of our business, but this is such a fax-intensive process. It is very paper-based as well. There is a lot of use of payer portals. I am a little scared to hear all the mention of portals today because I understand that it can offer some real-time capabilities. But the fact of the matter is for providers, they are burdensome. They take them out of their EHRs, out of their practice management systems. They require separate log arms that pass for each payer. I am hoping that we are not looking at portals as being our ultimate solution here.

Our survey did show that there was very low adoption of standard electronic transactions for prior authorization.

Even that survey data was five years old, I think it is in line with what we still see in the industry. I think the word on the street is everyone says no one really is using the X12 278 transaction for prior authorization. In the storage reference, there is a low industry adoption shown by the CAQH index. Thirty-five percent of health plans and providers combined are currently using electronic prior authorization. I would suggest that that percentage is even lower because the CAQH numbers do include web portals and interactive voice response systems as well as the standard electronic transaction.

The million-dollar question here. Why is no one using this transaction if there could be such benefit to all of us? From our perspective, we really think that a lot of this stems from the fact that there are multiple gaps and automation for this overall process. I think there has been a failure of all of us to look at this as a complex process. Several people have used the word conversation. I think that is a great word. It is a conversation or a dance between providers and health plans. It is back and forth. It is not just a simple one and back transaction like some of these other transactions we are going to be talking about for the next two days.

If we look at this, we see multiple holes in the process. As several people mentioned in the last panel, the eligibility response does not currently require return of prior authorization and requirements to providers. Right from the beginning, we have a problem.

And then as Rhonda was indicating, there is only one mandated implementation of the 278. The inquiry and response and notification are not required. That is another issue. Other folks have been acknowledging the fact there are no data content requirements. It is another problem because the minimum standard is the plan just to have to respond pending or will get back to you. That is not a real answer. That is another issue with the transaction.

Finally, as multiple folks have mentioned, Gail among them, we need a standard for electronic attachments. Very often as we all know, prior authorizations require clinical data to support the request. Unless that part is automated, we are never going to automate this whole process.

I think these missing links also have downstream effects for all of us. For providers, if they send a 278 and they get the response back from the health plan saying pending. Give us a call. Why would I bother to send a 278 in the first place if I am going to end up on the phone? There is no incentive really to go to an electronic process at all.

For health plans, we know that the process is often very manual and the back end systems are human and labor intensive and that again points to more manual, less automated processes. And finally, as I think George or someone else is recognizing the fact that this is a chicken and egg scenario. The vendor is saying providers are not using it. Plans are using it. Why on earth would I invest my resources in developing this transaction?

What are we going to do about this? First of all, I think we do have some standard issues that need to be addressed, as has been referenced. The inquiry and response and the notification of the 278 implementations need to be mandated. We also need a standard for the electronic attachment.

Operating rules can obviously help with the eligibility response and providing prior authorization information. And also, we need to leverage operating rules around the 278 to require specific data content, require real answers beyond pending or contact payer in those responses.

This sounds like a lot of work. I would say that it is a lot of work, but I think it is really worth it. I think we can all join together in some kind of multi-stakeholder work group and George alluded to in sort of a save this transaction kind of movement. I think it would really be beneficial to all of us and ultimately will help patients, which I think is — save this transaction. I am selling T-shirts afterwards. I wish I had thought of that.

Real quickly, pharmacy pre-authorization. I think there has been a lot more activity in this area than in the medical services area. NCPDP as well all know has created a suite of electronic transactions to the support of pharmacy prior authorization. We expect a proposed rule by the end of the year, mandating their use for pharmacy benefits.

The one thing I would point out about this. There is one missing link here too as well that I think is well illustrated by this workflow that I took from a specialty pharmacy Times article. As we can see, the electronic pharmacy prior authorization process is triggered by a denied claim in the pharmacy. That is the same as it is today. And the reason for that is that providers are not able to identify pharmacy prior authorization requirements at the point of prescribing due to lack of accurate and granular information in the EHR formulary data. This is a huge issue. Until we fix this, we are not going to really have succeeded with the electronic process.

Ultimately, we need to finish the job with pharmacy electronic prior authorization, fix the formulary data issue. I would caution everybody. Unless we fix this formulary data issue, we will not see full adoption of these transactions on physicians. And also we are not going to prevent patients getting to the pharmacy and getting their claims denies and that leaves to medication nonadherence. Thank you very much.

MR. SOONTHORNSIMA: Thank you, Heather. Rob.

MR. TENNANT: I wanted to thank the Committee again on behalf of 33,000 members. We are very pleased to provide testimony on prior authorization. We, of course, did our survey, which showed that 52.8 percent of respondents claimed that the prior authorization process was “very challenging or extremely challenging” and another third said it was moderately challenging.

And what was interesting about the CAQH index, and I know George raised it first, was not only did they show that the adoption rate was extremely low. George put a nice spin on it and said there was potential savings that were significant. But more importantly, the fact that it was the most expensive transaction of all. There is enormous cost built into this system for provider groups. That is the challenge, but of course, it is a huge opportunity if we could further automate this.

Obviously, we have a lot of concerns that mirror those that you heard already.

I think one of the things that we have to remember and Heather alluded to it is this is really the only transaction we are going to talk about in the two days that dramatically and directly impact a patient. If any of you have been a patient and gone in and had to find out that I am sorry. We cannot make a decision on your treatment because your health plan has not told us whether or not they are going to permit it or worse, you have gone to the pharmacy with your script in hand only to have it rejected and then have to build in another day out of work to go back to your provider to see if you can get the right prescription.

I think what is concerning to our members is things are not getting any better. In fact, they are getting worse. It used to be that the workflow was you had some questions. You had to go the plan. Now the plan is requiring or many are requiring prior authorization for almost everything including generic drugs, which is extremely frustrating. I use that word correctly because I think of all of the transactions and there is plenty of frustration in provider environments. PA perhaps has the highest level of frustration because it is directly impacting the care that they are delivering to their patients.

One of the things we have to remember is that the vast majority of prior authorizations are ultimately approved. It is not like it is 10 percent are approved and the rest are denied. It is a dragging out of the process, which is incredibly onerous for the practice, but again very disabling for the patient.

I think obviously you have heard about the transaction itself being onerous and challenging. There are huge opportunities. We want a very simple, automated approach to PA. Of course, when we are talking about PA, a lot of times we are really focused on primary care because those are the folks that are generating prior auths most often.

We also want one that is simple that applies to imaging, to drugs at the same time, same process, easy. Then it will be used. One of the things we are hearing is that it is so difficulty. We are falling back to facts. We simply cannot continue that.

There is obviously too much variability. Too complex. And to echo Heather, all the talk about the wonderful world of web portals. That is very disconcerting as well. You could see that being a viable option for a small percentage of very complex clinical situations. Again, for the most part, this can be a real time transaction that can come back to the physician while the patient is still there. Just like a real-time claim adjudication. They don’t do it for all claims. They do it for the vast majority. For the complex, surgical claims, you are not going to get that. But for something simple, there has to be an automated process.

In general, of course we want more education. I think that is one thing that is clear. We need to work all stakeholders with CMS to really drive home the automation opportunities with 278. The EHNAC/WEDI accreditation program includes the 278 and of course longer term. Again, we are looking for more outreach with the SDOs. We are looking for claim attachment standards since 1996.

Going out on a limb, I will say if you really want to save money and health care, you develop a single formulary. That solves 99 percent of the problems. Thank you.

MR. SOONTHORNSIMA: Thank you, Robert. Dr. Miller.

DR. MILLER: Ben Miller, Farley Health Policy Center, University of Colorado School of Medicine, Department of Family Medicine. I am glad Rob brought up the patient because let’s think about the patient for a second. When patients are in crises, having to go through a prior authorization process can be daunting. In some cases like that with mental health, the process can also be terrifying due to fears, concerns, and trust and in some cases, stigma. In a society that has prioritized instantaneous access for almost everything, how satisfying is the patient experience when one has to wait to see your provider despite the prior authorization happening immediately through electronic means. I testify today in response to the problem often faced by people as in need as it relates to their mental health and prior authorization.

The mental health world, like the broader health care world, has been one that is overtly fragmented. There are outpatient services, inpatient services, services for substance use, and psychiatric emergency services, et cetera. Sometimes even these different parts of the delivery system do not have connection or the ability to communicate with one another. Depending on one’s need, there is likely a place to get help. However, the challenge for most people is that when they are finally at a place to open up and talk about the concern they have, mental health or not, the mere act of disclosing it can be a difficult one. The additional challenge is that often times when people open up to talk about these issues, it is to their primary care provider and non-mental health provider.

Prior authorization can set up an unnecessary barrier for patients who have mental health needs. As I testified earlier today, due to historical underpinnings, we have inadvertently developed a one-size fits all approach to mental health. Patients, when identified with a mental health issue, are often referred from the settings in which they are identified. As mentioned, clinical data is important to have to make informed prior authorization. However, most medical providers do not have the adequate clinical data resulting in often inappropriate referrals.

In most cases, for referral, prior authorization is required for that service. However, there are two issues that arise when this occurs. Number one, patients do not show up for their referral and number two, the disclosure of this issue to the system may be more than the patient wants due to concerns about stigma, job security, et cetera.

Even if these two issues were not true, receiving prior authorization and coordinating care remains problematic between mental health and the rest of health care. The entire premise of prior auth is about making sure that a patient is eligible and connected for their next service. Data suggest that we cannot feasibly rely on enhancing coordination to improve mental health referrals and communication in our communities even if the patient is indeed approved for that service.

Take for example a survey done by our team, examining some of the more sophisticated primary care practices in the country. Those who are identified as certified as NCQA patient-centered medical homes. We found that despite becoming a medical home, practices still did not have the adequate mechanisms to coordinate, communicate, and track referrals made to specialty mental health. The inability to track these referrals was even more obvious when mental health was compared to cardiology and endocrinology. This begs the question. What role does prior authorization have when mental health may move to the setting where the patients are being identified most often? Health plans should expect to receive electronic prior authorization for mental health services from provider organizations where the requester is providing both primary care and mental health services and in some cases onsite together.

What happens when no prior authorization is needed because the care is offered right then and there in the moment the patient needs it most? Prior authorization becomes somewhat of an artifact of a past time when two separate systems united to address health. However, in the case of prior authorization, it is important to differentiate between mental health services that may be onsite compared to those that are truly integrated.

As more non-mental health settings, like primary care, become responsible for assuming much of what happens with mental health, the need to differentiate full access to mental health onsite versus a referral model to specialty mental health onsite becomes important and necessary.

When primary care has mental health onsite, integrated onto the team, the need for prior authorization may indeed go away. In the era of payment reform, there may be more alternative payment models that allow for primary care to go at risk for certain mental health conditions, meaning those historical benefits for mental health may look differently when integrated into an overall health or medical benefit. If the onsite approach consists of a separate mental health service line that has its own rules, finances, and operating procedures independent of the medical team, then prior authorization may be necessary to assure this separate service and provider will be covered.

One could think of this approach as replicating what is often seen on the outside of primary care, but inside with closer proximity. In essence, there will emerge two dominant approaches to mental health in primary care and the prior authorization need and function will vary based upon which approach is adopted.

I encourage the committee to consider the implications of prior authorization around mental health in an era of payment reform and clinical integration. In service to enhanced operational efficiency, there may be scenarios to be studied that address the role of prior authorization around mental health when payment reform and benefits packages have mental health as more of a seamless part of the care delivery rather than a distinct and separate service.

As research has shown, good primary care addresses mental health. In many cases, differentiating mental health as a specialty versus mental health as a part of primary care and serving more of a generalist function may be useful in understanding the role of prior authorization. Since we cannot separate the latter, perhaps there are some cases when having a separate system to address mental health works against the best interest and needs of the patient. Example is carving out mental health benefits and services.

There are two assumptions, however, that must be mentioned here to fully understand the promise of this. One, primary care practices have an onsite mental health provider on the team that can address the mental health needs. And two, the patient does indeed want treatment for mental health in primary care.

As more accountability is assigned to communities at both a local and regional level, the need to assign attribution and track patients will become more important. So too will the notion of prior authorization and what role it will play as a system becomes more aligned and seamless.

In closing, my ask for the committee to consider the role of prior authorization with patients who have mental health needs when the mental health delivery may not be in a different setting from which it is identified. There may be unique considerations when mental health as part of a primary care visit compared to stand alone mental health services that occur subsequent to being identified in primary care that can be addressed through operating rules. Thank you.

MR. SOONTHORNSIMA: Thank you. Margaret.

MS. WEIKER: Good afternoon. I am Margaret Weiker with NCPDP. NCPDP members use the telecommunication standard version D.0 for prior authorization request and billing, prior authorization reversals, prior authorization inquiry and prior authorization request only transactions. We also use the ACS X12 278 transaction as well as the NCPDP SCRIPT electronic prior authorization transaction.

The version D.0 transactions. Those are initiated by the pharmacy to the processor. There is your difference between the medical provider, your physicians, et cetera. As the telecom is initiated by the pharmacy to the processor for approval. The 278 and the ePA transaction are initiated by the prescriber to the processor to request a prior authorization.

For the most part, the NCPDP version D.0 transactions meet the pharmacy business needs for prior authorizations that are initiated by the pharmacy. Work arounds have been developed to support the business requirements not met in the current adopted standard.

Speaking of work arounds, in August of 2002, the NCPDP membership voted to move all internal data element code sets that were maintained by NCPDP to what we called external code lists or ECLs that would still be maintained by NCPDP, but they would now be external code sets.

We also implemented an annual ECL implementation schedule that incorporates up to four external code lists updates per year and that was enacted in October of 2003. Then in November of 2010, we developed a process for an emergency ECL value. That was primarily to deal with the Medicare Part D changes that were coming and we needed something that would expedite that process.

The X12 278 transaction does not meet the business needs to support the medication prior authorization because it does not accommodate the information necessary to facilitate the prior authorization. That is version 5010 that I am speaking of.

Volume. Version D.0 is about 22 million per month. We have limited number of transactions for the 278. The barriers. If they are identified, we have a process where what we call as a DERF or Data Element Request Form that any stakeholder could submit and request a change.

One of the barriers that was noted was not all processors have implemented the Version D.0 prior authorization transactions. Pharmacies are forced to use a web portal, fax, or a telephone to obtain a prior authorization.

As I mentioned before, with the 278, with the data content, in addition, it also required some other ASC X12N transaction specifically the 275, which is the attachment. And then there was the 277, which is the request for additional information, which is basically I need to know what the diagnosis code is. It is a question/answer type of transaction. Those were also required in order to implement a prior authorization transaction.

Alternatives would be the SCRIPT Electronic PA transaction, which is used for the exchange of prior authorization information between prescribers and processors for the pharmacy benefit.

In May of 2014, NCVHS sent a letter to the Secretary of HHS with two recommendations. Both included an adoption for that transaction. It was just a matter of how it would be adopted. To date, we have no regulation. We hear it is going to be done by the end of the year, but again that is here say.

Opportunities. Situational rules needs to be evaluated to eliminate the variability and interpretation. No significant changes have been submitted for the pharmacy transactions for the telecommunication standard.

The main reasons for limited usage of the adopted transactions is it did not meet current business needs and other methods proprietary layouts were developed instead. And the processor did not support the adopted prior authorization transaction.

In addition, most of the pharmacy transactions are submitted in a real time, using the NCPDP standard. You will see very little batch usage of prior authorization in the pharmacy industry.

Thank you.

MR. SOONTHORNSIMA: Sherry.

MS. WILSON: Good afternoon. I am Sherry Wilson, President of the Cooperative Exchange, representing the National Clearinghouse Association and Executive Vice President and Chief Compliance Officer of Jopari Solutions. I would like to thank you for the opportunity to submit this testimony today on behalf of our Cooperative Exchange members.

Our testimony today is supported by our 2015 WEDI Cooperative Exchange Clearinghouse Transaction Survey results, which shows only 40 percent of the clearinghouses support the prior auth transaction.

As far as value response, the automation of the current manual process of prior authorization transaction has been a high priority for providers and payers. And as George referenced, it has the greatest potential for RLI. However, due to low utilization and the variability and the use of the transaction, the survey results reflect the expected value of this transaction has not been realized and merits further research.

The other part that we saw in the survey, is the inability of the payers to provide real-time or timely determination, which contributes to the lack of provider request for this transaction and a low adoption rate.

But what is more alarming was the results on the volume. When we looked at providers, only 20 percent are using the X12 transaction versus 76 percent that are using the web application. We don’t have — I know Rob and Heather are looking at this. What is missing from here is what is the phone application? We don’t know that. Again, industry collaboration when we look at survey results can be very helpful to get a better insight on the use of the transaction.

But this volume, the questions were what is the information gap between the web 76 percent usage and the X12 transaction. Is it the timeliness of the response, better quality, quantity of data? Is the payer requesting supporting documentation with the web application to expedite the treatment authorization process? Again, these are questions that are unknown and really merits further research.

There are really four key barriers that came out of the survey results. One is the granularity of the data content of the transaction response. It does not meet the business need. Resulting providers seeking alternative methodologies for verification, as we all have expressed this afternoon.

The other barrier is the issue of market demand. Providers are not realizing the ROI. That is very clear. They are not asking their clearinghouses or their practice management vendors to support this transaction so the incentive to build is not there. Again, only 40 percent of the clearinghouses are supporting this transaction.

The other third barrier that we identified in the results were often times the business process review the request for authorization is done outside of the normal workflow for EDI transactions. This presents a barrier for real-time response as the transaction is route to another system for processing and again delays the timeliness of getting the authorization.

As far as key recommendations, we only have three key recommendations. One is further industry research and collaboration to be completed to confirm the next HIPAA version to make sure it is removing the barriers, meeting the business needs, and provides ROI before adopting. Again, as mentioned throughout the day, the need to study a staggered approach to adopting transactions based on ROI and interoperability of the transactions.

The second recommendation that has been reiterated by my colleagues this afternoon is workflow consideration to increase the functionality of the transaction. The ability to send and receive supporting documentation tied to prior authorization as well as a timely exchange of information. I think, George, you reiterated several times. It is really critical. I cannot express the need that sooner than later the need for attachment operating rules.

The third recommendation is the practice management vendors. We highly recommend that their subject to HIPAA, rules to ensure priority that providers have the ability to send and receive prior authorization transactions to be able to enable workflow automation. Thank you.

MR. SOONTHORNSIMA: Thank you. Chris.

MR. BRUNS: Thank you. I am going to be fairly brief and general. In short, 270 prior authorization transaction set is not yet providing value, nor is it meeting its intended benefits. HATA members believe the primary limiting factor of the widespread use of 278 is a low adoption rate across the industry, as everybody has been supporting here this afternoon. It is not nearly as widely available among industry stakeholders including both software vendors, service vendors and health plans as is seen with other transaction sets like the 270/271. There simply must be more adoption of the transaction set across the industry before benefits will be seen.

Many payers have portal functionality, as we have noticed, but they do not make the EDI transactions available because of low demand. Many PMS and EHR software vendors do not yet offer integrated 278 functionality. And because our customer’s provider staff are often satisfied with payer web portals or other manual methods like IVRs and faxes, they historically don’t demand it from their vendors.

Anecdotally, I would say as the product manager for CHRT I have seen that change over the last 18 months with the widespread adoption of 270/271 over the last ten years and the recent very high interest in services for patient estimation. I am seeing my specialist specifically radiologists and those who perform diagnostic imaging and testing are beginning to demand the capabilities from us in an attempt to reduce cost and overall turn around time.

Some of them are going so far as to switch all pre-service clearinghouse transactions to those who provide it and then they are making it a high priority development item for me. We are beginning to see a change in the mentality at the provider level. They really do want to adopt this transaction set.

I have three areas of improvement for prior authorizations. Number one, implement and support both the 278/215 and 278/217 transactions. Even for providers that have care collaboration software, tremendous amount of manual work is needed to obtain precertification and referral authorizations.

Second, ensure that payer portals, call centers and third-party review systems included are all updated simultaneously using the same 278 data source. That is a big request.

With so many different information access points, it is important to maintain standardization across all systems to ensure consistent information is being disseminated. It is critical for provider’s trust of the automated transactions as we have seen occur with eligibility and claim status inquiries, which are much more simple transaction sets.

Finally, support HSR linkage to third-party vendors when applicable. For example, a high percentage of pre-certification volume in the ambulatory side of the business is either cardiology or radiology where many payers employ third-party review companies to administer PAs. Thank you.

MS. BARBER: Good afternoon. I am Stacey Barber, ASC X12N Chair. As I listened to the testimony this afternoon that has been given, I hear two distinct different messages that are being given. One is what services need PA and is it over utilized in the industry. And the other is the transaction and the usability of that transaction. As the developer, ASC X12 of that transaction, those are the barriers and issues that I am going to address in relation to the transaction.

In general, the transaction supports the needs of the industry. Again, like with the 271 response, it is ability of people adopting the full usage of the transaction and its usability.

Some of the barriers that we have noted within X12, again, a lot of people have said this. Software vendors and practice management systems are not mandated under HIPAA to adopt the transactions. As such, providers have issues with getting them to adopt the transaction for them and to support that within their systems.

Another issue that we have identified within there is health plans are required to implement all of the transactions. However, providers are only required to implement them if they choose to conduct those transactions electronically. Because of the low adoption on the provider side of the 278 transactions, health plans are not putting in a lot of effort into creating more robust responses to a PA request because right now there is no return on their investment to do so. In returning the simplified pending response, you follow it a different way, is where the industry has gone.

We believe with the adoption of attachments that we could potentially see more use within that. There has been discussion of the clinical dialogue that needs to take place, the medical history for medical necessity review, all of which can be handled with the adoption of the attachments to be used in conjunction with the PA transaction.

Yes, the transaction is very complex. There is no question about that. The reason why it is very complex is because it has to support a variety of different types of authorizations and referrals that are currently supported within the industry. Because of that, it was necessary to put a lot of functionality within that transaction to support all of those different requirements of PA.

When we move into what some of our opportunities are, a lot has been identified. Margaret mentioned that the current 5010 format does not support drug requests very well. A pilot was performed using the 5010 transaction along with an attachment and the request for additional information. We identified where those gaps were, which have been filled in the next version of the transaction. There are opportunities for other pilots to potentially be conducted that could identify additional gaps that we need to fill within the transaction.

We have also looked at bringing in workman’s comp into it. Again, as with the 270/271 transaction, the service type codes have been moved to an external code set, which allow for more flexibility of the different types of services. It has also been expanded to be able to capture information regarding implants.

Mentioned several times the adoption of the inquiry and response and the notification and acknowledgement could help potentially facilitate more usage of the entire prior approval process. Again, I am going to mention attachments because that is a very key part of it. Many times within PA, the medical necessity needs to be proved and that is where your medical records come into play. And with the attachments if they can be exchanged electronically will help facilitate and streamline.

I am going to jump forward to the specific question on the non and limited usage. I think a part of this response is going to go back to some of the information that Heather provided in her presentation. There is no question that the 4010 model was really not adoptable. ASC X12 realized that during 4010 implementations and immediately took steps to rectify that. 5010 is a completely different transaction than 4010. In some of Heather’s response from the 2010 survey that was done, 4010 was still in use. 5010 is out there and maybe an educational process that people need to again learn more about the transaction and how the transaction is used. The additional functionality that was added to it in going forward.

I am going to say it again. The attachments. Very important. We have heard that a lot from a lot of other people. Thank you very much for allowing X12 to give our viewpoints on the 278.

MR. SOONTHORNSIMA: Thank you. Public comment?

Agenda Item: Public Comment

MR. PREBLE: Hi. Dave Preble from the American Dental Association. I just wanted to void agreement globally with the comments made by the AMA and the MGMA in opposition to this trend of web portals being used to essentially circumvent some of the electronic transactions from the provider standpoint and the work flow within a provider’s office, using a web portal in lieu of an automated electronic transaction is basically the opposite of administrative simplification. It is a costly diversion of resources away from delivery of health care. Thank you.

MR. SOONTHORNSIMA: Other comments? Questions from the committee members?

Agenda Item: Review Committee Q&A

MS. KLOSS: This is Linda Kloss. I have just a general question about whether it will be possible to increase adoption without a major rethinking of this process of prior authorization of streamlined complexity.

MR. SOONTHORNSIMA: Could you repeat that again please?

MS. KLOSS: I hear two things. It is too complex and I am wondering whether it is really possible for the industry to increase adoption given the current complexity or whether we need to step back and really look at design of a streamlined process and then following with a standard for a streamlined process.

MS. GOSS: Linda, you are really trying to understand if even trying to step back and increase adoption is realistic under the current design.

MS. KLOSS: Correct. Under the current complexity of the various approaches to prior authorization even. If the standard perfectly reflected this complexity, is it possible to increase adoption without streamlining the underlying business process?

MR. ARGES: This is George Arges. I think you posed an interesting set of questions. I would say it would be more the latter where it is probably best to step back. Take a look at exactly what are the barriers, what can be done to streamline it and really identify several areas where some improvements can be made right up front to basically pump up the volume so that it becomes more common place. I think right now there is this finger pointing going on. I am not going to do much because you are not doing much. The information getting is not much. I do think the attachment standard is one that also has to be looked at as well.

But I would say it is probably important to step back a little bit, digest all the barriers that are out there and take a look at what can be done to basically improve them from an operational point of view.

DR. CHANDERRAJ: I think the prior authorization is being used as a tool by the payer to cut costs throughout and provide health service. I think that is a fundamental issue that is coming out because 90 percent of the prior auth are approved. Only 10 percent are not approved. Ten percent can be retrospectively looked at as not necessary and they can be identified by some of the process other than prior authorization. I think if you remove the disconnect between the financial end and the health service end, then I think it would be a useful tool.

MR. TENNANT: Rob Tennant at MGMA. Just two comments. One, I think what providers are looking for is simplicity in the workflow. I cannot see a situation where you could not essentially combine the 270/271 with prior auth. When you are doing the eligibility and you ping the plan saying this is what I expect. This is what I am planning on pursuing to get back something from the plan at the time of service because that is how you are developing your treatment protocol. Whether it is PT or imaging or meds, really you want something that works within the dialogue, not with the health plan, but with the patient. I think that is what we are looking for.

I wanted to address Stacey’s comment earlier because hit the nail on the head when it comes to health care and that is it is a chicken and egg. Everybody says — the health plan says why should I produce a robust 278 when the vendors don’t support it. And the vendors are saying don’t blame me. We are not hearing anything from our customers about this. And the customer, the provider says the transaction is next to useless anyway so why should I spend the money to have the capability. I am not sure how we break that cycle, but I think it clearly has to start with the health plan. They have to offer something that is actually useful for providers that will produce the market with certification. It will nudge or at least force the PM assessments to adopt the technology and that will be part of the workflow. I think providers are willing to pay additional money if we get the automation and the workflow that we have been promised for many years.

MR. RUBENSTEIN: Sam Rubenstein. I just wanted to say that in today’s world of electronic health records, we believe at Montefiore that there is a very long analogy between the data that is being collected by physicians and clinicians at the point of an order entry process through the EHR and their prior documented information in EHR that could substantially augment the use of the 278 transaction if appropriate data elements are provided for it without requiring the physicians to necessarily enter a great deal of additional information.

Again, to reiterate what has been said, the workflow time is important for all of us, but especially important for physicians because if they are spending time filling out paperwork such as this, it delays again the care of the patient. It is also a direct hit in the number of patients that they can see in their practice.

On the flip side, I believe that if you would do a survey of many of the payer organizations, many of them have auto-approval rules that they currently use on their payer adjudication systems. There is a great instance of high approval on authorizations to begin with. I think that if we looked into the details of it, we would find that a great number of them are auto-approved without even having any manual interaction at the payer. I think this is just a great opportunity for this transaction to provide a huge amount of ROI if it is properly positioned.

MR. SOONTHORNSIMA: Let’s follow up on that. When you are talking about auto approval, is that through the website, phone, and fax?

MR. RUBENSTEIN: As far as I understand it, it is either way. Maybe one of the payers in the room can speak to that. It is a process whereby certain procedures are evaluated against criteria and that the payer then just essentially says you meet all of these criteria so we just shoot that authorization out.

MR. SOONTHORNSIMA: The question is through what vendor —

MS. KOCHER: The feedback that we received from Blue Cross Blue Shield plans is that it is actually a lot more manual intervention and it is not system automation on the back end. Since it sounds like the provider perception is that it is system automation, what that tells me is there is probably some additional research that we need to do perhaps on both sides or WEDI might be able to actually look at that in a future survey. I cannot substantiate based on what I have heard from my plans that it is actually a lot of system automation on that.

MS. STARKEY: I was just going to respond to Sam. That is actually what we did. Our 278 services everything. It services phone. It services portal and it services the direct 278. One single rules engine for all of it and we have done over about ten years an iterative process that what really do we, as Rob said earlier. Ninety percent of them ultimately get approved. Ultimately, we approve all of the initial PT requests, all of the initial OT, all of the initial home care. Why do we need to do intervention on those? All of those are automatically approved without any intervention done through the rules engine and then only continued requests that might cause you to stop and pause. And even some of those are actually auto approved now. But that took us a ten-year process of iteratively looking at those to find the benefits and where automation could be easily done. I think it can be done. It takes a fairly concerted effort to do so. But our initial install of this was a two-year ROI with a 14 FTE reduction in staffing internally.

MS. GOSS: Just to make sure we attribute that correctly, can you just state your name —

MS. STARKEY: I am sorry. Rhonda Starkey, Harvard Pilgrim Health Care.

MR. SOONTHORNSIMA: Real quick. One follow up on that one. You kind of touched on two things, maybe the 278 as the conduit, but you also had the back office UM system, utilization management. That is really what made your automation possible.

MS. STARKEY: Correct. But it took both of them to do so.

DR. SUAREZ: This was one of the transactions that we all thought was going to be more controversial was the word that we used, but more consistent messaging about the challenges and issues. I think we have heard consistently about the complexity of the transaction, the fact that there is not enough ROI, the reality of a lack of consistency in terms of what is required to be prior auth versus what is not. I guess my question goes into that part. To what extent there are opportunities within the health plan industry to simplify maybe and harmonize some of the expectations with respect to prior authorization requests or requirements? Another way of asking it is are there a lot of differences really in terms of what health plans require for a prior authorization. In other words, what services require prior authorization? My sense was that there were not necessarily a lot of differences. I wanted to see what is the reaction from the panel. I heard a number of comments about there are a number of differences and there are opportunities for perhaps getting some consensus around what requires a PA. That is one question and maybe for others to answer it.

The second question is about something that we are not necessarily focusing in this review committee because there isn’t really one adopted. But it is about really the role that operating rules could play with respect to prior authorization. I heard a lot of issues beyond the standard. In many ways, we come back to the fact that maybe the standards are not the problem. It is a lot of other things around the standard itself. Two different questions I guess. One is about the degree to which there is significant difference in the rules or expectations from health plans about what means a PA and then the role of operating rules.

MS. MCCOMAS: This is Heather from AMA. I think the first part of the question you wanted a health plan to answer. But I will jump in and say what we think about it. Physicians would love nothing better than for — they would love nothing better than no prior authorization at all. Let’s be clear.

Second, a long second after that would be for there to be standardization of prior authorization requirements across all payers. We have policy on that for standardized prior authorization forms. Some states have mandated standardized prior authorization forms for drugs, for example. I know there is a lot of pushback from plans. They have their own criteria usually. It is difficult to get everyone to agree. Sometimes the experience with those statewide standardized forms is that actually the plan requires additional information. There is actually a second information request, which actually ends up being more burdensome for the physician at the end. What we thought we were accomplishing by the standardization was not what the endpoint was. If the health plans — if there is appetite for that, we are so ready to have that party with you.

I would love the health plans to respond to that. Is it something you would be really willing to look at. You think about prior authorization questions. They are similar. They are usually like what have you tried before with a patient. Is there an intolerance or a safety issue or an allergy? Why are you doing this? I think they are all similar things. Sometimes there are lab values. I think we could probably come together on maybe some low hanging fruit that would be easy even for certain drugs or certain procedures. I would throw that out to the health plan to see what you think.

MR. TENNANT: Just a follow up. I agree with all that Heather said. You would think that if somebody has just undergone a knee replacement that there would be some clinical research done in terms of how many PT visits are required to get them up and running and allow a little bit of flexibility in terms of the physicians saying this person has this additional concern that may require two or three more visits. It is not rocket science. But it is certainly plausible that the industry could coalesce around a certain set of guidelines. This is why I mentioned a single formulary.

I think one of the issues is — and Heather and I have talked about this. The idea is there may be some financial remuneration issues that are driving some of prior auth to put that out there. That is an issue. But if I could agree, if we can coalesce around in some general precepts, I think that could really drive again use of the 278.

But also, as Heather said in her testimony, the answer cannot come back just call us because that is not going to solve anything. Thinking about operating rules, we would love to have a response within 20 seconds just like we get for the 271 so if we get it in real time. Operating rules can help in those regards. Maybe we are not going to get to 100 percent. As Raj said, if we could knock out 50, 60, 70 percent of these drawn out authorizations, that would save the industry billions of dollars.

MS. WEIKER: Stacey mentioned earlier in her testimony about a pilot that was done between the three SDOs, between NCPDP, X12, and HL7 probably about ten years ago. It has been awhile. It was focused on pharmacy formulary. We would get prior authorization forms from PBMs, processors, payers, and we would go through and we would try to standardize those across for a specific thing like Celebrex or something like that. You would see those. There would be some that would be patient name, birth date across all the forms.

But then you had a different set of questions based upon the payer of PBM. We tried to get those to say can you all agree these are the set of questions. To be honest, no. They wouldn’t.

And then you fast forward to the ePA work that NCPDP did for that transaction. We have built into that transaction this functionality of a question set. It is primarily, on LM(?) the pilot, and ten years later, it is still the same story. We want to have the ability to change our questions. I want to say it is not a whim. But we want to have the flexibility to change these questions maybe weekly or monthly or totally not need questions anymore because there has been some other study done.

What we found is the PBMs, processors and payers want to have a lot of flexibility in those questions they ask, the why do you want this drug, why do you want to have this procedure type of thing. I know in fact, there was a rheumatologist and she went through and got all the forms. Heather can speak to this because that is where I met her was at an AMA PA conference. She had gotten them all and had gone through and normalized it to say everybody’s question is on here on this one form because I have gone through and done all the homework. Do you know how many payers, processors adopted that form? Zero. She could not get buy in. There is going to have to be a mind shift here.

MS. BARBER: I was just going to build on what Margaret had said when we did the — it started out as a workgroup effort in determining what kind of attachments need to be created for drug authorizations and prescriptions. It morphed into this pilot. What we found in there is that the criteria between different plans are not always the same even for the same drug. We also within the 278 and the changes that we made to the 278 in creating the drug authorization segment built in that flexibility for the questions to vary between the different plans and benefit processors to allow for that flexibility. It was a very enlightening exercise that we did. It very rarely outside of basic demographic information were the questions the same even for the same drug. Margaret was saying Celebrex or growth hormone drugs.

We did in working through that build the flexibility in with the transaction to be able to support the variabilities that are out there. But I do understand that that does not make life easy for a provider. It is hard for a provider.

However, I go back to what I said earlier. There is a distinct difference between PA itself and the transaction and the transaction working. I just wanted to point that out.

MS. KOCHER: Since Heather kind of said what are the health plans think, one of the reasons I don’t have an immediate answer is it is not something we have engaged the plans on directly. As Stacey just said, it is really a medical review, medical policy conversation. It is not an EDI conversation to start. Do I think that we can engage our plans? Absolutely. But I don’t know what the answer is. I know plans like the flexibility because they know what works in their local market. They know what works with their providers, with their groups, with their customers, with their consumers. There is always going to be a need for some flexibility. Whether we can make that flexibility a little bit less and a little bit more standard around prior auth, I don’t have the answer for that. But I think the conversation first has to be medical policy and clinical and then we look at does the EDI work. Because if we start with the EDI, we are never going to get to a conversation that we all probably need to have.

MR. TENNANT: Just real quick, Margaret’s discussion of pilots reminded me that the good folks at AHIP created a pilot. I want to say maybe five, six years ago. All payer portals. I believe it was in Ohio and New Jersey because they did some outreach with MGMA state chapters. I am not sure if prior auth was part of the pilot. But it showed at least a willingness to move in a singular path. Though we all agree on the provider side that web portals are not the answer, but maybe for those very complicated ones where you have more of a long-term dialogue with the health plan. At least if it was an all-payer portal, it would again decrease administrative burdens, single sign on. There is really no reason why a single portal could not take you to a Blue’s plan or Cigna or Aetna or United. There are some options here if the industry is willing to look at them.

DR. BURKE-BEBEE: My question is a little bit different, but then again a little bit the same. There has been discussion about coordinating the transactions. The eligibility, the prior auth, and maybe even eventually the attachment. I am wondering, Rhonda, from Harvard Pilgrim, your ten-year iterative experience of the PA, if you in fact did any coordination across these transactions. Insurance first and foremost looks at coverage because if there is no coverage, you don’t have to answer anything else. When you talk about return on investment, that is prime.

With that said, if there was a tie in or a coordination, was there any problem with trying to answer the coverage question which then got in the way of trying to answer the other questions?

MS. STARKEY: Rhonda Starkey, Harvard Pilgrim. At this time, actually we have not done the coordination between the eligibility and the referral auth transaction. That is actually in our docket for next year because up until this point, we actually have not required referrals for specialist visits and we are going to do that. Part of the requirement, part of what we are doing now is looking at as we implement that, we need to within the 271 eligibility clearly show that a specialist visit does require a referral so that that is communicated upfront. We have worked and gotten very good use of our eligibility transaction. We have 30 million eligibility transactions on year on 10 million claims and 1 million members. We have eligibility incorporated very well with providers and we agree totally that that would be the stuff to help them understand, number one, a big policy shift on our end, and two, expand it so that we can clarify not just for the referrals that we are starting, but for all of the other services when the referral versus also a notification is needed.

DR. BURKE-BEBEE: I am thinking in the workflow of a provider being a nurse myself, I am thinking that the coverage eligibility question is upfront, but the prior auth may be at some other time. It is not necessarily going to be easily coordinated time wise. It makes me think of as a provider writing that script and pushing off the responsibility of knowing whether that formulary, the drugs included in formulary, to be between the pharmacist and the consumer. I would see a lag. The workflow is not all concise.

MS. STARKEY: That is also why really well if you can do that notification in the eligibility transaction and it is integrated into the receiver’s, their practice management system or EHR whichever they use because then it is a record and it is there. It is viewable later when you do decide that you are doing a referral or an authorization request. That is why the integration is really critical.

MS. WILSON: Just to support the conversation is that when we looked at the survey results from the WEDI Cooperative Exchange Transaction Survey, we see the difference in eligibility supported 88 percent as compared to the prior auth at 40. Part of — again, we are looking at recommendation for further study, but definitely the convergence of these transactions working together, being able to get the information upfront at the very beginning of the process. When you are looking at eligibility or the prior authorization, what is the documentation? Again, all of that up front is going to really streamline the end-to-end workflow automation. We see significant support and value in being able to leverage these transactions. Again, we have 88 percent use on the eligibility. Where can we get some more value by leveraging that?

DR. STEAD: As I try to track this conversation, I agree that much of what we have been talking about around prior auth is not an EDI conversation. But as a review committee, it seems to me that one of the things we have to figure out and we need to know to the degree to which the panel can help us is we may be talking about a transaction that is about a business model that is well on its way to going away.

There is a new business model that is emerging. Secretary Burwell said she wants 85 percent of CMS contracts to include a significant P for P value performance by 2018. That will be a C change if it takes place.

In my own world, as I watch our contract negotiations with payers, they are clearly moving to value escalator models and negotiation around price for services and largely assuming that we will be responsible for figuring out how to make these things match as a provider.

I think it would be very helpful to know if we could from the plan industry what percent of plans have stopped requiring prior auth for providers that have been hitting certain kind of quality goals. I see announcements of that and that is not new. That has been going on for some time. What percent have already gotten out of that business? What percent are negotiating contracts now that would make it irrelevant 18 months from now? So that we could actually look at this trim line of this difficult adoption of this transaction and what we might do as an industry to improve that. That is one trim line.

The other is the shift to the new business model, which in essence is going to be a very different model and would probably require a completely different type of transaction. If there is any way for us to understand that trend and we can decide or the industry can decide should we double down on one of these other transactions that is a lot closer. Let this business model change take place and then come back with a new standard and operating rule or should we make this one work. To the degree the panel could help us understand what those trends are, that would be very helpful.

MS. MCCOMAS: This is Heather from AMA. Probably some of that is directed at plans. I will start out by saying when I was interviewing for this position in the fall of 2013, my hiring manager asked what do you think are some of the administrative simplification priorities. Prior authorization. He said really. This movement towards value-based care and ACOs. Don’t you think that has gone away? Maybe. Did I just say something dumb? Here I am a year and a half into the job. At every meeting at the AMA, this issue comes up. I understand this movement towards value-based care. Right now, it is still a huge issue. I don’t think the tide has turned yet. The X has not hit the part where the lines are going in a different direction.

I think particularly if we look at drug prior authorization, I just don’t see that it is going away any time soon. First of all, most plans are using pharmacy benefit managers to handle that benefit for them. There is a graph. I think it is Mork(?) Research and Kaiser also publishes, as well, showing an increased trend of prior authorization and Part D drugs. I think it is over 20 percent of their formulary drugs require prior authorization. We think about the drugs in the pharma pipeline right now. They are specialty drugs. They are biologics and they are great therapies, but they are super expensive. We think about Sovaldi. $80,000 for one treatment course for one patient. Really? We are not going to prior auth that? Physicians would say yes. The patient needs the drug. Absolutely. No restrictions on that. I just don’t see payers backing away from that. Looking at the increasing cost of medical care. We can take so much better care of patients, but it is expensive. I wish that the trend would tide a turn, but I just don’t see that we are quite there yet.

MS. STARKEY: Rhonda Starkey, Harvard Pilgrim. I obviously cannot answer for any other plans. I hope Gail maybe has some perspective. In direct answer to your question, the reason we are implementing referrals now is because we are doing risk contracts with providers for pay for performance and they need the help managing those contracts. They need to know that through how am I assured that my referrals are going to the provider groups that I work with that I want to help manage my patients. That is actually the reason we are starting them as opposed to taking them out of the system at this point in time. But I cannot speak for the other services, but really referrals have been a key issue with those that are talking about pay for performance at least in our area.

MR. SOONTHORNSIMA: Most of them are more bonus-based PCMH, patient centered medical home arrangements mostly before you get the full ACO risk sharing. Maybe a few years down to your point.

MS. KOCHER: Gail, Blue Cross Blue Shield Association. I don’t have a ready answer for you, but I will commit to going back and seeing what information we have that we can share with the Review Committee about value-based care, as I know that it is something that we are definitely looking at across the blue system. I will make a point to see we can provide in follow up to help answer those questions.

MR. SOONTHORNSIMA: To facilitate that, it is still by and large fee for service I assume the payment to the providers.

PARTICIPANT: It is both capitated and feed for service. It is both.

DR. STEAD: Just for some clarity because things I have been seeing are people tightening up formularies. Things are just not going to be paid for period, prior auth or not. It is not that formularies are going away. But they are becoming much more explicit and therefore more standard.

It is not that fee for service goes away. That is one of the ways you reimburse under these models, but where the risk lies under fee for service and how the corrections get made as you true it up at the end of the year are where the changes are occurring. There is no question. The providers need the support, but then is that support going to be built into the provider system less so than into the payer system. These are all the changes I think we are going to be able to see. Until the degree we can get trend information, it can help us understand where do we double down. I am not trying to say one is right or another. I am just trying to say we need the radar if it is available.

MR. RUBENSTEIN: It would obviously seem prudent that there needs to be a more in depth workflow analysis that takes place and make some recommendations off of that before somebody might presume to know what the right path for this is. I am just thinking if there is an opportunity to do something like that and divide it potentially into a couple of major categories. Again, speaking from my Montefiore experience, we find that these service authorizations fall into a couple of major categories. Drugs being one of them. Radiology and nuclear medicine services, MRIs, and things like that. Advanced pathology testing is another one. Genetic studies. Things along those lines.

I think there might be an opportunity to categorize these things into broad stroke categories to find out what the data requirements are and what everybody is looking for especially in the risk environment because our findings are as being one of the pioneering ACOs is that providers are still being asked to submit a lot of this information even if it has nothing to do with their reimbursement for quality purposes, for monitoring care plans, for care coordinator interventions, things along those lines. While the use of it from a payment perspective may diminish, I think that it is going to be there for a while in order to substantiate the care plans.

MS. DARST: If I could just make a comment. This is Laurie Darst speaking for WEDI. WEDI has taken up the ACO bundled payment, looking at what is needed, what it means. If this could maybe be something that WEDI can maybe offer to help with.

MR. SOONTHORNSIMA: Are there any other comments? Questions?

DR. SUAREZ: Just one idea that I have been formulating. This is maybe too early to discuss, but I will just throw it out and see how it sounds. One of the issues that have been raised for this transaction and other transactions is the fact that practice management vendors really are not subject to comply with anything or to be expected to meet specific applications or standards. What if in some ways a practice management vendor were to be considered a business associate, but with the difference that just like with privacy and security, business associates are now required to comply with privacy and security regulations. In the transaction side, what is practice management vendors were to be considered business associates and then extend the courtesy of having the business associates in that situation to be responsible for complying with the transaction standard. It is another way to extend the coverage of expectations and responsibilities beyond providers and payers and clearinghouses.

It is a different artifact of how business associates — the term business associate is being used and is an extension of what the expectations are. But the precedent already exists that business associates are required to comply with privacy and security. They could be also at least considered that regulations could create an expectation that if they are business associate for transaction purposes, they would be required to comply with the transactions too. And that way we would at least create an opportunity that the applications that providers are using are going to have the capability of doing that. I guess I would like to hear some of your reactions to that idea if you have any and want to share with the group —

MR. BRUNS: Chris Bruns, president of HATA and the product manager for MedInformatix. We have had this discussion several times amongst ourselves. Many of us already with last year’s Omnibus rule, we are considered business associates. For instance, at MedInformatix, we sign a business associate agreement with every customer of ours. Most of them have given them to us here. It is time for you to sign this. But we may have had one on file with some of them, but not all of them. But that really picked up last year.

What I am hearing today is I have heard it I think three or four times is that practice management vendors should be covered entities.

DR. SUAREZ: It would take an act of Congress to do that. But it would not take an act of Congress to consider the ability to use the business associate structure to extend. Right now, business associates are required to comply with HIPAA privacy and security. They are not required to comply necessarily with the transaction standards. By extension, one could consider perhaps the possibility that through regulations that could be expanded. That is the possibility I guess that I was thinking about. It is a good point. There are already considered business associates and they are already expected to comply with the privacy and security side. By extension, they could be able to comply with the standard transaction side as well.

MR. BRUNS: Personally, I am not averse to the idea. One of our challenges as the organization that is representing practice management vendors is to — how do we hold ourselves to the standard if we don’t have a standard to hold ourselves to? Are we all just going to handshake on it and agree that we are going to be competitive and collaborative at the same time? There has to be a solution.

DR. SUAREZ: Something like that has been of course done in a different way. In the EHR world where there is certification program and all that process, we are not there in the administrative side world.

MR. BRUNS: Many of us are also certified EHRs. We are used to working with those requirements and certification standards. They are not foreign to us.

MR. SOONTHORNSIMA: Thank you. Rob.

MR. TENNANT: Rob Tennant, MGMA. Walter, you have raised a critical issue. We have looked at this frankly for over a decade because as soon ICD 10 became part of the lexicon, we immediately saw that the weak link in the chain was going to be the PM vendors. But I think we would support completely the idea of making your members accountable.

There are some challenges though because it is not quite as simple as privacy because there is so much integration between PMs and clearinghouses. Who actually does the transaction? Is it the billing service? Is it the software? Is it the clearinghouse? There would have to be some work done in that area. There is really no reason why we shouldn’t be at least exploring that because how else are we going to move the industry forward.

If there is one entity and not to pick on worker’s comp, but there is an example of — they have been carved out and they are always going to be a problem whether it is ICD-10 or the transaction. I think absolutely move forward.

I am not sure it can be done through regulation though. That would be something for the lawyers to look at. But it is certainly worth a try.

MS. WILSON: Sherry Wilson with Cooperative Exchange. As you heard me throughout the day, we are big advocates of the practice management system vendors coming under HIPAA. We are a business associate. And part of that you will be hearing that tomorrow as well. But when we really take a step back and look at end-to-end workflow automation, it is critical where it is a starting point and the starting point with the provider is at their system and the ability to send and to receive. Until we have that capability in supporting the transactions, we are not going to get that end-to-end workflow automation. It is just very evident. Even though we have wonderful solutions, great opportunities and recommendations, until we resolve it, the beginning point that enabling to do the end-to-end workflow automation where it is being originated, we will be stifled. We really encourage it. Again, it should say security and privacy, but also even if they were required to be transaction content compliant would be real helpful. We are very supportive.

We work with HATA on the steering committee. I think there are some great opportunities with the certification that is going on with HATA to do this. But I think this is a real key point. We are just not going to get to end-to-end workflow automation without it.

MS. STRICKLAND: I would agree with actually including practice management systems under the umbrella because of the ERA transaction. I have worked on this transaction for about 20 years. Some practice management systems are still back on 3020 content. What have I done for 20 years? Selfish for me, but the value of all of those individual CRs that everybody has worked on and AMA coming, worker’s comp coming, all of these entities coming to X12 to make the transaction more robust, give the providers more information, yet they don’t deliver it. Having them be content compliant gives the providers the information that they are coming to X12 asking for or the AMA is or MGMA or whoever is coming to ask on their behalf and actually letting them get that information from the practice management system.

MR. RUBENSTEIN: I just wanted to bring the conversation back to the transactions for a moment. I think we heard during the day several of the testimonies here mentioned it is not just the getting of the — submitting the request for the authorization and getting the authorization back, but it is also the notification of the downstream providers that are actually going to provide the service. Keep in mind that those downstream providers may be providers that have never seen this patient. When you talk about the workflow, I think we cannot forget about that and that there is an opportunity there as well to potentially when you are referring that patient to a particular provider whether it is a radiology service or a specialist to also be able to use the transaction sets to pass that demographic information about the patient to the receiving provider whether it is just name and address or it is coverage information need to be determined.

At least in my opinion, when you talk about streamlining workflow, that is a huge problem that if you are receiving provider and now you need to start asking that patient all of these questions over again, it really detracts from the patient experience. It could even potentially affect as to whether or not you are going to accept that patient because you may not be doing business with that carrier anymore.

MS. GOSS: And is by extension that take us back to the claims attachment need and by extension take us back to the source of the electronic health record data. I feel like you just tied a whole bunch of stuff up we have been talking about at NCVHS.

DR. SUAREZ: One final comment with the respect to the question I asked. I am glad to hear some of your reactions. We wouldn’t be where we are with EHRs unless we have started down the path of creating a standardization and a certification process for EHRs. EHRs of course were the key for providers to be able to exchange clinical information. I am trying to think of a similar relationship with practice management vendors because they are the key, as Rob mentioned. They are the key to how providers can communicate some of this information. There is that need to really find a way to bring them in a closer way. I just wanted to mention that perspective about EHRs. That is the focus really of the whole meaningful use program is on EHRs. Maybe too much.

MR. SOONTHORNSIMA: Thank you. One more.

MR. BRUNS: Chris Bruns, HATA. Just real quick. EHNAC has recently established a certification program last year. It is still very new. I would hazard a guess that half the PMS vendors out there don’t even know about it yet. That needs to be communicated and where we work with EHNAC to try to get the word out about the certification. It is voluntary though. That makes it quite a different thing.

MR. TENNANT: Just real quick. Walter, you mentioned the EHRs. That was not done through regulation at the beginning. It started off as a private sector initiative. Albeit funded by the Bush administration with CCHIT.

But I think what was the game changer at least partially was the inclusion of a deeming feature in the Stark and anti-kickback statutes. It said if you were CCHIT certified, you, as a hospital, could donate that to practices. I think that started and then that led of course to meaningful use. We talk about business associates. Frankly, as I mentioned, you could have an incentive program. Nothing drives health care more than dollars quite frankly.

George and I mentioned about the incredible opportunity costs of this transaction. If you could incentivize the provider by saying we, as a health plan, are going to make $10 on every PA. We will share a dollar of that with you for one year. That would give some operating capital to allow the practice to go out and buy certified PM, which would give them the opportunity and we move the industry forward. You can do it through regulation or you can incentivize financially.

MR. SOONTHORNSIMA: Are there any other comments? The big questions can we 86, 278. Is that the big question? I think what I heard today and just trying to recap. We started with a transaction, but then when you start looking at what is actually being passed through this transaction. Forget about adoption for a second. There are so many variations driven largely by clinical rules. Business rules. Both. Due to that variation, it seems like there are other venues such as website and what not that tend to provide additional information. But that also defeats a purpose of the original intention of the transactions itself called 278. I think that is what we have been going around and around talking about. Very important dialogue.

But that shed another light sort of speak to another set of dimensions such as the business model is shifting to pay for value or shared risk environment. That may happen down the line. But we still have today’s environment where we have fee for service or even bundled payment that is still required. Quality management, therefore, you do need to have some information passed for pre-auth.

Going to the point you made I think, Stacey, some pilots that have been done or you focus on a specific set of pre-auth like specialty pharmacy or like high cost imaging services. Those are basically what are to be done today. Those are some of ideas as to how you better use the standard transaction to drive those high value, high cost, and high transactions. Again, that gets back to the business rules.

We, as a committee, have to look at all these different drivers, these dimensions that are converging in some way and others. Things continue to move the way they do today like fee for service. We have to address that and we have to look at what do we call it at the end of the day. Do we put all the effort and energy as an industry to move this forward and get more adoption or we surgically look for, no pun intended, look for those opportunities to leverage this, but in more finite fashion? And then with attachment, maybe that will augment the value. I am not sure I captured everything. Those are the different dimensions that we talked about today.

Melissa, I think you have the last word.

MS. MOOREHEAD: Just to put an additional dimension I think on your dimensions, I would be very interested to have you all think about the tensions that exist between the regulatory cycle and a systems development life cycle and then the market development life cycle and the pressures that they each put on each other. It does seem to me that one of the reasons perhaps that we talk about 278 all the time for years and years is because it is an adoptive transaction. It is required. There are required operating rules coming up. That kind of clouds whether or not there are real business gains that could be made perhaps by taking other approaches because we have this one that has been mandated. I don’t have a solution unfortunately, but I think that is one of the really good things that the work of the committee could achieve is trying to get some clarity around those issues.

MR. SOONTHORNSIMA: Thank you very much. We do want to acknowledge the hard work behind the scene of all our support staff, our lead staff.

MS. DEUTSCH: I am probably going to mispronounce some of them, but there has been a great deal of work that has been done to be able to bring this together. Usually, we do this on the second day, but since we have so many people and there has been so many present today that I think this would be a good way to acknowledge them today. We will probably do it again tomorrow. This involved not only the communications back and forth, but there has been a great deal with setting this all up and all the media that had to be set up and copying all of the wonderful written documents that were sent. I would like to acknowledge the individuals. Marietta Squire is on vacation now, but many of you got communications from her about the logistics of the hearing and dealt with her initially. During her vacation, people have stepped in to be able to continue on. I would like to first acknowledge Jeanine Mtui, who has been working late hours to be able to do all of the work. She has been assisted with and by Jacqueline Clark and Gwen Mustoff and Katherine Jones and Debbie Jackson. And then we also have the individuals who have been dealing with all of the issues we have had on the website, et cetera. That is Jeff Agnew and I maybe saying the next name incorrectly, Chanda Chhay. If you all would take a moment to recognize these wonderful people.

(Applause)

MR. SOONTHORNSIMA: Thank you all very much panelists and we will see some of you tomorrow at 8 a.m.

(Whereupon, at 4:05 p.m., the meeting adjourned.)