[This Transcript is Unedited]
NATIONAL COMMITTEE ON VITAL AND HEALTH STATISTICS
SUBCOMMITTEE ON STANDARDS
November 18, 2011
Holiday Inn Rosslyn at Key Bridge Hotel
1900 N. Fort Meyer Drive
CASET Associates, Ltd.
Fairfax, Virginia 22030
TABLE OF CONTENTS
Hearing 2 — Section 10109 of the Affordable Care Act
- Call to Order
- SESSION I — Provider Enrollment Forms
- SESSION II — Applicability of Standards to Other Insurance Types
- Property and Casualty
- Keith Bateman, PCIAA
- Workers’ Compensation
- Greg Krohm, IAIABC
- Bruce Wood, AIA
- Lisa Wichterman, State of Minnesota
- Don St. Jacques, Jopari
- Property and Casualty (continued)
- Jon Bergner, NAMIC
- Automobile Insurance
- Susan Maynard, State Farm
- Margaret Weiker, Hewlett-Packard
- Debbie Meisner, Emdeon
- Lynne Gilbertson
- Questions by the Subcommittee
- Property and Casualty
- SESSION III — Transparency of Claim Edits, Publication of Plan Payment Rules, Standardized Forms for Audits
- A. Claim Edits/Plan Payment Rules
- National Correct Coding Initiative
- Niles Rosen, M.D., NCCI
- Donna Schmidt, CMS
- Shantanu Agrawal, M.D., CMS
- Health Plans
- Chris Jagmin, M.D., Aetna
- Tammy Banks, AMA
- Annette Gabel, NCPDC
- Holly Louie, Practice Management, Inc.
- Rhonda Buckholtz, AAPC
- Deb Strickland, Tibco
- State Initiative
- Barry Keene, State of Colorado
- National Correct Coding Initiative
- B. Audits
- Medicare RAC Audits
- Connie Leonard, CMS
- Provider Perspective
- Mari Savickis, AMA
- Lynne Gilbertson
- Medicare RAC Audits
- Questions by the Subcommittee
- Hearing 3 – Standards and Operating Rules Maintenance Process
- SESSION I Maintenance of standards and operating rules
- Questions by the Subcommittee
- Concluding Comments and Next Steps
P R O C E E D I N G S (8:15 a.m.)
Hearing 2 — Section 10109 of the Affordable Care Act
DR. WARREN: At this point I would like to start the meeting. We welcome you
to the second day of our hearings of the NCVHS Standards Subcommittee. We will
start by introducing ourselves and going around the table. For members of the
committee, please tell where you’re from and whether or not you have conflicts,
and then we will continue around with everybody else. If you’ll just give your
names and where you’re from, that would be fine.
I will begin. I am Judith Warren, University of Kansas School of Nursing. I
am a member of the Full Committee and co-chair of the Standards Subcommittee,
and I have no conflicts.
DR. SUAREZ: Good morning, everyone. I am Walter Suarez with Kaiser
Permanente, a member of the Full Committee and co-chair of the Standards
Subcommittee, and no conflicts.
MS. WILLIAMSON: Good morning. Michelle Williamson, CDC’s National Center for
Health Statistics and staff to the subcommittee.
DR. SCANLON: Bill Scanlon, National Health Policy Forum, member of the
committee and a member of the subcommittee; no conflicts.
DR. KLOSS: Linda Kloss, health information management consultant, member of
the Full Committee, co chair of the Privacy Subcommittee and corresponding
member of the Standards committee. No conflicts.
DR. CHANDERRAJ: Dr. Raj Chanderraj, practicing cardiologist from Las Vegas,
member of the Full Committee and member of the Standards Subcommittee. No
DR. WARREN: May we have the panelists introduce yourselves.
MR. AHMAD: Irfan Ahmad, The Clearing House.
MR. NICHOLSON: I am Dave Nicholson with Professional Management.
MS. SAVICKIS: Mari Savickis with the AMA.
MS. KOCHER: Gail Kocher, ASC X12.
MS. LOHSE: Gwen Lohse, CAQH CORE.
MS. WEIKER: Margaret Weiker with Hewlett-Packard, representing ASC X12.
MS. GILBERTSON: Lynne Gilbertson, National Council for Prescription Drug
MR. KROHM: My name is Greg Krohm. I am with the International Association of
Industrial Accident Boards and Commissions.
MR. SLATER: Zachary Slater, Merrill Lynch.
MR. KEENE: Barry Keene, Colorado Clean Claims Transparency and Uniformity
Act Task Force.
MR. BURLEIGH: Bob Burleigh, here on behalf of the Healthcare Billing &
MS. LOUIE: Holly Louie, Healthcare Billing & Management Association.
MR. FINERFROCK: Bill Finerfrock with Capitol Associates, here on behalf of
MS. BUCKHOLTZ: Rhonda Buckholtz, AAPC.
MS. HAVENS: Deb Havens, AAPC.
MS. BURKHART: Lori Burkhart, WPS Health Insurance.
MS. MEISNER: Debbie Meisner, Emdeon.
DR. LAZARUS: Steve Lazarus, Boundary Information Group and CAQH CORE.
MS. FOERSTER: Rachel Foerster, Boundary Information Group and CAQH CORE.
MS. GREENE: Tina Greene, Mitchell International.
MR. RODE: Dan Rode, American Health Information Management Association.
MR. BOWMAN: Bob Bowman, CAQH CORE.
MS. RICHTER: Erin Richter, CAQH CORE.
MS. THOMASHAUER: Robin Thomashauer, CAQH.
MR. SCHUPING: Jim Schuping with WEDI.
DR. JOPP: Devin Jopp, WEDI.
MR. DALEY: Jim Daley, WEDI and Blue Cross-Blue Shield of South Carolina.
MR. QUINN: John Quinn, H.L. Sutton.
MS. THORNTON: Jeanette Thornton, America’s Health Insurance Plans.
MS. SQUIRE: Marietta Squire, staff to the subcommittee.
MS. COOPER: Nicole Cooper, staff to the subcommittee.
MS. DOO: Lorraine Doo, Office of E-Health Standards and Services at CMS,
lead staff to the subcommittee, and no conflicts.
DR. SUAREZ: Do we have anybody on the phone?
MR. ARGES (via telcon): This is George Arges with the American Hospital
DR. SUAREZ: Anyone else?
Agenda Item: Session I: Provider Enrollment Forms
DR. SUAREZ: Welcome, everyone. This is our second hearing of a
three-hearing, two-day part of the Standards Subcommittee of the National
Committee on Vital and Health Statistics. Yesterday we had an afternoon hearing
on the health claim attachments standards and operating rules and business
This morning we are going to focus on a provision of the Affordable Care Act
under Section 10109 that asks the NCVHS, along with the HIT Standards Committee
and the HIT Policy Committee, to provide input to the Secretary on a series of
areas for potential standardization, business and administrative areas that are
worth looking into for potential standardization, for potential establishment
of national standards and use of national standards.
Those areas are how we divided basically the hearings, so we have first a
series of testimonies around provider enrollment into health plans and the
whole process of enrollment, and probably we will talk about credentialing and
Then we have a second session on the applicability of standards to other
types of insurance. The Affordable Care Act again in the provisions asked us to
look into how we can explore ways to have other types of other types of
insurance beyond health insurance to use the standards that are being used by
health insurance, including worker’s comp, property and casualty, the medical
component of auto insurance, et cetera. So that is another session that we are
going to have.
Then the third session of the morning will focus on a couple of other areas
that the Affordable Care Act asked us to look into. One is standardization in
the claim edits and the plan payment rules process and then standardization in
the health plan audits process. So we will be discussing those.
We are going to be basically doing the testimonies first, and then we will
have time at the end of each of the sessions for questions from the
subcommittee. Then we will be breaking for lunch and then joining the afternoon
with a series of discussions around a separate topic that we’ll talk about
I am going to turn things to Judy so we can get started. Thank you.
DR. WARREN: Let’s get right on and save time for all the testimony.
Gwen, do you want to start off the panel with CAQH?
I am sorry. Gwen knows about this but the others don’t. Lorraine wants to
show you her timing cards.
MS. DOO: Yes. Just for those of you who were not here for the program
yesterday, I do help you with your timing, which also helps your co-presenters.
This is the first sign, which usually I don’t put up. It says “11
minutes,” which means go ahead, we’re all ears.
This looks like a martini glass only at the end of the day. It’s a
“yield” sign. It means you have 5 more minutes. So that’s pretty
good. If you see it and the other person is not looking at me, you might want
to just give them a little tap.
This is when you have 1 minute to wrap up.
This is when you’re done. Somebody stared me down yesterday.
And this is really like take 20 seconds and wrap up.
Thanks very much for your cooperation.
DR. SUAREZ: I should mention that this went viral last night. It’s already
MS. DOO: Occupy NCVHS.
Agenda Item: CAQH/CORE, Gwendolyn Lohse
MS. LOHSE: Thank you very much for inviting us this morning. I am Gwendolyn
Lohse, the deputy director for CAQH.
I am going to try to give an overview of CAQH and the lessons learned we
have from provider enrollment from two different perspectives, share our
experience and then also share some recommendations as you all are moving
forward, as Walter gave an overview of the focus of the testimonies.
In the packet today, just as a note, there is an overview of these slides.
Then, also, we have gone in and answered your specific questions, which I
think, hopefully, are useful to the committee after the hearing and also those
of you that may be here; and then some attachments that provide a bit more
detail on the items that I am going to provide an overview of.
As some of you may know, CAGH is a nonprofit. We are solely focused on
From the perspective of today, there will be two lessons learned. One is
about CAQH’s UPD. It’s an industry utility that replaces multiple paper
processes with a single electronic uniform data collection process. The other
one is CAQH CORE, which is the only effort solely focused on national operating
rules for the administrative transactions.
So as we look at these two, the comments really are going to be about the
development and maintenance and how we enhanced UPD; and then also authoring
entities that are looking at operating rules for HIPAA transactions, because as
we think about enrollment, there are both HIPAA transactions and also non-HIPAA
transactions as the provider starts working with the health plan; and then how
also, obviously, standards are going to be critical here, some of that work
that we’ve done to collaborate with the standard-setting bodies.
As we do think about this section 10109, provider enrollment efforts are all
interrelated. So as we think about process improvement, we really see them that
they be interconnected to truly achieve administrative simplification and truly
go electronic and become standardized and uniform.
So as we look at this, some of the questions that we’ve been asking
ourselves about how best to present our views and our lessons learned, we
thought of some questions that the committee may want to consider as they are
• What common definitions — we heard a lot yesterday about
nomenclature and definitions. That holds true here as well, a very, very
important piece as we talk about provider enrollment that we all know the
specific elements we’re talking about. There is a very broad definition within
• Then what front-end processes exist for enrolling the provider in
EDI? Again, this could be for HIPAA or non-HIPAA. And is there an expectation
that databases will be used?
• Then best practices, standards and operating rules? Some of those
standards may relate to querying, accessing, and verifying the provider data.
So as we think about this, it’s a wide scope, and all of these are very
• The last one is collection, ongoing maintenance, and distribution. So
those are all relevant if we want to improve the process.
As we look at this, too, and we think about the integrated view, how do we
make sure we’re collaborating with industry efforts and leveraging?
Then I think you’ll hear a lot today, especially from the providers, about
public-private collaboration and how we may address that with provider
enrollment. For them to get to truly administrative simplification with this,
we are going to need to continue to focus on public and private enrollment.
With regard to HIPAA transactions, you all obviously — and thank you very
much — you had recommended that CAQH CORE, in collaboration with NACHA, draft
operating rules for EFT and ERA. As part of that process, the industry, through
an open survey to CORE participants and non-CORE participants, picked EFT and
ERA enrollment as a top priority, and so those rules did cover EFT and ERA
ANSI X12 and NCPDP both participated in that process. So those rules address
both the medical and pharmacy as appropriate.
With non-HIPAA transactions, UPD — and I will talk about that first — is
collecting over 700 data elements. I am going to talk about that first because
it is the first interaction between the provider and the health plan. When a
provider enrolls with a health plan, before that happens, the credentialing
process needs to start. That is going to be really relevant to this
conversation, because when you look at EDI transactions and non-EDI and the
application and provider enrollment, you’re thinking about both of those things
as you’re thinking about the bigger picture of provider enrollment.
So with UPD, just a few things here, and the attachments have more detail.
We launched this in 2002 to really support the credentialing process, which
again is the first step. The UPD is used by physicians, allied health
providers, behavioral, optical, and dental providers. There are over 650
organizations participating in UPD, and those include national and regional
health plans, state and federal government, including Medicaid agencies, and
that is a key point when we think about provider enrollment; the U.S. Army
National Guard, as well.
There are over 970,000 providers that are registered using the UPD. There
are over 8,000 that are registering more each month, because it is allied
providers, not just MDs and DOs. Then there are three in five of the practicing
providers in the United States who are in UPD.
We did do a study of how often the providers are updating their data. That
is happening over a very frequent and routine piece, and we have data on that.
UPD is available in 50 states and the District of Columbia. Then there are
some states that have specifically mandated the UPD application form and others
that have supported it through unique forms.
It is compliant with URAC, NCQA, and the Joint Commission for data
collection for accreditation.
The goal for UPD was to really have a uniform application and to have
provider ownership and involvement in this whole enrollment process and the
data collection piece. When I say provider enrollment, UPD has been built in
collaboration — and you will see this in a minute — with the AMA, the ACP,
the AFP, the provider — really, that partnership to move ahead.
Some of the key features:
• Access, Web-based system. It’s free for the providers to go in, and
they can complete the application on line or via fax, and then a toll-free
• Accountability. Providers are responsible for supplying and
maintaining their own data.
We do not do any advertising to the providers and independently resell their
data; none of that occurs.
• Then trust and transparency are obviously critical.
Some of the provider data elements. You will be hearing, I think, from a
number of the other folks testifying today about which data elements are
relevant to each of the applications and the collection process and the
The goal of UPD is to collect the data once and then have one place to go in
to update it.
There are demographics, licenses, and other identifiers, including NPI,
which is very relevant to a lot of these transactions for which providers
enroll; education and training, billing collection information, hospital
There is also a sanctions tracking tool on the top of it that goes across
the 50 states and beyond. There are 480 sources for that data. So the extent of
the data is pretty wide.
This is an overview of some of the stakeholder support. You’ll see it is
from both the health plan and the provider piece. So as we think about what we
can do in this area and you all contemplate what the scope may be, building up
the trust and the collaboration is critical.
This is just a view of the online application. It’s like a tax-preparation
software. They can use it to pre-populate UPD and other non-mandated forms.
Then there are interview-style questions.
With the overview of the application enrollment efforts, because of the 700
data elements, how to access the data and receive it, it occurs in a number of
file formats — XML, ASCII PDF images — and users may elect to map only those
data elements relevant to them.
Given where UPD started, we wanted to make sure we are enhancing the
utility, so we have been looking at accuracy. It is already 95 percent
accurate. We want to get it up to over 97 percent and have a number of efforts
going on. We have a detailed report on that.
Supporting large groups. When you think about enrollment, there are
individuals and also the large groups. I think you will hear that from others
today. That’s a resounding theme. That’s a goal for us as we think about moving
Then redundancy across systems, how to make sure you’re reusing the data.
Then that public-private continuing — we have four Medicaids that are already
using UPD for provider enrollment. How do we continue to expand that and also
work with PECOS, which is the Medicare enrollment system?
Then additionally beyond that, really thinking about HIEs, EEI. We did a
meeting with a number of stakeholders in this room about how, for instance, you
could work with a number of sources like UPD for EFT enrollment. You may hear
later about that from some of the other testifiers.
Then partnerships on proofing and additional elements to help with routing
and administrative simplification priorities across the board.
That was the data source UPD, non-HIPAA transactions, the first step in the
enrollment process, and that credentialing step. Then going beyond that, how do
the operating rules fit into this? What data sets could be needed, what other
best practices exist, what other interactions with enrollment are needed?
Then as you think about each of the EDI transactions, they all may have
different needs; for example, EFT. There may be definitions healthcare uses
that are different than what the financial services industry uses. So as we
think about definitions, nomenclature, each of the transactions needs to be
looked at to make sure we are specifically talking about what we hope we are
I just will highlight this. The CORE EFT and ERA efforts, they really wanted
to look at — again, these two EDI transactions were separate, non-standardized
enrollment forms across all the health plans that were involved in the
operating-rule process and, obviously, the other health plans. There were
variations in data elements collected that the group looked at, and then a
number of elements that were in those enrollment forms that should be
So the CORE process went through and said, “How could we help this
process?” The scope of the operating rules apply to those two
transactions, and in these two cases, these operating rules apply to 70
different data elements that are in the EFT/ERA operating rules. They support
the standards, but the enrollment piece for those two transactions.
Then it outlines a number of high-level requirements, and it is working to
simplify the enrollment in those two transactions.
So as we are moving forward — I want to stay on time here — hopefully,
this information in the back is useful as well. We want to share our experience
with the committee as you all decide what you want to do with 10109. Not every
aspect of provider enrollment should be addressed by the standards and the
operating rules, and it really cannot be, given the time frames. This is a very
large area, and we need to pick and choose as to what the scope is.
Also, standards and operating rules should really enhance some of the
existing solutions. In thinking about that public and private effort, how can
we continue to help with provider enrollment to mate public and private?
Then, thinking about operating rules, we are interested, if you do decide
you need an author, we will be applying with CAQH CORE. Also, we want to share
any of the lessons learned with UPD moving forward about the enrollment process
for non-EDI and then also how some of those data elements could be used for the
EDI and HIPAA transactions.
With that said, thank you very much. Hopefully, I stayed right on time and I
gave a positive overview. This is a very exciting prospect, and you will see
throughout the day there is a lot to be leveraged with regard to resources,
standards, operating rules, and also lessons learned. Figuring out an
appropriate scope so we can really move forward with administrative
simplification will be very positive.
DR. WARREN: Okay.
Gail Kocher from X12.
MS. KOCHER: I want to thank the committee for the opportunity to provide
some information on the ASC X12 provider enrollment transaction or the provider
information transaction. I think Margaret already provided a background on X12
yesterday and the organization.
What we know is that providers do enroll for various business reasons. They
enroll to participate in a health plan or provider network. In that you have
basic enrollment data, things like provider — just general information,
demographic, education and training, and then you need that credentialing data
that Gwen talked about, that much more broad data that gets verified. There are
provider attestations, work history, malpractice history.
X12 transaction to date has kind of separated the two, because we met an
initial requested need to get that basic enrollment, and then the credentialing
data is in addition to that.
There is also the EDI application. You need data to identify who the EDI
submitter is and associate with an existing submitter. Then, of course, there
is the electronic funds transfer.
Our 274 provider information standard does accommodate multiple business
needs. The basic enrollment transaction that I mentioned, what it accommodates
is the ability to request or apply to or register with a health plan or
provider network. It also can be used to request application for enumeration,
such as the National Provider Identifier. You can use it to notify a health
plan, government agency, or network if there are updates. It can return the
identifier that is assigned by the enumerator.
Credentialing would transmit and request senders to supply that additional
credentialing data, and then you would be able to notify trading partners that
credentialing information is verified.
Then an EDI application would include again that data needed to enroll as an
Then there is the EFT that we talked about, provider directory. That’s where
you transfer network or affiliated provider information.
Then the electronic service information discovery; that is the query and
response to obtain the electronic service information, which includes
electronic address and security information to then facilitate that secure
exchange. This is being worked on under the ONC Standards and Interoperability
So we do believe that our 274 is a viable standard. It identifies the data
content that is needed for provider enrollment, specifically that basic
enrollment and registration, EDI enrollment, and EFT enrollment.
It does support all providers and their relationships. We accommodate
individuals, groups of individuals, institutions, and we can accommodate
NPI-eligible and atypical providers.
It allows the industry to utilize existing EDI infrastructures. Our
implementations can be made available in XML Schema formats.
The electronic file interchange for the NPI enumeration for the NPPES system
or that bulk enumeration, the XML Schema that they had issued for that was
based on the ASC X12N healthcare provider information 253 implementation. That
implementation guide was specifically updated using X12’s expedited process to
accommodate — there were a few business needs that were identified as gaps in
working in concert with CMS as part of that initial rollout. In order to meet
the CMS time frames, we were able to accomplish the updates that were needed to
make that available.
NCPDP is an electronic file interchange organization, and they do, or they
have in the past, used this to submit that bulk application for the NPI for
NCPDP has also formed a task group to address the pharmacy provider
enrollment now that this issue has come up, and we are all going to start
talking about it in more depth again.
The other thing that I just kind of want to highlight, we do use the
external code sources. The Health Care Provider Taxonomy code set that was
originally developed by X12 and CMS was turned over to NUCC in 2001. That is
consistent with the health care specialty code set that is used in other
transactions mandated under HIPAA, and it is also used in NPPES.
We do have the capability of using the provider characteristics code set
that was originally developed by X12. That was also turned over to NUCC a few
years after the taxonomy was. That would be used for that additional enrollment
and credentialing information. It does provide flexibility for some additional
data needs that can be identified to collect for provider enrollment, that then
you don’t have to worry about going back and updating or modifying your
The next steps that ASC X12 is taking are that we will update our existing
implementations as needed if there are new business needs identified. We are
going to complete the development of the S&I Framework Electronic Service
We will be creating an implementation for EFT enrollment, and we will
support piloting of implementations within the industry to make sure that the
business needs are met.
That was it. I got the sign yesterday, so I was worried about it.
DR. WARREN: That’s fast, record time. Thank you, Gail.
Our next speaker is Mari Savickis with AMA and AHA. Is George here with you?
MS. SAVICKIS: George is on the phone.
DR. WARREN: George is on the phone?
DR. ARGES (via telcon): I am on the phone.
DR. WARREN: Thank you. Mari, why don’t you go first, and then we’ll have
Agenda Item: AMA/AHA, Mari Savickis and George
MS. SAVICKIS: Okay, great.
Good morning. This is Mari with the AMA, and thanks for inviting us and our
perspective on enrollment.
I am going to start by discussing Medicare enrollment first and then get
into the commercial enrollment.
I don’t think a day goes by that we don’t get contacted by a physician who
is experiencing trouble with the Medicare enrollment process. It is very
complicated. It is fairly unsexy, but it is something that is necessary;
otherwise, they cannot start billing Medicare.
CMS has made significant strides over the past few years to streamline the
process, and we are very pleased with that. But we do believe that a standard
for enrollment would be very beneficial to create greater uniformity.
Hopefully, you all have a copy of my presentation. I don’t have slides, but
I have written testimony. So I am going to go through a few things.
I am going to start with discussing the 855 enrollment form. That is the
Medicare enrollment form. It is about 30 pages long, depending on which version
you have. There are several different versions of that 855. There is one for
independent providers like physicians, and there is another one for hospitals,
one for DME suppliers, and a few others.
You may have to complete more than one 855, depending on your situation. For
example, if you are a doctor who is also a DME supplier, than you need to
complete both of those, or you have had to in the past. I think that one
uniform standard would help reduce the number of applications a doctor would
have to complete.
There is also a lot of confusion. When a doctor calls in to Medicare trying
to figure out which form they need to complete, there is a lot of
misinformation out there and there is confusion on the end of the Medicare
contractor. The customer service representatives may not be well informed, so
they might get misinformation about what they’re supposed to do. Having a
uniform form on line would be very helpful.
A number of changes have been made to the 855 Medicare enrollment forms
lately; in fact there was just a new revision this year. So you need to use the
most up-to-date version; otherwise, your application could get rejected. That
has also resulted in a lot of confusion, so another way that a standard
electronic uniform version of a provider enrollment would also help reduce the
confusion over that.
The one question that we do have that we suggest that NCVHS look into is
that right now, with respect to Medicare, the PRA, which is the Paperwork
Reduction Act, applies when the government wants to collect information. So in
the case of Medicare enrollment, you’re collecting information on the 855 as
well as other related forms like the 588, which is the EFT form. So we were
wondering, if you move forward with a standard uniform method for doing
provider enrollment electronically, what would be the implications of the
government on the PRA process? Would the government still have to go forward
with the PRA process?
Right now, when they make changes to the 855 — they meaning CMS or Medicare
— you have to go through the OMB and ask OMB for permission. So that is
something to explore.
Right now, there are concerns about who can update enrollment information on
line. While CMS does allow a physician to delegate that authority to someone
else, it is incumbent upon the physician to be the one who takes the
responsibility for any changes that are incorrect, or I guess if their
information is used incorrectly, so I think that, again, a standard would help
tighten that up.
I want to talk a little bit about enrollment deadlines with Medicare. There
are always deadlines, and I thought it would be helpful just to run through a
few of these, just because there are unique needs for Medicare.
There is the Medicare enrollment provider start date. You cannot send in
your Medicare enrollment application sooner than 30 days from the time you want
to start billing in that location. So if you send it in 31 days in advance, it
is not going to work; they will send it back to you.
Also, you are required to report changes in a certain amount of time. In
many cases it’s 30 days. For example, if you’re changing ownership or financial
control, you have to report that within 30 days. A change in practice location,
other changes require 90.
There have been significant changes to the retroactive billing period, which
again may not sound like much to folks in the room, but it means how far a
doctor can go back, or a provider can go back, and bill Medicare. It used to be
27 months, but it’s no longer that; it is now 30 days from your billing
effective date. So these are just things to think about.
There is also an appeals process, not the appeal of a claim but an appeal,
if your provider application has been rejected or denied. There are four
possible outcomes. Basically, you are granted Medicare billing privileges —
great, that’s awesome — or you may be contacted for missing information. I
mean it’s a long application. If you’re missing even one piece of information,
you are not going to get billing privileges right away. You’re going to be
contacted by the contractor and be asked to submit that within a certain amount
of time. Or your application can be denied.
There are certain time frames that go along with that, which I have outlined
in our testimony on page 4. You would have to adhere to those. For example, you
can file a written appeal within 60 days or a corrective action plan within 30
There are also time frames that the Medicare contractors must meet. They are
held to these. They don’t always meet them, but they are supposed to meet them.
They are supposed to prescreen an application within 15 days to make sure
you’re not missing anything and then process it within 45 for the online
system, because there is the paper application and then there is also an online
There are also unique needs to Medicare. Program integrity — Medicare has a
fiduciary responsibility to protect the Medicare Trust Fund, and as such they
may collect information that is different from what commercial payers collect.
You have to report felonies to the government. Commercial plans may not need
this information, but Medicare does. If you’re a felon, you need to tell the
government that, or if you’re on the OIG watch list, you need to also tell them
One way, we would think, to get around some of these issues that are unique
to Medicare is maybe to do something comparable to what you do with the
transactions today; that is, you create optional — have Medicare report the
stuff that they need and then not report other things that the commercial
payers may not need.
A little more on — how much time do I have left?
DR. WARREN: Five minutes.
MS. SAVICKIS: Five minutes, okay.
DR. WARREN: You can do plenty.
MS. SAVICKIS: Running through this, the 588 form is also required for
Medicine. It is the electronic funds transfer. There also could be greater
standardization if you have a uniform process. There are also several
supporting documents, like a certification statement, which will need to be
submitted with your Medicare enrollment application. Again, creating a uniform
process for doing provider enrollment would create greater uniformity there.
Enrollment fees. There are some enrollment fees for certain providers. There
are still a number of challenges, though, that remains and may not be solved,
which I go into detail (about) in our testimony.
I want to conclude by just discussing the commercial market. There are a
number of problems with the commercial market as well, including a massive
number of credentialing requests from hospitals, health plans, and government
bodies. There is no uniformity also here of the data requested.
There is an incredible frequency of recredentialing. There is a big time lag
between the credential submission time frame and the approval, which is long.
Even if a payer has initially enrolled a physician accurately, there may be
still errors in the database.
So we do think that there is a significant opportunity here for a uniform
standard of provider enrollment to tighten up a number of these processes. In
our testimony we have listed some of these recommendations in more detail.
For example, we do support the UPD, which Gwen mentioned, as one of the
options for helping create uniformity. We also support the NCQA effort for
credentialing standards that was also mentioned. There are many states right
now which are using the UPD, which is helpful.
So I think that there are a lot of things out there that provide a good
framework for moving forward as a basis. I think the AMA would be happy to
continue conversations with NCHS on either the Medicare-specific requirements
or our experience with the commercial side.
I guess I will leave it there.
I will let you know that a long list of our recommendations, which I will
not go through because you already have a copy, are listed on pages 8 and 9 of
our testimony, as well as an appendix. You can see where there are state laws
that require a uniform credentialing application, which Gwen mentioned. I
think, for example, Ohio is one of them.
These are things that the committee can consider off line.
DR. WARREN: Thank you.
George, do you want to give your presentation?
DR. ARGES (via telcon): Sure. Thank you for allowing me to be part of this
panel. On behalf of our 5,000 member hospitals, I want to again thank you for
Really, I just have a few high-level comments. I think we’ve heard Mari
discuss very thoroughly all the difficulties that are associated with the
process. But we want the NCVHS to consider, really, a general framework that
should be part of this process.
As many have indicated, this is a disjointed enrollment process that treats
provider enumeration, certification, and credentialing as different steps.
Today’s process really creates inefficient, burdensome, and confusing
approaches for health plans and providers alike.
But improving the enrollment process is complex and will require incremental
improvements that build upon one another. There are several important steps
that can begin to overcome some of the core problems associated with
• Work to standardize enrollment forms.
• Establish a centralized online portal to handle provider enrollment
with all health plans.
• A process to evaluate the different health plan and state
• And really provide a stakeholder forum to establish dialogue on
enrollment and maintenance criteria.
In order to create this more efficient electronic enrollment process, we
need a better understanding of how provider information is used among health
plans and really begin a process of automating the routine work involved in
gathering that information.
The process should include methods for determining the steps needed to
create a standardized set of enrollment information among health plans and an
acceptable process for managing updates to that enrollment information. Such a
review must include how best to handle changes or updates to enrollment
information, as well as how to revalidate that information on a periodic basis.
While the enrollment process must meet the needs of all health plans, it is
also important that the process engage the provider community. Providers can
help evaluate the information gathered for screening purposes, as well as how
to go about managing changes to enrollment information, including changes to a
provider’s practice location and ownership.
A multi-stakeholder group of health plans and providers is essential to help
start the review process.
An online portal that can serve as the central point for gathering
enrollment information is important. Besides gathering the information, it must
provide a method for handling inquiries or complaints. It must be able to
design a process that establishes a responsive and timely mechanism capable of
expediting the provider enrollment process.
Because of the passage of the Accountable Care Act, which introduces new
entities such as the health exchanges and accountable care organizations, there
must be an understanding of how these new programs will utilize provider
enrollment information, and they must be included in the stakeholder discussion
We would urge, really, the NCVHS to start the process of improving provider
enrollment by starting with a series of recommendations to establish the
creation of a multi-stakeholder group. Again, the stakeholder group should be
charged with establishing a common set of provider enrollment information as
well as designing the standard forms and templates necessary for managing the
electronic communication of enrollment.
The group should report back to the NCVHS on an annual basis with a set of
formal recommendations that they want adopted for standardization of this
I will leave it there. I want to thank you again for the opportunity to
share our thoughts and insights on how we can collectively move forward with
the development of these standards for provider enrollment.
Again, thank you.
DR. WARREN: Thank you, George. That was really good. Did you send in any
DR. ARGES (via telcon): No, but I will send it in. I completed it yesterday
and I thought about sending it in, but I knew you guys were all there.
DR. WARREN: I was taking notes, but I think I lost about a third of what you
said on some of your lists, and I want to be sure I get it all.
DR. ARGES (via telcon): We’ll forward it.
DR. WARREN: Okay, thank you.
Our next is Irfan Ahmad. Was I close on saying your name right?
Agenda Item: ACH/banks, Irfan Ahmad
MR. AHMAD: Yes.
I will try to keep with the trend and keep things moving along.
I would like to start by thanking Dr. Suarez and Dr. Warren and the
committee for inviting me to participate in today’s discussions. As I said, my
name is Irfan Ahmad. I am vice president of healthcare payments at The Clearing
Today I will be sharing with you our perspective as an ACH payments operator
with respect to provider EFT enrollment. That is predominantly where I am going
to focus. I am not going to get into the broader provider enrollment topics.
A little bit about The Clearing House. The Clearing House is owned by 21 of
the world’s largest commercial banks, representing 58 percent of the U.S.
domestic retail deposits. We are one of two clearinghouse and settlement
service providers for our member banks and other financial institutions,
processing about $2 trillion in payments daily, representing half of the
automated clearinghouse, wire funds transfer and check imaging payments in the
Over the past few years, The Clearing House has also taken an active role at
the intersection of healthcare and banking through the creation of a healthcare
payments working group that includes some of the most prominent banks in the
country, testifying last year with NCVHS regarding standards and operating
rules and working with many healthcare industry players to better understand
their perspective on EFT enrollments.
Today provider enrollments for EFT payments, as we heard, is cumbersome,
duplicative, paper intensive, and substantially varied among health plans.
Earlier this year, The Clearing House worked with CAQH and NACHA to lead a
joint initiative, interviewing key healthcare industry stakeholders regarding
the EFT enrollment process, during which we were able to identify and validate
many of the pain points associated with the current state of provider EFT
As a part of the EFT enrollment process, providers are asked to use multiple
channels for registering their bank account information. These channels range
from paper forms that must be mailed to the health plan, emails from providers
to their health plan account representative containing the provider’s bank
account information, online forms that often require a subsequent paper form to
be printed and mailed or faxed to the health plan, and in some cases even
telephone calls to the provider’s account representative.
Once the providers have navigated the enrollment process for each individual
health plan, they then have to be ready to review and accept terms and
conditions associated with the health plan’s EFT enrollment form and meet
signatory requirements ranging from multiple internal and external signatories
to none at all.
Finally, upon completion of the EFT enrollment, the provider must still take
into account the potential need for data maintenance. While infrequent, changes
to EFT data do occur and can be just as cumbersome, duplicative, and paper
intensive as the initial enrollment.
In addition to being operationally cumbersome, current EFT enrollment
processes do not actively address fraud issues. For example, the use of a
pre-note merely verifies that an account is open and can receive payment, but
it does not verify any of the account holder details.
If a fraudster is able to forge a wet signature and submit EFT enrollment
documentation to a health plan, the health plan will likely enroll that bank
account for payment, as the forged signature and pre-note will not raise any
suspicion that fraudulent activity may be occurring. Similarly, written
verification on bank letterhead and even voided checks can be duplicated.
When taking a look at these most common practices for verification of
provider bank account information, we can see the root cause for potential
fraud to be the fact that financial institutions are not directly involved with
the verification of the provider’s bank account information. As financial
institutions are the only ones with direct access to the bank account data,
they must be directly involved with the verification process in order to combat
Further, in addition to fraud concerns, we believe data security is another
concern that must be addressed. In most cases, when a provider enrolls for EFT
payment, that provider’s bank account information is stored at the particular
health plan with which they enrolled. As we see continued growth of EFT
payments, this will mean that each provider could have their bank account
information housed at anywhere from a few to a few hundred plans. This will
result in increased exposure to a provider’s bank information from fraud and
potential data breaches.
By centralizing EFT enrollment data into one database that is designed to
hold and process financial data, these risks can be minimized. The banking
industry already has enrollment directories and products such as masked account
identifiers in place to address exactly such concerns.
In order to address the existing gaps in EFT enrollment and make further
progress towards administrative simplification, there are several steps that
need to be taken. These steps include:
One, development of a standardized EFT enrollment form. Developing a
standardized EFT enrollment form will be important to creating operational
efficiency and taking waste out of the system. A standardized EFT enrollment
form is a step in the right direction; however, it will not eliminate the need
for providers to perform multiple EFT enrollments. Further, a standardized
enrollment form in itself does not adequately address the pain points
associated with operational inefficiencies, fraud, and privacy concerns.
Two, creation of a centralized EFT enrollment database. In order to create a
true network effect, whereby a service becomes more valuable as more people use
it, we believe that a centralized EFT enrollment database will be required. By
creating one centralized data store for EFT payment data with multiple on-ramp
channels through which providers can enroll, many of the inefficiencies and
privacy concerns associated with today’s EFT enrollment process can be
Three, addressing fraud prevention. The only way to truly combat fraud in
the EFT enrollment process is to validate the information provided during
enrollment against the bank’s current records. In order to do this, banks must
be involved in the EFT enrollment process. Any other attempt at fraud
prevention during EFT enrollment that does not include verification against
banking information is, at best, a deterrent and not prevention.
Four, utilizing masked payment identifiers. Today health plans are
maintaining separate and distinct databases of bank account information for the
multitude of providers who are enrolled to receive EFT payments. The key to
protecting provider bank accounts from being breached due to acts of fraud is
limiting the number of individuals that have direct access to provider banking
This can be accomplished by centralizing storage of provider bank account
information and distributing unique masked identifiers that obscure the true
bank account number. The assignment of masked account identifiers should be
housed within the payments network and supported by financial institutions who
already take responsibility for the accuracy and security of customer
information. These masked account identifiers can be made available to health
plans to facilitate origination of electronic payments.
The banking industry is at the epicenter of all payment transactions.
Millions of payments are originated and received via various payment methods
utilized by financial institutions on a daily basis. In fact several financial
institutions are already providing EFT enrollment products which offer health
plans and providers the ability to leverage their existing banking
relationships to complete enrollment.
Further, the banking industry already has shared enrollment systems in
place. The creation of a centralized database eliminates the need for multiple
enrollments and also allows both health plans and providers to benefit from the
larger network adoption.
In conclusion, a centralized EFT enrollment process embedded within the
payments network will allow sensitive bank account information to remain within
the confines of the secure and highly regulated banking industry. Utilization
of such an approach will eliminate the need for health plans to maintain
multiple databases of provider bank account information for initiating
While the banking industry will play a pivotal role in supporting the
transition of payments from paper to electronic, collaboration between the
healthcare and banking industries will be key in the development of a
standardized EFT enrollment process. To this extent, cross-industry cooperation
is essential to achieving administrative simplification.
DR. WARREN: Thank you.
I apologize, Dave. So we have Dave Nicholson next.
Agenda Item: HBMA, Dave Nicholson
MR. NICHOLSON: Thank you.
Good morning. On behalf of the HBMA, which is the Healthcare Billing and
Management Association, I want to thank you for this opportunity to present on
whether the process for enrollment could be made electronic and standardized.
My name is Dave Nicholson, and I am president of Professional Management,
Inc., a medical-billing and practice-management company located in Baltimore,
Maryland. I am here representing the HBMA.
My company was founded in 1968, employs 55 individuals, serves 500 providers
in four states — Maryland, Delaware, Pennsylvania, Virginia — and the
District of Columbia. Last year we submitted claims to over 900 different
health plans. We consider ourselves in the trenches. We are the end user in
doing some of these things.
As for HBMA, our organization has 700 member companies, serves providers in
every state and in every specialty. The average member has 40 to 50 employees
and processes more than 400,000 claims per year. In aggregate, our member
companies employ more than 30,000 people nationwide and internationally.
Our members have significant experience with provider enrollment. Some do it
as an accommodation, while others provide this as a fee-for-service additional
On the other hand, providers may have to deal with enrollment only a few
times in their careers. Their staff has little experience and is unfamiliar
with the regulations and complexities of the enrollment process.
Our remarks will focus on enrollment.
In preparing our testimony, we attempted to address each of the questions
that were submitted to us ahead of time:
Question 1: Differentiate between enrollment for EDI and other electronic
It has been our experience that the terms “enrollment” and
“credentialing” are often used interchangeably, which creates
confusion. In our view, credentialing is the process of cataloguing and
verifying the clinical credentials of a health care provider or organization,
whereas enrollment is the process of registration of a provider with an insurer
or government program so that that provider can conduct business with the
insurer. The enrollment of the provider in a health plan is essentially a
gatekeeper function for each insurer.
It is our experience that enrollment and credentialing are frequently
independent of each other, although there are examples where commercial
insurers are both. We believe that it would be very helpful that the Secretary
establish a standard definition of the word “enrollment.” In our
written testimony, we have included such an example definition.
HBMA supports having an efficient and secure process to assure payers that
their claims they receive are from providers they know and trust.
Question number 2: How many provider enrollment forms and processes exist
today? I would envision that there is a different form for each of the more
than 2,000 health plans. My company has completed dozens and dozens of unique
enrollment applications. Along these lines, HBMA has collected some sample
enrollment documents and would ask that these be entered into the record.
We have enrolled thousands of physicians in governmental and commercial
plans. However, like many medical billing companies, provider enrollment for us
is a so-called “value-added” service rather than a core service. We
gladly provide this service, but we do not view provider enrollment as a core
part of our business.
Provider enrollment requires countless hours of redundant work. Even though
we maintain a great deal of the information in our systems, this does not
simply download or transfer to a health plan’s database. Instead, the
information must be manually transferred from our database to paper or entered
into a plan’s Web site. This information is essential to ensuring the provider
gets paid, so we go to great lengths to avoid errors.
Question 3: Is anyone sharing an enrollment system for providers? Yes.
Several years ago, health plans and provider organizations got together to
create CAQH. Out of this, the CAQH establishes the universal provider data
source, UPD, as part of CAQH’s credentialing application database project,
which sought to make the provider process more efficient for providers.
The CAQH initiative is voluntary. While many plans are using the UPD, most
do not, including Medicare and most Medicaid agencies.
Finally, we would note that several Medicaid programs piggyback on the
Medicare program’s enrollment process as a means of saving administrative
money. By requiring Medicare enrollment to serve as the proxy for Medicaid
enrollment, the states do not have to pay for or support this activity.
Question 4: How different is the data that is compiled by each health plan?
Not surprisingly, there is little difference in the data that the various
health plans ask for as part of provider enrollment. HBMA has compiled a list
of the most commonly requested information on the provider application form. In
our written testimony, we have given some examples.
Question 5: Would it be onerous to consolidate an enrollment data set? No.
CAQH and various states have done this on a statewide and nationwide basis.
Question 6: Are there systems that could be leveraged to be shared
enrollment systems? Yes. Obviously, CAQH is the obvious place to start, but we
could also envision the Medicare NPPES database being expanded to carry more
provider information than is currently being submitted.
Question 7: Are paper enrollment forms used extensively across health plans?
Are wet signatures required on enrollment forms by most plans?
In my experience, most of the plans that I am familiar with require wet
signatures. In fact, some plans dictate that the signature must be in blue ink.
Even with plans like Medicare’s new online PECOS system, the initial setup for
enrollment in PECOS requires a form with an original signature.
In the packet of information we are sharing with the committee, there is a
form that Idaho mandates for use for all providers and health plans. The only
problem with the Idaho form is you either must type or handwrite the
information onto the form. It cannot be done electronically. I am tempted to
ask how many people in this room still have a typewriter.
I want to specifically make some remarks about the Medicare enrollment
process. First, I want to acknowledge that Medicare and their enrollment staff
are working diligently to improve the Medicare enrollment process. PECOS is an
improvement, and HBMA has been part of the PECOS Power Users Group that is
working with CMS enrollment staff to make the system more efficient and user
We can say that there have been some dramatic improvements in the past year.
We would like to encourage CMS to work with us and others to come up with a
more efficient process.
Question 8: Is X12 a potential standard for provider enrollment? HBMA is not
familiar with the X12 initiative but would welcome the opportunity to learn
In conclusion, HBMA strongly supports the establishment of a centralized
data collection source to simplify the provider enrollment process. Can this
work? Absolutely. We have ample examples in other areas where similar types of
centralized systems work quite well. As noted earlier, CAQH has gone a long way
towards establishing the service. We believe that using such a system would
save countless hours, time, and money for the providers.
However, from my organization’s point of view, the quarterly updating
process is very tedious and one of the reasons why we have chosen not to use
Finally, we urge the NCVHS to recommend to the Secretary that Medicare
immediately begin discussions with CAQH or other equally reputable
organizations with a goal of coordinating the Medicare enrollment process by
the end of 2013.
DR. WARREN: Thank you, and I hate to admit it, but I do have a typewriter in
MR. NICHOLSON: You are very rare.
DR. WARREN: And it’s my husband’s, not mine.
DR. SUAREZ: What is a typewriter?
DR. WARREN: What do you mean, what is a typewriter? We have jokes going on
All right, we have written testimony from Jeanette Thornton that is in your
The next testifier we have is Zabeen Chong, who is on the phone.
Agenda Item: Zabeen Chong, CMS
MS. CHONG (via telcon): Yes. Hi, good morning everyone.
I have been asked to give an overview of the Medicare provider enrollment
process. I will be going over a high-level overview of what that process is, a
little bit of information on the PECOS system, and then some information on the
initiatives that CMS has in place for improving provider enrollment in
Really, the purpose of provider enrollment is to ensure that incoming
providers and suppliers meet all federal and state requirements necessary to
bill Medicare. This includes verifying that they have a valid practice
location, valid tax identification number, that they meet CMS regulatory
requirements, and that they are not excluded or debarred from the Medicare
program or have a felony conviction.
Prior to 1996, each Medicare contractor did have their own provider/supplier
enrollment form. I believe it was starting soon after 1996 that we moved to the
consolidated CMS 855. As AMA had indicated, there are various versions of that
form, depending on the type of supplier or provider that you are enrolling as.
There are five different versions of the form. There is the 855-A, which is
completed by institutional providers; the 855-B, completed by organizational
suppliers; 855-I, completed by physicians and non-physician practitioners;
855-R, which is used to reassign an individual’s benefits to another individual
or group; and then the 855-S, which is completed by DME suppliers.
We are working on efforts to consolidate these forms and streamline them. We
do recognize that they are lengthy. But the other piece of it is that we are
really also promoting online enrollment through our PECOS system, because that
is the simplest way. We do want to move away from the paper process, so a lot
of our efforts are around improving our online system so that people are going
in through that route versus sending in tons of paper to the contractor.
There are key pieces of information that we ask for on these forms: reason
for submission, their identifying information, whether or not they have adverse
legal actions, their practice location information, information on owning and
managing organizations, billing agent information. Then there is the
certification statement which is the last piece of that.
The PECOS system allows the provider to go in and choose why they are coming
into the system and what type of provider they are. Based on that, the
questions are then generated for them based on that scenario versus their
having to fill out a specific type of form.
We’ve tried to make it more of an online wizard for them. There are a number
of enhancements that we have coming in the 2012 and beyond releases. One of the
big ones that is coming out in January is the e-signature implementation. As
others alluded to, the fact that there is still a certification statement that
requires a wet signature, we are trying to move away from that, so that if you
do submit your application on line, there would be an e-signature process that
would allow them to fully submit their application in an electronic format.
We are also working on integrating the EFT form on line. Currently that is
only submitted in paper format. We are trying to incorporate EFT, the 588
questions, into that online PECOS system so that they can submit everything
In addition to that, there are efforts under way to allow providers to
digitally upload their documentation, so if it is something that cannot be
submitted electronically, such as licensing information, they could actually
upload that document along with their 855 submission through PECOS.
One of the other efforts we have under way is also looking at a way to
automate our screening process. Currently, when an 855 is submitted, if it’s
submitted in paper format, the contractor manually enters this information into
an administrative interface in the PECOS system manually. If they submit it
through the Web, it gets transferred over and there is no manual upload of that
Then once they get that information, they are required to verify and
validate the data. So they do things like check the OIG list, check the GSA
list, validate that they are at a valid practice location.
Going forward in January, we are planning to implement automated screening,
which will allow PECOS to talk to a third-party system which will consist of a
number of different referential databases such as state licensing databases,
LexisNexis — those are just to name a few — to actually screen the data in
automated format versus having the contractor have to go out to multiple sites
and validate the data.
That not only should streamline the process for enrollment, but it should
also allow Medicare to have more up-to-date data, have more assurances that the
data is valid, that the provider is eligible to enroll in Medicare.
For certified providers, there is a slightly different process in that for a
part A or part B certified provider or supplier, the Medicare contractor, once
they finish their screening process, they put that application into a
recommended approval status, and from there the enrollment goes over to the
state and the regional office to actually do the survey and certification
That tends to be a very lengthy process that is outside of the contractor’s
control. But it is not until that survey and certification piece is completed
that the Medicare contractor can actually approve that application and allow
that provider or supplier to bill Medicare.
One other thing I wanted to mention is that we currently do have an effort
under way to revalidate all of our providers and suppliers. This is part of the
Affordable Care Act, CMS 6028. We are currently planning to revalidate all
providers and suppliers by 2015, which is the target date. We’ve begun this
effort as of August-September of this year with the first mailing of
revalidation notices to providers that currently are not in the PECOS system
and exist in our legacy system. So we are trying to make sure that all
providers that are billing Medicare are in the standard PECOS system and we
have all of their data up to date and valid through this revalidation effort.
A lot of the efforts that we’re making with the PECOS system are to really
help streamline that revalidation effort. A number of the enhancements include
allowing the provider to go in if they’re already in the PECOS system, be able
to see all of their data in one concise screen, and be able to review it and
then submit if it’s all valid or edit it easily if it’s not, versus having to
redo an entire 855 paper application.
As I said, our initial efforts for the revalidation are for those that don’t
have a record in PECOS. The second phase will focus on providers who meet our
higher risk criteria.
I think that’s it for me right now. Thank you.
DR. WARREN: Thank you very much.
Do we have Pat Squires on the phone?
DR. WARREN: Do you want to say anything, Donna?
MS. SCHMIDT: I’m sorry. Again, my name is Donna Schmidt. I addressed you
yesterday. Thank you again.
I apologize that Pat Squires or someone from the D.C. Medicaid program is
not on the phone. We did have some logistical issues, and so we are unable to
have a Medicaid perspective for provider enrollment. If, however, there is not
a written testimony, we will make sure that you receive a written testimony so
that you have the Medicaid perspective.
Thank you again.
DR. WARREN: Thank you.
Agenda Item: Questions by the Subcommittee
DR. WARREN: With that, we open it up for questions. Walter, do you want to
DR. SUAREZ: Okay, sure. Thank you.
Well, thank you very much for this very interesting overview of so many
different issues. I, of course, was taking notes and have over a page of
summary themes now. But I wanted to highlight a couple of points.
We’ve heard that there are certainly multiple systems, multiple methods to
perform this. There are a number of national systems collecting data on
physicians, from the NPI to the UPD, to vendors. There are provider
directories. Every health plan provides enrollment in different ways.
So there’s a number of recommendations, I think, that have been coming out
on where to start, what to start doing, what to consider. I think probably the
most critical aspect we are going to have to look into is defining the right
scope of what needs to be done. Enrollment is such a large aspect, and there
are so many different meanings even to the term and different processes related
to that, from enumeration to the actual enrollment and verification,
credentialing even, the maintenance of the data and all that.
We heard about developing a general framework, creating common definitions,
defining the role of standards and the operating rules, and the reality that
there are things where they are good and will work and help, but there are
other parts where there might not be a need for, nor would it be appropriate to
define, specific ways of doing things, I guess, because there are still the
internal responsibilities of health plans and others to do different things
with the data. But it is important to consider what are the right places where
standards and operating rules can apply.
I like George’s recommendation of a multi-stakeholder group that can get
into more of the details and then bring back specific recommendations to NCVHS
periodically and to really consider approaching this from an incremental
perspective, identifying initial steps that can be taken, including basic
components like definitional issues, standardizing, where appropriate,
enrollment forms, and probably leaving the more complex issues to some later
steps in the development.
I have two or three quick questions. The first one is really for X12 and
maybe for others too. I was wondering about the standards themselves and to
what extent the provider information standard, the 274, if there is any sense
in statistics or numbers around how much of that transaction is being used by
health plans and providers.
MS. KOCHER: I may need Margaret to help me with this.
We do know, like I said, like part of the testimony, it is being used as the
basis for the bulk enumeration on NPPES. I believe that the broader use of the
standard is for provider directory use. I don’t believe that there are active
uses other than the bulk enumeration for the basic enrollment.
She’s shaking her head yes.
DR. SUAREZ: Great. Thanks.
For George — George, if you are still on the phone, and maybe others — so
who might be the right host of this multi-stakeholder group?
DR. ARGES (via telcon): That’s a good question.
Actually, having participated at CAQH’s process in terms of the electronic
funds transfer, I thought they did a terrific job of trying to bring together
the various organizations to identify the issues and problems and then put
forward a set of recommendations for a ballot. I thought they did a terrific
job of trying to do that. So I like what they have been able to do thus far,
and I would like to see that kind of continue. It’s one approach.
DR. SUAREZ: All right, thanks.
One of the things I was finding out through the testimony is that in this
case there is a lot more about business and operating rules themselves than the
actual standard. In most of the other work that we do the standard is a very
significant aspect and the operating rules are sort of a supportive element to
the standards. And here it is like there are a lot of areas where operating
rules as we are beginning to know them and business rules become much more
So thanks for that answer, George.
My last question is, very quickly, about — this is more for everyone, I
guess — we’ve been hearing a lot about the benefit of some centralization of
some of the information, whether it’s a centralized repository of data, that
serves not just the general enrollment of providers but also the enrollment for
EFT and for other purposes.
What are your general perspectives, I guess, to the testifiers, about that,
particularly providers and payers around the table here? What is your general
sense of that benefit? Right now, of course, the data is all over. We heard
basically provider enrollment and banking information, all those details,
resides now in every place where they actually apply to. So, conceptually, what
would be your perspectives about pushing for a centralized or moving into more
of a centralized type of a repository for this information?
MS. SAVICKIS: This is Mari with the AMA.
I think from our perspective, I think we would have to think about this.
There are always privacy concerns when you start having a massive database of
information. An alterative to that could be interfaces, like right now there is
no interface between CAQH’s UPD and the PECOS system. So interfaces might be
another option where you are allowed to collect information regionally or by
plan, and yet you can still maintain a standard where you’re asking for a
uniform amount of information.
I wanted to make one other comment that I did not make before that I think
is worth considering. That is there is no interface right now between the PECOS
system or any commercial provider enrollment system and the NPPES.
So even though the government — in this case it’s really CMS, particularly
really the Medicare staff — maintains PECOS, there isn’t any interface. So
even if you update your information for the NPI, which is a standard that is
not just to Medicare, it doesn’t just move over and automatically self-update
in this case in PECOS or other commercial systems.
So considering some kind of way for that to happen, I think that would
provide a lot, I mean as a starting point, would provide a lot of help, because
if you update your address in the NPI system, it doesn’t change anywhere else.
So that would be helpful.
MR. NICHOLSON: Dave Nicholson from HBMA.
Assuming that people could get the interfaces right and the security right,
we would support any effort to cut down on the work. So if things could be made
together and organized in one central place where we would only have to do it
once, I think all of our members would like that.
MS. LOHSE: Gwen Lohse from CAHQ.
Just two comments. One is, as Mari and also Dave emphasized, the
relationship between the databases could really be beneficial to the market.
I think there is a letter that would be really useful for the committee to
have. The AMA, the MGMA, I think the AFP — I will send it to you — suggested
how that could work between, for instance, UPD and PECOS, and we will share
that letter with you. I think the provider associations have really done some
thoughtful guidance on that.
With regard to databases, one of the things as we’re moving forward, we
should think about guiding principles. For instance, provider preference, not
for profit, items like that as we do — I think Mari brought up some good
points, and Dave’s, about sharing information across the databases; what are
those principles that we feel are essential?
DR. SUAREZ: I was just going to ask George if you have any reaction to
this, and certainly —
DR. ARGES (via telcon): I think I agree with what Gwen and Mari and the
other gentleman indicated. I don’t think it is as important to basically have a
centralized database. I think it would be nice to have a central portal that,
with the right credentials, as you enter into it, you can go to various
sections that would house other pieces of information, and they may have other
types of security associated with it, and that portion of that database would
be more secure.
But I think it’s figuring out the interfaces that go along with that. If
you update one, can some of that information then port over to another area
that is most critical, that sort of thing?
But I am not so sure that it is necessary to have a central database as
much as it is to perhaps have a central point to go to, to be able to input
DR. WARREN: Zabeen, do you want to comment on that too?
MS. CHONG (via telcon): Yes. I think having some type of portal may be a
better solution than centralizing the database. I know that CMS currently is
trying to move in that direction at least for Medicare and Medicaid provider
enrollment. We recognize that there are a lot of different systems that the
providers today are required to use. Allowing them to be in one centralized
location, whether the back end ends up being multiple data sources, that should
be just transparent to the provider.
MS. LOHSE: We had had some discussions with PECOS EPD, because as you think
of this as public and private, too, how do they work together, whether the
portal for the providers that interface with public and private is very
DR. WARREN: On my list I have questions from Lorraine and then Lynne and
MR. AHMAD: If I may comment on —
DR. SUAREZ: Yes, I think you were going to make a quick comment.
MR. AHMAD: Irfan Ahmad, The Clearing House.
I think I agree with a lot of what has been said. One of the main
challenges, I think, is going to be not all data necessarily belongs together
in one place, for a multitude of reasons. I think George brought up the point,
and a couple of others, about interfaces, and I think that will be part of the
key, because I don’t think you’re going to find one centralized place where
you’re going to hit public, private, clinical data versus other data.
DR. WARREN: Lorraine?
MS. DOO: Yes. I actually wanted to go back to one of Walter’s first
questions. Both Dave and Irfan had said something about a stakeholder group or
a collaboration, and I wanted to know a little bit more about your ideas of how
that would happen and where a good place for that would be, because you both
made reference to it, also, in addition to George.
MR. AHMAD: There are several places that have been doing stuff along these
lines. I know Gwen and CAQH, along with NACHA and The Clearing House — and
George referenced, I think, that session where we had an industry summit around
EFT enrollment — I know that there are other folks out there, including NACHA,
that have healthcare task forces, if you will, that pull in key players. I
think they are connected to some of that as well.
Outside of there, I would have to think about other areas that could work,
but I think the key is pulling all of the key stakeholders together across
vendors, payers, providers, and the banks.
MR. NICHOLSON: I think that responds to mine, and I don’t have much more I
DR. WARREN: I just have one quick question for Gwen. I just wanted to
confirm. There aren’t any commercial plans using UPD for enrollment to do a
bulk file download, for instance?
MS. LOHSE: There is also someone here — Atul Pathiyal can answer detailed
questions on EPD.
With regard to the health plan enrollment, the providers that are
registered, the health plans all receive the information and then they can
reuse the data. There is a study that we’re actually doing with a number of the
plans about how they can reuse that data to ensure higher quality, less
redundancy, et cetera, and we can share that report with you. I did mention
that a number of the Medicaid plans are using it to assist with enrollment as
DR. WARREN: Right. That’s what I wanted to check.
MS. LOHSE: You are starting to see that, and we would like to share the
details with you because it is a pretty strong report.
DR. WARREN: Thank you.
Lynne, you have a comment.
MS. GILBERTSON: Lynne Gilbertson, NCPDP.
I just wanted to mention that if there is exploration, there are quite a
few products in the market that do assist in the enrollment processing.
The other point just for consideration is the enrollment process in a lot
of cases consists of a contractual relationship. So when two parties are
involved and now you put a third in the middle, the two parties may not agree
that the third party can represent them legally. So we have to consider that
there are legal ramifications of centralizing and offloading functions and
things like that.
DR. WARREN: Thank you very much.
We are running out of time, so do you have a really quick one? Real quick.
DR. CHANDERRAJ: I think one of the major stakeholders are the federal
licensing boards or the state medical licenses, and the national data bank
people also need to be involved, because some of this information through
portals can be exchanged and we don’t have to re-update all this.
DR. KLOSS: Actually, I think that I can be very quick.
Yesterday when we talked about claims attachments, we had some testimony on
the kinds of cost savings that could come from re-looking at the process.
I was just asking whether any who testified have done any work in the
administrative simplification cost savings. I know that work has been done with
regard to credentialing, but for the broader provider enrollment area. If you
do, that would be helpful to look at the scope of the opportunity.
DR. WARREN: I think at that point what I will ask for is if anybody does
have any of that information that they could send it in to Lorraine so that we
can process it.
I want to thank the panel very much. I learned a lot this morning.
With that, I would like to have the next panel come up so that we can try
to stay somewhat on time today. While they’re taking their places, we cannot
say it too much: Walter and I really appreciate all of the effort that has gone
in to everybody preparing testimony and everything else. You make our job a lot
Agenda Item: Session II — Applicability of
Standards to Other Insurance Types
DR. WARREN: Let’s settle down so we can start the next panel. We’re going to
be talking about applicability of standards to other insurance types. Again,
this task was given to us by the Affordable Care Act.
So, with that, we are going to be talking about workers’ comp. Our first
speaker is Greg Krohm.
MR. BATEMAN: We were going in a different order.
DR. WARREN: Then you guys take off. You just tell me who you are when you
MR. BATEMAN: I’m Keith Bateman. I’m going first.
MS. DOO: Just a quick question. If you need help with the slides — I know
it’s a lot of them — let us know so we can come and queue them up for you. If
you have any question about the slides, the red thing that comes up with that
“Yield” sign does not mean 1 minute, it means 5 minutes. So don’t
panic; you have plenty of time left when you see that first sign.
Agenda Item: Property and Casualty, Keith
MR. BATEMAN: Okay, thank you.
Thank you very much. My name is Keith Bateman. I am with The Property
Casualty Insurers Association of America. We represent 1,000 property/casualty
insurance companies. Some of our members are very small, some are large. Some
write only personal lines, some write commercial lines, some write multiple
I am going to provide a high-level overview of the property/casualty
coverages. That was what I was asked to do. Others will fill in with more
In 1996 Congress recognized that the property/casualty coverages were
different than health and passed the provision excepting our benefits from the
provisions of the administrative simplification.
The Affordable Care Act did not repeal the excepted benefits provision — it
in fact amended a lot of provisions around that provision — but did require
the Secretary to “seek input” by January 1, 2012, on whether these
excepted coverages should be brought in.
We believe Congress was right in 1996 and that decision is still correct
There are significant differences between property and casualty from health.
A “claim” on the health side is a bill. A “claim” on our
side is a demand for payment as a result of a covered incident and covers a
variety of payments within that demand. It covers all the payments in that.
Therefore, having our claim number is very important to us to be able to match
bills, demands, back to the claim.
Secondly, we don’t have enrollees. For example, in workers’ comp, the minute
you walk through the door as an employee, you are covered under workers’ comp,
and you may be covered after you have left that employment for an incident that
occurred during that employment.
Similarly, a lot of our coverages are ones where our first involvement with
a claimant is when they make a claim against us. We have no contractual
relationship, or any relationship.
We talk about two types of coverages. We talk about first-party coverages
where the claimant is our insured — and that is an oversimplification, as
others may want to expand — and we have third-party coverages, again where
someone is claiming against our insureds.
Our coverages involve legal and medical issues. We have to make a
determination whether it’s something we are responsible for. Things we have to
use medical information for, other than treatment and payment, are to determine
causation and/or responsibility in some cases, the extent and duration of
impairment or disability, whether there are unrelated causes that are really
the reason for the medical treatment, whether it’s a new injury or an old
injury which may determine which carrier and which employer is responsible, for
example, in workers’ compensation. We need information in order to establish
appropriate vocational and occupational rehabilitation programs for folks.
Our coverages are broader than health. I will let others explain some of the
wide variety of providers that we end up paying for, but it is broader than
what you are paying for. Not only that; we are paying for a lot more than
health. We pay for lost income, we pay for pain and suffering, we pay for
attendant care, we may pay for long-term care, depending on the coverages.
We are less likely to have any sort of ongoing relationship with the
providers. First of all, the PC industry is much less concentrated than the
health industry. Second of all, the thing that triggers our relationship is a
claim, and those claims are not regular occurrences.
I pointed to a study by the California Workers Comp Institute in our written
statement that shows, over an 8-year period, two-thirds of the providers had a
very, very limited number of workers’ comp claims that they were dealing with.
And these were the ones that were in the system, not the ones that never
treated the workers’ comp cases.
We process a much smaller volume of bills than you do on the health side.
Our coverages vary considerably. We have ones where people are mandated to
have our coverages. We have ones where it’s totally voluntary. The source of
coverage requirements may vary. It can be totally by statute, workers’ comp.
The statute is your contract in terms of what benefits you provide. They may be
a mixture, as in some of the no-fault states, of statutory requirements and
contractual requirements, or, like in general liability, they may be entirely
contractual. This varies by jurisdiction, as my friends from State Farm will
explain to you in their testimony.
Again, as I said, we have the first-party/third-party claim issues.
We also differ in the medical obligations, again by line. In some cases you
may have very low policy limits. For example, the average no-fault policy state
requirements are a $5,000 medical limit, but you have Michigan which has
unlimited medical. In workers’ compensation in most states medical is unlimited
in both duration and amount.
We also differ on who we pay from the health side. Yes, we pay providers in
some lines, some coverages, but in other circumstances we may be paying the
claimant, who then reimburses the providers, or in a liability case, we may
simply be paying damages. That is a pot of money that the claimant has to
decide how they’re going to use and pay for their medical bills.
We really believe that you ought to allow us to evolve into the healthcare
system. We are well aware that we are, as somebody once put, the flea on the
tail of the dog in terms of the total health expenditures in the United States.
I don’t have an exact figure, but I know that in comp the federal government
figure is 1.6 percent. If you figure all lines, you’re talking somewhere
between 4 and 6 percent of the total healthcare dollar in the United States.
Our transaction volume is much lower than yours. I have estimated in terms
of bills — now, this is bills, not transactions — that in workers’ comp we
pay nationwide about 40 million bills. Contrast this with statements that all
together there are 4 billion bills that are processed in this country. Medicare
alone, in part A and part B coverages, processes 1.2 billion. The healthcare
side has had 15 years’ head start on us, and as you know, there still isn’t 100
percent electronic transactions, for a variety of reasons. I have cited some
examples in my written testimony.
We have been working with the standards bodies which over the years have
been dealing with the health issues to try to explain the needs that we have,
either because of our coverages or because of state requirements, and work with
them to do workarounds or fixes to take our things. But that takes time.
Of our coverages, workers’ comp is the furthest along because we have three
states that have mandated, either like California, that we be ready to accept
bills electronically, or states like Minnesota and Texas, where both provider
and payer are required to be able to engage in electronic transaction sets.
I think Minnesota provides a good example of what happens when you mandate
standards before folks are ready to go there. Carriers went and spent
considerable sums of money to get ready to receive bills electronically, and we
are getting very few bills received electronically. I cite some figures. The
highest number I could come up with somebody getting 15 percent of the bills
Again, you have some small carriers that it is not economically feasible for
them to be involved. If you have 10 claims a year in a state, electronic
transactions don’t necessarily make a lot of sense. You have to have the
infrastructure in place to assure connectivity, work out the issues. Some of
them involve working with state governments to get them to change their
requirements as well. So this is an area where we believe that time has got to
be allowed to work this out.
Again, think of yourself as a health clearinghouse or a provider. When you
have comp, particularly if you’re not specialized in those specialties that
deal a lot with comp, where are you going to try to assure connectivity on
electronic transactions — with the 95 percent of the dollars or the 5 percent
of the dollars? So you can see, from a priority point, where we come (from).
We believe uniformity will be achieved when it is in the best financial and
business interests of both providers and property/casualty insurers. We went
towards uniformity in the comp reporting stuff simply because of the fact that
it made good business sense to try to eliminate multiple state requirements.
Again, as I said, you are going to hear from others, but don’t assume
electronic transactions make sense for all our coverages. If you force us into
the health mold prematurely, you are going to still have differences and you’ll
have failures. Give us a chance to evolve.
DR. WARREN: Thank you.
Are you next, Greg?
Agenda Item: Workers Compensation, Greg Krohm, Bruce
Wood, Lisa Wichterman and Don St. Jacques
MR. KROHM: Yes.
Good morning. My name is Greg Krohm. I am the executive director of the
International Association of Industrial Accident Boards and Commissions. We
represent primarily workers’ compensation state regulators and regulators
throughout the world. Many of our members are non-jurisdictional members, and
one of our jurisdictional members is on this panel with us this morning.
I am by background a regulator. I have worked for the state of Wisconsin for
over 25 years as a regulator in other regulatory capacities.
I am in general agreement with the excellent points that Keith just made
about the peculiarities and differences of the property and casualty insurance
industry and how it differs from health care. Within the property and casualty
insurance industry, workers’ compensation is the largest single segment as
judged by premium. So we are the biggest single chunk of property and casualty
As Keith alluded, workers’ compensation has a diversity of state laws. I
could go on all day talking about the differences from state to state in
workers’ comp law. Seeing one state is seeing one state. Workers’ compensation
is the oldest form of social insurance, and this is the centennial of workers’
compensation. So for 100 years states have been developing their own particular
approaches to workers’ compensation, indemnification, and medical payment.
Workers’ compensation, as Keith alluded to also, is very different than
health insurance. You will hear testimony in this panel today about those
differences, differences in terminology, differences in legal structure. But
the difference that I would like to stress, and this difference is extremely
important — it produces almost a visceral reaction from both regulators and
payers — is that the free flow of information, and that includes personally
identifiable medical information, must persist in workers’ compensation. It is
essential so that workers can get their indemnity or their wage-replacement
checks as timely as possible. Having been a regulator who has heard from
workers who have had their wage-replacement checks interrupted because of
hang-ups in getting medical reports, I can assure you it is a very big deal
with injured workers.
Second of all, workers’ compensation in its ideal, in its best
manifestations, tries to get injured workers back to work as quickly as
possible and as safely as possible. This requires very, very immediate and
detailed collaboration between the payers, the employers, and the medical
providers. Hence, this free flow of information between all the parties to the
claim has to persist.
The IAIABC has worked for over 20 years to develop electronic standards for
states to report to regulators. This has been a very challenging process
because of this diversity of state laws that I mentioned. The IAIABC now has
first reports of injury, subsequent reports of injury, that are widely used by
the states, and it is an increasing trend. The states are really on board to
use EDI to receive their regulatory reports.
So we as an association strongly support electronic standards as a means of
improving the efficiency of workers’ compensation systems.
Now, EDI for provider medical billing and payment has great appeal within
the workers’ compensation system. I have heard from many medical providers
through the years, and most recently, that electronic standardization of
transactions is very important to providers from controlling their costs. I
have also heard from insurers, our member companies in our association, that
they are coming around to the belief that EDI and ProPay — or
provider-to-payer electronic billing, as we call it — is a good thing for them
in the workers’ comp industry.
The state of Texas took the lead in developing an eBilling system. The state
of Minnesota followed suit. The state of California recently enacted
administrative rules to refine and enhance their eBilling initiative in
California. We think that this is a process of eBilling whose time has come.
So we, the IAIABC and its members, both jurisdictional and
non-jurisdictional members, have worked very, very hard within the X12
structure to create a model eBilling system. We are very gratified by the
cooperation of many people on this panel who have worked very hard within X12,
within a national standard-setting organization, to promote something that
works for workers’ compensation.
We have a memorandum of understanding with X12 and other standard-setting
organizations, and we are delighted to work within that structure.
We also work with other organizations in partnership, such as the National
Association of Insurance Commissioners and various provider groups, to promote
Electronic bills and acknowledgments are now possible in workers’
compensation. For the vast majority of situations, eBills can be processed just
like a health claim. There are necessarily some state exceptions where there
are specific codes, and specific state business rules apply. This is an
inescapable fact of the nature of workers’ compensation.
We as an association are working with our members, our jurisdictional
members, to try to promote uniformity, however, to ease off on idiosyncratic
requirements that don’t have a very strong inherent business reason in their
state workers’ compensation system. So we are trying to promote as much
uniformity as possible.
In the future, the IAIABC is committed to work with other standard-setting
organizations to harmonize this process of electronic EDI standards within the
workers’ comp system with general health transactions.
Some health transactions do not apply to workers’ compensation. That is just
abundantly clear. Things like coordination of benefits, or other X12
transactions sets don’t apply fully or at all to workers’ compensation.
The IAIABC will continue to work with its members to implement eBilling
nationwide and to do it as uniformly as possible.
I would like to end on a positive note to say I am convinced that eBilling,
its time has come. Not only is it working very successfully in Texas,
Minnesota, but soon it will be spreading as it has to California. Louisiana has
adopted the IAIABC model eBilling rule. The state of Illinois has enacted
eBilling as statute. We think North Carolina and many other states are going to
come on board very quickly.
So eBilling is really in the future for workers’ compensation, and the
IAIABC intends to support it as fully as possible.
DR. WARREN: Thank you.
Bruce Wood, are you next?
MR. WOOD: I am.
Good morning, all. First of all, I am Bruce Wood. I am associate general
counsel and director of workers’ compensation with the American Insurance
I don’t have a PowerPoint this morning, unlike others. I will just talk to
AIA is, like PCI, a national property and casualty trade association. We are
headquartered here in Washington. We have six regional offices around the
country. Our members are generally the much larger national multi-line and some
with global operations.
They write a lot of workers’ compensation; in fact they write more workers’
compensation than anything else. So they have a huge stake in this
The conversation this morning is focused, in the narrower sense, on
compatibility of uniform data transaction standards. I want to embrace what has
been said before here, but I wanted to focus this morning on the privacy
aspects, the HIPAA privacy aspects and its treatment of workers’ compensation.
Importantly, there is a long history, as Keith alluded to, that really goes
back to ERISA and the accepted benefits construct that was carried over into
HIPAA in 1996 and then translated when the HIPAA privacy regs were promulgated
first by the Clinton Administration in 2000 and then reaffirmed early in the
Bush Administration during that evaluation in 2002.
So there is a fabric of statutory and regulatory precedent that
distinguishes health plans and liability systems, including workers’ comp. So
that is why it is critically important to take cognizance of the entirety of
all of this fabric.
There are distinctions because Congress recognized that not all systems were
the same, with the same informational needs. Workers’ comp payers, insurers,
and self-insured employers require unimpeded access to medical information to
evaluate compensability and to effectively manage disability.
Property and casualty insurance differ from other types of insurance because
the policyholder is typically not the party claiming benefits but, rather, a
party against whom a third party is asserting legal rights and whom the insurer
owes a contractual duty to defend and indemnify.
So the information that a property and casualty insurer needs in evaluating
and settling claims is not information in its possession but is information in
the hands of a claimant third party. So, as Keith alluded to, there is a
critical need for P/C insurers to have unimpeded access to medical information.
The privacy rules need to protect the workers’ comp insurers’ ability to
obtain, use, and disclose health-related information without an authorization,
without these kinds of impediments, and not permit such changes to be subject
to conditional release by an injured worker who has placed his or her medical
condition at issue.
The bright-line distinction between obtaining a release for medical
information in connection with a liability claim and exempting workers’
compensation from authorization requirements, as the HIPAA rules do, is
grounded on this fact: In property and casualty insurance, other than workers’
comp, a party still must prove fault. Failure to provide information necessary
for the insurer to make a judgment about the merits of a party’s claim means
the plaintiff will be unable to prosecute the claim. At least up to the point
where unfair claims settlement practice laws would apply, the insurer could
refuse further consideration of the claim.
So the key objective for liability insurance is to prevent interference with
downstream disclosures that embody legitimate insurance functions such as
exchanging information with industry databases and protecting against fraud.
But workers’ compensation is different. Workers’ compensation is a no-fault
system. The insurer’s obligation is to pay benefits, and to pay benefits within
a certain brief period of time after filing a claim, unless it is going to be
controverted. So the absence of an authorization requirement in workers’ comp
ensures the carrier is able to obtain medical information expeditiously and to
make timely judgment about the merits of the claim; and, having made a timely
judgment in favor of the claimant, ensures that benefits will be initiated
promptly as the statute requires.
I think that sometimes gets lost in the privacy debate, that the need for
unimpeded access to medical information and for downstream disclosure of that
information is certainly not just in the interest of the insurer that is
required to pay benefits; it is in the interest of the injured worker to whom
the insurer owes an obligation to provide medical treatment on an immediate
basis and to make decisions about the nature and extent of that medical
This also goes to a point that there is sometimes a misunderstanding about
what workers’ compensation is. Some people equate workers’ compensation with a
health plan. Of course, it is not legally, but it is thought of in that way.
But medical treatment under workers’ compensation is not the same as medical
treatment under a health plan. Workers’ compensation is not a health insurance
plan; it is a disability plan. It is a disability program.
So the function there, the requirement there, is to manage disability. It is
to provide medical treatment with the objective not just of curing the injured
worker but to return him to work. That is the essence of managing disability
and effectively managing disability.
As I mentioned, both the Clinton Administration and the Bush Administration
recognized the distinctions, special informational needs, of the workers’
compensation system. I just wanted to read a paragraph because it further makes
the point, reinforces the point, about the concerns that two administrations on
a bipartisan basis had about restricting the flow of information in workers’
In 2000, with the promulgation of the initial HIPAA privacy rules, the
“In drafting the proposed rule, the Secretary was faced with the
challenge of trying to carry out the statutory mandate of safeguarding the
privacy of individually identifiable health information by regulating the flow
of such information from covered entities while at the same time respecting the
Congressional intent to shield workers’ compensation carriers and other
excepted benefit plans from regulation as covered entities.”
“In the final rule, we include a new provision in this section that
clarifies the ability of covered entities to disclose protected health
information without authorization to comply with workers’ compensation and
similar programs established by law that provide benefits for work-related
illnesses or injuries without regard to fault.
“Although most disclosures for workers’ compensation would be
permissible under other provisions of this rule, particularly the provisions
that permit disclosures for payment and as required by law, we are aware of the
significant variability among workers’ compensation among workers’ compensation
(sic) and similar laws and include this provision to ensure that existing
workers’ compensation systems are not disrupted by this rule.”
The Bush Administration, the HHS in 2002 in repromulgating, reevaluating the
rule and repromulgating, stated:
“The Department understands concerns about the potential chilling
effect of the Privacy Rule on the workers’ compensation system. Therefore, as
the Privacy Rule is implemented, the Department will actively monitor the
effects of the Rule on the industry to assure that the Privacy Rule does not
have any unintended negative effects that disturb the existing workers’
“If the Department finds that, despite the above clarification of
intent, the Privacy Rule is being misused and misapplied to interfere with the
smooth operation of the workers’ compensation systems, it will consider
proposing modifications to the Rule to clarify the application of the minimum
necessary standard to disclosures for workers’ compensation purposes.”
To conclude, it is abundantly clear that it is a long historical record of
distinguishing between and among payer systems, because not all payers are
alike, not all payer systems are alike, not all data is equal, and data needs
differ. I think all of what we’re saying here could pretty much be distilled in
those few short sentences.
With that, thank you very much.
DR. WARREN: Thank you.
Next we have Lisa Wichterman from Minnesota.
MR. BERGNER (via telcon): Good morning. I just want to let everybody know
Jon Bergner from NAMIC is on the phone. I am not sure where I fit in to this
panel, but just let me know whenever you would like me to present.
DR. WARREN: Okay, thank you. We will let you know. Thank you for jumping in.
You are about two or three speakers from now.
MR. BERGNER (via telcon): All right, thanks.
MS. WICHTERMAN: Thank you to the co-chairs, members, and staff of the
subcommittee for the opportunity to present today.
My name is Lisa Wichterman. I am the medical policy specialist with the
Minnesota Department of Labor and Industry. I will be presenting today from a
state’s perspective on workers’ compensation.
Workers’ compensation differs from general health care as it is a legal
system; it is based on statutes and rules. Each state has different laws and
policies regarding workers’ compensation, and the payment of medical bills may
greatly differ from the way a bill is paid under a general health insurance
In workers’ compensation, medical bills are paid based on law, including
medical fee schedules and other regulations, legal settlement agreements, or a
judge’s order as a result of litigation.
If standard electronic transactions are to apply to the workers’
compensation industry, flexibility in transaction standards is needed.
The workers’ compensation industry appreciates the value of electronic
transactions. Paper health care transactions are expensive and inefficient for
health care providers and payers. The general health care system has shown that
one electronic system improves efficiency, is fast, increases accuracy and
accountability of stakeholders, and decreases administrative costs.
Unfortunately, the current 5010 standards were not designed for workers’
compensation systems. Trying to implement the standards designed for general
health care has been very difficult for workers’ compensation stakeholders.
Several workarounds have been applied to the standards in an attempt to include
workers’ compensation. Many stakeholders simply give up and continue to send
paper. We understand that efforts to improve the next version of the standards
to be more compatible for workers’ compensation are being done. But an ideal
standard that workers’ compensations stakeholders would embrace is not
Minnesota workers’ compensation has had firsthand experience with the
standard electronic transactions. In 2009, the Minnesota legislature mandated
electronic medical transactions for all health care providers and payers,
including workers’ compensation. Minnesota workers’ compensation has taken an
electronic format designed for transmitting health care transactions in the
general health care insurance system and has made modifications to allow for
submission of workers’ compensation health care transactions.
Minnesota workers’ compensation has done this while still remaining
compliant with jurisdictional legal requirements. The lengths that Minnesota
has gone to to be compliant using the existing standards, stresses the need for
flexibility of the standards.
Many states, including Minnesota, require health care providers to send
payers a medical record documenting that the treatment was needed to treat the
work injury. Transmitting a medical record along with the 837 has been and
still is one of the biggest challenges in the electronic process. To overcome
this challenge, a method has been developed to match the 837 with the medical
record through the use of a unique number placed in loop 2300 PWK segment of
the 837 and the same unique number placed on the paper medical record so the
837 and the medical record can be paired together.
Currently, most medical records are faxed from the health care providers to
the workers’ compensation insurer/payer.
The next hurdle for workers’ compensation is the transmission of electronic
data between the health care provider’s clearinghouse and the payer’s
clearinghouse. This has been such a significant problem that Minnesota had to
amend the law to require clearinghouses to transmit and receive electronic
transactions to and from any other clearinghouse or trading partner that
requests a connection.
This brings us to our biggest challenge that we have encountered. The
existing claim adjustment reason codes, CARC, and the remittance advice codes
did not communicate the legal citation for the reduction or denial of a medical
charge, which is required by Minnesota workers’ compensation law.
The ASC X12 5010 835 does not have freeform text ability. For the 835 to be
compliant with workers’ compensation rules, Minnesota aligned with the
International Association of Industrial Accident Boards and Commissions, the
IAIABC, to modify existing CARC and draft additional CARC that fit the
jurisdictions’ legal and other needs unique to each state workers’ compensation
Minnesota and IAIABC members presented the proposed CARC codes to the X12
work group to ensure compliance of the wording. Minnesota and IAIABC members
then presented the CARC to the X12 Codes Committee to vote on for approval.
The Minnesota Department of Labor and Industry drafted specific 835 workers’
compensation rules. These rules require workers’ compensation payers to specify
in the Insurance Policy Number Segment 2100 loop, “Other Claim Related
Information” and the Healthcare Policy Identification segment, 2110 loop
of the 835 remittance advice transaction, an enumerated code to identify the
basis for its adjustment or denial of a medical bill or charge. This code
specifies the workers’ compensation statute and rule the payer is citing as its
support for the adjustment or denial. A code list that describes the basis for
the adjustment or denial was developed and placed on our Web site for
stakeholders to access. Now a compliant 835 can be sent from the payer to the
health care provider.
These examples illustrate the workaround workers’ compensation must do with
the standards to ensure transactions meet the legal requirements and processing
needs of a jurisdiction. This is a time-consuming and burdensome process.
Despite all the hard work and effort, one Minnesota payer has estimated that
fewer than 10 percent of medical bills were successfully transmitted
electronically. This shows the need for flexibility of the standards to align
with workers’ compensation.
Workers’ compensation uses the HCPCS, CPT, and ICD-9 code sets. Some states
do have some specific procedure codes in addition to CPT procedure codes.
Minnesota workers’ compensation is in the process of transitioning our laws
that specify ICD-9 codes to ICD-10 codes. The change to ICD-10 requires
Minnesota to go through the formal rulemaking process, which can take several
months to complete. On October 1, 2013, ICD-10 codes will be required for
Minnesota workers’ compensation.
Coordination of benefits in workers’ compensation systems is not a
traditional type of COB; it is a legal process. In Minnesota, if a dispute
exists as to whether an employee’s injury is compensable, and the employee is
otherwise covered by a general health insurer, the health insurer must pay any
medical costs incurred by the employee for the injury up to the limits of the
applicable coverage. If the injury is subsequently determined to be
compensable, the workers’ compensation insurer must reimburse the health
insurer, including interest.
The standards governing enrollment and disenrollment in a health plan,
eligibility for a health plan, and health plan premium payments would not work
in workers’ compensation systems, because liability is established only when an
injury occurs. Therefore, Minnesota law requires workers’ compensation
providers and payers to comply only with the health care claims, health care
payments, and health care acknowledgment transactions.
However, the referral certification authorization transactions could be
useful in the workers’ compensation system, and we would be interested in
further exploration of these standards.
The IAIABC has a standard for the employer’s electronic first report of
injury that is currently successfully used in about 30 states. The IAIABC’s
first report of injury standard includes security measures, acknowledgments,
and tracking methods. We are requesting the NCVHS recommend the implementation
of the IAIABC standard for the first report of injury, as it meets the needs of
individual jurisdictions. A first report of injury to be used by health care
providers may be worth exploring further with the IAIABC.
Three states have been working diligently to implement the applicable
electronic standards: Minnesota, Texas, and California. Other states have made
inquiries but are cautious at this time to move forward with the conversion due
to the complexity of the standards and the initial implementation costs.
Standard electronic transactions are definitely a tool that will be valuable
to the workers’ compensation industry. A compatible set of standards that will
easily function with all lines of health care transactions is optimal. Because
each state has different workers’ compensation laws and systems, the standards
cannot be rigid and must allow for flexibility to accommodate different state
The IAIABC is in an excellent position to coordinate the needs of individual
states in implementing electronic transactions.
DR. WARREN: Thank you.
Next we have Sherry Wilson and Don St. Jacques.
MR. ST. JACQUES: While we are getting our slides started, good morning. I am
Don St. Jacques, senior vice president of business development and client
services for Jopari Solutions.
We would like to thank the subcommittee for allowing us this time today to
spend sharing with you a little bit about what is going on in the industry
right now of the practical application of these standards as they relate to
electronic billing in the property and casualty and specifically the workers’
We have several different areas we want to cover today. We are going to
spend some time first giving you a little background about who is Jopari, who
we represent. We then want to give you a little historical view. You’ve
probably seen some of this material before. You’ve also heard a little bit more
of it in the previous presentations with our panelists.
But what we want to do is give you a practical application of how this is
being applied. We are also going to be, “Where are we now?” because
there are some well-defined benefits that are being achieved by folks who are
utilizing EDI; and then also our recommendations to you as representing a very
large cross-section of the industry.
Some quick background about Jopari Solutions. We are a privately held
organization. We primarily focus on delivering EDI connectivity solutions for
the property and casualty industry, particularly in workers’ compensation and
auto medical. We’ve been doing this for a number of years.
We primarily started off first in the payment and remittance arena, and very
quickly, as states began to adopt eBilling regulations, our clients, who
consist of large carriers, small TPAs, all across the spectrum, and a number of
providers suggested that a comprehensive end-to-end solution was something that
they wanted and they needed.
With that, though, in the early days, it really became a necessity to
innovate. How do we help with things such as attachments? How do we help with
things such as online viewing for those folks who don’t have sophistication in
their office? So as such, there has been a significant amount of innovation in
order to bring forward the capabilities that are very similar to what you might
see in the group health world but with the bent, the nuances, of workers’ comp.
At the same point in time, we’ve been building great partnership with a
number of the largest technology suppliers to the provider community, as far as
either embedding technology or also allowing them to utilize the technology to
bring property/casualty solutions to their customer base.
We have also played a very significant role with a number of the leading
organizations. I would like to specifically recognize Sherry Wilson, who is
here with me today, who is the X12 liaison for property/casualty, and the fact
that with that we’ve seen a tremendous amount of collaboration begin to arise
from the folks here on the panel as well as the fact of the payers, the
providers, and the technology suppliers.
Let’s just talk a little bit for just a second about the property/casualty
utilization of eBilling. It really started back in 2000. This is not something
that just started last week or last month. This has really been around since
the year 2000 when the very first solution was brought to the street, the
ability to move bills and attachments between providers and payers. It was a
very small group of early adopters, but with that we saw interest, we saw the
marketplace begin to understand right away that there’s a better way of doing
business, and that’s electronically.
With that, the inherent benefits were envisioned. There was a number ways
that people saw that maybe it didn’t work so well because of some of the
standard issues at that point in time, because we were using the old-time
standards. It was whatever was available at the time.
The early adopters, as I mentioned, were the more sophisticated payers who
had the technology or IT resources, some of the larger occupational health
providers who obviously had a vested interest in trying to improve their
From 2000 to 2007, we saw some growth, but again, somewhat inhibited by the
fact that connectivity just wasn’t there. At the same time, there also was a
need to have jurisdictional interest. In that time frame between 2000 and 2007,
the states of Texas and California declared that they were going to put forth
regulations. They wanted to see a better way of doing business, and eBilling
was the way that they were recommending.
So with that, the interest and the understanding — because there was an
understanding gap — that there were other ways of doing it, and the fact was
that the health care industry already had standards for moving transactions. So
the reality was that utilizing those standards of X12 would in fact help bring
the advent of eBilling.
Texas issued their rule in 2007, effective January 1, 2008, to be the first
state to be able to bring eBilling to light. What Texas brought was an X12-like
scenario. There were a few things that were specific to the jurisdiction. That
in itself created a few challenges, specifically the challenges being that
practice management systems, revenue-cycle management systems, clearinghouses
were faced with the fact that they would have to provide a Texas-specific
solution for a minimum number of transactions. So volumes were very limited at
first. They have since gotten much better, and we are about to share with you
Minnesota came along in 2009, again in a much more widely encompassing plan
to bring all health care transactions into administrative simplification, which
included property and casualty. Minnesota was the first taking that
far-reaching approach that also brought some of the other property and casualty
coverages into the mix that never had ever envisioned EDI transactions before.
With that, that brought its own set of challenges as far as a connectivity
network, as well as also some specific needs. What was interesting, though, was
that there was an immediate need recognized by the state of Minnesota for
collaboration. I think Lisa just shared that with you, that reaching out to the
stakeholders, to the IAIABC and to the various portions of the industry, that
they reached for collaboration to find a way to improve that process and
improve those code sets.
The critical learning was that in order for us, the property casualty
industry, to fully adopt the benefits of eBilling — because it had already
been perceived; we already saw what was happening — that if we didn’t reach
out, if we didn’t embrace the national standards on a voluntary basis and work
with the standards-setting organizations so that we could work together, that
eBilling was going to become problematic. And we all know — we, the industry
knew — that it was a benefit to both the provider and the payer community.
So the property/casualty industry, led by the efforts of the IAIABC, as well
as many of the other standard-setting organizations, as well as many of the
trade organizations, the AMA, all came together and began to put together an
approach of how to work with the national standards, as well as how do we
embrace the technology vendors so that they can use those standards.
That result was collaboration. That collaboration meant that the IAIABC put
together a model eBill rule and a model piece of legislation and a companion
guide. The WEDI folks put together a property and casualty SNIP to begin to
educate their members and all the other transaction sets about what was going
on and how we needed help. X12 began to modify the 5010 opportunities to look
to embrace some of the needs for property/casualty.
The jurisdiction said, Fine, we now have guidance. So with that you began to
see now the adoption of the new rules. The AMA has taken a including Webinars
and toolkits. Specifically, the leading technology suppliers, the
clearinghouses, the practice-management systems, and the other suppliers of
services to providers are now beginning to embrace the need for
property/casualty programs and/or services and are beginning to adopt that and
roll that out to their customers.
What does that mean? Again, what we wanted to be able to do is bring to you
an opportunity here to talk a little bit more pragmatically. What does that
mean? Well, we are starting to see defined results. What we’re sharing with you
are certainly just snippets. But with this we are seeing providers who are
reporting that they are having an 85 percent first-time acceptance rate of
workers’ compensation bills. For the bills that go out the door, 85 percent of
the time it’s getting in and getting paid, or a determination. It doesn’t
necessarily mean it is always paid. Typically, they are used to 20 or 30
We are seeing a large national workers’ compensation service company who now
is doing over 60 percent of their translations electronically. What that has
resulted in for them is a significant reduction, anywhere between 20 and 40
percent, depending upon the jurisdiction they are in, of their days of sales
outstanding. It has reduced their receivables over 120 days dramatically. Their
average payment cycles have dropped in half just by implementing eBilling.
We have seen a Texas payer who was one of the first early adopters who has
seen their overall payment cycle reduced by 33 percent. That is significant for
a payer in the workers’ compensation world. And, last but not least, one of the
national clearinghouses that has adopted this technology and is embracing it
with their customers has now got their pilot clients out there telling them
that they’re seeing payments from payers in the workers’ comp world in 15 to 20
days versus they were used to seeing three to five times that rate. And that is
without the payer having to really change much of their workload.
Is it working? Again, these are just snippets, but there are lots and lots
and lots of these examples out there.
Are there still challenges? Yes, there are.
Where are we today? We are seeing provider automation and connectivity
solutions. They are embracing this. There are more and more folks now who are
coming on board who want to help. They want to be able to retain their
customers so that they can have a singular work flow. That’s really what the
message is to the provider community. How do we help them have one way of doing
everything in their office without having to do something over here for this
coverage and something over here for this coverage? That’s what administrative
simplification is all about.
Transaction volume is increasing. There is no doubt that, month by month by
month, transaction volume is increasing. It will continue to increase,
particularly as there is more jurisdictional adoption.
With that, though, we are seeing improvement in payment cycles. We are
seeing reduction in friction between providers and payers.
X12 has committed in the future versions that there will be ways to continue
to resolve many of the open issues that the 5010 workarounds had to support. So
with that, the continued collaboration on a voluntary basis has in fact
resulted in the ongoing opportunity for improved solutions.
Our recommendations as Jopari and representing our customers, both providers
and payers countrywide, are really pretty simple:
One, we do believe absolutely in the administrative simplification concepts
and believe that moving forward this is a better way of doing business. I think
everybody here on this panel probably has represented that same feeling.
With that, though, we need to make sure we continue to align with the HIPAA
standards, without a doubt. Having one-offs, having state-specifics are not
going to fly. We are not going to get the penetration. We as an industry need
to be able to have this type of technology available.
There are some transactions that don’t apply, which are eligibility, health
plan premium, and enrollment, simply because they don’t fit the business models
or the specific coverage definitions. What we would recommend as Jopari
Solutions is that NCVHS advocate the continued adoption by the property
casualty/industry of the HIPAA standards and encourage the continued consensus
between the standards organizations and the industry. Obviously, we need to
have more education and more knowledge by the customer base, both on the
provider and the payer side, to understand the benefits and the hows and whys
of what the electronic transactions mean to them.
So on behalf of Jopari Solutions, I would like to thank you and thank the
subcommittee very much for the time today. Hopefully, this perspective will
give you a little bit more insight as to what is really happening out there.
But again, we are very encouraged. And again, this has all occurred by
DR. WARREN: Thank you.
Jon, you’re up. You’re on the phone.
Agenda Item: Property and Casualty (continued), Jon
MR. BERGNER (via telcon): Yes, okay, terrific.
I just have a very brief statement. No slides, obviously.
First of all, I just wanted to start off by introducing NAMIC to you all.
NAMIC is a full-service property/casualty trade association representing about
1,400 member companies who write all lines of property/casualty insurance and
account for about 50 percent of the automobile and homeowners market.
Our members include small, single-state, some regional and also national
carriers, so we have a pretty wide cross-section of the industry.
I just wanted to thank the committee for allowing us to speak today.
As you consider the application of the standards and operating rules to
automobile and workers’ compensation insurance, we would urge you to carefully
consider the costly impacts on these carriers. In particular, we wanted to
highlight the impact on smaller insurers.
We agree with what others have said on this panel and believe that
property/casualty insurance is fundamentally different from health insurance
coverage. The basis for coverage is different, the terminology is different,
the insurance relationship is different. Although we make payments for health
care costs as part of both automobile and workers’ compensation claims, these
payments are only one component part of a larger claim. Contractual
obligations, state law determinations are required to determine whether the
claimant, which may be an insured or a third-party claimant, is eligible for
coverage, including whether the injuries were the result of a covered event and
whether the claimed medical care qualified for payment.
In addition, many claims are adversarial in nature, and sometimes liability
is in question. Furthermore, property/casualty claims are based on specific
covered events, and each claim must be identified to a particular covered
event, not just to a specific individual, which requires multiple identifiers.
As a result of these and other differences, property/casualty claims do not
lend themselves to many of the transaction standards in question, such as
eligibility for benefits, first report of injury, or even an individual unique
Forcing these kinds of health industry-centric standards and operating rules
on these claims could needlessly complicate administration and drastically
increase the cost of these claims.
So as the committee considers the merits of application to the
property/casualty industry, we think it is essential that a rigorous
cost-benefit analysis of such application be conducted. Automobile and workers’
compensation claims represent a small fraction of total health care
transactions, and so the cost of implementation of standards with respect to
this small percentage of transactions should definitely be taken into
Complying with the new electronic transmission standards and security
standards would for most P/C insurers require new computer and operating
systems. That is an investment in new hardware and software, and that demands
extensive new employee training and claims administration procedures. So for
smaller companies, particularly, these costs could be prohibitive.
I would cite as an example that our companies are still struggling under the
new Medicare secondary payer reporting requirements. They have invested
significant financial resources and human capital in developing, implementing,
testing, and training for this new data capture and reporting system, and yet
the program continues to undergo modifications, and it is unclear — and, we
believe, unlikely — that the benefit to the federal government is going to
outweigh the cost to these companies.
Similarly, we would note that even previously covered entities which have
been complying with HIPAA’s administrative simplification and electronic data
transmission standards for a decade are still struggling under the weight of
As an example, the decision by HHS to delay enforcement of the requirement
to use the ASC X12 version 5010 standard acknowledges that a majority of
covered entities are unable to be in compliance by January 1.
In conclusion, application of the standards to property/casualty insurers
would impose significant burdens on companies in an ever-changing world. To ask
property/casualty companies, and in particular smaller property/casualty
companies, to make such a financial investment in the absence of any documented
significant benefit during periods of rapid technological change is imprudent,
and we would respectfully urge the committee not to make such a recommendation
at this time.
Again, thank you very much for the opportunity to speak.
DR. WARREN: Is that your complete report, Jon?
MR. BERGNER (via telcon): It is.
DR. WARREN: I need two things from you. First, could you restate your full
name just so that we get it on the register?
MR. BERGNER (via telcon): Sure thing. It’s Jonathan Bergner, B-E-R-G-N-E-R.
DR. WARREN: And then you made quite a few points there, especially some
comments about identifiers and the costs for small companies. We would really
request that you put some of that in writing and send it to Lorraine Doo.
MR. BERGNER: (via telcon): Yes, sure thing.
DR. SUAREZ: Who does he represent?
DR. WARREN: He is giving the report for Julie Gackenbach.
MS. DOO: NAMIC.
MR. BERGNER (via telcon): For NAMIC, yes.
DR. WARREN: Thank you very much, Jon.
MR. BERGNER (via telcon): You’re welcome.
DR. WARREN: Our next speaker is Susan Maynard for the auto insurance.
Agenda Item: Automobile Insurance, Susan
MS. MAYNARD: Good morning. My name is Susan Maynard. I am a claim consultant
with State Farm Insurance, and on behalf of State Farm Insurance, I would like
to thank you for the opportunity to testify.
Just as a little background, State Farm is the leading underwriter of
private passenger automobile insurance in the United Stats. We are the largest
homeowner insurance carrier in the United states. Generally, we are recognized
as a leader within the industry, with 81 million policies in the United States
I don’t have a PowerPoint but just a statement for you.
State Farm does support the uniform EDI health transaction standards for all
relevant parties on a national basis. However, the current standards and rules
adopted under the Administrative Simplification provisions of HIPAA are
unsuited to property and casualty insurance and, without modification, will not
create uniformity and efficiency.
Inclusion of property and casualty insurance within the scope of the
Administrative Simplification rules is unnecessary and inappropriate, at least
at this time. The healthcare industry’s implementation of these standards, as
well as state legislative changes, will compel the property and insurance
industry to adhere to the compatible standards in order to conduct electronic
Thus, it is State Farm’s position that this committee should recommend no
action at this time with respect to prescribing EDI standards applicable to
property and casualty insurers. Instead, the subcommittee should recommend that
further study be undertaken over the next several years with an objective of
evaluating a need to include the property and casualty insurance industry
within the scope of federal EDI regulations after the existing standards for
the health industry have been fully implemented.
State Farm supports properly designed EDI standards for property/casualty
insurance, including automobile insurance. This could promote efficiency, save
costs, ensure better and timelier service to our customers, and reduce
transaction costs. Such standards should facilitate a much more productive and
effective system for processing medical bills than exist today.
For State Farm in particular, the potential benefits of national uniform
health data standards applied to automobile insurance include:
• Efficiency gains through the reduction in costs of manually
processing vast quantities of information.
• Enhancement of service to customers through more rapid, accurate
settlement and payment of claims.
• Reductions in general operating costs, including supplies, overhead,
• Relief from the cumbersome and expensive process of conforming to
different standards in different states.
• Aid in combating insurance fraud by facilitating data checks and
tracking of claims.
• Improved communications required for coordination of benefits and
subrogation among insurers.
However, these standards were designed for application to the health care
industry, and applying these standards to property insurance, casualty
insurers, and in particular automobile insurers, creates very significant
To appreciate the challenges involved requires an informed understanding of
the complexities of the automobile insurance payment process. For example, the
following questions arise when an automobile accident involves medical
First, whose insurance policy applies? In an automobile insurance claim,
both the beneficiary and the type of coverage may be unknown until after the
accident. Determining whether a person may receive benefits under the policy is
dependent upon policy contract, applicable law, and the facts of the accident.
The policy contract may define whether a person is a beneficiary, such as a
named insured, relative, or passenger.
State law may require the policy to extend benefits to certain classes of
persons, such as pedestrians or persons whose injuries are caused by the
responsible tortfeasor. State law may require that certain types of benefits be
extended to persons who incur accidents within the state, such as no-fault or
increased liability coverage.
Accident facts also determine who may be responsible for payment. The
policies and laws of different states, provinces, and countries may apply to a
For example, consider a person from Ontario who, while visiting her father
in New York, is involved in an accident in New York as a passenger on a
motorcycle. Who pays for the medical bills for treatment she receives in the
United States? It could be her father’s New York no fault coverage if she
qualifies as a New York resident relative. It could be her Ontario accident
benefits coverage if she owns a car. It could be an Ontario relative’s accident
benefits coverage or the Ontario Motor Vehicle Accident Fund.
The drivers of the automobile and motorcycle may be responsible under their
New York liability policies. If the New York automobile liability insurer is
also a registered insurer in Ontario, the insurer itself may be responsible for
payment of medical bills under Ontario’s loss transfer regulation.
Another question is when does the third-party coverage pay the claim? In a
liability claim, the person at fault for the accident usually does not pay the
injured person’s medical providers. Because of the adverse relationship between
the parties, the tortfeasor may not have permission to directly access the
injured person’s bills or medical records. Instead, through the settlement
process, the injured person discloses medical records and bills, and the
injured person has already paid these, whether they are out of pocket or under
his or her property/casualty or health insurance benefits.
The tortfeasor pays the damages to the injured person when the claim is
resolved by settlement or litigation. Because liability claims are generally
settled after the medical treatment is paid, and the settlement is paid to the
injured person directly, the liability insurer does not issue payment to the
An automobile policyholder may have first-party medical or no-fault
coverage. While a few jurisdictions require purchase of an extensive no-fault
benefits package, most permit a policyholder to optionally purchase coverage
for medical expenses for themselves and their passengers.
A typical automobile policy includes medical payments coverage of $5,000 or
less for benefits incurred within 1 to 3 years after the accident.
Property damage liability coverage pays for accidental damage only to
property damage. However, this coverage may pay for medical equipment and
supplies that are damaged in the accident and does not involve injury. An
example of this could be restocking the ambulance that was damaged in an
Another question is, when is a bill payable? Once an insurer determines the
person making the claim is an insured entitled to benefits or a claimant
entitled to damages, then the insurer must determine whether a claim supported
by a medical bill is reasonable, necessary, and related to injuries sustained
in the accident. All, some, or none of a particular charge may be related to an
accident. Since a claim under the policy pays only for injuries sustained in a
single automobile accident, charges for treatment that a patient receives may
need to be apportioned between the accident and other illnesses or accidents.
Because policy language requires medical payment to be provided, documented,
and related to the accident in order to be considered for payment, a patient’s
treatment is rarely pre-authorized. Reasonable and necessary treatment may
include alternative as well as traditional therapies.
Other issues that may need to be considered to determine whether and where
coverage may be available could include statutory and contractual limitation
periods and policy conditions, as well as contributing, stacking, and excess
To deal with the complexities of automobile insurance in the context of EDI
raises a further series of questions, including:
• What is a healthcare transaction?
• Who must comply with these health care transactions?
• What types of coverage would be subject to the Administrative
• Would applying the Administrative Simplification EDI standards to the
automobile insurance subject the auto insurance industry to all those
standards, and even possibly to other Administrative Simplification rules?
• How could harmonized transaction codes be adapted for property and
I see my time is running out, so I won’t go into complete details on all of
those, but if you have further questions, we can discuss that.
Just as a summary though, State Farm supports the concept of uniform EDI
health transaction standards for all relevant parties on a national basis.
However, as we stated before this subcommittee in 1996, “State Farm urges
HHS to design its standards for application by property/casualty insurers as
well as health insurers, in order that the standards may be used to facilitate
all medical insurance transactions. It simply makes no sense to prescribe
health data standards with the objective of achieving widespread efficiency and
yet to exclude a major portion of the health care payer population from
consideration as potential users of the standards.
“Although HIPAA does not refer to property/casualty insurers as
‘health plans,’ as a practical matter, property/casualty insurers will
inevitably be compelled to use HIPAA standards in order to conduct electronic
transactions with providers and other users…”
State Farm believes that, since the current standards and operating rules of
HIPAA Administrative Simplification are not designed for property insurers such
as automobile insurers, application of the standards will not create uniformity
and efficiency for the industry. They will instead subject the industry to
implementation of expensive EDI requirements at both the state and federal
levels without obviating the need to comply with existing state paper
Because the industry is already subject to similar requirements under other
state and federal law, mandating compliance with the Administrative
Simplification standards in addition to the industry’s existing obligations
will subject property/casualty insurers to higher compliance standards than
Our recommendation is for the federal government to monitor this issue but
take no regulatory action at this time. The health industry’s implementation of
the Administrative Simplification standards, coupled with evolving state
legislative requirements, will inevitably compel the property/casualty industry
to adhere to compatible EDI standards in order to conduct electronic
We believe that because this market evolution is moving faster than can be
conceptualized by regulation, the federal government should postpone a decision
about EDI standards for property/casualty insurers until the existing standards
for the health industry have been fully implemented. At that time it will be
more clear whether the existing standards are workable in general or whether
they require modification, and it will be possible to make informed decisions
about federal mandates for particular EDI standards for casualty insurers.
DR. WARREN: I just have one question right now. Tell me who or what a
MS. MAYNARD: Now you’re getting into the legal questions. A tortfeasor is
the person responsible for the accident.
DR. WARREN: Okay, thank you.
Jon, are you still on the phone?
MR. BERGNER (via telcon): Yes.
DR. WARREN: We just found the handout for your presentation, so you don’t
need to send us anything.
MR. BERGNER: Terrific. All right, that’s great.
DR. WARREN: Okay, thank you.
The next speaker on our list is Margaret Weiker from X12.
Agenda Item: X12, Margaret Weiker
MS. WEIKER: Thank you, Judy.
Margaret Weiker with Hewlett-Packard Company. I am representing ASC X12. I
am the chair of the Insurance Subcommittee.
Yesterday I spoke a little bit about what is X12. I am not going to go into
that today. Instead, I would like to focus on the actual X12 transactions and
those transactions for workers’ compensation and property and casualty.
We’ve heard some different views on these transactions, whether they work or
not, today. We do know, however, that we did do errata as part of the Version
5010 errata that was promulgated. We included some specific items in that
errata concerning workers’ comp and property/casualty, such as the patient
identifier segment; we modified some usage rules as well as situational rules.
There are workarounds and bridge strategies in 5010 to support those
industries. However, those have been addressed in the Version 6020 technical
reports which are out now for public comment.
Claims, remittance advices, claim status, and attachments, those
transactions are used today. They work.
Everyone, I think, would agree that eligibility, enrollment, and premium
payment don’t. And it’s not because there’s something wrong with the standard.
Let’s make sure we all understand that. There’s nothing wrong with it. It has
to do with the workflow and the fact of when you become enrolled and not, in
regard to eligibility.
Specifically, there is no highway built, because when you think about
workers’ compensation, eligibility is based from the employer type of thing, so
there are no query transactions that employers typically support.
Prior authorization and referrals, today that is done very manually,
primarily. We would need to consider the business requirements and the
workflows associated with prior authorization.
When you look at electronic funds transfers, if providers are receiving
those today for their health care claims, and many are, it is likely they would
want to adopt this for their P&C and WC claims. However, we would need to
perform some industry outreach in regard to that to make sure everything can be
First report of injury. Not all jurisdictions require first report of
injury. The reports that are required are not consistent. With many of this,
there are very specific state requirements. Most P&C regulations do not
require a first report of injury; that is more of a workers’ compensation type
There is an X12 transaction for first report of injury. That is the 148
transaction in X12. X12 is willing to work with stakeholders in developing an
implementation guide or to make modifications to that transaction. We don’t
have an active work group today that supports that transaction, so I would have
to establish one, and I would need the stakeholders to come to the table to do
that. But we are willing to modify or write a TR3 to support a first report of
Other items that we have done. We have approved the IAIABC Workers’
Compensation Electronic Billing and Payment National Companion Guide based on
the ASC X12 5010 and NCPDP D-zero. This has been adopted by California and
Texas as well as I think I heard today Louisiana is looking to support that as
Also, the IAIABC jurisdiction eBill Model Rule Template. It supports the use
of the national standards as well as code sets. It mitigates the 50 different
state approaches to EDI and their companion guides.
In regard to claim adjustment reason codes and remittance advice remark
codes, states primarily use proprietary codes today versus national codes. Some
states place limits on the allowed use of codes. Some states have very specific
language associated with their CARC and RARC codes.
The IAIABC guide supports the standard CARC and RARC code sets. In fact,
they brought forward I think 150 new CARC code requests that were basically
boiled down to 30 once they understood and we went through and looked at what
they submitted versus what existed. It boiled down to end up being just 30 new
CARC codes were added to support that.
The California, Texas, and Minnesota rules mandate those uses.
One of the questions that was submitted has to do with the different terms
used between health care as well as in the workers’ comp and property/casualty.
So what I did was build a table. On the left you will see the health care term
and on the right you will see the workers’ compensation equivalent or what does
it mean in workers’ compensation when they use the same naming convention.
For example, in the health care, we have a claim number, and that is
specific to a claim. In workers’ compensation when you say a claim number, that
applies to all of the bills associated with a claim.
A subscriber in health care is a person. A subscriber in workers’
compensation is an employer. So there is different verbiage based upon health
care workers’ comp.
As I was building this, I kind of first lumped in workers’ comp and P&C
into this table. But after talking with my friends at State Farm, we split it.
So the next slide and the one that I am showing here has to do with, again, on
the left are the health care terms, on the right are the property and casualty.
I am not going to go through them, but you can see there is a difference
Another question that was asked had to do with code sets — CPT, HCPCS,
ICD-9; was this industry going to move to ICD-10 code sets in 2013? That
depends basically on the state and jurisdiction. Some use the same code sets.
Some have proprietary code sets, and there are rules. Some have a mixture.
Could this be standardized? Probably.
Coordination of benefits. There is typically not coordination of benefits as
we think of it in the health care arena. Coordination of benefits, if used, is
done via subrogation. It’s a pay-and-chase type of model. For example, there
may be instances where Medicaid may pay for a claim and it comes back that it
was really a workers’ comp type of claim. So then the Medicaid would actually
perform subrogation to get the money back from the workers’ comp carrier.
There are benefits to standardizing. I’ve got the provider benefits and the
payer benefits. I think other people have also talked about that, so I am not
going to go into those because my time is running out.
What would be the challenges? Obviously, infrastructure is a challenge. It
is also an opportunity. There is the connectivity between the provider and the
employer. That doesn’t exist. Today you have connectivity between the provider
and the payer. They may use a clearinghouse. In this model they could as well.
However, there is not that direct connection, electronic connection, between
the provider and the employer.
The level of connectivity differs, as well as some of the sophistication
around that connectivity. In health care there is already this built-in network
in the P&C and workers’ comp that it is just not there yet.
Practice management systems obviously would need to support the billing
differences. There would need to be training for the person that does the
billing, as well as how to crosswalk and handle the proprietary codes as well
as adding them in.
Contracts. Typically in health care you have the contract between the
provider and the payer of the health plan. They have some type of contract. In
P&C they don’t have these types of contracts already set up.
State-specific regulations and laws and jurisdictions. Every state, every
jurisdiction has one of these. Some have many, many of these. So all of those,
if we thought about moving forward and adopting these, would have to be looked
at and considered. I know Minnesota ended up having to change some of theirs
once they started adopting these. So that is a big to-do, so to speak.
Then, of course, property and casualty companies who need to become more
involved in the standards development. We have a lot of workers’ compensation
in the IAIABC. Jopari has been great. They have come to the table with
resources, with knowledge, willingness to help and assist. State Farm is there,
like a good neighbor — I couldn’t resist.
She is probably like, I knew somebody was going to do that. I couldn’t help
So, anyway, we would need some of those or more of them.
So that’s my presentation.
DR. WARREN: We needed the laugh, Margaret. Thank you.
Okay, Debbie, you’re on.
Agenda Item: WEDI, Debbie Meisner
MS. MEISNER: Members of the subcommittee, I am Debra Meisner, vice president
of regulatory compliance with Emdeon and a member of the board of directors for
I would like to thank you for the opportunity to present this testimony on
behalf of WEDI. I need to make sure I have my right hat.
As the committee knows, WEDI represents a broad industry perspective of
providers, clearinghouses, payers, vendors, and other public and private
organizations that partner together to collaborate on the industry uses. WEDI
is an advisor to HHS under HIPAA. We take an objective and collaborative
approach to resolving industry issues.
WEDI has worked collaboratively, as we’ve heard several times today, with
the IAIABC over the past several years in an effort to educate the health care
industry on the workflows and challenges faced by the workers’ compensation and
property/casualty industry. Part of this collaborative effort included the
formation of a sub-work group to specifically address this topic.
In addition, a session was held at the WEDI fall conference in October to
discuss whether or not this needed to go forward. The combination of the
collaborative work and the feedback from the session is what has contributed to
the responses offered in the specific questions posed by this panel.
I am going to go as quickly as I can through this because a lot of this
we’ve already heard.
What are the different terms? What we discovered in our WEDI sub-workgroup
effort in addressing the gap analysis is that, yes, there were some terminology
differences, but we were able to bridge that gap. As a result, we developed two
white papers to focus on that. I encourage you on the committee to reference
those white papers.
The first one is addressing terminology and workflow differences. As we’ve
heard today, there are a lot of workflow differences going on in the different
sectors of workers’ compensation and property/casualty.
The other paper addressed what you’ve heard of as some technical challenges.
As we worked through the issues with the standards organizations, we were able
to come up with some resolutions and workarounds for each of the technical
challenges that were brought forward.
This group was comprised of health care participants, several folks from
the IAIABC, from the state of Texas, as well as other P&C participants,
like our good neighbor.
The second question posed had to do with the code sets. In most instances
what we have learned from our constituents is that yes, they do use the CPT,
HCPCS, and ICD-9, but there are some jurisdictions that use proprietary codes,
which will be a challenge. The challenge to that is that some of those are
actually written in the laws, which would require the laws to be changed.
It was felt, as we discussed this, that education would be needed to use the
GEMs; how would they use the GEMs in going to ICD-10? The IAIABC I believe is
working on doing some of that education, but they really need to understand
I think you’ve heard pretty much how the workers’ compensation, auto
industry, and other P&Cs don’t really coordinate benefits like we hear in
health care, but it’s more of either a shared ownership of the responsibility
or, in the case of perhaps the injury, the illness-injury bridges to employers;
how do they share that compensable payment? In the auto industry there are
secondary payer situations, but again, that is accomplished through the
provider-to-payer model rather than through a COB.
What are the benefits to moving to standard transactions? We’ve heard a lot
of them. Providers of P&C medical are the same providers as those for
health plans. We’ve heard that work comp specifically is a very low percentage
of volume, and creating a one-off solution for that very low percentage is not
One set of requirements reduces the cost and the education. It would
encourage providers to treat worker comp and auto injuries where some providers
today would say, “not touching it.” And it would provide a faster
turnaround which would help meet the prompt payment laws that are written under
the worker comp laws.
So the challenges, I think we’ve heard a lot of these. State regulations
would need to be changed. National payers who have implemented should see an
increase in their ROI as they see more and more transactions come through.
Again, we agree with what you’ve heard today. There are some transactions
that do not fit in the workflow of the work comp and auto industries. There are
some content challenges that we need to work within the SDOs to fill. And the
CARCs and RARCs may need some more modifications to meet state requirements as
we go along.
What else should the committee know?
• We would encourage you to reach out to the states that already have
the regulations — you’ve heard about them today — and determine what their
costs and benefits and challenges were.
• Look to the large clearinghouses and eBill agents such as Jopari, who
have worked to overcome a lot of these obstacles. There are transactions
• Workers’ comp and property/casualty rely heavily on the attachments
and would benefit from the adoption of that standard.
So WEDI would like to present these items for consideration by the
• Consideration for applicability under HIPAA for medical claim/bills,
payments, and acknowledgments.
• We suggest that all medical claims and bills, along with the payment
and acknowledgments, be considered for applicability under HIPAA to determine
whether the exclusions for the workers’ compensation and other
property/casualty industries are warranted. Several states have regulations
that require electronic transactions without exception with success. Many of
the carriers are national entities and have expanded their exchanges outside of
the states that are mandated.
WEDI believes that workers’ compensation and other property/casualty
industries should be considered in the regulation requiring the transition to
ICD-10 effective October 1, 2013. Continued use of ICD-9 by these industries
will put an undue expense to the providers who interact with these industries,
requiring the need to support dual systems.
In addition, the ICD-9 codes will no longer be maintained, leaving the
property and casualty community with no way of accommodating new diseases or
• WEDI suggests that a policy advisory group including the industry
experts and other interested parties be convened to develop recommendations
regarding applicability of the above standards to workers’ compensation and
other P&C industries. And WEDI offers our assistance in this regard.
• WEDI further suggests that workers’ compensation and other P&C
industries be considered in the assignment of health plan identifiers, as these
identifiers may be needed in order to properly implement and route electronic
WEDI would like to take the opportunity to express our appreciation for the
collaborative work being done with the IAIABC. They have been working hard over
the last several years with the standards development organizations to bridge
the gaps and have worked closely with WEDI to develop educational materials.
However, there is still a challenge getting the P&C industry involved in
the development of standards. To make this successful, there needs to be more
involvement by the subject matter experts in the fields of workers’
compensation and property/casualty.
I thank the committee for allowing us to present this testimony.
DR. WARREN: Thank you.
Our final presenter is Lynne Gilbertson from NCPDP.
Agenda Item: NCPCP, Lynne Gilbertson
MS. GILBERTSON: Good morning. I am Lynne Gilbertson from the National
Council for Prescription Drug Programs.
I am going to allow this slide to just be entered in, skipping forward all
the way to this section.
NCPDP has a work group, Work Group 16, that is devoted to the workers’
compensation environment and promoting and educating the use of national
standards for the streamlining of processes and to make sure we’re meeting the
needs of the industry. They have worked a lot with the IAIABC in the past
couple of years.
You’ve heard the information about the different states. Pharmacy is right
along in that environment. But there are still some challenges even in the
pharmacy side of things.
We have in some areas the processors, payers, or pharmacy benefit managers
that you may think of in the pharmacy claims benefit processing; they are also
doing workers’ compensation for the pharmacy claims. So there is a lot of
overlap and reuse of efficiencies when possible. But there is no real
widespread adoption of the NCPDP standards for the pharmacy. They are out
there, they are used.
Some states have customized pharmacy billing requirements still. Several
states have adopted or are recently adopting the NCPDP standards. Of note, the
telecom standard has supported workers’ comp as a — we call it a claim, but
it’s the bill — for more than 20 years. So it’s out there, it has been used,
it has been used; it is just the traction of getting more and more and more
entities using it.
It allows for the prospective processing of workers’ comp, so it is the
real-time claim that you’re used to thinking about for the retail pharmacy or
We also offered as part of the work with the industry and IAIABC a workers’
compensation universal claim form, a paper form, that standardized the ability
to exchange the manual bills and has jurisdictional sections for the places
where there were no standards, and guidance for what goes in those
Regarding code sets, the same story: It’s all over the board. Not much else
to say there. Just pick a state or jurisdiction and you’ve seen that one
Coordination of benefits, the pharmacy in the same vein. I can report this,
I don’t know a whole lot about this, but Work Group 16 provided this to me,
that it is rare to have another party outside of the carrier responsible for,
in a coordination of benefits, except for they mentioned a lien in Florida and
apportionment in New York.
There is subrogation, so it is the pay-and-chase that we’ve heard about in
the HIPAA environment where, especially with Medicaid, going after the
recoupment of funds.
The questions you had asked that Work Group 16 tried to answer related to
the benefits, obviously a lot of consistency and improvements in moving to
standard transactions and code sets, obviously weighing that against the
Becoming a HIPAA-covered entity — those questions as well. It’s the
benefits versus the costs. As the other speakers have said, it’s the good
analysis of is this industry ready? What are they recommending for themselves?
There are standards out there. There are code sets out there. There are
improvements that can always be made. There are processes for those
improvements. Are they ready or not? It is really up to the industry.
On privacy and security, what Work Group 16 reported is that a lot of the
entities that are involved in the processing of workers’ comp already are
supporting the HIPAA privacy and security regulations as their foundations. But
you are obviously going to have folks who are not. So there is still going to
be transition to impact employers, to carriers, for that.
First report of injury. We don’t have a lot of experience with that, so I
will leave it to the panel folks who are much more experienced.
And that’s it.
DR. WARREN: Thank you.
Thank you for the panel. That was a lot of information quickly.
Agenda Item: Questions by the Subcommittee
DR. WARREN: I am going to take just a point to ask the first question.
Actually, I need a clarification.
Minnesota reported that you’re having to change state laws to account for
MS. WICHTERMAN: Yes, we are. We have to amend our laws. Some of our rules
and laws have specific ICD-9 codes listed in the law. So what I have done is
actually translate that ICD-9 to an applicable ICD-10 code so that we can amend
the law to list the correct ICD-10 code.
DR. WARREN: Okay. So my question to the whole panel is, how widespread is
this with the other states that we are looking at having to change state laws
to allow for code sets as well as standards? I am seeing lots of nods that this
Do you want to make a comment, Greg?
MR. KROHM: Specifically with respect to conversion to ICD-10, we’ve surveyed
our state members and we find that they are all over the lot in terms of their
awareness of the issue and their actions. It is not to say that states aren’t
doing anything because some states are keenly aware of this.
The other thing to mention is that some states really don’t have much of an
issue because there is no specific reference to ICD-9 in any state
administrative law or regulation. Lisa pointed this out in her testimony. But
it would be in, in my personal estimation, fairly isolated cases that this
would become an issue.
It is true that there are some references to ICD 9 in state regulations, but
where they are applied is relatively narrow areas of application. So it
wouldn’t be the end of the world if they had not changed their administrative
rules by the time the new ICD-10 coding was put in place.
DR. WARREN: I am just worried about the timing that it takes to get state
laws changed and their regulations.
MR. KROHM: It wouldn’t be statutory changes, it would be administrative rule
changes for the most part. It takes a minimum of 2 years to change a state
administrative rule, unless it is done on an emergency basis, which a lot of
states would permit this on an emergency basis, which then would solve the
problem. But to formally change an administrative rule takes a minimum of 2
years in most states.
DR. WARREN: Keith, you had a comment?
MR. BATEMAN: I just want to make the observation that, first of all,
Medicare, as part of the section 111 reporting, is eventually going to require
us to be able to code things in ICD-10. The issue that we’re still struggling
with is ICD-9, because many, particularly outside the workers’ comp area, they
never collected ICD-9s. They did not need ICD-9s, and they are still trying to
figure out how to properly code ICD-9s.
Medicare, within a few years — and who knows, giving the shifting time
frames — is going to require that they switch over, for section 111 reporting,
to ICD-10. So the carrier folks may be there before the states.
DR. WARREN: And I guess that was the distinction I was trying to understand,
is that whole piece between what goes on in health care and what goes on in
property/casualty and that, because they are handled in different parts of
state law. While I know that all the Medicaid agencies are well aware of moving
to 10, I didn’t know where that was with property/casualty.
MR. BATEMAN: Remember, they are payers, okay?
DR. WARREN: Right. So I am just looking at state agencies —
MR. BATEMAN: State comp agencies are not payers for the most part.
DR. WARREN: Yes.
MS. MEISNER: One of the things that has come up in several of the WEDI
sessions when we’ve talked about work comp is the fact that they do a lot of
state reporting. So one of the concerns is that as ICD-10 starts coming in on
the bills, are they going to have to convert them back to ICD-9 or will the
states be ready to accept the ICD-10 in their state reporting?
So the state reporting is a piece that is kind of not talked about a lot. It
comes up in many of the discussions that we have at WEDI, but it definitely is
going to impact, once the provider starts sending that ICD 10, how will it get
reported in to the states, and are the states going to be ready?
DR. WARREN: Lisa, did you have a comment back?
MS. WICHTERMAN: I was going to comment that it normally only takes about 18
months to go through a rulemaking process. It only would take 18 months if
there were someone who disagreed with the change, and that usually comes from
the legal community. I don’t mean to be lawyer-bashing, but sometimes they
don’t understand what the codes mean and what the implications of the codes
are. They think that if we update codes that we’re changing an injured worker’s
benefits, which is not true.
So that is why it could take up to 18 months. Otherwise, a normal rulemaking
process should go through in about a year in Minnesota.
DR. WARREN: Then on my list I have Lorraine and then Walter.
MS. DOO: I just had a slightly related question to make sure I understood.
So on the eBills of the IAIABC and the model rule, will ICD-10 be accommodated
in that? And will the payers, the P&C, workers’ comp and auto, be prepared
to take that? Is that part of the process? Are they using it to make payment?
MR. KROHM: I am profoundly hard of hearing and I think you were addressing
that to me. I didn’t hear a word you said. I’m sorry.
MS. DOO: So either someone on your side. It was really about will they be
MR. KROHM: I’m sorry, you’re still below my hearing threshold.
MS. DOO: Will you be able to address —
MS. WICHTERMAN: The ICD-9 in the model law — I don’t think we have
addressed ICD-10 in our model law that I am aware of. Does someone remember
something that I don’t?
MS. WILSON: We are encouraging the use of current code sets as much as
possible with the jurisdictions, knowing that the provider community and the
output on those bills are going to be representing current code sets. That
becomes an issue if we’re using outdated code sets.
MS. DOO: Okay.
DR. SUAREZ: Well, thank you very much. This has been very, very informative.
I think it is clear that across the board, property/casualty, workers’ comp,
and auto insurance, the messages at least that I got was first of all they are
quite different from health care. There are differences with respect to terms,
workflows, relationships, and multiplicity of state regulations.
But there are also some commonalities that I heard. The number one is they
use the same providers, for one. The same physicians see patients.
All of you recognize consistently that benefit for electronic transactions,
for the standardization of those transactions, for the benefits to apply those
electronic transactions to P&C, to property and casualty, workers’ comp,
and auto insurance.
We heard that there were issues with the current standards, and this is one
area that I found it important to think about, because it seems that there are
some concerns that the current version and in some respects specific versions
of the health care transactions have some issues with their applicability to
workers’ comp and to auto insurance and property and casualty, and that
certainly not all of the transactions apply but some of the ones that apply,
like the health care bill, the claim and claim payment, the acknowledgment, all
those in some respects need to be looked into as to whether and in which
elements they are still not able to carry specific needs from each of these
other insurance areas.
I heard also that there was a lot of work being done across the board very
consistently, a lot of cross-participation between IAIABC and the associations
and the standard-development organizations. So that is really very, very
I also heard in terms of recommendations that clearly there is support for
this eBilling concept, which pushes forward the idea of using electronic
billing on the standards. We need more education and need to continue to
advocate for the adoption of applicable HIPAA standards aligned with national
standards, or the transactions applicable to the property and casualty and
workers’ comp and auto insurance but that are aligned with national standards
but also that are appropriately adapted to the insurance line.
We heard also again the idea of forming a policy advisory group to help
craft and develop more formal recommendations into the applicability of
transactions to these three lines of insurance.
I have a couple of quick questions. The first one is HIPAA, in the HIPAA law
originally, had said to define standard for first report of injury. Back in the
early/mid-1990s, I guess, I actually was living in Minnesota. I lived for 20
years in Minnesota, my home state in many respects. But we worked quite a bit
in the concept, never really established it as a standard necessarily there.
So the question is, are we ready to recommend the adoption of first report
of injury in the industry?
MR. BATEMAN: I think one of the key understandings is that — you need to
understand that when you’re talking about — I don’t know what you mean by your
first report of injury. I assume you’re talking about a health transaction.
Our first report of injury is not a health transaction. It is from the
employer to the carrier and the state agency. It has nothing to do with a
health care provider. There are a few jurisdictions, I think three or four,
where there are some requirements for providers when they have someone come in
and report injuries.
So our concept of first report of injury is we don’t know what they ever
meant by that, but it certainly doesn’t fit in with a health transaction of any
MR. KROHM: I would agree with what Keith said. There are by my count three
states that have what is called a doctor’s first report of injury. That report
of injury is to be shared with the state regulator and the insurance company
and sometimes with the employer. But those are only very isolated examples. The
claim starts with the injured worker reporting to their employer, who then
reports to the insurance company, and in many instances — not all, certainly
— the insurance company is going to get their first report of injury from the
employer before they ever get a medical bill.
MR. BATEMAN: Can I give you another example of the timing difference that
you need to keep in mind? On pharmacy, very electronic in the health area. In
comp the big issue is the first fill, because when the worker goes in with a
prescription from the doctor, that may be before he has filed a claim for
benefits in workers’ comp, and it’s even more complex in the other lines.
So there is no match. He has no card. So if the pharmacy fills the bill, it
has to then try to track down who is responsible for paying it. It doesn’t lend
itself to an electronic transaction.
MS. WEIKER: There is not an implementation guide to adopt. So when you say,
oh, should we adopt the 148 or adopt first report of injury, unless you adopt
— I know the IAIABC has a first report of injury standard, but that would be
considered a proprietary standard. There would be no implementation guide.
There is no implementation guide for the first report of injury at X12.
We worked on it, and the jurisdictions could not agree, so they walked away,
and it has sat there ever since. So there is not an implementation guide to
Also, when you were doing your summary, you made a comment in regard to the
transactions not working, and I would disagree with that summarization. They do
work. There are some workarounds. We built a bridge strategy and we have
incorporated those items in 6020. So when you said they don’t work, I have to
disagree with that statement.
DR. SUAREZ: Oh, thank you. Thanks for the correction. I stand corrected.
That was all my questions. I think we are way over time.
DR. WARREN: We are way over time. Thanks for the panel. Again, you’ve given
us a lot to think about, and we’re going to have a break for 10 minutes. Walter
says five, so let’s make it seven. What time would that be when everybody has
to be back? Let’s make it about 11:55.
Agenda Item: Session III — Transparency of Claim
Edits, Publication of Plan Payment Rules, Standardized Forms for Audits.
Agenda Subitem A: Claim Edits/Plan Payment Rules
DR. WARREN: We have been doing some reconfiguration. We would really like
for you to be as crisp as you can, and I hate to tell you this. We would like
you to try to keep it at 9 minutes so that people need to get some lunch and do
other kinds of things and catch planes.
We are going to reconfigure the order because we do have some who has to
catch a plane, so Niles Rosen is first.
MS. DOO: And you all know to watch for the signs. Everybody was here before.
Agenda Item: National Correct Coding Initiative, Miles
Rosen, Donna Schmidt and Shantanu Agrawal
DR. ROSEN: Good morning. Thank you, members of the NCCHS, for allowing me to
provide testimony regarding the National Correct Coding Initiative, the NCCI,
and its possible role in establishing a uniform set of edits for use by
third-party payers other than Medicare and Medicaid.
Because of time limitations for my testimony, I have also submitted separate
written testimony which coordinates with my slides and provides a more thorough
discussion of each of the issues.
In the short amount of time I have, I will explain the Medicare NCCI program
and how lessons learned from transferring it to the Medicaid program provide
guidance that NCCI will transfer to other third-party payers.
My name is Niles Rosen. I am a licensed physician, board certified in
pathology, and have been the national contracted medical director for the CMS
NCCI since 1997. I am the majority owner of the NCCI CMS contractor, which is
CCS WP, LLC, and Correct Coding Solutions, LLC.
CMS owns NCCI and determines its contents. The NCCI contractor advises CMS
about NCCI issues, develops new edits, modifies existing edits, produces
quarterly edit file updates, and handles correspondence.
An edit is a claims-processing rule. NCCI consists of two types of edits
which I will discuss in a moment. It does not contain a broad range of
different types of edits.
The purpose of NCCI is to promote correct coding and reduce paid claims
error rates. The Medicare edits are based on CMS coding and payment policies.
The Medicaid edits are based on the Medicare NCCI edits. The NCCI program is
utilized for fee-for-service Medicare and Medicaid claims.
The NCCI focuses on services provided by the same provider to the same
beneficiary on the same date of service, which are billed with HCPCS codes
including CPT codes.
The NCCI consists primarily of two types of edits. The first type of edit is
a procedure-to-procedure edit, or PTP edit, which consists of a pair of HCPCS
codes that should not be reported together. For example, it would not be
appropriate to bill both a vaginal hysterectomy CPT code and an abdominal
hysterectomy CPT code, since the procedure can only be performed in one way.
The second type of edit is a units-of-service edit which defines the
maximum number of units of service for a given HCPCS code that should be
reported on a single date of service under most circumstances. These edits are
termed medically unlikely edits, or MUEs, because it would be medically
unlikely to bill more than the defined number of units of service. For example,
billing four units of service for a cataract extraction procedure would be
medically unlikely, as there are only two eyes.
CMS first implemented the NCCI PTP edits for practitioner claims in the
Medicare program in 1996. In the year 2000 CMS expanded NCCI PTP edits to
Medicare’s outpatient hospital claims, subject to the outpatient prospective
payment system methodology. In 2007 CMS implemented the Medicare MUE edits for
practitioner services, outpatient hospital services, and durable medical
The most recent expansion of NCCI resulted from enactment of the Patient
Protection and Affordable Care Act of 2010, section 6507, which required that
state Medicaid programs implement NCCI methodologies by October 1, 2010.
It is extremely important to note that NCCI methodologies differ from the
NCCI edit databases in that the methodologies define most importantly the
claims adjudication rules and provider type subject to the edits, in addition
to the edit sets.
The Medicare and Medicaid NCCI and MUE edit databases are updated the first
day of each calendar quarter.
The edit development process is transparent. Prior to adding or modifying
most NCCI edits, the proposed edit changes are released for a 60-day review and
comment period to interested national health care organizations. Over 100
organizations participate in this process.
CMS reviews all comments received regarding edit proposals before edits are
implemented. I believe that the national health care organizations consider the
process to be transparent and fair.
The Medicare and Medicaid programs have a process whereby any interested
party may request a reconsideration of an NCCI or MUE edit. CMS makes
determinations about all the requests.
Medicare and Medicaid have separate Web pages for their NCCI programs. Most
Medicare and all Medicaid NCCI and MUE edits are published on the CMS Web
sites. The edit files and various other NCCI-related documents posted on the
CMS Web sites are available for download by interested parties at no cost.
Because the vast majority of these edits are published by CMS, some
third-party payers other than Medicare and Medicaid fee-for-service programs
attempt to utilize NCCI either by direct download from the CMS Web sites or by
purchasing it from commercial vendors who have no relationship to Correct
Coding Solutions or the CMS NCCI program. Unfortunately, Correct Coding
Solutions occasionally receives complaints from providers regarding the
incorrect application of the NCCI edits by third-party payers, primarily
because they are using incorrect claims-adjudication logic.
Claims-adjudication logic is one of the three components of NCCI
methodology. Use of NCCI by the Medicare and Medicaid programs has been
accepted in general by the provider community. The process of edit development,
claims adjudication, and reconsideration appeal, claim denials due to NCCI and
MUE edits, are generally viewed as fair and transparent.
Misuse of NCCI by other third-party payers using incorrect claims
adjudication logic creates dissatisfaction because the third-party payer blames
the incorrect claim denial on NCCI when in fact it is due to erroneous use of
the NCCI claim adjudication logic by the third-party payer. This reflects
adversely on the federal program’s use of NCCI.
Many lessons were learned during the process of transferring the Medicare
NCCI methodologies to the Medicaid program. Similar issues would need to be
addressed if NCCI methodologies were transferred to other third-party payers:
One, which of the five NCCI methodologies, two PTP methodologies and three
MUE methodologies, would be transferred?
Number two, would a separate edit database need to be developed? Just as
some Medicare NCCI edits were not appropriate for Medicaid programs, some
Medicare NCCI edits might not be appropriate for other third-party payers.
Additionally, edits would need to be added for HCPCS codes used by other
third-party payers that are not used by Medicare or Medicaid state programs.
Number three, it would be absolutely necessary that NCCI methodology claims
adjudication rules be used correctly and consistently. Otherwise, incorrect
claim denials are likely to occur. Misuse of these rules is the most common
complaint about misuse of NCCI by other third-party payers.
Number four, would third-party payers be required to apply the NCCI edits to
appropriate types of services? Otherwise, incorrect claim denials are likely to
Number five, updated quarterly NCCI edit databases for Medicaid are
synchronized to the NCCI changes in the Medicare edit database. Would the same
synchronization be done for the edit databases for other third-party payers?
Number six. Would third-party payers be allowed to deactivate edits
inconsistent with their payment and coding policies?
Number seven, would third-party payers be allowed to overlay their own
unique edits related to same date of service, same provider, same beneficiary,
procedure-to-procedure, or units-of-service edits; and if so, would those edits
need to comply with NCCI coding principles?
If third-party payers were required to use the NCCI edit databases, NCCI
claims adjudication rules, and apply them to the appropriate types of
providers, the administrative simplification could be expected to save money
for providers. It would likely reduce the number of inappropriate claim
payments by health care plans.
However, there are costs associated with implementing the NCCI program.
Since NCCI program edits are applied during electronic claims processing,
third-party payers will incur costs of writing and integrating software into
their systems to apply the NCCI program edits. There may also be costs
associated with provider appeals of denied claims.
Additionally, there will be administrative costs related to provider
education, customer service, edit file maintenance, and other items. These
costs could be substantial and could create problems for smaller third-party
The NCCI PTP and MUE edit programs have worked well for the Medicare program
and are applied uniformly by Medicare claims-processing contractors. The
Medicare NCCI methodologies have been transferred into the Medicaid program
successfully, but it has required a great deal of effort, and many lessons have
been learned and continue to be learned.
While the potential does exist to provide greater uniformity, transparency,
and cost savings by transferring the Medicare and/or Medicaid NCCI edit
methodologies to other third-party payers, the task would be challenging, would
need to be well planned, and would require the cooperation of a wide variety of
I would be pleased to answer any questions. Thank you.
DR. WARREN: Thank you.
We are back at the top. Our next speaker is Chris Jagmin.
MS. SCHMIDT: Excuse me. Could we just introduce ourselves on the Medicare
and Medicaid side?
DR. WARREN: I’m sorry?
MS. SCHMIDT: Could we just introduce ourselves for Medicaid and Medicare?
DR. WARREN: Oh, sorry. I thought they were the same. They’re different?
MS. SCHMIDT: Well, we’re all together.
DR. WARREN: Okay.
MS. SCHMIDT: Good morning. My name is Donna Schmidt. I work for the Centers
for Medicaid and CHIP Services in CMS. I just wanted to give a quick background
about NCCI and Medicaid.
As Niles so correctly annotated, state Medicaid programs were mandated by
section 5407 of the Affordable Care Act to implement compatible national
correct coding initiative methodologies into their Medicaid claims-processing
systems by October 1, 2010.
CMS released guidance to state Medicaid programs on September 1, 2010.
Because of the short time frame for implementation, CMS did provide states with
some flexibility to deactivate certain Medicaid NCCI edits based on conflicts
with administrative rules, payment policies, state laws, and operational
readiness until April 1, 2011.
Moving forward, we have been working with states to fully implement the
methodologies in their Medicaid programs, so we have about 6 months of actual
full implementation in state Medicaid programs.
Thank you for the opportunity to comment to the committee, and I will be
happy to answer any questions about Medicaid NCCI.
DR. AGRAWAL: Hi. My name is Shantanu Agrawal. I am the medical director of
the Center for Program Integrity, a board-certified emergency physician, and a
member of the NCCI work group for Medicare.
Niles has actually covered the Medicare side, both Medicare and Medicaid,
very well. I have really nothing additional to add to his testimony but would
be happy to answer any questions especially relating to Medicare.
DR. WARREN: Thank you.
Now I think we’re ready for you, Chris.
Agenda Item: Health Plans, Chris Jagmin
DR. JAGMIN: Thank you.
My name is Chris Jagmin. I’m a family physician from Dallas, Texas. You will
have to excuse my blue tie today. I hear there’s a football game this weekend.
I am a medical policy and operations senior medical director for Aetna. In
that capacity I serve as Aetna’s subject matter expert and educator for coding
and payment policy issues.
Suffice it to say we’re a large company that pays a lot of claims and
administers a lot of benefits. Today I am testifying on behalf of America’s
Health Insurance Plans, whose members provide health and supplemental benefits
to more than 200 million Americans through employer-sponsored coverage, the
individual insurance market, and public programs such as Medicare and Medicaid.
I chair AHIP’s Coding and Claims Edit Workgroup, and I am AHIP’s
representative to the AMA CPT Editorial Panel.
I am pleased to provide the subcommittee with input as we discuss the
requirements under section 10109 of the Affordable Care Act “whether there
could be greater transparency and consistency of methodologies and processes
used to establish claim edits used by health plans.”
Earlier this year, we convened a group of health plan experts to help
thoroughly develop our recommendations. We focused our recommendations on
services and coding for services to detect and deter fraud, waste, and abuse on
services that are billed on CMS’s 1500 Health Insurance Form.
I would like to talk a little bit about the role of our edits and our health
plans. The HIPAA transaction sets and rules mandate that all health plans use
CPT codes for reporting physician and other health care professional services.
Claims “edits,” if you will, are computer algorithms programmed
into health plan claims-adjudication system related to the treatment of a
specific service reported on the claim with a CPT or a HCPCS level II code.
They are designed, these edits, to promote the correct coding of services
performed by physicians, ensuring that we as health plans pay for services that
are rendered and that we only pay for the work associated with each service
once, as defined within the valuation of that CPT code.
It is important to note that when I refer to “claims edits,” I am
not including edits that may be associated with a health plan’s particular
benefits. Such edits are beyond the scope of my testimony.
While claim edits have been important tools to ensure correct coding and
reduce fraud and abuse, it has been suggested that some of the variations in
claim edits used by health insurance plans increase administrative costs for
plans and providers, without offsetting incremental benefits in improved
coding. We have given this issue serious consideration, with a goal of
identifying potential areas where the government may be able to reduce any such
unnecessary administrative costs through actions related to categories of edits
applied, the process through which such edits are developed, and how issues
related to such edits are resolved.
Before we discuss the role of health plan-specific claim edit software, we
want to provide a perspective of commercial plans on Medicare’s use of claim
edits. As we’ve heard, NCCI establishes claim edits to ensure that claims are
coded properly to Medicare guidelines, and I am sure Medicare wants to pay for
services correctly also. And as we’ve heard, it has been expanded to Medicaid.
While insurance plans in the commercial world do use NCCI to varying
degrees, most of our plans have individually also developed claim edits or
utilized commercially available third-party claim-editing software that is more
applicable to our commercial insurance population, their particular underlying
conditions, and the type of insurance they may have.
The scope of the NCCI edits as they are used by many plans and by the
federal government requires that any part of this discussion about code-editing
process include NCCI. There are several issues we have, though, both procedural
and substantive, with applying NCCI edits generally or solely to commercial
We suggest that any discussion by this committee or HHS to promote more
consistent edits be informed by the NCCI edits but not be limited to NCCI
edits, given their limited applicability and scope. We also request that this
group not require the use of NCCI given the edits are developed for Medicare
and Medicaid implementation without the direct input of commercial health
A key aspect of any claims edit development process is transparency, as we
heard earlier. From the health plan perspective, the process used by CMS to
develop claim edits, while transparent to providers under Medicare and some of
the national health care organizations, has not been open to input from private
insurers and to the public at large until maybe in the comment period after
vetting and the discussion has gone on in some other venue, or until the final
decisions are made and posted.
CMS meetings related to the NCCI and mutually exclusive edits are not open
to the public, and the National Correct Coding Solutions does not offer a
general means of understanding the rationale or methodology behind edits
chosen. For example, there may be many reasons why an edit was incorporated
into NCCI, and it is difficult to tell. Was it a clinical consideration? Was
there specific feedback from providers, or concern? Was there specialty society
input that led to the edit? Is there some limit in the CMS adjudication system?
Or are there statistical methods that are showing outliers in the Medicare
population which would not necessarily apply to a commercial population?
Because of the limited information and lack of engagement from private
insurers, health plans, the lack of information necessary for interactions with
regulators and providers leads to issues with the plans in communicating to the
states and regulators about the use of NCCI edits in their own plans.
We can only provide the information that we have. The lack of disclosure to
health plans about the rationale for the NCCI edits can leave us unable to have
a productive dialogue with providers, state regulators, and consumers about the
differences between commercial and NCCI claims edits. This leads to unnecessary
claim appeals and administrative costs for both providers and health plans.
Secondly, these NCCI edits are not designed to be implemented by the
commercial market. As we’ve heard, they are dedicated for the Medicare and now
Medicaid population. Providers are able to get some of the logic behind edits
after submitting a claim or after having a denial, and the logic is not
generally available to all providers in Medicare once it is obtained.
The NCCI contractor has indicated that education of potential users of NCCI
edits, other than providers and Medicare contractors, is not in its scope of
contract with CMS. So as an individual health plan, our ability to reach out
and receive education on the use of these edits is limited.
Third, the scope of the NCCI edits is based on a Medicare population,
incorporating Medicare’s policies regarding appropriateness; for example,
relating to which procedures can be done in ambulatory surgery centers and what
constitutes an inpatient versus an outpatient service. Health plans don’t
always contract on that basis, and these edit policies may not be applicable to
a commercial population.
We also think, most importantly, the edits themselves are missing many code
pairs that are not part of the Medicare population. As the NCCI edits take on
the Medicaid population, I am sure those issues will diminish. But the
inclusion of only incidental and mutually exclusive edit sets, the two types of
edits we heard about, do not include many of the edits that we use in the
private insurance world.
For instance, we apply multiple surgery reductions in different ways to
different types of procedures. So if you have multiple procedures performed on
the same date of service, the second and third procedure may receive a discount
because the preoperative and postoperative care is duplicated.
Duplicate edits. We have a large issue in private commercial insurance with
providers billing as multiple units for the same service on the same date of
service. Some of it is reasonable and explainable, some of it is not, and
frankly, it is at least waste in the system.
Bundling edits. These types of edits ensure the equal treatment of codes
submitted as a group or separately submitted. The example we would have is a
lab panel. If you have a panel of eight tests and the provider bills all eight,
it should go into one code. If they bill seven out of eight, NCCI would not
necessarily roll those up into one code, which would lead to an overpayment.
Assistant surgeon edits. This edit is not in NCCI but is rather handled by
Medicare practice. Medicare practice in this area differs significantly from
commercial market practices, which are based on recommendations from other
sources on the application of assistant surgeon edits.
We recognize the potential benefits of improving consistency of some types
of edits. The NCCI edits in their current form are both insufficient to address
the full range of commercial issues and are inappropriate for mandatory, total
use due to procedural and substantive issues.
We have included some additional detail on these in the appendix to my
So if there is something else that could be done, what could that be?
Section 10109 referenced the need for “consistent methodology and
processes” used to establish claims used by health plans. As an
alternative to the adoption of a single set of code edits, such as the NCCI,
for commercial markets, it may be useful to consider whether additional
governance structures and processes could be established to provide a forum for
the discussion and review of the NCCI edits and address existing conflicts
between other commonly used edit sets and coding recommendations when health
plans use these.
We note that health plans must be afforded the opportunity to make their own
decisions on how to incorporate the recommendations of any new processes that
DR. WARREN: We need you to wrap up, so like 30 seconds.
DR. JAGMIN: So today there are multiple sources. We would propose that this
group work to establish a process for the public to provide input to the edit
process, to develop principles for discussing the standardization, and to
resolve the issue of possible antitrust conflicts when health plans get
together to discuss this code set.
I thank you for your time.
DR. WARREN: Thank you.
Tammy Banks is next from AMA.
Agenda Item: Providers, Tammy Banks
MS. BANKS: Thank you.
The American Medical Association would like to thank NCVHS for the
opportunity to provide our comments on standardization of claim edits and
The AMA is committed to simplifying the health care billing, payment, and
claims reconciliation process. Eliminating excessive cost from the current
claims process is one of the easiest steps we can take toward reducing health
care costs in America.
There is simply no justification for a system that costs physicians 10 to 14
percent of revenue just to get paid. The complexity and opacity of the current
process feeds the unhealthy level of distrust that permeates the relationship
between physicians and payers today, distrust that is undermining the potential
for collaborative efforts that could significantly improve the quality and
efficiency of health care delivery in this country.
Even the basic element of the fee-for-service pricing and the specific fee
schedule to be applied to the claim remains a major source of contention.
Because transparency of the fee schedule is a fundamental building block of any
payment system, the AMA strongly supports the adoption of a fee schedule
standard transaction that would eliminate ambiguity in this area.
Another building block is clear identification of the payer, the plan
product type, and the holder of the contract with the physician. We are hopeful
this piece of the puzzle will be resolved through the future implementation of
a robust health plan ID, as we have previously testified before the committee.
The payment of physician claims on a fee-for-service basis is not simply a
question of determining the specific fee schedule to be applied. Rather, each
claim is subject to two other sets of rules that may affect the payment amount.
First, claim edits are applied, including when more than one service is
billed, the interrelationship between those services will affect the price. The
AMA suggests that the term “claim edit” be defined to mean a rule
applied by a health plan or its agent to reduce the agreed payment for a
specific claim line to zero in those circumstances where that is required to
ensure the correct coding of a claim.
The library of claim edits would be created from nationally recognized
sources and developed without regard to their economic impact on the payment
for health care services. This definition can be operationalized in the 835 by
the inclusion of the zero in the allowed amount and payment field and appending
a CARC or a reason code indicating standard claim edit in the explanation
For example, an E/M service performed with a urinalysis in the office would
require the reporting of both services from an accurate coding perspective. If
a plan chose to not pay for the urinalysis, then that insurer may deny the
claim line and appropriately apply a CARC to indicate the reason for the
denial. The service may be an uncovered benefit or a fee-schedule agreement
exists with the provider for zero payment.
We are not suggesting that there cannot be other reasons for zero payments;
we are simply suggesting that if we are to ever automate the claims process and
reconciliation process, other types of payment adjustments need to be clearly
identified and separated from claim edits.
Unfortunately, payers are commingling their benefit plans and fee schedule
adjustments within the payer-determined claim edits. This vagueness often
results in a claim appeal to be sent to the payer.
Second, pricing rules are applied where it has been determined that certain
services should systematically be paid at some percentage of the fee schedule
amount different than 100 percent.
Pricing edits such as taxonomy and modifier adjustments are initially
applied to single line items. Then after code edits, post-edit payment rules
are applied, such as multiple-procedure reduction logic, that affect multiple
line items. This definition can be operationalized in the 835 by the inclusion
of the agreed amount in the allowed amount field and a CARC indicating standard
Unfortunately, except with respect to the Medicare program, fee schedule,
claim edits, and pricing rules are not routinely disclosed. Thus, neither
physicians nor patients can predict what payments will be until after the
health plan has processed the claim. And even then, there is no easy way to
validate the accuracy of the payment.
Moreover, those commercial companies that have attempted to maintain ongoing
updated catalogs of each payer’s claim edits and pricing rules report that this
effort requires a team of staff members, resources which are clearly not
available to the vast majority of physician practices.
If you still have any doubts about the business case for an industry-wide
standard set of code edits, look no further than the AMA’s most recent report
card on the claims-processing and edit activities of the nation’s largest
health insurers, which was published in June of 2011.
For the months of January and February, 17 percent to over 25 percent of
claim lines, no payment was received from the health plan, as much as one
quarter of all payments. The administrative burden imposed is obvious. The
reasons for the zero payments are many: gaps in patient coverage, noncovered
service, high deductibles, a host of claim edit libraries applied without
uniformity between payers.
A zero payment is a sentinel event that requires every physician practice to
analyze the appropriateness of each and every zero payment. Of the 17-to-25
percent of claim lines that receive zero payments, 2 percent to over 10 percent
of those claim lines resulted from the application of claim edits. The number
of claim edits that receive zero payments resulting from code edits dwarfs the
claim lines that receive zero payment from denials. This demonstrates the
importance of focusing on code edit simplification and standardization, as only
1-to-4 percent of claim lines that receive zero payments were caused by
Much has changed since the first code-editing software was implemented in
the early 1990s. Auditing for outliers is increasingly addressed through
sophisticated data-analytic programs similar to what FAIR ISAAC uses for credit
All trading partners are encouraged to bring ambiguities and concerns
regarding CPT codes and definitions to the CPT Editorial Panel, where code
change proposals are considered in an open process and where the CMS, AHIP, and
the Blue Cross Blue Shield Association all have official representatives.
The patients’ financial responsibility with the health care service has also
CMS/NCCI has developed a robust catalog of over a million claim edits that
all trading partners can access and download into their practice management
systems or repricing engines without charge.
CCI currently includes only two edit types, which was discussed. However,
given CCI’s purpose to ensure correct coding, there appears to be no policy
reason why CCI edits could not be expanded to include the other edit types that
are required to ensure correct coding.
Requiring all payers to use the same pricing rules would make it much easier
for all stakeholders, again including patients with high-deductible health
plans, who are increasingly likely to be affected by pricing rules to determine
their financial rights and responsibilities, both pre- and post-service.
Medicare payment rules are being used by many commercial payers and maintain
the relativity of the Medicare RBRVS. The AMA recommends that the Medicare
payment rules should be the starting point for the development of a national
pricing rule standard. A standard edit set and pricing rules would not
interfere with the ability of health plans or their agents to negotiate fee
schedules, limit contractual arrangements that could be negotiated with health
care providers, nor would standardized edit sets dictate benefit designs or
The AMA recommends:
• That HIPAA transaction and code set rule and other administrative
simplification provisions be revised as necessary to ensure the simplification
and timely disclosure of all information necessary for determining patient and
payer financial responsibilities at the point of care.
• That Medicare CCI be the starting point for the development of a
national claims edit standard. Medicare pricing rules should be the starting
point for the development of a national pricing rule standard and the
development of a contracted fee schedule standard transaction be devoted to
eliminate the current ambiguities.
Billions of dollars of cost savings for physicians, payers, patients, and
the health care industry can be realized by moving to real-time adjudication of
claims and enabling the adoption of point-of-service pricing. Adoption of
standardized pricing rules is a critical step towards that end. We can no
longer afford an opaque, complex payment system that diverts time and staff
resources from the practice of medicine and keeping patients well.
Thank you for your time.
DR. WARREN: Thank you, Tammy. That was wonderful.
Annette Gabel, are you on the phone?
MS. GABEL (via telcon): Yes, I am.
DR. WARREN: Okay, Annette, it’s your turn. Lynne is going to advance slides
Agenda Item: Pharmacy, Annette Gabel
MS. GABEL (via telcon): All right, thank you.
Sorry I’m not there in person. I am going to provide the pharmacy side of
claim edits for you.
We tried to base the slides on the questions that were presented to us. I
know I can’t see the time, Lorraine holding up her cards, but I am going to be
brief, so hopefully I will try to get you back on track.
For the pharmacy benefit, claim edits are primarily based on plan benefit
design. I provided some examples here that would be related to eligibility,
maximum days’ supply allowed, formulary edits, network limitations, and patient
In addition to that, NCPDP field and segment requirements as defined in the
Telecommunication Implementation Guide provide the basis for claim edits as
Because of our edits occurring at the point of service, the real-time
adjudication process supplies the provider and the patient with the status of
the claim at point of service, which mitigates the therapeutic and financial
risks that would occur post-dispensing.
In addition, our rejects occurring in real time assist the provider and the
patient in determining the next course of action.
Pharmacy claim edits are used consistently since the implementation guide,
the data dictionary, and the code values are created with industry consensus.
This basically means that they have already agreed to how these are going to be
Requirements for the use of reject codes are specific to the fields within
the telecommunications standard. Reject codes are also standardized in our
batch and Medicaid subrogation guides, because they use the framework of the
NCPDP’s process allows for new reject codes to be added, modified, or
discontinued on a quarterly basis using industry consensus. Once these requests
are approved, they are published in the next release of the external code lists
and are available for use according to a formal implementation time line. By
the way, that implementation time line was also created by the NCPDP
membership, so everyone basically agrees to the time line that is out on the
The pharmacy industry’s successful application of claim edits again is due
to its consistency in use.
That was all that I had on the claim edits.
I was asked to provide some information on the Medicare and Medicaid
National Correct Coding Initiative, so I am assuming it’s okay for me to
continue with that.
DR. WARREN: Yes, it is.
MS. GABEL (via telecon): All right.
The current standards and code lists that are utilized today are based on
the 4010. We are hoping that with the move to the 5010 there would be more
standardization if, obviously, the rules are followed.
There are challenges in the specificity returned in the 835 because we are
seeing inconsistency in the use of the name standard. Some do first-level
reports, others do not. We see inconsistency in responses. We see proprietary
reports being used.
There is also inconsistency in the timeliness of the response. We have a Web
site that can be checked for results on hours, day, et cetera. Then there are
proprietary values to the part B that occur in some of the data elements. There
are proprietary error codes and there are some proprietary first-level edit
I am going to move on the plan payment rules. Is that okay or do you want me
to hold off on that?
MS. DOO: Yes, she’s got time.
MS. GABEL (via telcon): For NCPDP and the pharmacy industry, as far as the
payment rules, claim status and payment information, as most of you know, is
communicated immediately using the real-time adjudication process. The payment
times are established and communicated to pharmacy providers or their
intermediaries as part of a contracting process that occurs with the payer.
There are some exceptions, and those exceptions are based on state and
federal regulations which require specific payment terms which may alter the
established payment terms and time lines that have been agreed upon.
The pharmacy industry, due to the work that we were doing on operating
rules, we created some guidance that the 835 may be sent at any time prior to
the release of the electronic fund transfers or the checks, but it may not be
released any later than three business days after.
That is all that I have, but I will be on to answer any questions that the
subcommittee has at the end.
DR. WARREN: Thank you, Annette. You were fast.
Our next speaker is Holly Louie.
Agenda Item: HBMA, Holly Louie
MS. LOUIE: Good afternoon. Thank you very much.
My name is Holly Louie, and I am an RN, certified, and a Certified
Healthcare Billing and Management Executive. I am the compliance officer for
Practice Management, Inc., a multi-specialty billing company in Boise, Idaho.
I am here today representing the Healthcare Billing and Management
Association. Our more than 700 members process an estimated 350-to-400 million
claims per year.
My company’s experience mirrors that of HBMA members across the United
States. Payers routinely misapply, misinterpret, ignore or correct the AMA CPT
guidelines and/or the CMS Correct Coding Initiative.
The payers we heard from earlier this morning, like workers’ comp and auto,
they may use CPT or ICD-9 codes, but some of them haven’t been valid since
dinosaurs roamed the earth.
CPT codes are part of the HIPAA standard transaction sets, but coding
conventions and interpretations are really up for grabs. In short, there is
much secrecy, no consistency, and wide variability even within the same payer.
Far more importantly, matters of coverage and policy are incorrectly
characterized as coding problems.
It is not surprising that physician coding is targeted and under continual
fire for inaccuracy. The correct answer for one payer is improper coding for
another. Imagine what your life would be like if in Chicago a red light means
stop, in Denver it means go, in Orlando it means no left turn, and in Los
Angeles nobody knows what the heck it means.
This is quite comparable to what we are asking our physicians, coders, and
billing professionals to figure out. The fact is coding rules are a moving
target, but audits are based on the same conventions that are not being
followed to begin with.
My written report provides much more detail regarding coding and with
supporting clinical examples. But my goal is that the committee understand that
these denials are inconsistent with and/or in direct conflict with both CPT
coding conventions and the CMS Correct Coding Initiative, cost physicians and
their staffs significant dollars in unnecessary overhead. They unnecessarily
increase payers’ costs in time and staff to handle all the appeal requests.
They create compliance risks and they make true electronic claims-processing
environment virtually impossible.
If physicians their billing companies do not have very sophisticated
denial-management processes and analyses, significant lost revenue results;
invalid claims will not be paid.
Per the CPT and CMS instructions, “a modifier provides the means to
report or indicate that a service or procedure that has been performed has been
altered by some specific circumstance but not really changed in its definition
or code…” Modifiers are necessary to explain many things. For
example, an evaluation and management is not related to or significantly
separately identifiable from a procedure that may have been performed.
This circumstance is reported through the use of the modifier and, in
postsurgical cases, through the use of diagnosis codes explaining that the
service is not related; for example, treating fractured ribs and a head injury
after a spleen removal. Although the correct modifier and diagnoses are on the
claim, large volumes of these are denied as included in the surgical services
or unbundled anyway.
Modifiers are also used to report a repeat procedure or service. We
understand that no payer is going to pay for unnecessary duplicative services.
However, there are times, predominantly in diagnostic specialties, where repeat
exams are medically necessary. Patients may require an exam to measure
progress, deterioration, or perform post-procedural exams. These exams are
frequently denied as duplicate.
This seems especially egregious when not only the correct modifier but the
actual times of the service are on the electronic claims. This so-called
duplicate is compounded because groups, unaffiliated physicians, and sites of
service are all lumped together.
In order to justify the second exam, some payers, including Medicare
contractors, are now requiring not only the modifier but a redetermination
request that includes the medical record from the denied exam and in some cases
documentation from all encounters on that date, information that a physician
may not even have access to.
Patients occasionally see providers of different specialties for unrelated
reasons on the same day. For example, a patient sees their cardiologist and
later that day sees a dermatologist for a planned lesion excision. Many payers
are bundling the cardiologist into that lesion excision.
In order for the cardiologist to receive payment, they must write an appeal
and send their medical records, and in some cases they have to also provide the
dermatologist’s records to prove that the services are not related, which
frankly seems to make no sense.
I want to discuss one modifier briefly that has been both a CMS and an OIG
target for improper payments and misuse. Under certain circumstances, a
physician may need to indicate that a procedure or service was distinct or
independent from other services on the same day. Per the CCI edits, modifier 59
is appropriate in those cases to unbundle those services.
Despite extensive published guidance on proper use of modifier 59, a
Medicaid program currently requires it on exams that are not bundled by anyone
in order to adjudicate the claims. This is problematic at many levels. It is
clearly an incorrect use of modifier, it is an OIG risk area in every
compliance guidance published. And because it is unique to one payer that
processes high volumes of crossover claims from a primary payer, all of those
crossover claims are jeopardized also.
We do not believe that payers should be able to just invent their own rules
surrounding the correct use of modifiers and conventions.
In most cases when multiple surgical procedures are performed on the same
day and during the same session, each additional service is subject to
reductions, which is appropriate for the duplicative work that may be involved.
However, there are also procedures that are considered add-on procedures.
They are only reported in addition to other procedures, and they should not be
subject to multiple surgical discounts. The add-on procedures have already been
reduced through the RUC and the fee schedule processes. However, many payers
routinely require a modifier 51 on those also or take additional reductions
I want to talk briefly about unlisted services now. The CPT and CMS
instructions state that you should “select the service or procedure that
accurately identifies a service provided. Do not select a CPT code that merely
approximates the service. If no specific code exists, report the service using
the appropriate unlisted procedure or service code.”
Despite very clear guidance, many payers simply deny unlisted procedures as
invalid, while others insist that a different CPT code be picked that merely
approximates the service. Physicians and coders are now left with a choice of
no reimbursement for a valid service or reporting an incorrect code.
I would ask, with the increasing focus on preventing false claims, fraud,
and abuse, will physicians be forgiven for incorrect coding when the payers
actually require it? Is correct coding even achievable when there is no one set
of conventions that physicians can even follow or that are published and
I will now share my company’s experience with these issues.
Coding is performed by certified coders with expertise in the specialty. We
have implemented a very robust denial management program that includes up-front
edits such as CCI, customized payer edits when known, backend work to
investigate denials and attempt to solve the problem, and finally a review by a
coding compliance expert where the alleged problem is coding errors.
Of the denials that met that criteria in 2009, 61 percent of our
denials were due to idiosyncratic payer edits. Written appeals disputing these
denials ended up being successful in about 86 percent of the cases, which was a
significant amount of cash for our physicians.
In 2010 we evaluated and addressed 2,888 claim line denials, accounting for
more than $749,000 in charges. For the first 10 months of 2011, that number is
more than 3,000 claims and $863,000.
Obviously, this experience is not unique to my company.
I think I have talked super-fast. If Bob Burleigh has some data, I may ask
him to share on these numbers, because he says I can’t do math, and he is
accurate about that.
Obviously, these numbers do not include anybody who is not being serviced by
an HBMA member.
In summary, the current lack of standardization for coding conventions, code
pair edits, and explanation for denials has allowed idiosyncratic payer edits
to proliferate. Billing companies and physicians frequently do not know why a
claim was denied or even how to correct the problem. Coverage policy and
payment determinations are misrepresented as coding errors, leading to
confusion for billing companies, patients, and beneficiaries.
We frequently receive calls from patients saying that their EOB told them it
was coded incorrectly and they’ve called their insurance company, who said yes,
it was coded incorrectly, and it’s not a coding problem; it is a coverage
problem. We think that that type of misrepresentation is egregious.
The costs to analyze these denials rely heavily on manual and paper
processes — obtain copies of medical records, file written appeals, program
systems, educate providers. An attempt to receive payment is onerous and an
unnecessary, enormous cost to everyone in the claim cycle process. In fact, the
magnitude of work for physicians and their billing companies and the amount of
paperwork is growing, not lessening, with simplification.
HBMA views this as a critical problem, and we are certain the elimination of
unpublished and nonstandard edits and conventions would make dramatic progress
toward electronic processing and simplification.
Our recommendations are:
• That the CPT coding conventions should be adopted as part of the
HIPAA standard transactions mandatory for all covered payers.
• The CCI edit pairs may need some customization, as discussed earlier,
but we believe that that should be a required standard methodology for code
• Remittance advice codes and explanations should be accurate and they
should be standardized.
• Denials based on payer coverage policies should not be called coding
• And the enforcement of all HIPAA violations should be consistent and
Thank you very much.
Bob, I think I left you at least 30 seconds.
MR. BURLEIGH: Holly mentioned that HBMA’s member claim volume is between 350
million and 400 million claims a year. Using that information and applying what
I learned this morning from Tammy, our estimates are actually quite
conservative. At 7.5 percent of the claims submitted, 350 million, that’s
about 26 million claim issues — that’s number of claims with issues, 26
million — that’s about $6.5 billion in claim value.
The cost of rework, which means dealing with all the examples that Holly
gave, even as low as $8 a claim, which is not much time or money, is $210
million a year for our members. We are only about a third of all the claims
processed. That comes up to almost $800,000 per day for our industry alone in
reworking claims because of the issues that Holly has outlined.
DR. WARREN: Okay, so we’ll say a “Wow!” now.
Next is Rhonda Buckholtz.
Agenda Item: Coders, Rhonda Buckholtz
MS. BUCKHOLTZ: Thanks. I’m Rhonda Buckholtz from AAPC, and I appreciate the
opportunity to give some testimony here today. I promise mine will be short.
I wanted to take the approach when I was doing this to just kind of show you
some issues behind the scenes, because when we talk about numbers — and those
were some amazing numbers that we just heard — there’s a lot of frustration
and a lot of idiosyncracies that go on behind the scenes.
So we did a sampling survey of our members that indicated, on average, most
practices contract with no less than 18 health plans, which was the lowest
number reported, and some, upwards of 80-plus. The highest number that we got
back was over 280.
As we are all aware, no two health plans are alike. So even within each plan
itself, the different families of offerings make the frustration of not having
consistent guidelines and edits, an administrative burden most practices simply
Now, there are many items that go into setting up a practice management
system in order to handle all of these varying edits correctly. Of course,
simply transitioning to an electronic format does not help a provider in these
This is just a screen shot of an average practice management system that’s
on the back end. Every single field needs to be completed for each procedure or
service provided by the physician. For a family practice provider, this could
easily top well over 100 procedures or services on average. For each health
plan contracted with, a line needs to be filled out in the fee schedule for
each code, for each service or procedure.
Now, that in itself is a burden, because most often we cannot get an entire
fee schedule from the health plan. We have to beg and borrow to try to figure
out exactly what they’re going to pay us, for all of us. We can usually get the
most frequently used but we can never get an entire list unless we have some
type of leverage or background that we can pull in.
For those practices that contract with even 50 health plans, that means
5,000 line items need to be filled out for each service and procedure. Each
line contains the price charged, the expected amount from the health plan, any
modifiers required, contractual obligations, bundling edits, and special
characteristics such as, for this plan, it needs to be CPT or for that one it
needs to be HCPCS code. For this plan we have to use this modifier, for this
plan we have to use a different modifier.
It can actually take hours to set up an individual health plan, given that
detailed research is actually necessary to be sure to capture every single
different nuance that’s required. And keep in mind, if we get these details
wrong when we’re filling out these line items or setting up our systems, it can
then come back and be identified as fraud later on upon audit.
On average, a biller or coder stays on the phone between 20 to 45 minutes
trying to get a response to resolve a claim edit. Provider portals, while easy
enough to maneuver, don’t offer a realistic solution, especially, to my
favorite, the old standby of “claimed service lacks information that is
needed for adjudication.” Exactly what information is missing? This of
course results in an inquiry. On line it can take at least 24 to 48 hours to
get a response that usually doesn’t provide any additional information, or it
will instruct us to contact a representative.
So now you are forced to call and deal with multiple transfers after a
lengthy automated system that finally gives you the runaround. Eventually, once
you fail the automated responses enough times, you can finally get through to a
Most edits that are used by the health plans are vague in nature and cannot
be interpreted by the average person without spending numerous attempts to
manage it. If a provider sees 30 patients a day, 5 days a week, and 10 percent
are rejected or have edits applied — and that’s a very low number, as you’ve
heard — that equals 15 claims a week per physician. If the average time spent
is only 30 minutes, it takes 7-1/2 hours a week just for a one-provider
practice. Most practices have multiple physicians. There are actually very few
single-provider practices out there. So it takes at least a full day just to
follow up on edits.
Auto-posting was obviously a welcome relief for most practices. However,
many of us have realized that most often they take just as much work as manual
posting due to all of the edits and the inconsistencies.
Many EOBs linger unbalanced until an edit can be resolved by an
administrator or the vendor, and certain health plans will alter the codes
submitted to fit their own guidelines, making the claim not match what was
billed and not allowing for the automated posting anyway. Again, this prompts
the inquiry process that can take several days to resolve before that
remittance advice can actually be processed through a practice management
The time spent to train someone for this portion of the work is extensive to
say the least. Many practices get frustrated and overwhelmed, and the claims
just sit in the system unpaid due to staffing constraints, causing additional
financial burdens on the practice.
We know that some sort of consistency is indeed necessary, and we believe it
can happen in a uniform format. It would be helpful to all of the providers if
the health plans used a standardized format for reporting edits back and for
EOBs, just as we are required to submit our claims in a standard format.
Edits should be as consistent as possible for all of the health plans and
contain language to a provider that is actually easily interpreted. I will take
you back to the “claimed service lacks information that is needed for
adjudication.” There needs to be a way for us to be able to interpret the
information that is given back to us in a meaningful manner.
Easier resolutions need to be made available to providers, such as having an
actual person to speak to, to get through to these edits and can actually
answer their questions. As we heard before, a lot of times we get calls from
patients where they say, “I called my health plan because of this denial.
They said you coded it wrong.” Well, how do they know I coded it wrong if
they haven’t even requested the record?
So when we call the health plan and we try to get it resolved, they insist,
“No, our reps would never say that.” Then you have to take names and
phone numbers so that they can go review the phone log so that they can
actually, yes, determine that they did do that and they will fix it for in the
There have to be some uniform methods available, and we believe that that
can be easily accomplished with those.
DR. WARREN: Thank you very much.
Next we have Deb Strickland from Tibco.
This is a hidden eye test.
Agenda Item: Vendors, Deb Strickland
MS. STRICKLAND: Hopefully, this will aid in some of the discussion that
we’ve been having here, because in dealing with the claim edit situation, I
really needed to break it down quite simply for myself so that I can really
understand what is happening here. I thought it would be beneficial to share
the breakdown that I had done for myself.
From a validation vendor perspective, what we have is front-end edits.
Front-end edits can be simply syntactical edits, so basically is it a good,
sound transaction? Does it have the right loops and segments? Is it the right
repeats, field lengths, those kinds of things?
The other thing that we’ve seen is that payers want to move edits to the
front end. Those are called front-end edits. They are edits that the payer
would never pay a claim if it came in in this way. So they move them up to the
front. So not only are we doing syntactical editing but we are also doing some
front-end editing. That is just saying, Look, I’m not going to take this kind
of claim; I’m pushing it back before it even gets into a process where there
have to be appeals and so forth.
Then we have two sets of what I interpret as internal edits, one being a
claim edit. Those are NCCI-type edits, procedure/diagnosis, maybe procedure
modifiers, things that don’t go together, male/female things that just don’t
work. Those types of things could happen to any type of claim for any person.
Then we get into what I consider an adjudication edit. That would be
something that would be a little bit more specific to the benefit, but it is
not limited to that. It could have something specific about the member, about
their historical claim history, any pricing rules, and maybe reasonable and
customary as it applies to their benefit plan.
When we look at that, internal edits, the issue that we have with internal
edits is their use is very complex across the industry, and it varies greatly.
Of course, digging into what those are is very complex.
The front-end edits, however, they do have pain points. The edits vary by
payer, so everyone has different edits that they’re pushing forward. The
provider systems are consistently trying to keep up with them. The validation
engines as well are trying to keep up with those.
In addition, notice of change, how much notice or time is given for those
edits, and the changes to those edits also varies greatly. Of course, there is
inconsistency across the industry with that.
Some room for improvement. Well, we can start with CMS that has some edits
that are different by regions. These are clinical rules, and if they were
consistent, at least from a Medicare perspective, across the industry, that
would be helpful — you know, the 80-20 rule.
The payers and the providers just need to find some common ground. We need
to get in a room. We need to talk about it. We need to bridge the gap between
payers trying to pay a little less for a procedure and providers that are
billing fraudulently or are forced to bill fraudulently because they can’t get
their claims paid.
Some of the challenges and obstacles that we have here are that the edits
are constantly changing. The time line for those varies greatly, and PMS
systems may not be getting those changes into their systems timely.
Edits. Payers are prohibited from sharing some edits because they actually
purchase them, and so they cannot be shared.
We are also talking, when we’re talking about who has to be in a room to
resolve these issues, we’re talking about different people. I think we need to
realize that before we start this effort and get into a room. These are the
benefit people, these are the coders, these are the people who deal with the
codes and the benefits related to them. So we should be mindful of that as we
Some of the solutions from a provider’s perspective are that the payers need
to publish as many of their rules as possible so that the providers can bill
correctly and the vendors can also create edits. Payers just feel that
providers should bill for the service that is done. Now, let’s hope that the
payers will offer the ability to pay those bills, as we’ve heard from these
Also, having a standard set of the consistent CARC and RARC codes will help
the industry to move forward. Consistent use of those codes is absolutely
imperative for the providers to understand what edits are being applied.
The edit that was mentioned before, “missing or invalid
information,” is only one part. That code actually requires a remark code
to be coming with it, and if it is not, it is not being sent correctly.
Then I think we should find out what beyond CCI edits the payers are doing,
so find some commonality. Maybe there is some commonality across other payers
to see if there is among not only CCI but additional edits that maybe are
things that we can deal with.
So I think that from our perspective and what we’ve heard, the next step is
to create a well-balanced industry group, maybe such as WEDI, bringing together
all different parties to do PAGs and discuss this, talk about it. It’s
definitely an area that we have some concern. Providers are concerned, payers
are concerned. So we have the right level of concern.
We also need — and I think it would be a positive thing — to address the
low-hanging fruit. There is that. What are the front-end edits? What are payers
constantly pushing forward? What can we say, “That’s a win, let’s move it
over to that category”? That will help us in our cooperative exchange.
The other thing I would like to say adamantly is that the PMS systems must
be on board with this. We need to have them at the table. It is not just a
payer/provider issue. If the PMS systems are not on board and on with these
edits, the ability to change these edits, we are still going to have a problem.
Communicating the changes has to be managed so that the expectations can be
set. I do believe that a champion to steward the effort through to resolution
is absolutely imperative because this is going to be a very complex issue. We
have a lot of moving parts and a lot of things that need to change in order for
us to be very effective in this.
Additional questions on claim edits that were in your packet of questions
were the fact that the insurers require the different codes and information and
what the role of the CCI edits is. My suggestion here is to combine the two
issues, and perhaps the solution is to find the delta between what the CCI
edits are and what other payers are doing. That could be sort of a step that we
take in our sessions.
Also address those front-end edits separate from the internal edits. Let’s
take it one step at a time. Let’s get the things that we can be very successful
at, learn how to interact with each other and decide what things work and what
things do not.
Another question was that the physicians are “oversending”
information because the requests are nebulous. This speaks to the attachment
session from yesterday, but I wanted to address it. My opinion on this is that
we should have a mechanism for the payer to ask for the specific information
they’re looking for and for the provider to respond with just that information.
Again, that includes the PMS systems. The PMS systems cannot just have one
button that goes send the entire medical record. It has to be very particular
to that piece of data for the PMS systems to program so that they can send that
I did address the timeliness. I did some research on this and found very
little interest in this item, so I will move along.
A couple of different things that I wanted to bring up to the group are that
the EDI life cycle, many say it starts with eligibility. I would disagree. What
we found is that enrollment of the member into the plan has become a
significant issue, and research and surveys by the AMA and others have shown
that enrollment is a large part of the problem that we have when we end up
having reversals and corrections and overpayment recoveries in the remittance
What that means is that the current enrollment for member plans is not
working. Employers’ groups send the data on spreadsheets, bar napkins,
whatever, and it is not working. A suggestion would be for them to use the 834
transaction and to be legislated to do so in order to get this issue resolved.
This would obviously create simplification from the payers who have upwards of
400 different formats that the employer groups can send in. That’s ridiculous
when we have a standard transaction for that.
Just a slight comment here on the workers’ compensation and P&C, since I
was actively involved in creating some of the workarounds that actually work
within the industry for 4010 to 5010. It was not initially involved in the
HIPAA legislation, but I do believe it should be. The reason I believe it
should be is because we do have somewhere across the industry, just from one
clearinghouse, 1.4 million transactions actually that are working in the
industry. If we have something that works, how can we continue to hear,
“It’s not going to work, it’s not going to work”? This is working.
If we don’t include them and they don’t move to ICD-10 and everybody else
does, if they don’t move to the standard transactions and everybody else does,
what we’re doing is creating dual process everywhere — at the payer, provider,
and vendor level.
DR. WARREN: Okay, thank you very much. I wish we could have seen your happy
faces on your graph, but that’s okay.
MS. STRICKLAND: I know. Here they are. These little ones are so sad. We
don’t want sad faces.
DR. WARREN: Next we hear from Barry Keene.
Agenda Item: State Initiative, Barry Keene
MR. KEENE: I’m Barry Keene from Colorado.
For all the reasons that we have been hearing in this section of testimony,
Colorado passed House bill 1332 in the 2010 legislative session, which was a
very contentious legislative session. This bill passed with wide bipartisan
support with no challenges in the committee hearings.
We set out to create a uniform set of edits and payment rules across the
spectrum in Colorado. The bill created a task force. Lorraine has the actual
bill I’ve sent to her. On pages 10 and 11 in that bill, you will see that we
did address in our bill many of the things that Dr. Jagmin brought up in
his testimony. It is a broad-based approach to this.
The very first thing we learned — we’ve been working on this a year now —
was that there is no definition across industry on what an edit actually is or
means and that lexicons are a first-order issue to deal with in this process.
We do have a very specific community of edits that we’re working with.
We are not working in this area here. We feel that these tend to be value
added from the payers, and we stayed out of that arena.
We did begin with NCCI because NCCI is the payer or the edits — the
community of predominance for providers across all 50 states. If we wanted to
create a uniform set of edits in Colorado, we couldn’t start outside of NCCI.
We had to figure out a way to incorporate NCCI or at least be informed about
the effect of NCCI.
We also included things — and this is not a complete list — there are
possibly 16 of these types of edits that are in our work. As has been clearly
stated so far, due to separate interpretations, there can be variations — I
shouldn’t say there can be; there are variations — in application between
We believe that transparency and standardization around edits and associated
payment rules would go a long way to alleviating the administrative burden.
More specifically, we think that a standard set of claim edits, disclosed to
the provider community in advance and in a downloadable format for inclusion in
the physicians’ billing system, would streamline the claims processing and
As a high-level observation, we want to make a point that we think that it
would helpful — we find many payers who are participating with us where the
correct coding edits often are intermingled with fraud detection and other
value-added-type edits that should remain. So separating these things out
somehow is important.
I won’t spend time on CARCS and RARCS; that has been addressed as well.
We were asked if there are other states involved in doing this kind of
thing. Our observation is that California, Minnesota, Texas, Vermont, and
Washington have all had activities either currently or previously in the area
of simplifying claims. Some of those did involve conversations around edits. We
are not going to comment on those states’ work.
How can this be turned into a national agenda? That is really what I would
like to spend my time on this morning, or this afternoon, in that it has so
well been discussed already what the problems are that are being experienced.
So what needs to happen is that a recognized national authority needs to
step in here and solidify the consensus around several things:
• First, we need to formalize and standardize some level of edit
adoption. We need to have a standard way of adopting an edit through the
We need to create a transparent and credible process to do that with.
Colorado’s task force operates under Colorado’s sunshine law, which is a robust
law for the public to be able to be engaged and involved. All our meetings are
open to the public, including our subcommittee meetings.
Then we need to establish a sustaining strategy in that the industry is ever
To start with, you have to establish a stakeholder consortium. That has to
have knowledgeable constituents, people that really work with edits in the
trenches day in and day out. We have a lot of those people on our Colorado task
Obviously, you need providers from across the spectrum of place of service
and type of provider. Payers, commercial, not-for-profits, co-ops in some
cases, government payers all need to be engaged in this discussion, and vendors
of software at all levels, the high end, the fundamental software creators, the
practice management billing software. Billing and revenue cycle services need
to be engaged, obviously. We hear that today.
NCCI must be part of this conversation, and you need some knowledgeable
consumers as well. I will talk a little bit more about that later on.
Then you have to start by selecting a base set of edits. This turns out to
be an interesting project. You have to first decide what communities of edits
you want to focus on. One way we have looked at that is what the most impact
for the effort you get is.
Then you have to decide on whether you’re going to build that community of
edits — there’s millions — or to buy them from perhaps some existing supplier
of these things.
Then you have to develop criteria that everyone accepts for adoption of
Next, you need the sustainability piece of this. The building blocks of that
are that you have to establish or adopt criteria and definitions for
“nationally recognized sources.” We thought that that was a given
already. We have learned that is somewhat different.
You have to determine a credible use for those sources. We find varying uses
of the national sources. This gets into translating adverbs into logic.
“Almost always” or “almost never,” those terms that we see
from the medical societies, they are fairly easily translatable.
“Sometimes,” how do you deal with that? How do you translate that?
That asks to have a different response from every different payer, and that’s
what we have.
Then you have to establish some behavioral standards for the nationally
recognized sources. That is, are they willing to update annually? Do they want
to be involved in this process? My written text goes into this in more detail,
and we would be glad to go into this in great detail with you from our findings
and our own process.
Then you have to have a way to enforce this. I am a business owner, so I
like a carrot-and-stick approach. I am just throwing out some ideas and
suggestions here. But there have already been collective actions in this arena.
If you were to protect the participating payers, those who would participate
in a standard set of edits, from collective actions, that might be a carrot. If
you protected the participating payers from the next 49 states that approach
this, that might be helpful.
I think if you required all payers participating in the exchanges to adopt a
uniform set of edits and payments rules, that would be a good way to implement.
And it may be a thing that you might want to require for the adoption of these
features for the quality society accreditations.
What is the role and opportunity for Medicare and Medicaid? We’re so glad
you asked. CMS should accept their role as the payer predominating providers in
all 50 states and, by extension, their responsibility to lead an initiative to
NCCI should initiate a goal of alignment with private sector payer practices
and create an initiative to reconcile discontinuities where they are revealed.
The NCCI contractor must be a part of this conversation. I am sorry Niles is
gone, but he and I have had this conversation. They have to be at this table.
We are trying to sort out subtle differences between private payer practices
and NCCI. And there are real differences, and there are real reasons for that.
Where CMS does not want the contractor to speak for them, they need to be at
the table. I would invite CMS to send a representative to the Colorado task
force and at least sit in on where we are now.
So why now? ICD-10 obviously amplifies things exponentially. Standardization
anywhere would help the coders.
Insurance exchanges compare uniform products, and non-uniform edits will
undermine this goal and dampen consumer trust.
Creating an essential benefits package requires a uniform edit approach to
enforce the value metric.
Mistrust and antagonization between industry and partners is exacerbated by
nontransparent, non-uniform edits.
Clearly, the quality of comparability across data in all payer claims
databases, which we have in Colorado, is significantly improved.
Last, and something I haven’t heard very much at all in all of these
conversations is that in the end the consumers are impacted by unanticipated
out-of-pocket medical expense caused by inability to estimate cost at the point
and time of service.
DR. WARREN: Thank you.
DR. WARREN: I believe next is Connie Leonard for Medicare RAC audits.
Connie, are you on the phone?
MS. LEONARD (via telcon): I am, yes.
DR. WARREN: You’re on.
Agenda Item: Medicare RAC Audits, Connie
MS. LEONARD (via telcon): All right, thank you.
Thank you, members of the subcommittee, for asking me here today. I am going
to provide some basic information on the Medicare fee-for-service recovery
audit program and how we go about the audit steps that we conduct. I say
fee-for-service because I am sure many of you know it has been expanded to
Medicare Part C and D and in both Medicaid, so certainly lots of things going
on in the recovery audit world from a CMS perspective.
The process that we use is basically the same as the medical review process
by the Medicare administrative contractors. It’s a process that has been in
place for years. Really, we tweaked it somewhat. We tried to add in some
constraints to provide providers some protections against burden and such, but
it really is the same type of process used by the Medicare administrative
Medicare reviews can happen by a number of different entities. The recovery
auditors are just one of those. They can happen by the MACs, by the PFCs(?) and
NC(?) types, by other governmental agencies like the OIG or GAO. So there are
lots of different entities out there that can audit Medicare claims.
That is an issue that we do hear from providers. We hear from providers that
they get hit for audits from the Medicare side, maybe from the fee-for-service
side, from the Medicare Advantage side, the Medicaid side, the commercial
insurer side, and that they’re looking for some type of help. I think that’s
one of the big questions, hopefully, for this subcommittee, is how can we all
work together to ensure that the provider’s facility will provide that quality
of care that they need to provide also?
One of the things that we did when we went out to implement the national
program was the recovery auditors placed all the new issues, all the areas of
audit, onto the Web site. We did that again to provide transparency and to
allow providers to be able to do their own quality review processes to correct
any mistakes that they might identify and to improve their current billing
But we have heard from some associations and some providers that other
insurers, other payers, will look at that Web site and then, very shortly after
it goes up on the Medicare Web site, they’re getting audits from other entities
on the same issue. So while we certainly understand that, I think it was an
unexpected occurrence from our transparency of putting this, taking our issues
The types of reviews that we do, we wouldn’t really constitute them as
financial. We do a clinical review when we request documentation. We are
requesting medical records. Right now, we allow the provider to submit
everything that they need to submit to support payment of a claim.
I know in one of the earlier segments it was questioned about could there be
a form or could there be something so that providers don’t have to submit the
whole entire claim, and I think that is possible depending on the type of
review. But if you’re really getting into a medical necessity determination
where you are trying to determine if the service that was provided was accurate
and medically necessary, I think, at least right now, that the Medicare care
program would feel a little wary just because that’s a full denial.
If we deny that claim, we are taking all of that money away from a provider,
and we would feel that a provider would need to be able to supply everything
that they felt would support payment of that particular claim.
It is a big issue for CMS about who is auditing what, especially as the
Medicaid and the Medicare Parts C and D RACs come on board. That is something
that we’re currently looking at, who is auditing whom, when, where, what, and
why, so to speak.
From a Medicare fee-for-service perspective, we do have a database that we
do try very hard to make sure that the claim or provider that we’re reviewing
is not also being reviewed by a PFC or a ZPEC(?) and then, vice versa, that we
are not impeding on an investigation or an audit that another entity is doing.
We do that with the Medicare administrative contractors too. So if they have
already reviewed a claim, a Medicare recovery auditor is not going to go back
and review that claim again.
We certainly have had agency-wide discussions about all the various types of
audits that happen and what we can do to make sure that one particular provider
is not getting bombarded not only by Medicare fee-for-service but by the
Medicare Part C or Part D or Medicaid, or at least all the other governmental
programs. We understand that. So we have had those initial discussions.
But the flip side of that is if a particular provider is billing incorrectly
in Medicare, there is probably a high probability that they’re also billing
incorrectly in Medicaid. So I think from that perspective that CMS has a
financial responsibility to the trust fund to make sure that that is not
So again, I think there you have a double-edged sword in that we don’t want
the provider to be unnecessarily burdened, but at the same token we do have
that fiduciary responsibility to protect the trust fund and take back any
Because we are very cognizant of a particular provider who might be getting
more burdened than necessary, we have some of the protections in place in the
recovery audit program. We do support ES&D. Right now it is voluntary for
the recovery auditors to participate, but in the next contracting effort it
will be mandatory.
We have medical record limits or additional documentation limits which are
based on a provider’s Medicare billing for the previous year. It limits the
amount of medical records that a recovery auditor can request from a particular
We also implemented what we call a discussion period. It is a period of time
after they receive a review results letter but many times before they even get
the actual demand letter, where providers can call up and talk to the recovery
auditor about the identification and if it was an accurate one or not.
Just to follow up, again, the whole point of why CMS, why we thought the
recovery audit program was a good thing for CMS is because the purpose behind
the program is to pay the claim right the first time. That has always been our
goal since we started with the demonstration project back in 2005.
We use the results from the recovery audit program to help implement a
system edit, edits up front, to stop the claim from even getting paid, to make
policy changes and clarifications, and to provide education to providers about
what they’re doing and how to bill correctly. Many of you maybe have seen the
quarterly provider compliance newsletters which we have been getting great
feedback on because it does provide some examples to providers about what we’re
seeing and how they can work to improve that.
We are always willing to talk to provider groups to get more information
about how can we again do more provider education and, hopefully again, pay
their claim right the first time because we believe that’s the ultimate goal in
any audit program, is so that you don’t have to have that robust an audit
With that, I will take questions at the end. Thank you.
DR. WARREN: Thank you. You made it way under time, which is really helpful
because we’re over.
MS. LEONARD (via telcon): I’m sorry, maybe I talked too quickly.
DR. WARREN: Our next presenter is Mari Savickis.
Agenda Item: Provider Perspective, Mari
MS. SAVICKIS: Hi. Thanks again for having the AMA testify.
The AMA has worked really closely actually with Connie’s staff. I think this
is a perfect example of how providers and the federal government can work
together to make a program work better.
But let me, before I get into the RAC stuff, just make a general comment. If
think if there were two words I could use to summarize our testimony, it would
be uniformity and transparency.
In order for payers to realize the full benefits of audits, physicians must
be able to determine and accept the accuracy of an audit request. This
understanding can lead to desired long-term improvements in the practice
operations. Helping physicians understand and rectify billing errors is perhaps
the most important goal of a legitimate audit activity.
With that being said, I am going to touch upon the RAC program and then some
of the commercial audit programs under way.
The Medicare RAC program, as Connie mentioned, started off as a pilot and
then became a permanent program. As we were able to work with CMS, we were able
to get some greater uniformity. I think the lessons learned there could be
applied to other areas; for example, with the Medicaid RAC and with the
For example, as Connie mentioned, they have standardized audit demand
letters which are really, really helpful. Initially they weren’t standardized.
Just getting the CMS logo on that and having seen our language in the manual
was actually extremely helpful.
We have recommended that CMS do something similar with respect to the
Medicaid RAC program, but at this time they haven’t chosen to do that. They
have left that to the discretion of the states, which can be confusing for
physicians because they’re going to be getting different letters with different
logos and different sets of language, so that again presents — again, if you
have uniformity, you’re going to reduce the confusion that physicians have. But
again leaving that discretion to the states was something that CMS decided. So
it is something that we will continue to push for.
Also with respect to the Medicare Advantage audits, I know that we get
several inquiries from physicians saying, “Do I need to respond to
this?” Some of the inquiries are actually mandatory, while others are
actually optional. There is a significant amount of confusion with physicians
as to what they do and do not need to provide when being contacted by a
Medicare Advantage contractor. So we think that standardizing that process
would also be very helpful.
There are several problems that exist obviously in the commercial market
because there is even, believe it or not, more payers out there than even
Medicare with the fee-for-service, the managed care. So the problems are even
multiplied in the payer setting.
Again, these are compounded for physicians. They’re getting hit every which
way from an audit. It is to be likened to having an IRS audit. It is that
scary, it is actually fairly terrifying, and we are called upon many times to
assist physician in trying to understand and work through what exactly they are
being asked for.
Also, the commercial payers use a variety of different forms for requesting
information. The letters look different. Some level of uniformity would be very
helpful in trying to respond to the requests, because many times they don’t
even know exactly what they’re being asked for and the language is confusing,
or there are many numbers of requests being asked for at one time. If you could
standardize that process alone, that would be very helpful.
There is also the issue of extrapolation. One acute problem in dire need is
standardizing this area. Because auditors are subject to few, if any,
transparency allegations with respect to extrapolation methodologies, it is
virtually impossible for a practice, particularly a small one, to determine
with any accuracy what the extrapolation methodology actually is. So
standardizing that would be very helpful.
There is also the matter of ERISA. There is a need for standardization that
may not be adequately addressed by state law due to the application of the
Employee Retirement Income Security Act preemption.
Put in its most general terms, ERISA preemption precludes state oversight of
some activities performed by self-insured group health plans or third parties
acting to administer those health plans.
We have a number of different recommendations with respect to the commercial
market, including stating clearly what the purpose of the audit is, stating the
legal name and tax ID number. There’s a number in here, but I just want to go
through a few of them: The name of the specific benefit plan; the full name,
date of birth, and health plan-assigned identifier applicable to each patient;
the specific dates of service; the CPT codes with respect to the overpayment
being made. Things that you would think would actually be fairly commonplace
are not actually evident in the information that is always being requested from
I could go on, but we have about 16 specific examples. Another one is
requesting information on medical necessity. We recommend that it be based on,
when at all possible, national quality forum guidelines or those endorsed by
the NQF. If it is being based on extrapolation, the audit form must provide
information sufficient to enable to enable the physician to determine exactly
how the auditor derived the information for the overpayment and independently
verify the extrapolation’s statistical validity.
In wrapping up, just to conclude, I think the two terms again that we would
advocate for would be uniformity and transparency. There simply is not enough
information today for physicians to adequately respond in a timely fashion. It
is actually pretty terrifying. The AMA will continue to try to help physicians.
But that level of standardization and uniformity would be very helpful.
DR. WARREN: Thank you.
So Lynne, you are on with audits.
Agenda Item: NCPDP, Lynne Gilbertson
MS. GILBERTSON: This is Lynne Gilbertson from the National Council for
Prescription Drug Programs.
NCPDP has a working task group open to any participant in the industry,
nonmembers as well as NCPDP members. They actually took on the charge of — a
project had been submitted to NCPDP to create standards for the audit
exchanges. So they provided the information for this testimony.
Some of the pain points with the audits are that audits do continue to grow,
and with that there is more operational inefficiency due to lack of standards,
miscommunication of information, especially when what we see in the pharmacy
industry, the underlying issue is the same but it is asked for two different
ways. There is an example there where a day’s supply is calculated incorrectly.
One entity wants to audit based on the day supply; another wants to audit based
on quantity and day/supply ratio that is in error. So there are some problems
Providers may not have sufficient notice or detailed requests prior to
So these are some of the pain points that you asked about those.
Why audit? Three particular reasons were given. One is the typical
uncovering and stopping fraud and abuse. But there is also a value to audits
that they can be used to educate and modify operational practices so that the
same situation doesn’t occur again and again and again.
A third option for audit is recovering funds.
What can be improved? Another one of your questions. Providing notice
sufficient to providers when audits are going to happen. Supply requests for
data in advance of an onsite audit: What do you need?
Avoid audits at re-enrollment times, like January 1, perhaps.
Standardize the requests and the information that is needed, especially for the
routine kinds of audits; and that there is a lack of incentive for the auditing
entity to educate and improve the business practice to not have to see this
What can be standardized in audits? Typical answer: the data, the format,
the transaction, the codes, all that. but also some of the content. They
provided some examples of reasons for recouping monies and chargebacks, so that
when something is identified as an auditable, and it can be corrected, that it
Providing sufficient information to identify the chargebacks. Meaningful
codes in the remittance advice. Claim level and provider level audit segments
that relate to the chargebacks in the remittance advice.
So these are all things that will be coming forward as possible
modifications, solutions to work through with the industry.
Continue to enhance the standard to include more operating rules, such as
corrective actions within a time frame, when not to perform the audits, lead
time for audits, and efficiencies of claim processing to stop the audit from
This task group was overachievers, and they have put together, which was
approved this summer, the Version 1 of the NCPDP audit standard. It defines
record layouts for two-way communication. There is a request and a response.
One of the things that was reached as an industry approval, especially from
the health plan perspective, is that not all transaction payers have to be
supported. You have a given starting point, but you may have different ending
points in the audit flow based on the outcome of the step before.
There are two types of audit functions that are supported in this standard.
One is called a desktop audit. That is where the pharmacist is given a list of
prescriptions that are going to be audited and they want specific details about
those prescriptions. The other is an in-store audit where there is actually
somebody physically going on site and looking at the prescriptions there.
The task group is active in working toward getting some pilots moving on
this and adding FAQs, things like that.
Not to freak anybody out, this is just a list of the transactions. But
recognize they are all pairs. So there is request and response, a request and
response. You know that’s how the pharmacy industry works. You start with the
initial audit and you can go all the way down to any of these different action
steps that can occur.
That is the end.
DR. WARREN: Thank you, Lynne.
Agenda Item: Questions by the Subcommittee
DR. WARREN: With that, because we are over time, I’m going to limit
questions to 5 minutes. So if you have burning questions, let’s ask them. If
not, if people could ask offline.
DR. KLOSS: I wanted to ask about the results you’re seeing in the Colorado
project are? That’s a terrific breakthrough.
MR. KEENE: Thank you. We are at the end of our first year of a two-year
program that has a potential option to go a third year. The biggest things we
are learning are that — this hasn’t been tried before, and so definitions are
an issue, lexicon is an issue, and that the nationally recognized sources were
not as uniform as we might have anticipated that they would be.
So we are still in an early determination of how to implement CCI code and
add to that code that would be sufficient to satisfy the commercial payers.
DR. KLOSS: So would we expect that at the end of your second year you will
have results, impact results?
MR. KEENE: Yes. We are required to report out in December of 2012 with our
recommendation, and implementation begins in January 2013.
DR. WARREN: Anyone else? Jim?
MR. SORACE: I sort of have a general question, but are claims edit sort of a
subcategory of business rules?
MR. KEENE: I think that that is fair. They are a subcategory. I think if you
went down this panel, if we had a few more payers, you would probably get a
slightly different response from each one.
DR. WARREN: Lorraine?
MS. DOO: I wanted to thank everybody again. It has been an incredible amount
of information really on both days, but this in particular was very
Everybody had pain points and also some recommendations for solutions. So I
guess I would ask the group to think about it, and if anybody wants to respond
now, who can convene a group of people that would be willing to come and have a
hard discussion about what really can be changed to come up even with two
recommendations that would change something, that could be changed within the
next 2 years?
MS. STRICKLAND: My recommendation just from experience with the organization
is that WEDI would be the place to do that because it does bring in all of the
different interested parties, and it is effective. The advisory groups, the
PAGs that go on, are well attended, as well as — I mean you can have 400
people really looking at an issue, and an issue of this magnitude, I think,
would draw a good crowd, and we need to have good dialogue.
We also need to have those participants that are not generally the active
participants in some of these groups, but to bring in those expert coders and
benefit folks to really get to the nuts and bolts of this and to really make
this happen and resolve these issues.
DR. JAGMIN: I would think if we are going to use WEDI or something like that
that we would stick to something very, say, noncontroversial or easier to get
the low-hanging fruit, like modifier definition, for instance. I think there
are some great opportunities there.
But if we’re talking beyond that — unifying code edit sets, for instance —
I think that is going to have to be something that the Secretary is going to
have to convene or something that is going to have to be above, at a pretty
high level, even above a CMS level, to talk about that big issue.
DR. WARREN: Last comment. I will give you one, Tammy.
DR. ROSEN: I would add that the — speaking for Holly Louie, since she had
to head to the airport, the medical specialty societies I think are important
because there are so many things that change year to year in terms of clinical
technique and procedures and so forth, and software vendors, because in the
end, if this is going to be successful, it has to be something that could be
implemented within a software product so that the outgoing claim is coded
correctly and processed appropriately and the response back has the same
DR. WARREN: Okay, Tammy. You are last.
MS. BANKS: Oh, man. Now I’ve got to be good.
I just really want to commend the state of Colorado for taking on this issue
and for bringing key stakeholders to the table. They have the software
developers, they have major national payers, they have obviously
representatives from Colorado.
We also strongly participate in that process as well. I think if you’re
looking for short-term recommendations, obviously I also have to commend Barry
Keene and his — as a public member, I don’t know why or how or what inspires
him, but I wish there were more public members out there like Barry Keene.
I would strongly encourage using them as a resource to figure out where to
DR. WARREN: Thank you, everybody.
We are going to take lunch, so probably about 30 minutes. We will reconvene
Hearing 3- Standards and Operating Rules
SESSION 1 Maintenance of standards and operating
DR. WARREN: okay I’d like to welcome you to the last panel of the day, and
we’re going to be talking about the whole process for the maintenance of
standards and operating rules as we go into – as this whole area starts
evolving, we really need to pay attention about collaboration and evolution of
the standards and the operating rules to meet all the challenges that we have
ahead of us, and I understand that we have invited some representatives from
the DSMO that are not going to be presenting but are on tap for us to ask
questions of from NUCC, NUBC, ADA, X12, NCPDP and HL7. So with that, I’d like
to start the presentation with Margaret Weiker for the DSMO.
Agenda Item: DSMO, Margaret Weiker
MS. WEIKER: Thank you, Judy, and we do have, I’m hopefully on the phone, we
have the representative from the NUBC, the NUCC and the DECC, as well as then
one representative from X12, Lynn Gilbertson, who’s across the way, is a
representative from NCPDP and Debbie Meisner and Gail Kocher, which went to
grab lunch, will be representing X12.
On the DSMO, I represent NCPDP. I have served as the First Chair of the
DSMO, and I think another term as such, so I’ve been involved in this since it
was actually called the NUDC, yes, that long ago – not many people know
that’s what it originally was called. So anyway, I’m not going to go into what
is the DSMO, who makes up the DSMO, how the DSMO was formed. That testimony was
given on April 27 of this year. There’s a little bit of a brief in this
document that I’ve got pulled up, and we submitted. I have submitted the April
27 testimony as well as our annual report to NCVHS as background material, for
those new members who may not have been on the panel at that point in time. So
I did submit that as background information.
So to get to the actual testimony. The DSMO recognizes that from time to
time, all organizations benefit from a review of the existing processes. The
following provides a list of process improvements.
According to our initial review, five of the six organizations that make up
the DSMO recommend that the DSMO should continue to perform their core review
function for improving the health care HIPAA standards. The members of the DSMO
that wish to speak or state something differently than what I’m about to
present can do that.
At this point, after we gave the April 27 testimony, we went back again and
looked at the processes and had further discussion; some of it precipitated by
some questions from Lorraine. So we said okay, what are the problems we’re
trying to solve, because we kind of keep talking about this and keep talking
about this, but it boils down to what are we trying to solve; what’s the
purpose that we’re trying to do here?
So our first problem statement was, there’s a perception that the changes to
the HIPAA standards can turn into some lengthy process and may not be capable
of meeting the business needs of the industry. To address this problem, ACA
requires the Secretary to establish a review committee not later than April 1
of 2014, which will meet not less than biannually thereafter. The Secretary,
acting through this review committee, shall conduct hearings to evaluate and
review the processes for adopting new or revised standards, as well as
incorporating operating rules to support the standards.
As part of the overall process, the DSMO-required time line may impact the
timeliness of the change to the next version of the implementation
specifications released. For change requests that come in through the DSMO
process, the current time line allows for ten days for opting into the change
request; ninety days for each DSMO member to review and vote on and then a
45-day extension if more time is needed. In addition, ASC X12 has streamlined
their process in moving to new versions of the HIPAA standards to a two-year
So in order to address the “We can’t get it done in a timely
fashion”, the DSMO recommends that the Review Committee continue to be the
NCVHS Subcommittee on Standards, particularly since that is an established
process and relationship that can be used. For the sake of consistency, the
DSMO supports the established process of the DSMO to NCVHS, to the Secretary,
to regulations, and that this process continue to be used going forward.
The DSMO plans to create a more effective triage process for handling
incoming change requests; thereby streamlining the change review process. It
should be noted that the modifications to process time frames will require the
change in the DSMO Memorandum of Understanding, or the MOU. In addition, each
individual organization will need to evaluate and adjust their operations and
approve the modifications. Some suggested changes under consideration include:
Decrease the number of days for DSMO members to opt in on change requests to
five days, allow the DSMO members to post their recommendations during the
five-day opt-in period, decrease the number of days for the DSMO to review
change requests to 60 days, refine the process for which an organization can
request an extension, develop a change request triage process to meet early in
the month if we determine whether change requests should be deferred to another
entity. Continue to allow invited observers to the DSMO calls, including
organizations that change or maintain or develop operating rules, code sets, et
cetera, to assist in effectively triaging change requests early.
The DSMO will provide documentation for the invited observers to manage
expectation of change requests. Expectations could include the observer
organization providing the DSMO with the disposition status of change requests,
the completion time frame, action taken, et cetera.
Problem Statement Two. Some industry stakeholders do not know where to go to
request a change. The process of submitting a change request is not widely
understood in the industry. Our recommendation is the DSMO will modify their
website to provide additional education and guidance on how to submit change
requests. The DSMO will need to determine funding to incorporate these website
changes. Additional guidance will help subpower users to better understand the
type of change they are requesting and the direction of where their change
requests could be directly submitted. There are other submitters who don’t know
whether their change requests could be resolved by a code set or through
interpretation or clarification of the standards reporting requirement.
The DSMO would provide more change request education on the website,
including where to send change requests that are not appropriate for the DSMO
site, for the submitters that wish to go to the source organization.
The DSMO website would handle any change requests submitted, regardless of
the type of change, whether the change is to a standard, to an operating rule,
to content, to code set, et cetera. The DSMO would develop a decision tree to
assist the submitter for where they go directly to request a change, and
explain how the DSMO would triage the change requests they receive. Individual
organizations will be asked to offer more DSMO information on their websites,
to include information about DSMO change request processes on their websites.
Problem Statement Number Three. The current DSMO website form for requesting
changes needs to be updated. The information requested is not always sufficient
or appropriate for the DSMO review process. The current DSMO website form for
requesting changes will be updated; today the information provided is not
always sufficient or appropriate for the DSMO review process. Changes to the
DSMO Change Request Form may include elimination of the requester identifying a
solution. Currently the requester can submit the resolution and often, this
leads to issues within the DSMO, where the concept of the request is approved
but the DSMO does not approve the submitter’s solution.
Emphasize the importance of the requester to finding the business need,
evaluate and update the type of request categories and to streamline the
questions needed when entering the X12 change process.
Statement Four – There are some gaps in the ability to finalize a
change request. We support adding new categories for deferring change requests
to other entities, to notify submitters that their change request was deferred
to another entity, analyze the recommendation and disposition categories, as
well as establish a flow that captures how items deferred to another entity are
reported back to the DSMO for closure.
Some other observations. The change request only works if the public
identifies needed changes and submits those requests for changes. The DSMO
recommends that the updated education may help solve this problem. Another
observation – the recommendations above seek to further streamline the
DSMO process, but the regulatory process still takes the largest amount of
time. The DSMO recommendation is to look to NCVHS and HHS for assistance.
Another observation. The industry wants the opportunity to be able to move
to new versions, but how often is still a difficult question. The DSMO
recommendation: the ACA modifications allow the publication of an interim
finding rule and the ability for regulations to be issued on a predictable and
timely basis. Perhaps this will assist the industry in preparing for routine
adoption of newer versions of the standard.
Another observation: The DSMO must be made aware of the impact of other
regulations on the standards. The HIPAA Privacy Regulations had significant
impact on the standards. The MPI regulations affected the standards. It is
anticipated that the health plan identifier regulations and regulations from
ACA will also impact the standards. The DSMO looks to HHS for assistance in
providing this information in a timely manner.
And that concludes the DSMO report.
DR. WARREN: Okay you get a star, too. Next is Gwen, from CAQH.
Agenda Item: CAQH/CORE, Gwen Lohse
MS. LOHSE: Thank you, Gwen Lohse, Deputy Director of CAQH and Managing
Director of CORE. Thank you for inviting us today. I know you’ve had a really,
really long last few days, so hopefully the thoughts I’m going to share are
useful to you.
You’ve seen a lot of people in the last few days, so I’m going to try to
stay a little bit on track.
With the agenda items, one of the things we wanted to share was just a
little bit of background to make sure we were looking at this in a similar way,
and then talk about the role of, now that we have, as Margaret had said,
mandated standards as well as rules, how they could work together, both with
their roles and then towards administrative simplification, enhancing the
system as well as enhancing the processes, and then we’ve spent more time about
how to enhance CAQH/CORE, given that the draft rules have been proposed in the
interim final comment.
With regard to the context, I think Margaret already really went over this,
and you know, CAQH is a nonprofit. We did start CORE over – it’s 2005 now when
it was started, and the operating rules have amended HIPAA, so we’re talking
about new regulations, so I am going to talk a little bit about what our
perception is of the regulation and how that fits into the maintenance process.
Due to the regulation and also due to the independent processes beyond that,
how can we move forward?
One of the things, as we’re thinking about this, is there’s no doubt the
maintenance, with regard to operating rules and standards, really do fit into a
larger context. This problem of how to do this is not necessarily unique to
just the administrative arena. It’s happening in a lot of other places with
health IT, so we’re going to continue to learn from that and also think about
how we do fit into the broader picture.
There’s evolving players; NACHA, I think, is a probably fantastic example of
that. Process improvement is needed. How do we gain adoption and increase
participation? And as Margaret had said, when is it appropriate for the next
version, due to the adoption? And then that goes into user-friendliness and
innovation and education.
So resources, a shared understanding of roles and responsibilities, then
We’re really looking at – there’s both strategic and technical issues.
With the strategic issues, consensus-based processes around the regulatory
framework, public/private identification and then the technical issues, some
that may be very specific to a standard or to an operating rule, and there may
be more of those, and then also the strategy just is ongoing. So the two
working together as we’re moving forward.
The definition of a scope of operating rules and how they work have been
going on since 2005. We had an implementation period, and as you all know
better than us, 2010 we spent a lot of time about the regulatory process of how
these will work together. And then we do have our first interim final rule on
operating rules. There was a proposal from NCVHS in the last few days on a
second set of operating rules. So that’s information as to what are the scopes
and the roles, and then there was a public comment period, and I think in that
public comment period we saw some of the challenges that people are looking at
the scope of the rules and the responsibilities. So we wanted to look at those
again – We think the IFC provides pretty clear examples of how the
standards and the operating rules can work together, and that there’s value in
looking at that and seeing how the content and the infrastructure and the
operating rules can support the standards, to get to the goals of what’s in the
And the EFT and ERA is probably a prime exhibit of this. You, as a
Committee, recommended that there be operating rules for EFT and ERA, so we
went through and said what’s out of scope and what’s in scope, due to the ACA?
Which could be viewed as maintenance, right?
Maintenance and change requests. So we received, from the industry, it was
over 130 companies, what they would want and how they wanted to edit it along
the way, and we constantly went back and said what’s in scope and what’s out of
scope? And there’s certain examples here on a strategic level about constantly
thinking; we do not duplicate or reflect the standards, so whenever anyone
suggested anything that was specific to the standard, that was called out of
scope, catalogued and then forwarded on to the SDOs and highlighted that it was
not appropriate for the operating rules.
That also happened with the EFT; in scope was addressing the CCD+, but not
repeating what was already in it, or other parts related to the ACH network
itself. And then going beyond the infrastructure. And in the back of my
testimony, you’ll see there’s a number of things, examples of what were out of
There is this separate process for standards and operating rules. They both
have to meet certain criteria to be transparent, and they coordinate together
through distinct processes. Requiring the operating rules entities to
participate in the DSMO is inconsistent with the statute, because you do have
two different things, and the DSMO was created for the standards, and not for
the operating rules, plus there’s other players. So where appropriate,
obviously, the standards should incorporate where appropriate what’s in the
operating rules, and then we need to think about a new structure, about how to
all work together more closely.
What’s the timing, too? The operating rules can augment the standards, and
then the standards and the operating rules don’t need to be tied together at
the same time. We saw some comments in the interim final rule that they should
come out at exactly the same time, and we think that’s actually not beneficial;
the goal of it is to say when do we need operating rules and when do we need
standards? And they may happen at different times, like we’re already seeing,
where they supplement each other. So that timing is going to be what the market
needs to do.
There could be several versions of operating rules that take advantage of a
base version of the standard to get further value from that base version. We
saw it with V5010, or V4010, we’re going to see that with V5010 for ACS X12 and
we’re also seeing it with some of the security, SSL, that TLS. So how do we
continue to have that happen and make sure that the next version of the
standards incorporate the operating rules where appropriate?
Non-technical decisions right now are primarily made by the SDOs, or the
operating rule authors, versus in a group, so those are happening on an
independent basis, and the regulatory process, through the DSMO, is for a
specific group of SDOs, so not everyone involved in the operating rules is in
the SDO. Additionally, we need to take a look and see what’s appropriate, since
4010 to 5010 to the ACA; what role has the DSMO played and does it fit into the
structure anymore? And we think, moving forward, there’s been a lot of
evolution, and we do need to think about a new structure, and I think Margaret
highlighted resources are needed, for whatever that structure is.
CAQH/CORE, just as a piece here, we’re trying to evolve and really think
about how to improve; that relates to participation, governance, process
improvement, procedures on transparency, including the change requests,
commitment to education and collaboration. And you’ll see in the Appendix,
we’ve had over a hundred meetings in 2011 between CORE and the SDOs, so whether
– if we were counting NCPDP meetings, as we collaborated a lot on the
EFT/ERA, also with ASC X12 and meeting with CMS around the comments with the
interim final comment, meeting with NACHA because they were greatly involved in
the operating rules, that’s a hundred meetings; it’s quite a lot of time. We’re
obviously collaborating quite a lot and talking a lot and exchanging
information, but how do we make that better? But I think there’s lessons
With the EFT and ERA, this process for identifying and evaluating priorities
happened in about a two-month period, but it only happened because everyone had
done a lot of work beforehand, so taking that work into consideration and then
thinking about how do we best use it as an industry and move forward, and
you’ll see WEDI is included, X12, state efforts, so working together to
maintenance to move forward.
With regard to diversity and participation, we have, obviously a diversity
of participants at the table. You did ask us to highlight this. There’s 75
percent of the commercially insured, and something to note, a number of the
financial institutions joined because of the focus for last year, and I think
moving forward, you’ll see that as you work on new things, people will join.
And then a number of provider organizations are also coming to the table,
and they’re listed, in looking at ROI and states.
What have we done to make this happen? One of the questions you asked is how
are we getting participation and outreach. Town Hall calls are free. We’ve done
them about every six weeks, and on average, we have about a hundred and ten
entities coming; I think average is about 95. More than half of those are not
CORE participants. So those are entities that are not CORE and they have
decided to join the free calls, and every time we offer one, there’s an
Doing webinars with WEDI, with NPAG, which is a blues group, with NACHA,
MGMA, MA, going to about 40 conferences and presenting on panels with the SDOs,
and in many cases, attending the NCPDP annual conference and doing surveys,
whether it’s specific to ROI or if it’s specific to a particular focus, like
Transitioning governance – We are going through the process of transitioning
governance, so we can continue to move forward, and in a multi-stakeholder
fashion, even more so.
The change request process – as we looked at the questions about change
requests, really, right now, you can come through and ask CAQH/CORE for change
requests. As you think about this, there’s two types where it could go with
regard to a substantive or a major change or a non-substantive change. There’s
different sources. We’re getting questions from the Town Hall calls; people
that are just learning. We have a process on CAQH/CORE to submit a request.
Entities completing the voluntary certification: There’s a lot of lessons
learned there, because they’re actually implementing, and then also participant
discussions. We’ve held like 80 calls, so they’re coming in through that.
There may be clarifications; a lot of them are suggestions of additional
requirements, and a lot of them are suggestions for removing requirements, and
then they’re analyzed and the ones that are substantive need to have a vote and
the ones that are non-substantive do not need to have a vote because there’s a
structure involved, and then additionally, the rules have to follow the
Federally-mandated standards, so when, for instance a new standard comes up,
like 5010, we update the rules, put them on the site and do redlining, and
moving forward like that.
With regard to the most resource-intensive, and I think, Lorraine can
probably speak to this a little bit, because we’ve been working with her
office. We get questions, but now that the interim final comment is out, a lot
of them tend to be people asking to make additional requirements, and that’s
something that a bigger group needs to look at, and then also, contacts about
details of a standard, and we do not answer those, and really move that
question over the appropriate SDO.
So as we’re moving forward, we want to have greater visibility into this
process, and put out more of these questions. We have over three hundred FAQ’s
on the site, and then are looking at updating the rules when we have early
adopters like EMDEON sitting here or Aetna.
So also, input on industry-neutral rules; working with NACHA – we have
to be working with them to see how health care fits in too. They’re making
edits on their rules due to health care requirements.
Using the public website: The CAQH website has a ton of FAQs, access to
critical items, so that’s critical, but again, it takes resources, and how do
we work together to use public methods like the website in coordination? And
we’ve hired a Director of Rule Writing to work on this, because it’s a full
time job for someone to really do a good job and completely be devoted to that.
Return on investment – also, that informs maintenance – what’s
actually working. I know you’re going to ask us to wrap up – focus on user
friendliness; we’re going to be redoing. You’ve asked us for some changes to
the rules, we’re going to be making those, and then collecting data to process
improvement on the other rules.
Larger picture – to continue the moving forward. We need to think about
how to create more industry dialogue on these critical items if we’re going to
have good maintenance processes and work together. We need to think about how
to better align as we’re moving forward. So we’ve established a research office
to track the adoption of the transactions, and then are thinking about how to
DR. WARREN: Gwen, we’re going to have to call a stop. We do know the last
two slides you have recommendations for, so that’s good.
So our next presenters are Jane Estep and Michael Herd, from NACHA.
Agenda Item: NACHA, Jan Estep, Michael Herd
MS. ESTEP: Thank you I’m Jane Estep, with NACHA, and also at the table with
me is Michael Herd; he represents our rule-making organization within NACHA.
Thank you for allowing me to speak with you today, and for offering this
testimony on maintenance and change for operating in rules and standards,
specifically as they apply to NACHA’s CCD+ standard for electronic funds
I will provide you with a bit of an introduction, and that is that the CCD+
is a national EFT standard that is used by all industries, and I point that out
because unlike other HIPAA standards, the CCD+ has been adapted and is used by
all types of industries across the United States. And so while the process for
the use of the standard and the standard itself can be, and has been,
incorporated with health care-specific requirements, the process for
maintaining and changing the standard does need to be mindful of all
As a standards and rule-making organization, NACHA does employ an open and
very inclusive rule-making process that is national in perspective. It
considers all viewpoints and it responds to the needs of all industries that
make EFT transfers using the ACH network. As the health care industry moves
forward, with broader adoption of EFT, we have outlined steps to supplement and
enhance our existing processes in order to facilitate dialogue even further
between financial services and the health care industry.
I’d ask you to recall that in the February 17, 2011 letter to Secretary
Sibelius, this subcommittee did recommend the NACHA CCD+ as a health care EFT
standard in conformance with the NACHA operating rules, and it’s critical that
the maintenance and change request process for health care standards and rules
will be, and continue to be, flexible, timely and adaptive to the needs of this
NACHA does recommend that NCVHS embrace the CCD+ as the mandated health care
EFT standard and acknowledge the NACHA process for maintenance and change, as
supplemented for health care, is the existing and appropriate method for
consideration of changes that may be needed for the CCD+ standard that is used
for EFT by all industries, including health care.
So I’ll drop back for just a moment to talk about NACHA and the ACH network,
and certainly I ask you to refer to past testimonies that I’ve made to the
subcommittee, but we are a not-for-profit organization that maintains both the
standards and the rules for the automatic clearinghouse for the ACH payment
system. We develop, maintain and amend the rules for implementing the ACH
standards. We have been doing that for about 40 years and have extensive
experience in developing, maintaining and amending the standards and rules,
which again, are used by all industries for EFT.
The ACH is a safe, secure and electronic network for direct consumer
business and government payments of all types. Large and small financial
institutions of all kinds jointly govern and use the ACH network, facilitating
billions of payments annually, such as direct deposit and direct payment, that
are used by all businesses, including all types of health care entities, and
NACHA, therefore, does maintain a national perspective in maintaining the ACH
It is governed by fair and equitable rules that create certainty and guide
risk management for all participants. The rules also create the legal framework
for the ACH network, and all participating financial institutions are bound to
comply with those rules, and the financial institutions provide the warranties
for the ACH transactions, backed by their capital, and thereby guaranteeing the
financial integrity of the payment system.
ACH transactions are therefore a ubiquitous form of electronic payment that
we believe is already used by all health plans, including Medicare. The NACHA
operating rules and the standards on which they are based provide the backbone
for this system, and the rules establish the roles, rights and responsibilities
when transmitting EFT transactions. And we believe this framework, as well as
its widespread use and its efficiency, is why the Committee previously
recommended the CCD+ as the healthcare EFT standard.
So with that, I want to talk for a few minutes about our process for change
and then give you a few examples. We believe that in part, the rules have been
highly successful because they are amended in a very deliberative and inclusive
process, very similar to that used by Federal agencies under the Administrative
Procedures Act. It’s transparent and adaptive, and considers all viewpoints.
All participants in the ACH network, commercial banks, community banks, credit
unions, large corporations such as health plans and hospital groups, small
businesses such as doctors’ offices and dentists’ offices, industry processors
such as health care clearinghouses, vendors, government agencies, they all have
an opportunity to comment on proposed rules change. When rules changes are
required for the benefit of all participants, there is a methodical and
prescribed manner by which options are considered, impact is assessed and
viewpoints are heard.
Due in part to the open, inclusive and transparent nature of his process,
the US Department of Treasury and the Federal Reserve System incorporate the
NACHA operating rules by reference in their own regulations as a UC ACH
Network. So when proposals to amend the rules are reviewed, they’re overseen by
a NACHA rules and operations committee, which is comprised of a representative
sample of financial institutions by size, type and geography, as well as
representatives of regional payment associations, the network operators,
Federal Reserve Board of Governors and the US Treasury Department.
A rules proposal is assigned to a rules workgroup for research, impact
evaluation and development, and they also obtain additional input from what is
called an industry support group, and that is comprised of interested industry
representatives that may be most impacted.
As a draft rule moves forward in the process, a request for comment is
posted on the NACHA public website and available to any interested party of any
organization to provide input. NACHA therefore accepts reviews and considers
all comments and viewpoints on a rules proposal, and checks and balances
throughout the process ensure that proposals have broad-based support.
I will also remind the Subcommittee that NACHA also supports a comprehensive
framework for delivering education, information to audiences across the United
States, and education is clearly something that we think is key for
understanding not only rules development but implications of implementing a new
So with this as the framework for the current process, I’d like to talk
about things that we would use to supplement the process. I said before that
NACHA reviews any request to change the EFT standard or rules, and we need to
assess the impact across all industries. Therefore we believe we should not
create and employ a separate process that is unique to health care alone for
considering requests. We do believe, however, that there are steps we can take
to supplement our existing process to ensure that we provide the greatest
ability for health care industry users of the EFT standard to provide their
input and viewpoints on proposed changes.
In this regard, the partnership that has been established between NACHA and
CAQH/CORE on the EFT and ERA operating rules and standards, is playing a very
important role. We have participated in appropriate CAQH CORE subgroups and
workgroups and thereby have established a forum that can assess change requests
for the NACHA/EFT standard and the rules, in support of health care operating
rules. We are establishment formal touch points and appropriate dialogue, to
make sure that NACHA’s existing process to ensure close review and
communication, occurs over time for appropriate enhancements. In fact, the
first such request included in the draft CORE, EFT and ERA re-association rule
that the committee is reviewing is an example of such.
As an SDO for the health care EFT, NACHA will accept requests to modify the
CCD+ standard from any party, directly from anyone in the industry, through
CAQH/CORE or through direct members of NACHA. By working with critical health
care partners and by engaging health care entities in the process we have, we
will continue to seek input and guidance fluidly over time.
I would like to give you an example of how this has worked in the past,
because I think it helps to bring it home a bit. Again, our process is one to
respond to and incorporate changes from any entity and from any industry, as
they apply to the NACHA operating rules and our standards. Changes have been
made over time to include changes that are necessary for technology innovation,
regulatory changes and industry-specific requirements, such as auto dealer
drafting, child support collections, tax payments and individual enrollments in
In a similar fashion, NACHA will ensure that changes can be supported by
financial institutions who are responsible for the integrity of the system.
Let me talk through two examples quickly to show you how the flexible and
iterative process can work to help all industries.
NACHA developed a non-monetary standard for the ACH network, called an ENR,
or an automated enrollment entry, to be used by a financial institution to
request that a bank account holder be enrolled to receive ACH credits and
debits from Federal agencies. The ENR code was developed in direct response to
the Treasury and the Social Security Administration. We defined the ENR
standard, including its specified format, as well as incorporated rules that
instructed banks and the government as to its proper use. The format definition
for the ENR includes the standardized use of a company entry description field,
something where the word “auto-enroll” sticks out so that everyone
can understand it, and it included other format requirements such as program
identification and information about a company name and ID number.
The operating rules, then, included requirements about processing returns
and responsibilities of the government agencies and the receiving enrollment
entities. Subsequent to this initial use by Social Security and the Treasury,
the ENR standard has been adapted through the rulemaking process to be used by
other industries, so that other industries can enroll their customers in
electronic billing services, enabled by banks. In adapting the ENR standard for
this use, it’s been a way to really eliminate paper and could also be used as
we talk about health care enrollment, the discussion earlier today.
A second example is child support payments, and every business needed to
support a consistent way of withholding payments from direct deposit to send to
SDUs, or state disbursement units. Again, this was done with a CCD+, not
changing the format itself but defining the way that the information is used to
again support another industry in a very unique fashion.
As I consider what we have learned, through examples like this and many
other that we’ve considered as technology and regulations have changed, balance
and adaptability are most important. They’re required as we consider risk
versus innovation, the speed of rulemaking versus inclusiveness, cost versus
benefit, and really, how you engage types and sizes of all participants.
As technology changes, for instance, NACHA developed an opt-in program, a
mechanism to use rules for only certain participants that wanted to test
something out, but still have the strength of rules in standards behind them,
as they were able to test techniques and evaluate results before moving things
forward across the whole network.
As a standards development organization, NACHA is an industry-neutral SDO,
but we will accommodate health care needs, as we have done with and for many
other industries while retaining the essence of our time-tested process. We
defined a dependable process to accept changes for standards and rules, in an
ongoing basis. It’s inclusive, transparent, balanced and adaptable, engaging
thousands of viewpoints in the rules and in education, and we commit to work
with the healthcare industry as we move forward through 2012.
We request that NCVHS embrace the CCD+ as the mandated health care EFT
standard, recognizing its widespread use today, and the efficiency it can
afford the industry. We also request that NCVHS recognize the existing process
as the appropriate and effective process for the maintenance of changes to the
CCD+ standard for health care as it is for all industries, and that you
recognize that we will supplement our process to accommodate healthcare
industry users, consistent with the guiding principles of the DSMO and that the
health care industry request the modifications according to our existing
process as supplemented by health care, rather than running through the
existing DSMO process.
DR. WARREN: Terrific. Remember we have some time for questions.
Jim Daley, with WEDI.
MR. DALEY: Thank you for having me here to testify. We were here in July
2010 and April 2011, on this topic in April we had a lot more detailed
testimony. Some of what I’m going to say today draws on that one. I also would
like to thank Margaret and Gwen for answering some of the issues that I’m about
to raise; they’re already working on some of these, so that’s great.
We know who WEDI is; I do want to emphasize we’re consensus-based. We don’t
develop or maintain standards, and we do represent a cross-section of the
In summary, the current process allows open participation, so that’s a
really good thing; there is a chance to have a voice in the process, but it is
dependent on organizations’ resources. What in theory is great in practice
doesn’t work quite as well, but it’s still a good process. It does take too
long between a development of a standard, adoption of a standard and
implementation of it; I think we all know that, and now with the introduction
of the operating rules to go along with the standards, there was a potential
for some conflicts to exist.
The way the current process is working, with the Affordable Care Act, the
way HIPAA adapted the transactions and ACA went along and said operating rules
have come along with these various dates, now we’ve got dual implementations
and all the expense of testing and everything else that goes along with that
dual implementation, so you’ll find the testimony later on. To the extent we
can get them closer together it would be a real good thing.
These are an answer to the specific questions that Lorraine had sent. The
value, the openness, it’s great. Anybody can participate, anybody can request
changes and it’s a consensus-based approach to it. That’s all good stuff. The
pitfalls – that it does take time to do it, and I know they’re working on
making that shorter, but if you look at the original HIPAA version in 2003, now
it’s going to be the first of 2012 when the next one goes in; that’s a long
time, a lot can happen between there.
The adoption has unpredictable time frames. As we said, nine years there,
eight to nine years, who knows when the next one is, also 4050 was built in the
middle but wasn’t adopted, so people aren’t sure what to bill to vendors;
should they support 4050, not knowing if it’s going to be a real thing or not?
That unpredictability is a concern, and also if we knew, on a regular basis,
here’s what’s going to happen, organizations could budget their resources as
well, so getting some predictability into it would probably be a good thing.
And testing, there’s no established process to pilot the standards; people in
Claims Attachments yesterday talked about some good things happened when they
did that, some found that it worked so well that they tweaked them a little bit
and actually started using them, so that’s another good thing to think about.
Advantages – we already said that – the effectiveness, the
advantages of participation, multiple viewpoints. The drawback is the
participation depends on the organization’s time and resources. Certainly if
you want to go to CAQH, you want to go to X12, if you go to X12, you go to the
835, you go to the claim, there’s so many groups to participate on, for large
organizations some of them are able to cover that, or most of that, for the
smaller organizations, it’s very difficult, so they have to pick and choose.
Communications: Public communication is a little bit limited. It’s hard to
find out in the middle of a process what’s going on. Once the public comment
periods come out, this announcement, people see the things, but to be involved
all along as this occurs, that might be a good thing, say we’re working on
this, and here’s some things that might be changing, what do you think, and get
more of the public without the need for people to actually go to the meetings
and do all that kind of stuff, knowing that obviously, you need the revenues
from attendance and all that too, so we need to balance that somehow.
The multiple implementations I talked about, with the varying compliance
dates, and references, if you’ve got a requirement, one thing. Now you’ve got
to look at the implementation guide, or the technical report type three, and in
the front matter of that one, then you look at CORE and then CORE refers to a
previous version of the operating rules, and now the new, I think it’s the
EFTRA, there’s a technical report type two coming out of X12, which is an
operating rule equivalent, so there’s a lot of places to go to figure out how
to do a transaction, and to the extent we could get that more consolidated,
that would also help.
Suggestions on improving the process – definition clearly, I think
we’ve heard this several times before. Define what is a standard, what is an
operating rule – what can the operating rule do, what can’t it do, that
kind of thing.
Alignment – develop them in harmony. Operating rules should supplement, not
fix, a standard, so if there’s something wrong with the standard, let’s find a
way to get it caught up front, through a pilot, through whatever, have the
operating rule supplement that, and Gwen brought out a very good point, of if
we harmonize, that’s a good thing, so they come out about the same time, so
there’s one target for the implementation, but don’t rule out the fact that as
time goes on there’s needs to do new processes, enhance new things; if an
operating rule can allow you to do those new things, that’s a good thing,
without adopting a brand new standard version. So we need to essentially have
our cake and eat it too, if we could.
We also need to allow for emergency changes. Sometimes you implement
everything and say uh-oh, how did we ever miss that? So you need to have a way
to fix that very quickly and not wait for potentially eight or nine years to
adopt a new version.
Public participation – I already mentioned enhancing, getting more and
more public participation in here so that things that may be kind of obscure
aren’t overlooked because it’s only representative of who’s attending meetings.
Conflicts – there is potential for some conflicts to exist. I’m not
saying there’s a lot. I know there was discussion over (?) codes at one point,
of what are the total gamut that could exist, what’s the right combinations,
what combinations are going to be adopted through the operating rule. I think
the full set that could be out there; things like that, we need to figure out,
how do you resolve those and say this is what it really is, and where do you go
to get that resolved?
Duplication – I mentioned the TR3s, TR2s as potential for some
duplication there. What if the TR2 is not adopted, so therefore what is the
purpose of a document that’s not adopted? That is the question there.
Public participation – I mentioned that as something that’s not
working. It’s working but it’s limited. So how can we streamline that
definition? Clearly define what’s a standard, what’s an operating rule. Find a
good way to resolve disputes, if there’s a conflict. By having a clear
definition, people might be better able to understand, is it just an
interpretation issue that I’ve got? And I know which organization to go to to
get that interpretation; that may resolve my conflict. In the event it is a
true conflict, what’s the authority that says, I could figure out how this
should work? Who should resolve it, where should it be resolved, and where that
change should be placed.
Coordination – we certainly need to have the operating rules entities
and the standards entities work together as they develop things so that they
are a supplement. Emergency changes – I already mentioned, we need a
mechanism to do that. Communications – greater communication, helping to
simplify broader public communication would be very helpful.
I think – I didn’t mention before one of the other issues -–
timing. 6020 public comment period is ongoing right now, and we haven’t put
5010 into production, so that’s another issue. We need to resolve that. I think
we’ve got a little bit of resolution on that already, but we need to find
– those comment periods probably should occur after we’ve had a little bit
of experience in the prior version; again, pilots will help so we don’t have as
much issues after the fact, but work out that timing a little bit so then we
can suggest your changes based on what you see and need to do.
And I didn’t get a card, so I guess I talked fast enough. I do thank you for
the opportunity to testify, and as always, WEDI is here to help any way we can.
Agenda Item: Questions by the Subcommittee
DR. WARREN: So with that we are open up for questions. Lynn is here, so if
we have questions of them, we can ask. NCPDP submitted testimony that I’m not
sure if it made it in your packet, but it is important information for
PARTICIPANT (FEMALE): And in addition to that, X12 submitted testimony as
DR. SUAREZ: First of all, thank you again for this very thoughtful set of
points. You know, in the scheme of things, I keep thinking how long has it been
since we started HIPAA, and some people think it’s been more than 50 years;
some people feel like it – some people think it’s been only ten years, and
realize it has started – really, when you think of when we started, with
privacy and then standards, it was since 2003, so in the scheme of things,
we’ve been in this for six-seven years, and I think there’s a lot of experience
with the first attempt, the first transition, the first standard being set; it
wasn’t necessarily the most perfect or the best standard to take, and we’re
learning and we’re seeing the changes and improvements. There are still some
improvements, certainly, to be gained, I think that’s what this whole hearing
is about, and with the introduction of operating rules, there is now also a
coordination question, and a need to make sure that there’s a better
So the first question, and this is really one that we had made, actually, in
previous letters, and have said several times, we all, in the perfect world,
perhaps, we all would expect to see that we would make a change to the standard
every X years; every 2 years on January 1, we know that that’s the first day
for the next standard regardless of what happens.
In a perfect world, there would be also a process for adopting, or changing
the standard, in an emergency situation, where there is something that was
missed or something new, a new situation, medical or otherwise, that requires,
or business process, like health reform, introduction of ACOs, and now we have
to figure out how to – so anyway, there’s an emergency process, so that’s
the second part, and then in a perfect world, I would say there’s operating
rules that then are focusing primarily on things that the standards don’t deal
with, and we don’t need to have to use the operating rule process to adjust for
some of the content of the standards, or some of the elements that are already
being defined by the standard.
We’re not in that perfect world, and we are in a very different world,
because we have a standard that is right now the one that we’re implementing.
We’re about to start a new one, and we are implementing, we’re starting to
implement, operating rules.
So the question is, do we really want to see a very defined time frame for
the implementation of next versions, and what would be that time frame? Is that
– and I can give you some perspectives. I have heard it both ways; people
say yes definitely, we want that to be the case; every January first every two
years, every three years, whatever it is.
People have said well, sometimes we don’t need to go to the next version
because the improvements and the benefits might not justify, really, making the
switch to the entire health industry into that new version, so that’s the
question. Is it worth really defining a defined date to do that, or is there a
MS. WIEKER: I think what we should do is – on a period, and we can say every
two years, we need to ask. We need to ask NCPDP, we need to ask X12, and when
attachments gets mandated, we need to ask HL Summit. You’ve made changes since
the last version, because NCPDP can change the telecommunications standard, the
batch standard, the medication subrogation standard, four times a year. So
that’s a lot of changes. It could be a lot, it could be one or two or it could
be none. That would be the day, and X12 is moved to a two-year development
cycle at this point, so I think at some point in time, say every two years,
we’re going to ask the SDOs, the operating rule entity, do you have something
to go forward with? Do you want to mandate this? Because it’s going to be the
members and the constituents and the stakeholders that are going to say, we
need to move forward, because this includes A, B, C, D, it includes how to deal
with a health plan, it includes changes that are needed to support the ACO
model of payment and reconciliation, or something, so I don’t think we need to
say every two years we will move to a new standard. I think we need to say
every two years we’re going to ask, should we move to a new standard, and when
that answer is yes, then we start that process. It shouldn’t take but more than
a year to say here’s the standard, put out an NPRM or an IFC, and go forward,
and then by the end of the year you could say, that’s adopted, six months’
DR. SUAREZ: Any other perspective?
JOHN: Assuming a post-Attachments world, we’re going to see a – I mean,
if just Meaningful Use Stage 1 to Stage 2 is any example, we’re going to see a
large number of attachments, a backup for bunch, just the number of
transitional care documents to stage two is surprising me as to how fast we’ve
moved. There’s still lots of other areas with potential. We’re mirroring
clinical documentation as it relates to the delivery of health care here, at
the same time as we’re making the attachments available and the contents of
those attachments available for use in attachments for the payment process.
So right now in HL7 we do a one to two-year draft standard for trial use
period, where we demand actual live operations between in this case, designated
printing partners, to test out the implementation guides. I know Doug is
interested that we work with DSTUs in transition of care, that we have a live
trial period with some set of partners, so that when it’s introduced to the
general industry, it doesn’t go off like a big bomb and doesn’t work. We can
work with one or two years, but I’m speaking again only for attachments, when
that happens I think you’ll see a steep step function increase in demand for
changing at least that content, but maybe not the rest of what’s going on.
MS. MEISNER: This is Debbie Meisner speaking from an X12 perspective. We
talked a little bit about the emergency fix process. And that does exist within
X12; we have our errata. But I think we need to put our collective heads
together and determine how we can move errata out faster without it, number
one, being a dirty word, and provide relief to the industry when we do find
that something needs a emergency fix, either because there’s a new mandate that
out but we’re not ready yet with the new version of the guides, or we have
found something that didn’t get discovered until the eleventh hour, which we’re
dealing with now.
So I think we do need to look at – X12 does have a process. We can have
an errata out in a very short order, but then it has to go through the
regulatory process, which is what slows the whole process down. So for example,
a problem found today could be fixed and we have a published fix for it within
a week. That doesn’t do the industry any good until the regulation’s been
adopted. And I don’t know if we can think outside of the box, where we could
say the regulation adopts the version and any subsequent errata as deemed
necessary by the industry and the standards development organization.
MS. DOO: Yes, I just want to briefly say, sorry Jim, just to confirm that,
because we had, when we did the last errata, we had to have significant
discussions with general counsel about the difference between a maintenance
versus a modification, so where there was a substantive change, and that would
be a modification, or whether it was maintenance, which is really in the
process, and therefore would be more acceptable and wouldn’t require the same
kind of regulation, could be done with a notice. So part of it is that
terminology that’s used, and I remember Margaret and I were going around even
the use of the term, another word for critical – catastrophic –-
versus corrective. And to be very careful about that one for industry
implementation ,but in terms of what we can then help, posting a signal about
guidance coming out until that can happen, so industry can go forward with the
use of it, heavy implementation.
MR. DALEY: I support the dialogue that’s going on here, but before we jump
into too much of a restricted time frame, we should consider what’s the actual
minimum necessary time frame to make even a one-byte change in a transaction?
Because even though this goes through X12 — quick, that’s good, everybody
wants to adopt it, fantastic – now vendors have to go through some process
to incorporate it into their products. They’ve got to field test that, it’s got
to be installed, the trading partners want to make sure it works for them,
there’s some kind of a time frame that’s involved in there; I’m not sure if we
figured out exactly how long it is for even the smallest of changes.
Till we do that, I’m not sure we can say we need to adopt and implement
every so often.
DR. WARREN: So you’re suggesting we not only look at the change process and
the SDO, but then to come out and take a look at how that impacts vendors, test
that change, et cetera, before we even get to implementation.
MR. DALEY: — software and any implementation testing rollout process of
all of that, and that’s the complete time frame you need; as we see, it takes
quite a while.
MS. LOHSE: I was just going to highlight some of what Jim just spoke about.
It is the development process, obviously, an informed, as John was
highlighting, an informed development process, but then the adoption and what
is going to -– value and the cost of that. I think it’s going to be very
hard to get on to constantly new versions of the standards unless we can
embrace and show that there’s going to be a clear benefit, and that’s really
where there’s going to be some buy-in through the industry, and as Jim’s
highlighting, the people that actually have to adopt this, they have to assign
staff, they have to assign budgets. If you’re at EMDEON rolling out new
versions, so how do we make sure that there is that value understood, in the
time lines considered? If there’s not buy-in with the values there, we can keep
rolling them out and it’s not going to get us to where we need to be.
DR. WARREN: I’m going to allow Gwen to respond to this question, and then
we’re going to move to Linda’s question.
MS. LOHSE: Supporting what Jim mentioned about the vendor implementation,
because we all know what’s happening 1/1/2012, even given enough time to
prepare, so I propose that we probably have to shift the problem statement of
what in the process is not taking too long, and correctly identify what is it
anymore, because with the streamlined process that was recommended years ago to
NCVHS, we’ve got the SDOs have made themselves more nimble for their
processing, the IFCs, or IFRs are more nimble now, all we’ve done is push the
balloon a little in a different direction, and so what problem are we really
trying to solve? And we’re not going to have a perfect world.
There may be some lessons learned from meaningful use, too, as that rolls
out, that are applicable to this.
MS. KLOSS: As we kind of step back and maybe step up, do we need to frame
the kinds of changes or categorize the types of changes? There are incremental
changes because of what we’ve learned, and we see possibilities for things
getting better in an incremental way, but sometimes I think that providers
– and we slow it down because there’s this impression that this isn’t part
of a continuous change process, and that we need some overarching vision as to
where we’re going and then some markers that help everybody see what the major
steps are along the way, realizing then that within that there are some
I think that from a provider’s standpoint, and even a vendor, it’s always as
if all these things are surprising, and yet we’re going to be at this forever!
So I think as we reframe it, we need to think about how to envision it as a
continuous change process, and perhaps look at different types of changes
within that, and they might have different time frames, depending on their
I don’t know if I’m expressing myself –
MS. ESTEP: Just a short comment, because I have not been directly involved
in the HIPAA standards and implementation, being from the financial services
industry, but it seems very foreign to try to establish a rigid future
schedule, as you said, not knowing what’s changing or how things may change in
the future, and I keep using that word or words fluid and adaptive, because the
ACH network has been around for 40 years; I don’t think anybody could have even
predicted ten years ago what changes we’re facing now. Some of them very small,
some of them very large. Some things can be done in a short time frame; others
do take a lot of time. And how can you get into a continuous adaptive mode?
Even though it sounds scary, it might be an interesting vision.
DR. WARREN: And so the changes that you make in your standards and rules,
are those also having to be put into Federal regulation?
MS. ESTEP: No.
DR. WARREN: So you don’t have that step that we have.
MS. ESTEP: It’s actually a little bit backwards, because we write our rules
as a private sector rulemaking organization, and they are then incorporated
into what is done via the Federal government and treasury. They sometimes take
longer to implement than is in the rulemaking, but it’s done in the opposite
DR. WARREN: That was one of the questions that I wanted to ask, was what the
process looking at it from a different industry that has rules and regulations
as well as standards.
JOHN: We are very used to thinking in the model of what’s going on in the
payer industry in terms of these upgrades; you’ve got a couple of new entitles
to consider here. The EHR vendors, and nobody has an EHR system today, really,
without a vendor of some sort supplying it; those vendors, for the most part,
are on one-year update cycles for things that can be planned. One year update
cycles, so Cerner every year comes out with a major update that everybody’s
required to install to stay supported; the same with Epic, the same with
Siemens, et cetera.
We had a long discussion, and all of our examples have looked at medical
information that would assist or augment or make better in some way the payment
process, the adjudication of the claim. There will be a time when the payers
look at the information that’s potentially available in electronic health
records systems and want an attachment that, in fact, maximizes or optimizes
their processes, and is not related with something that came out of ONC as a
transition of care document.
So you might want to consider keeping that in your mind that in this
session, essentially, will most likely come out of care plans, and out of the
business of care plans.
MS. LOHSE: I had one comment to make, too, as we look at that, based on our
experience with voluntary certification and testing, one of the challenges has
been with the administrative transactions, is that the providers have obviously
contracts with the different vendors, and even, they maybe have a version
installed, and depending on the contract, the contracts may not be focused on
the updates. So I think there may be some analogous lessons with the EHRs, but
some of that may be less analogous when you think about the contracting
process. I think there’s lessons learned, but there’s also probably
supplemental aspects too.
JOHN: I can guarantee you that the vendors will not support a new attachment
type on an old version of their software; that’s a given. So the hospitals in
this case, or the providers, are going to have to stay up to date.
MS. LOHSE: And there is cost associated for the providers, as they look at
the new versions of the standards.
DR. SCANLON: I think it falls on this issue of change and kind of
anticipating where we need to go, and in some ways it’s about the whole two
days here, as well as our meeting of the full Committee, and as we were going
through these two days, it struck me that in our HIPAA report to Congress, we
raised the issue that we are now sort of dealing with HIPAA in a world that we
never anticipated; that we’re talking about new sources and needs for data, and
we need to think about how do we fulfill those needs. Linda brought this up
yesterday; think about bundled payments and ACOs and value-based purchasing
– you dramatically change the kind of information you want, and if you
want to do this in a way that is viable over time and actually achieves some
kind of level of optimality over time, you’ve got to do it efficiently; you
cannot sort of creep along and put huge burdens on the system in terms of
change or just in terms of the individual maintenance.
I think it relates to yesterday, when we were talking about the claims
attachments. I almost thought – yes, there’s a problem here, but is it
yesterday’s problem? Or is tomorrow’s problem that it’s not just solicited and
unsolicited attachments; we need to have conditional mandatory attachments.
Depending upon the person and the procedure, that there’s certain information
that you need — that combination, and it has to be submitted, and we can’t
have a single claim form that solves all purposes, but you’ve got to have
contingencies to deal with these various purposes.
And so that becomes kind of an overwhelming thought in terms of well, what’s
the changes we’re envisioning here? Seven thousand procedures? A contingency
for each one? Multiply that by the kind of patient you’re dealing with? It’s
overwhelming at one level, but it’s also necessary at another level, and the
question is, how do we start down the road to sort of produce this information?
Because what’s the alternative that we’re doing now? If you talk to providers
about the requirements being imposed upon them for outcome and quality
reporting, let’s go back to the paper records here and start sort of totaling
up things and sending information, but then on top of that they’re getting
requests from multiple parties for the same essential information, but in
different formats and so we’ve created this huge level of inefficiency that we
needed to think about how do we work our way out of it? And I think that
relates to this issue of the frequency of change, and the direction of change.
It’s like – as we think about change let’s not lock ourselves into
something that becomes more difficult to unravel for a future that we’re trying
to define as we go along right now.
DR. WARREN: Walter, then Lorraine. Did you want comments from people? Any
from the panel in response to Bill?
MS. LOHSE: I just have one thought. I think being forward thinking is going
to be a lot more innovative and less costly to the market, because to tear
things down and change them costs a lot more than visioning about where you’re
going, and giving people a roadway and a path, so those are fantastic comments,
DR. CHANDERRAJ: I think health care – you cannot pigeonhole this into
something that will fit something that we’re looking for. I think it needs to
evolve, and I think our process, although you might say it’s been creeping
along, I think creeping along is a better way, and adapt to the changes as
we’re going along rather than define the goals and try to fit this whole health
care into that vision. I think we should start somewhere and build on things as
we get along information, and try to make the whole to fit this thing.
MS. DOO: Again, I don’t think any of us who have answers to this has to do
with the industry engagement issue, and I know I’m a thorn in everybody’s side
about who else is not at the table? For me it’s not who’s there, it’s who’s
missing. And we’ve been talking about some remarkable changes that are
happening in our standards; we were talking about claims attachments yesterday,
and it requires a whole other level of subject matter expertise, including in
our shop, and Debbie was talking about again, who’s not at the table with the
vendors? Who’s not at the table with CORE yet? They’ve done a good job at
reaching out; I think pharmacy has — representation and X12 has had
longstanding representation, but I always get the sense that we’re still
missing somebody; for all of our groups, and just put out there for us to do
some creative thinking together, so that the education and outreach that you
were talking about having some place that people can go so that we would be
responsible in part — everything would link, and if you would give us some
ideas about who’s missing and what we can do to help support that, and funding
is not off the table either. It doesn’t mean Congress is going to give it to
us, but I think it’s an important question we’ve been doing a lot of thinking
MS. KLOSS: To follow on to Bill’s comment, one other insight I think that
the Committee had in doing a retrospective on HIPAA experience was the handicap
we’ve all been working under in not having good metrics as to what our starting
point is, what the opportunity is, and how we measure impact going forward. And
that may actually be something that we begin to think about. I know we had some
potential cost savings data brought out in some of the discussions, but I think
that that could at least tell us where it’s worth putting some short-term
energy and painting that vision that helps everybody see why we’re doing it.
DR. WARREN: Is there anybody that is still on the phone that wants to make
any comments? I will take that as a no.
MS. WEIKER: Is George Arges still on the phone?
MR. ARGES: I am on the phone.
MS. WEIKER: And you have no comments, George?
MR. ARGES: Well I think I support some of the comments that have been made
over here with respect to how things need to proceed. It’s a very complex
issue; I think the whole idea, I think Lynn talked about the ROI from the
provider perspective; there’s always a hurdle that has to be looked at in terms
of how one looks at trying to set up a new version of a standard and migrate
people to a particular standard.
So the value proposition has to be thought of as part of that process. But
in a lot of ways, I would like to see us take apart the transition from 4010 to
5010, and look at what worked, what didn’t work well, in terms of meeting the
time frame and where things could be improved upon, because I do think this
seems like a fairly simple thing to do, on the surface, but any type of change
requires that it be coordinated, and maybe it’s the sequencing; providers say
that they’re waiting for their vendors to basically make the system changes,
and maybe there’s something that has to occur much earlier in the process, so I
almost would like to see us kind of step back a little bit and do an assessment
of this transition to see how we can learn from it, and what we can improve
MS. LOHSE: And maybe to add to that point, identifying some of the barriers
right now when folks want to go that next step, whether they’re pilots or
they’re voluntary efforts, what are the barriers to doing that on a larger
scale? Because there’s different pieces of the system; in order for this all to
function we have to think about those different pieces of the system.
DR. SUAREZ: George thank you for that; in fact, Bill mentioned a HIPAA
report to Congress, which was approved yesterday by the NCVHS; we point to that
effect, or that idea, of really having to find ways to better measure all sorts
of things, including the impact of these transitions, and to learn from those
transitions, and see where we can improve, as well as also learn from and try
to put some metrics around the benefits of all of the things we’re doing,
because when one comes to review back and see if we really ever quantified the
amount of savings, that I think were 39 billion in one rule and 31 billion in
another, and of the amount of money that we were going to save by implementing
HIPAA, I don’t know that people can really quantify that, and it’s hard, I
know, and there’s benefit, but I do have a little bit of an exercise here
around the pathways that we’re going to be looking at, so we have in 2012, next
year we’re going to be implementing a whole bunch of operating rules as well as
plan ID, hopefully, and a few other things. We’re going to be, in 2013,
implementing the ICD-10, barring no change of that, and so when you look at
that schedule and start to think of when is the real opportunity for the next
version of X12? 6020? Or 6050, or 7010, whatever the next one is, I don’t
expect that anything will be done by January of 2014 for example, or probably
not January of 2015, given that we are coming out of implementing ICD-10, and
so realistically we are going to, in my mind, see the implementation of the
next version, whatever might it be, if again we go back to the question, which
I think is a great point, of asking the industry are we ready to go there
– by January, probably, of 2016, which coincidentally is the time frame
for implementing claim attachments.
So we’re going to see, roughly, as soon as no more than four years, before
potentially the next implementation, if not more, before the next
implementation of the standard. Trying to push it before January 2016 will be
hard. So I’m just putting it out there because I think it’s going to be helpful
to begin to give the industry some sense of where and when might the potential
next version be, the soonest expected to be implemented. I mean, people really
are asking; asking me and probably others, so when is 6020, or what is going to
happen with 6020, and not that people are ready to jump into it, but it’s just
asking the question, that you were pointing out, the predictability.
So is that a good sense, from your perspective, if you had a crystal ball,
what’s the soonest that the next version of the standard would be possible to
MR. ARGES: Hey, this is George Arges again; if I may comment here, and I
think you bring up an excellent point in terms of trying to look at what the
soonest might be. But I also think we have to look at it in the context too, of
this past several years, that there’s been a perfect storm, so to speak, of a
number of IT initiatives that are on the docket almost about the same time.
It’s very difficult for the industry to basically find the necessary resources,
and money is one of them, but I think more importantly, the manpower needed to
devote toward taking on a lot of these tasks. Some of them, like meaningful
use, for instance, had carrots dangled in front of the public to basically gain
their attention toward those, because there was a monetary reward for that,
whereas some of these HIPAA transaction standards are at some cost that people
just need to be prepared for, but it’s still difficult to deal with everything
that’s on the first timeline, so to speak, of trying to handle all this. So
that’s another thing to consider.
MS. STRICKLAND: To address your question on the 6020 process, we, as an
organization, X12, will be looking at how did it go, what did we do good, what
did we need to fix. We’re going to be doing our due diligence on the
streamlined process. This was really piloting the streamlined process with
6020. There’s a lot of, as the government has their rules and regulations, we
have lots of steps that need to be done in order to publish these guides. But I
would also caution the industry in thinking that 6020 won’t get adopted, so
therefore I don’t need to look at them. The 6020, whether you adopt it or not,
from a government process, will be the foundation for the next version of the
guides, so if there’s something wrong in there, we need to find it now.
I know everybody’s knee-deep in 5010 implementation, but this is the public
comment period, and this is the opportunity they’re going to have to say this
isn’t going to work for us, or you missed this, or how are we going to handle
this during a transition period. Whatever concerns that they have, this is
their opportunity to really get them addressed without having to deal with
errata down the road. So even though it may or may not be adopted, I don’t want
to lose the emphasis on reviewing them and getting your comments into the
organization that can make the change.
STACEY: Hey this is Stacey; if I could jump on that as well. One of Walter’s
questions was when would the next one be available that could potentially be
adopted, and based on our schedule, 6020, even though we have extended our
comment period, we are still looking at publishing in August of 2012, so as
soon as the 6020 is published, then there is the ability that the
recommendations could be made that it could be adopted.
MS. GILBERTSON: As to the time frame, the pharmacy industry will be doing
what they did last time, which is evaluating the changes that have been made
and bringing forward a recommendation to the DSMO to follow the process with a
time frame, so it’s Telecom D0; we’re balloting DA, that’s how far we’ve moved
this , but we’ll just make the recommendation based on the industry, and the
first thing they’re going to ask themselves is what’s the value, what do I
need, and as I’ve mentioned earlier, we’ve become much more nimble, so when
things need to be adjusted a bit, we have processes that help the industry
survive between versions.
Because the industry isn’t nimble. They can’t just update five thousand
stores tomorrow. They have to have their timelines too. So that part has to be
predictable. So as we did with MMA and as we did with HIPAA, we’ll bring
forward a request with the time frame.
DR. WARREN: Okay, anyone else with burning issues, because I’d like to open
it up for all those people sitting behind me that have waited, that we’re going
to open up the mike.
MS. THORNE: Hi, I’m Jenna Thorne, with America’s Health Insurance Plans. I
wanted to make a comment about claims edits; we’re definitely supportive of
figuring out the right forum to get the group together, so one of the things
that we as an industry can’t do is sit in a room and agree. We’re all going to
agree to do claims edits this way, or to use modifiers this way. So we really
need – we can work with you in thinking about how do we work with justice,
what kind of deemer is used so that we can have some cover, if you will, to sit
around the table and really talk about these issues in a balanced and open way.
Because we all agree that that’s important to do. We all think it’s necessary
to do. It has to be done in the right way. And doing it on a state by state
basis is just not going to work. We can’t have claims edits standards that vary
by state. It’s just not going to work. We’ve seen that in Minnesota, now we’re
seeing it in Colorado, and it’s really going to be challenging for us.
And then on provider enrollment, I would really caution you guys in thinking
about putting forth the recommendation that we have a national database. I
think what your role as a committee can do is help create a marketplace to get
solutions out there that are based on common data standards. I think we all
need to think about what are the key data that we need across the provider
enrolment process, and how can you all think about using those standards to
create utilities across the industry, that can get this done. Because I think
we’ve all sort of learned the challenges with creating these databases, and as
soon as you create them they’re already out of date. SO we want to think about
how do we have a process; can we request provider data and get it to our system
so that they own their own data and we can get it when we need it? Things like
that; I think there are innovative solutions out there. A database sometimes
seems like the easiest way, but maybe not long term would be the best way to
handle that issue. So thanks for the opportunity to comment.
MR. RODIE: Dan Rodie, AHIMA. We will submit written comments on the
attachment from yesterday, because it would take me too long to cover it right
now. On the current conversation, I think it’s going to be extremely important,
and John raised this question, that we incorporate what’s happening here with
what’s happening with the HIT committees in the direction ONC is going. We’re
dealing with the same data. We’ve already seen, in stage one, an attempt to
bring administrative transactions into meaningful use, and conceivably, we will
be looking at that in stage to or stage three. If we don’t have coordination,
we have to have the same data definitions; we have to look at the vocabularies,
we have to look at, as George mentioned, what are the implications of
implementation, and we have to look at what are the depths of the changes? One
of the problems with 5010 was it took us essentially, if I look at when we
began the process for 4010, it took us almost 12 years to upgrade, so we had a
lot of upgrades, some minor, some large. If we keep having that large of a gap
between where the industry’s going and the standards groups, and where this
group goes to adopt standards for HIPAA, we’re going to continue to have these
very large implementations and not look at some smaller implementations that
might be much easier to take. I get an update, unfortunately, from Microsoft
about every other week, and if I’m not looking at the right time, my computer
goes down and I’m updated. If we can’t do the updates in a position where the
vendors don’t have to expand staff greatly to do an implementation, but look at
it incrementally, we will be a lot better off, and a lot more flexible where
the industry is sending us. Thanks.
MR. WALKER: Peter Walker from AETNA. If I could just comment on the process
of changing the standards, I think as well as looking at how to do that on a
more timely basis, we need to look at how to make that an easier process to go
through for everyone. We’ve seen that people have found it difficult to meet
the deadline, even with plenty of notice. We’ve also seen that I think is my
experience and the experience of people who I’ve talked to, is that moving to
5010 has been massively more expensive than was originally projected. One of my
colleagues at another company said it’s the largest program in the history of
that company, and that includes the original 4010 implementation and the year
It wasn’t quite as big for us, but it was certainly a major, major effort.
So I think we should learn about why is that process so expensive; for us,
basically, that was in terms of getting where we needed to be on January 1 of
this year, and then again, in March, to catch up with the errata, and then why
it has taken so long after that for the actual testing and implementation to
get underway in terms of the entities we exchanged transactions with; cost, I
think, definitely needs to be looked at.
DR. WARREN: I think that is what George was trying to get at, is we need to
do a thorough review of all the problems that are in 5010.
I think we’re at the point where we have concluding comments and next steps
that are standing between us and adjournment.
Concluding comments and next steps
DR. SUAREZ: I’m glad it’s concluding comments, really not a summary. I just
want to express our really incredible appreciation for all your time, our
effort in preparing and participating in this two day and a half set of
hearings. I don’t think we have had ever a three topic hearing, or maybe we
did, but in this case it was more like seven different topics at the same time.
We learned so much. One of the things I have been hearing more and more is that
we need to be very cautious in terms of recommendations and in terms of
recommending specific directions on things that are still evolving. We heard
today a lot of topics where there is a lot of things still evolving, from edits
to provider enrollment, to all the things that we listened to today, so clearly
an opportunity to put together a lot more thoughtful groups in terms of people
that are focusing a lot more on the specific topics, and then having them come
back to us with recommendations; I think that’s one great idea that covers a
lot of the things that we discussed today.
So I think in terms of next steps, you all know our kind of standard way of
proceeding. We will be assembling a series of observations and will be
presenting those back to the full Committee. In some cases there will be some
recommendations regarding more process then specific elements about adoption of
regulations or anything like that, and those will be vetted through the
Committee process. In our case, we have been talking about, in this particular
area of Section 10109, presenting those to the HIT Standards Committee and HIT
Policy Committee as well, because this is something that certainly applies to a
lot of the things they are doing, and probably claims attachments as well, and
it was actually included in the provisions of the 10109 in the Affordable Care
Act, so I’m thinking that we will have something ready certainly by the first
meeting of the NCVHS in 2012.
The other thing I think is worth mentioning is that we are going to be
putting together our plans for 2012 and begin to in advance, mention some of
the expectations that we will have in terms of topics, areas to discuss and
hearings specifically, so that again, we ask the industry to begin to prepare
for some of those. Certainly, I would expect that we would have hearings around
5010 implementation, since we are going to start implementing it next year, and
certainly the ICD-10 topic will be there, and the transition to the new
operating rules as we begin to look at the implementation of those in early
2013, so there is a lot of those ongoing topics that we will be continuing to
look at. So thank you so much again for your time, for spending a lot of these
last two days in so many different topics, and I’ll turn it to Judy.
DR. WARREN: Thank you I would just like to thank those people that put very
clearly on their slides, NCVHS should recommend, and then gave us some nice
language; that always helps as we start writing the letters, to have some
– at least places for us to start, and we do appreciate that. And I really
appreciate you being on this journey with us; the task that we were given in
ACA is on top of the task of HIPAA, and as several people have mentioned, this
subcommittee also has the responsibility for writing NCVHS’s Annual Report
about HIPAA implementation, so we finally got that through yesterday. So we
really appreciate everything that you have, and you will be hearing from us.
Thank you very much, we’re adjourned.
MS. LOHSE: Judy and Walter, can I ask for the 2012 planning, maybe there
would be an ability at some point for you all to hold a hearing about how are
entities tracking impact, how are they using measurement tools to track impact,
how are they getting other entities –
DR. WARREN: I think that will be part of what George had talked about,
because I think all of that’s in there.
MS. LOHSE: A hearing on that would be very informative for all of us.
DR. WARREN: So if anyone has any ideas for how we should go about
identifying metrics or measures or impact on these big implementations, please
get those to Lorraine Walter or I, we’d really appreciate that. The other thing
we would appreciate hearing about is we’ve not had vendors involved; we’ve
heard repeatedly today and yesterday afternoon about the vendor perspective on
there, so if you have anything you can help us with on pulling together some
hearings that would involve the vendors, even if you suggest which ones we
DR. SUAREZ: Thank you again!
(Whereupon, the hearing adjourned.)