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July 31, 2007

Laboratory Corporation of America® Holdings (LabCorp®) appreciates this opportunity to comment on implementation of the next version of HIPAA transaction standards.  Building on our experience implementing HIPAA standards we hope to work with CMS and our industry partners to promote a rational transition plan that assures the continuity of health care transactions and healthcare payments.

LabCorp has focused primarily on the 837 Health Care Claim and the 835 Health Care Claim Payment/Advice transactions, and realizes the opportunities as well as the challenges associated with these transactions. During the implementation of the ASC X12N 4010 standards, differences in interpretation of the standards were identified between LabCorp and our trading partners.  Additional time and resources were required to address these differences to secure the Company’s revenue.  Upon adoption of the next version of the HIPAA standards, the evaluation of each trading partner’s interpretation will be part of LabCorp’s implementation plan.  The adoption of the next set of standards will require time and resources to evaluate all changes made to the ASC X12N 4010 core program and all program corrections made to date to apply all lessons learned.  The time and resources spent on the examination of the current programs and upgrading to the next version of these standards will not return additional electronic opportunities.  Please consider recommending adoption of the next version of the ASC X12N standards only if the industry anticipates a major change, such as ICD-10, that requires an infrastructure change.

As an independent laboratory, our Company has the opportunity to interact with only twenty percent (20%) of our patients in person.  As a result of not having scheduled appointments, the company does not utilize the 270/271 transactions to determine eligibility prior to performing the requested test. The billing and eligibility information is provided by the primary provider at the time tests are requested.  These transactions may eventually be utilized by our personnel at the point of service in our patient service centers.

For LabCorp, the 835 Health Care Claim Payment/Advice transaction is very important.  This is a transaction for which we have implemented “work arounds” to ensure the data extracted is correct.  Often, simple things such balancing a payment to the amount billed are a challenge.  Also, matching payment information to a claim within our system can be a bit of a treasure hunt.  The idea that people and explanation of benefits are removed from the posting process when an 835 transaction is available is a myth.  We find the human resources saved by electronic posting are now used to help research why payment information reported at a claim level does not match payment information at the line level for the same claim.

With the industry contemplating upgrading the HIPAA mandated transactions, LabCorp does agree that there should be an implementation plan.  The plan should be crafted based on lessons learned from the implementation of the ASC X12N 4010 standards.  The core purpose for the Workgroup for Electronic Data Interchange (WEDI) is to, “Improve the quality of healthcare through effective and efficient information exchange and management”.  This stated purpose makes WEDI an ideal group to identify best practices from the previous HIPAA implementation and to suggest an implementation plan that includes a final target date.

The enforcement policies deployed by CMS for the adoption of the ASC X12N 4010 standards and NPI have focused on obtaining voluntary compliance, with a complaint-driven approach to keep the industry focused.  As a national laboratory, we have the opportunity to work with a very large percentage of payers across the nation.  Due to the large percentage of payers that we must coordinate changes with, our implementation plan may span two (2) years to protect the Company’s revenue.  Given this large window for implementation, the complaint-driven approach works beautifully as we coordinate with payers that are at all different levels of readiness.

The adoption of revised HIPAA standards presents several challenges to our Company.  The Company primarily relies on internal software development for our electronic commerce.  We are fortunate to have our own software development team.  Our first challenge is that the resources that will be addressing the upgrade to the 837 Health Care Claim and the 835 Health Care Claim Payment/Advice will be the same resources that will be addressing all other changes to electronic commerce, including the other HIPAA mandated transactions and other initiatives such as ICD-10 and claims attachments.  These programming resources are finite and LabCorp funds projects based on value to the Company.  LabCorp would recommend implementing the following transactions first, with supporting transactions implemented at a later time.

Transaction Transaction Name
277 Health Care Claim Acknowledgment
835 Health Care Claim Payment/Advice
837 Health Care Claim
997 Functional Acknowledgment

For every ASC X12N 4010 standard that is upgraded LabCorp will go through the following:

  • Internal Development
    This phase identifies the changes needed for the required upgrade and results in a plan of action to integrate the changes within our system.  Unfortunately, this process is performed without interaction with our trading partners, since it so hard to find partners who are able to answer questions until their programs are enhanced.
  • Internal Testing
    Any update to the core programs involves aggressive testing.  Regression testing is a key component of this step.  The regression testing helps to identify payer specific logic that was required to bridge the gap between our trading partners’ interpretation of the ASC X12N 4010 standards and LabCorp’s interpretation.  The gaps are identified and addressed to minimize future edits.
  • External Testing
    Testing with our trading partners that are capable of utilizing a controlled environment outside of the adjudication system provides a minimum level of security.  On one hand this phase helps to fill in any gaps that were a result of programming without interaction with payers.  On the other hand most payers are not able to test all the way through their adjudication system.   All LabCorp learns during this step is whether the payer’s system will accept our claims.  LabCorp walks away from external testing without learning what will happen to our claims once they enter the payers production adjudication system.
  • Pilot Testing
    To truly secure our programs, pilot testing is required.  Pilot testing is performed with representation from each facet of the industry, including Medicare, Medicaid, Blue Cross / Blue Shield and other commercial payers.  It is during this phase that we see the results of how our trading partners’ interpretation and our interpretation of the standards interact.  Unfortunately, many payers systems require live claims for this level of testing: therefore, our comfort after pilot testing may be limited.    It is at this phase that LabCorp will determine how best to move forward with implementation.
  • Controlled Implementation
    Based on lessons learned with the implementation of the ASC X12N 4010 standards, LabCorp knows that not every payer’s interpretation of the standards will interact with our interpretation and produce the expected results.  It is during this phase that program corrections will be identified and addressed.  LabCorp’s internal programming group will modify and adapt our programs on a trading partner by trading partner basis to ensure that the Company’s revenue is not impacted by interpretation differences.  These are the same resources that developed the upgrades for the standards and will address other potential HIPAA changes such as ICD-10 and claims attachments.  During the controlled implementation, the Company will indeed support dual versions of our translator.  Supporting dual versions of the translator will add an additional level of protection for our revenue stream.

During the controlled implementation of the ASC X12N 4010 standards, LabCorp had the opportunity to work with vendors that are very professional and prepared for the required industry changes.  Unfortunately, we also worked with the vendors that were not at the level of readiness they portrayed.  Vendors are not covered entities, therefore they are not held to the same level of compliance as the rest of the industry.  Vendors’ incentive for compliance is driven by their clients’ need for change.  Clients do not learn the extent of the vendors readiness or lack of readiness until the client has another trading partner that is ready to deploy their program updates.  When vendors misrepresent their state of readiness, the industry is grateful for the CMS enforcement policy, because it allows trading partners to work with the vendor to create a plan of action that results in compliance.

Due to the large number of payers that LabCorp interacts with, it is a monumental task to track the level of readiness of both the payers and vendors.  Since the industry is very dynamic, this type of research is a continuous task.  To help the industry monitor the state of readiness for proposed changes, please consider recommending a certification process through a neutral entity.  A certification process would minimize misrepresentation throughout the industry, regardless if you are a payer, provider or vendor. Also, please consider recommending the creation of a database maintained by CMS that would report the certifications granted to each entity. During industry changes, every entity is creating the same database to track the readiness of their trading partners.  In the interest of administrative simplification, all entities would benefit from utilizing a centralized repository of this data.

While making industry-wide changes is an arduous task at best, the task is made much more difficult when not adequately defined at the beginning.  Please consider recommending the evaluation of all comments made by the industry prior to issuing the regulation and addressing each and every comment.  Using NPI implementation as an example, the industry requested a centralized site of NPIs to aid in information exchange between payers, primary providers and secondary providers.  The centralized location was not defined until one (1) week after the NPI law took effect.  By not having this information in advance, the industry as a whole dedicated significant resources to a task that in the end was not necessary.  If the concerns with information exchange had been addressed at the same time as the issuance of the NPI regulation, the industry would be enjoying the advantages of administrative simplification, rather than pointing to it as a key industry initiative.

Adequate lead time on proposed changes to electronic commerce is necessary and greatly appreciated.  Please recommend consideration of budget cycles when mandating the use of the next version of HIPAA standards.   A lead time of a least two (2) years would allow for development of accurate cost estimates and adequate funding for the required changes.

Education is a key component of any industry change.  LabCorp would like to take this opportunity to compliment CMS on its efforts to provide timely information to the industry.  CMS has created a listserve for every significant sector of the industry.  Most entities within the industry can find a listserve tailored to its needs, and CMS will deliver via e-mail information that is relevant to that business sector.  Outreach for any industry change should begin at least three (3) years in advance.  This lead time will allow the industry to vet the proposed change thoroughly, which will help to ensure the that proposed change is adequately defined at the beginning of the project and will help ensure a smooth transition.

LabCorp appreciates the opportunity to comment on implementation of the next version of HIPAA standards and looks forward to working with CMS, WEDI, X12, and our industry partners to promote a smooth and efficient transition.  We sincerely hope that NCVHS will give thoughtful consideration to our comments.  Please contact Kimberly Williams at if you have any questions regarding our comments.