Administrative simplification funnels industry's data flow

Key Points

THE FIRST OPERATING RULES to address Administrative Simplification go into effect in January. Whereas HIPAA initially focused on defining electronic standards, administrative simplification goals in the Patient Protection and Affordable Care Act (PPACA) now have expanded to include operating rules that promote the use and flow of data among constituents such as health plans and providers.

Yet there are compelling reasons for plans to not only comply but also to use administrative simplification operating rules to advance strategic initiatives. The mandates comprise three waves, says Fran Irwin, principal at Deloitte Consulting.

The business rules and guidelines for electronic eligibility and claims status transactions-"operating rules"-comprise wave one, which is the segment mandated for January 2013. Wave two, for January 2014, covers claims payment remittance advice and electronic funds transfer transactions; and wave three, which Irwin calls "the heavy lifting" will go into effect in 2016. Wave three addresses claims and encounters, enrollment/disenrollment, referral authorization, premium payments, and claim attachments transactions.

"The administrative simplification section of the healthcare reform bill has now amended HIPAA," says Gwendolyn Lohse, CAQH Committee on Operating Rules for Information Exchange (CORE) managing director. "It is a landmark change; as a nation we are going to take the necessary steps to have interoperability within the administrative arena-and the operating rules are going to play a critical part."

In a multi-stakeholder effort, CAQH CORE authored the eligibility and claim status transaction operating rules to which all HIPAA-covered entities must comply.

Lohse says that the operating rules around inquiry transactions, which will apply to many of the transactions that occur between plans and providers, were developed proactively in 2005 when plans and providers realized an updated framework was needed. The legislation recognizes the need.

"The critical goal is to look at the transactions that occur and support the standards, and then recognize what else is required to have an aligned healthcare administrative system, to remove cost and add interoperability," Lohse says.

Using response time as an example, when a patient presents in a physician's office, there are definitions around how quickly the member's eligibility and coverage have to be sent back to the point of service.

"Today, that could take a couple of days," says Irwin. "The push is toward fraction-of-a-second response times so the patient knows the cost and how much will be covered by the health plan immediately, getting away from the high-level estimating that takes place now."

The degree of technology buildout that will be necessary largely depends on the provider technology base. Health plans in regions where providers have been using electronic transactions extensively have been better equipped to adopt new rules because they already had a standard and a relationship with their providers, says Derek Hamilton, also a principal at Deloitte.