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April 30, 2009
Final Updates to HIPAA EDI Rules
The Department of Health and Human Services (HHS) has made final updates to the electronic data interchange (EDI) transaction standards1 and medical data code set rules2 of the Health Insurance Portability and Accountability Act (HIPAA). HHS proposed these changes last summer. The EDI transaction standards and medical data code set rules were last modified in 2003. Health plans engaging in HIPAA standard transactions had been required to use those standards and code sets since October 2003. This Capital Checkup summarizes the final updates, with compliance dates of January 2012 and October 2013, respectively.
HIPAA Medical Data Code Sets
In 2000, HHS adopted the International Classification of Diseases (ICD), 9th Revision, Clinical Modification - known as the ICD-9 - for use in HIPAA standard transactions as the method for coding diseases, their manifestations and their causes. The ICD is developed and maintained by the World Health Organization (WHO), and the ICD-9 has been used in the United States for nearly 30 years. At the time, HHS considered but ultimately rejected the adoption of the version that was then the most current (the ICD-10), opting instead to stay with the ICD-9.
Some of the shortcomings of the ICD-9 include the limited total number of codes (13,000 for diagnoses and 3,000 for procedures) and the inability to support emerging needs such as quality measurements linked to provider reimbursement (generally known as pay-for-performance). As a result, HHS has decided to replace the ICD-9 with the newer version, the ICD-10, which was adopted in 1990 by the WHO and is widely used outside the United States. The ICD-10 supports 68,000 diagnosis codes and 87,000 procedure codes, and it is based on current usage of medical terminology and devices.
Under the final updates, covered entities3 must begin initial compliance activities (including internal testing) in January 2011 and comply with the ICD-10 standard by October 1, 2013. Last August, HHS had proposed October 2011 as the compliance date, but HHS delayed implementation in response to comments received on the proposal.
HIPAA Standard Transactions
The final updates revise the EDI transaction standards (the ASC X12 format4) from Version 4010/4010A to Version 5010. According to HHS, the new version has many advantages over the existing version. For example, for the Health Care Claims standard (ASC X12 837), the new version separates diagnosis code reporting by principal diagnosis, admitting diagnosis, external cause of injury and reason for visit. For the Enrollment and Disenrollment standard (ASC X12 834), the new version adds codes to explain coverage changes, such as changes in student status, age limitation, life partner changes and other changes in coverage status.
The final rule also updates the retail pharmacy format from Version 5.1 to Version D.0. According to HHS, among other advantages, the new version responds to changing business needs necessitated by the creation of the Medicare Part D outpatient prescription drug program.
The compliance date for the updates to the transaction standards is April 2012, with internal testing of system changes to be completed by December 2010. The proposed rule had set April 2010 as the compliance date, but HHS agreed to delay implementation by two years.
Implications for Plan Sponsors
Although there is still plenty of time to achieve compliance, plan sponsors may want to begin discussions with system vendors and third-party administrators to ascertain their plans for complying with these new requirements on behalf of their group health plan clients. Plan sponsors that are self-insured and self-administered will need to ensure that they are compliant, while those that are insured or rely on an administrator should monitor their service provider's compliance efforts.
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As with all issues involving the interpretation or application of laws, plan sponsors should rely on their legal counsel for authoritative advice on HIPAA and related guidance. The Segal Company can be retained to work with plan sponsors and their attorneys on compliance with HIPAA.
- 1
- The final updates to the EDI transaction standards were published in the January 16, 2009 issue of the Federal Register. A table on page 3 of The Segal Company's September 2000 In Depth, "Final HIPAA Rules Will Require Health Plans to Accept Electronic Claims by October 2002" describes the EDI standards. (Click on the following text to return to the Capital Checkup.)
- 2
- The final updates to the medical data code set rules were also published in the January 16, 2009 issue of the Federal Register. (Click on the following text to return to the Capital Checkup.)
- 3
- Covered Entities include health plans, health care providers, and health care clearinghouses. (Click on the following text to return to the Capital Checkup.)
- 4
- The ASC X12 format was created by the Accredited Standards Committee (ASC) of the American National Standards Institute (ANSI), a private organization that helps sets standards for governing business relationships. The ASC specializes in standards for the insurance industry. (Click on the following text to return to the Capital Checkup.)
Capital Checkup is The Segal Company's periodic electronic newsletter summarizing activity with respect to health care and related subjects. Capital Checkup is for informational purposes only. It is not intended to provide guidance on current laws or pending legislation. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.