Segal's Capital Checkup July 17, 2002

print this page

July 17, 2002

CMS ESTABLISHES EMPLOYER ID FOR HIPAA EDI TRANSACTIONS AND PROPOSES TECHNICAL MODIFICATIONS TO COMPLIANCE RULES

The Centers for Medicare and Medicaid Services (CMS) has specified the employer ID that must be used to comply with the electronic data interchange (EDI) requirements of the Health Insurance Portability and Accountability Act (HIPAA). In addition, CMS has proposed several technical modifications to the HIPAA EDI compliance rules. These developments are of interest to health plans and plan sponsors that transmit health care data electronically.

Final Rule Establishing Employer ID

CMS has established the employer ID used for HIPAA standard transactions: Health plans, health care providers and health care clearinghouses should use their Employer Identification Number (EIN) issued by the Internal Revenue Service (IRS) in the exact format issued by the IRS, including the hyphen (e.g., 12-3456789). This rule is effective July 30, 2002, and must be followed for transactions conducted on or after July 30, 2004 (2005 for small health plans).

Although employers are not required to disclose their EIN to a health plan or other covered entity (because they are not subject to the HIPAA EDI rules), there is a strong incentive for them to continue the common business practice of providing an EIN voluntarily in order to transmit enrollment information to an insurer or other health plan. The EIN, however, does not replace the employer's group number, account number, policy number or subscriber number.

Proposed Technical Changes

Proposed technical changes include:

Allowing non-retail pharmacies to use any coding system that they want (or that their trading partners will agree to) for electronic transactions. This proposed change would be welcome given that no drug coding system in existence today meets the needs of the entire health care industry. (Retail pharmacies would continue to be required to adopt specific standards for their electronic transactions.)
Modifying two of the standards for retail pharmacy transactions in recognition of the finding that they could not be supported by the format originally specified. Further, CMS proposes allowing retail pharmacy transactions to be submitted in batch form, rather than individually.
Making limited changes affecting the technical programming of certain transaction standards as recommended by the industry groups responsible for monitoring implementation of the standards. For details of these proposed modifications, click here.

To see the proposed changes as published in the Federal Register, click here and here.

Capital Checkup is The Segal Company's periodic electronic newsletter summarizing activity in Washington 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.