If Possible, Comply by the Deadline

EDI compliance is a critical issue for self-administered plans since they must be capable of conducting HIPAA-compliant electronic transactions themselves by October 16, 2003. In addition, sponsors of self-insured health plans have a fiduciary obligation to ensure that their administrators are in compliance with the EDI standards by October 16, 2003.

Consider Adopting a "Contingency Plan"

Sometimes, no matter how hard a health plan has worked to achieve compliance, complete compliance by October 16 is not possible due to the lack of readiness of trading partners (such as health care providers or other plans). After all, the successful completion of financial transactions between two entities requires coordination and compliance on both sides.

Anticipating some compliance problems within the health care industry, the U.S. Department of Health and Human Services (HHS) recommends that health plans adopt and publish to their trading partners an EDI "contingency plan" as soon as possible. In recently published guidance, HHS states that to ensure minimal disruptions, the sooner such a plan is adopted and communicated to trading partners, the better.*

A contingency plan would permit a plan to continue to receive and pay claims that do not meet all of the EDI requirements for a brief time after October 16, as long as the plan has made reasonable and diligent efforts to become fully compliant.

HHS will give plans considerable flexibility in designing a suitable contingency plan. According to their guidance, HHS considers an "acceptable" contingency plan "whatever is appropriate for the individual plan's situation in order to ensure the smooth flow of payments." HHS further states that the "appropriateness of a particular contingency or the basis for deploying the contingency will not be subject to review."**

The Segal Company has prepared a sample contingency plan that group health plans can adapt to ensure minimal disruptions to claims processing. The value of having a contingency plan in place should not be underestimated. In the short term, HHS enforcement action is unlikely if a health plan continues to process some non-compliant claims in accordance with a "contingency plan," as long as the plan can document its own "good-faith" efforts to comply with the EDI standards.

Keep Track of Compliance Efforts

Plans should document compliance activities engaged in both before and after October 16. In their guidance HHS states that for plans that could include "keeping track of outreach activities (e.g. letters, conferences, hone calls, etc.), encouraging providers/submitters to schedule testing, testing schedules and statistics showing increased testing results."

HHS Enforcement Will Be Complaint-Driven

At least in the short term, HHS is likely to give some leeway to plans that have made good faith efforts to comply. When HHS receives a complaint about a covered entity, it will "ask the entity to demonstrate their reasonable and diligent efforts to become compliant and, in the case of health plans, to facilitate the compliance of their trading partners." In so doing, HHS will place "strong emphasis" on "sustained actions and demonstrable progress in determining" a plan's good faith effort. Note that HHS will expect to see documented efforts not only within the group health plan itself, but significant outreach to trading partners.

For assistance with HIPAA EDI compliance, contact your Segal consultant or the nearest Segal office.

Compliance Alert, The Segal Company’s periodic electronic newsletter summarizing important developments affecting benefit plan compliance, is for informational purposes only. It is not intended to provide authoritative guidance. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.

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