Segal’s Compliance Alert December 12, 2001

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December 11, 2001

Possible Extension of HIPAA EDI Compliance Deadline: Bills Pass Both Houses of Congress, but Provisions Must Be Reconciled Before Legislation is Sent to President

On December 4, 2001, the House of Representatives unanimously passed a bill (H.R. 3323) to extend the deadline for complying with the electronic data interchange (EDI) requirements of the Health Care Portability and Accountability Act (HIPAA) for one year to October 16, 2003 for all plans (including small plans). A few days earlier, on November 27, 2001, the Senate also unanimously passed a bill (S. 1684) that would provide for the same one-year delay in HIPAA EDI implementation.

The House bill, the “Administrative Simplification Compliance Act,” contains additional provisions that are not in the Senate bill. For example, the House bill would require health plans and other “covered entities” to submit to the Department of Health and Human Services (HHS), before October 16, 2002, a Compliance Plan covering:

The extent of noncompliance and an explanation of the reasons for noncompliance,
A budget, schedule, work plan and implementation strategy for achieving compliance,
Whether the plan intends to or might use a contractor or other vendor to achieve compliance; and
A specific, six-month period of testing to begin no later than April 16, 2003.

(H.R. 3323 and S. 1684 are available on the Library of Congress’ legislative Web site Thomas.)

Outlook

Both bills must now be reconciled before a final bill can be submitted to President Bush for his signature. If the Senate passes a bill identical to the House bill, the delay legislation may be able to go to the White House before the end of the year. If the Senate does not pass an identical bill, and a conference committee must be appointed to work out the details, the legislation is not likely to be acted on in the near future.

Implications

Although both the House and Senate bills support a delay in EDI, there is no initiative underway in either body to revise any of the substantive requirements of HIPAA. Moreover, the detailed requirements of the House bill make it clear that the government is serious about proceeding with EDI. Consequently, health plan sponsors should continue their compliance programs.

In addition, HIPAA’s privacy rules, which are effective April 14, 2003, will not be delayed under either the House or Senate bills. Therefore, health plan sponsors should begin privacy compliance efforts in order to assure that the effective date is met.

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.