Eligibility and claim status
The Administrative Simplification provision under Section 1104 of the Patient Protection and Affordable Care Act (the Act) intends to improve the standards for electronic transactions mandated by the Health Insurance Portability and Accountability Act (HIPAA). The intent of this provision is to reduce administrative costs by adopting a set of operating rules for each transaction and to create as much uniformity in implementing electronic standards as possible.
Video: Administrative Simplification and the Affordable Care Act
Paying for a doctor visit or seeing a specialist often involves complex paperwork. This provision has the potential to simplify our experience with the health care system. View video
The rules for Administrative Simplification govern the compliance by covered entities health benefit plans, health care clearinghouses, and certain health care providers.
To date, the Department of Health and Human Services (HHS) released two interim final rules (IFR) that govern compliance for eligibility and claim status and the second for electronic funds transfer (EFT) and electronic remittance advice (ERA). A final rule was issued on health plan and national provider identifiers.
Health Plan Identifier and National Provider Identifier
On Aug. 24, 2012, a final rule was issued that (1) adopts a 10-digit health plan identifier (HPID) for health plan entities to use in transactions with other covered entities, and (2) requires certain individual health care providers, who previously were not required to do so, obtain and disclose a national provider identifier (NPI) in 2013. At this time, the use of an HPID would only be required for electronic transactions.
The effective date to comply is Nov. 5, 2014, and small health plans Nov. 5, 2015.
The Aug. 24 final rule delays the implementation date for ICD-10 from Oct. 1, 2013, to Oct. 1, 2014, based on concerns from providers about their ability to meet the 2013 deadline. HHS believes the delay would give providers and other covered entities more time to prepare and fully test their systems to ensure a smooth and coordinated transition by all industry segments.
While UnitedHealthcare was prepared to launch ICD-10 by the original Oct. 1, 2013 date, the proposed 12-month delay allows more time to assist, educate and train providers on the new coding requirement.
Electronic Funds Transfer and Remittance Advice Transactions
On Jan. 5, 2012, HHS released an IFR addressing the standards for EFT and ERA transactions that a health plan must comply with to transmit payments to providers via EFT.
Today, with few exceptions, the electronic remittance advice and the health care payment/processing information are sent in different electronic formats through different networks, contain different data that have different business uses, and are often received by the health care provider at different times. The two transmissions must be "reassociated" or matched back together by the provider.
The HHS believes this issue can be alleviated by requiring that a single electronic file format be used by all health plans that transmit health care EFT to their financial institutions.
UnitedHealthcare is compliant under the requirements outlined in the IFR and continues to encourage providers to sign up for EFT and ERA which they can request at: firstname.lastname@example.org
Eligibility and Claim Status
On July 8, 2011, the IFR outlined operating rules covering two electronic health care transactions:
- Eligibility verifying if a patient has sufficient coverage (e.g., benefit coverage, copays, base deductible and remaining deductible); and
- Claim Status the stage of a health care claim (pending, allowed, settled, denied, etc.) after it's submitted to a health insurance company.
UnitedHealth Group completed the CORE Phase I and II testing process that certifies that UnitedHealth Group can deliver more efficient and predictable patient-eligibility and claims-verification information to physicians, hospitals, physician offices and other care providers. UnitedHealth Group is the first health care organization to complete certification using the updated 5010 platform.
|Jan. 1, 2013
||Eligibility and claim status operating rules compliance date.
|May 6, 2013
||National Provider Identifier compliance date.
|Oct. 1, 2014
||ICD-10 new compliance date.
|Jan. 1, 2014
||Electronic funds transfer and electronic remittance advice compliance date.
|Nov. 5, 2014
||Health Plan Identifier compliance date. For small health plans, the date is Nov. 5, 2015.
These rules are part of a series of administrative simplification rules expected over the next several years required by the Act. Below are future regulations and their proposed effective dates for compliance:
- Requirements that health benefit plans certify compliance with all HIPAA standards and operating rules, and phased in beginning Jan. 1, 2014
- Operating rules for claims and encounters, enrollment/disenrollment, premium payments, referral certification/authorization, and claim attachments, effective Jan. 1, 2016
For More Information
- Overview: Administrative Simplification/HIPAA 5010/ICD-10 flier (PDF)
- News Release: UnitedHealth Group is First to Achieve CAQH CORE Certification April 12, 2011 (PDF)
Frequently Asked Questions
Terms and Definitions
- What is an operating rule?
The Act defines operating rules as "the necessary business rules and guidelines for the electronic exchange of information that are not defined by a standard or its implementation specifications as adopted for purposes of this part."
- What is the difference between operating rules and standards?
Operating rules support the adopted standards for health care transactions. Operating rules foster and enhance uniform use of the adopted standards and implementation guides across the health care industry. Standards and operating rules overlap in their functions to increase uniformity, but differ in their purposes.
- What is electronic funds transfer (EFT)?
EFT is the electronic message used by health plans to order, instruct or authorize a depository financial institution to electronically transfer funds through the ACH network. The EFT includes information about the transfer of funds such as the amount being paid, the name and identification of the payer and payee, bank accounts of the payer and payee, routing numbers, and the date of the payment.
- What is remittance advice (RA)?
An RA is an explanation from the health plan to the provider about the claim payment. A health plan rarely pays a provider the exact amount a provider bills the health plan for claims. A health plan adjusts the claim charges based on contract agreements, secondary payers, benefit coverage, expected copays and coinsurance, etc. These adjustments are described in the remittance advice.
- What is ACH?
ACH stands for Automated Clearing House (ACH) and is an electronic network for financial transactions in the United States.
- What is a trace number?
The trace number is also referred to as the TRN Segment. It is a type of tracking code for ERA and the health care payment/processing information transmitted via EFT. Ideally, the TRN Segment within a specific ERA is duplicated in the health care payment/processing information transmitted via EFT. After the health care payment/processing information is transmitted with the TRN Segment to a health care provider, the provider's practice management system can use the TRN Segment to automatically reassociate the health care payment/processing information with its corresponding ERA and post the payment in the provider's accounts receivable system.
- What is a National Provider Identifier?
NPI is a unique 10-position all numeric identifier that providers must use to identify themselves in HIPAA-related transactions and communication. NPIs are assigned by the Centers for Medicare & Medicaid Services.
Health Plan Identifiers
- What is a Health Plan Identifier?
In the final rule, HHS defined the primary purpose of the HPID is for use in standard transactions to identify health plans in the appropriate loops and segments and to provide a consistent standard identifier so a health plan no longer uses multiple identifiers in HIPAA-covered transactions. HHS proposed a 10-digit identifier that mirrors the format for NPI.
- How does a health plan identifier work?
Health plan identifiers facilitate routing of covered transactions or, in other words, "to determine either where the standard electronic transactions are to be sent if the receiver is [a] health plan or from where they came from if the sender is a health plan." The primary function of the HPID is to create a standard data element for covered entities to identify health plans in HIPAA-covered transactions.
- What is the cost impact of a health plan Identifier?
The final rule states that the HPID is expected to yield the most benefit for providers, while health plans will bear most of the costs. Costs to all commercial and government health plans together (Medicare, Medicaid programs, IHS, VHA) are estimated to be $650 million to $1.3 billion. However, commercial and government health plans are expected to make up those costs in savings. The final rule states that the industry will not find that the HPID overly burdensome. HPID's anticipated 10-year return on investment for the entire health care industry is expected to be between $1.3 billion to $6 billion.
- What is the advantage of a health plan identifier to providers?
Health care providers can expect decreased administrative time spent by providers interacting with health plans, and a material cost savings through the automation of processes for every transaction that moves from manual to electronic implementation.
- Will self-funded customers need to obtain a health plan identifier?
Yes, under the final rule, self-funded customers would need their own HPIDs. Given that self-funded group health plans are included in the definition of health plan, and there is a potential need to be identified in the standard transactions, HHS stated that self-funded groups be required to obtain a HPID. (Fully insured customers would not need an HPID as UnitedHealthcare manages the claim transactions.)
- Will the HPID need to appear on ID cards?
At this time, UnitedHealthcare is working through the implications of the final rule. Health plans have two years to comply with the requirements.
- How will health plan identifiers be assigned?
HPIDs would only be assigned by an enumeration system through an online application process. A health plan or other entity, when applying online, would be required to provide certain identifying and administrative information.
Operating Rules and EFT Standards
- Why are operating rules needed? Aren't the HIPAA standards sufficient?
While the standards significantly decrease administrative burden on covered entities by creating greater uniformity in data exchange and reduce the amount of paper forms needed for transmitting data, gaps created by the flexibility in the standards permit each health benefit plan to use the transactions in very different ways. The operating rules help close these gaps.
- What are the advantages to the new operating rules for EFT and RA?
The automated reconciliation saves time for providers' accounts receivable process. Ideally, the time savings that will be realized will increase provider migration from paper checks to EFT for claim payments. And, there will be savings to health plans in transmitting EFT in place of the time and material cost of sending paper checks as more health care providers migrate to EFT.
- Do the EFT standards mean that health plans must submit EFT through the ACH Network?
No, this interim final rule neither prohibits nor adopts any standards for EFT transmitted outside of the ACH Network. But, when health plans do send health care EFT through the ACH Network, they must do so using the new EFT standards.
- Do the EFT standards apply to all claim payments made via EFT?
No, the new EFT standards do not apply to claim payments made outside of the ACH Network.
Impact of Administrative Simplification on Entities and Transactions
- What organizations or entities are impacted by the interim final rule on administrative simplification?
All HIPAA-covered entities would be affected as well as software vendors and any other business associates providing transaction-related services, such as billing support and third party administrators. Covered entities include:
- All health benefit plans
- Health care clearinghouses and vendors
- Physicians, facilities and health care professionals
- What if providers do not submit transactions electronically?
Some health care providers may choose not to conduct transactions electronically, but they are required to use these operating rules for HIPAA transactions that they do conduct electronically.
In practice, health plans will only have to use the health care EFT standards if the provider wants to receive claim payments via EFT through the ACH Network.
- What do providers need to do to prepare for conducting transactions electronically?
The EFT standards are the implementation specifications for the electronic format that a health plan is required to use. The standards do not impact how a provider's financial institution transmits the TRN segment to the provider. There will be no direct systems costs to physician practices and hospitals to implement the new EFT standards.
- What if a provider chooses not to accept electronic funds transfers?
Physician practices and hospitals drive overall adoption and usage of EFT. Most health plans give physician practices and hospitals a choice of payment between paper checks (sometimes accompanied by paper remittance advice) or EFT.
- What if a health plan does not transmit payment electronically?
HHS estimates that it will cost health plans, on average, $4,000 to $6,000 to implement the EFT standards. This is a one-time cost to health plans. HHS assumes that many commercial health plans will have minimal to no costs; for example, health plans that must simply update their vendor contracts to accommodate this change without any additional operational costs.
- What are the financial benefits of EFT for the health care industry?
The IFR cited a 2009 UnitedHealth Group working paper that reported $108 billion could be saved industry wide over the course of 10 years if health care claim payments were required.