Testimony: WEDI Public Hearing on Implementation of HIPAA Regulations

Presented by D'Arcy Guerin Gue
Phoenix Health Systems and the Healthcare Information and Management Systems Society (HIMSS)

January 27, 2004

Introduction

On behalf of HIMSS and Phoenix Health Systems, thank you for extending your invitation to appear at this important hearing.

I am here today to provide an overview of the most recent aggregate healthcare industry data available on HIPAA Transactions and Code Sets compliance progress and issues. Beginning January 6, 2004 and ending two weeks later on January 13, HIMSS and Phoenix Health Systems conducted the 17th consecutive US Healthcare Quarterly Industry HIPAA Compliance Survey. The Winter 2004 Survey placed special emphasis on readiness to conduct HIPAA transactions, prioritization of specific electronic transactions, the impact of the Contingency Plan offered by the Centers for Medicare and Medicaid (CMS), and the impediments to compliance progress faced by healthcare providers, payers, clearinghouses and vendors.

The Survey Approach and Participants

Following several website and email appeals to HIMSS 13,000+ members and to Phoenix’ 20,000+ HIPAAlert newsletter subscribers, a total of 631 healthcare industry representatives responded. The online Survey was completed anonymously via Phoenix’ web site, HIPAAdvisory.com. The breakout of participants by industry segment follows:

• Providers – 70% (Hospitals – 51%)
  • Hospitals with 400+ beds: 18%
  • Hospitals with 100-400 beds: 20%
  • Hospitals with less than 100 beds, or 30+ physician practice or similar size: 13%
  • Medium-sized physician practices (11 to 29 physicians) /other like-sized providers: 8%
  • Small physicians practices (10 or fewer physicians) /other like-sized providers: 11%
• Payers – 19%
  • Covering fewer than 150,000 Lives: 6%
  • Covering 150,000-500,000 Lives: 4%
  • Covering 501,000-1,500,000 Lives: 4%
  • Covering more than 1,500,000 Lives: 5%
• Vendors – 9%
• Clearinghouses – 2%

Nearly 90% of all respondents reported that they hold an official role in HIPAA compliance within their organizations: 20% are members of senior management, 11% CIOs, 22% other department managers, and 28% Compliance or Security Officers. The remaining 19% hold various positions including analyst, attorney and other roles.

Before I present the key results of the Survey, please bear in mind a few explanatory, perhaps cautionary points:

1. The Quarterly HIPAA Compliance Survey is intended to be a high level report on HIPAA Transactions-related progress and issues; limitations on the length of the Survey (which also addresses Privacy and Security compliance) have been necessary to ensure participation by the large polling samples we seek. Also, because of the varied job roles of participants, we have striven to make the polling questions sufficiently non-technical that all participants are able to answer them.
   
2. The Winter 2004 Survey generated a very small sample of Clearinghouse representatives: 2% of total respondents. This is consistent with Clearinghouse responses throughout the history of the Survey. The small size of the sample should be taken into account when interpreting our results.
   
3. To some extent the Survey sample may reflect a self-selection-based bias. It can be inferred from our polling process – through HIMSS and HIPAAdvisory.com – that the majority of respondents are either members of HIMSS, and therefore reasonably information systems-savvy – and/or are already familiar enough with HIPAA to be users of HIPAAdvisory.com’s resources. Therefore, it also can be inferred that covered entities that know or care little about HIPAA, or who are not members of HIMSS, may not be adequately represented in the survey results. While the polling model, admittedly, is imperfect, the results have undeniable value, in that
   
   1. The Quarterly U.S. Healthcare Industry HIPAA Compliance Survey represents the only large-scale HIPAA compliance survey that has been undertaken regularly over four years. A resulting advantage is that we have been able to compare new results relative to past results, and, indeed, have found the relationship between them to be reasonable and consistent.
      
   2. It is logical to assume that covered entities that know or care little about HIPAA compliance, and that have not been exposed to our surveys for that reason, will have achieved less progress in HIPAA compliance than those who are represented in our sample. Therefore, we believe that any conclusions that can be drawn from the Survey data are likely to be from the positive end of the industry’s TCS progress. In other words, the picture I am about to paint likely represents the best possible current compliance scenario, when, in fact, the reality for the industry as a whole may be somewhat less encouraging.

Key Findings of the Survey

• Over 80% of covered entities have completed Transactions and Code Sets gap analyses.
  
  

	Gap Analysis Done
Provider	82%
Payer	86%
Clearinghouse	100%



• Over three quarters of covered entities have completed internal TCS testing.
  
  

	Internal Testing Complete
Provider	75%
Payer	81%
Clearinghouse	75%

This data reflects significant progress since our Fall 2003 poll, when only 43% of Providers and 20% of Payers indicated completion of internal testing.

• On average, only half of covered entities have completed external testing.
  
  

	External Testing Complete	To be Completed Within 3 Months
Providers	56%	20%
Payers	50%	18%
Clearinghouses	50%	50%

This data indicates strong progress by Providers since the Fall 2003 Survey, when only 20% had completed external testing. However, there is no increase in the percentage of Payers that have completed external testing since Fall 2003.

• Vendors were asked when they expected to complete all testing, internal and external. Forty percent reported that they are already finished (as compared to 22% in the Fall 2003 Survey), with 16% anticipating completion with three months, and another 24% expecting to be complete within six months.

• Fairly consistent with the internal testing results discussed earlier, most respondents stated that they are ready to accept/transmit one or more, but not all, standard transactions.
  
  

	Ready Now
Providers	80%
Payers	92%
Vendors	76%
Clearinghouses	75%

• All participants were asked when their organizations would be ready to accept/transmit all standard transactions.
  
  

	Ready Now	Within 3 Months	Do Not Know
Providers	45%	18%	21%
Payers	56%	17%	10%
Vendors	40%	16%	12%
Clearinghouses (4 responses)	50%	0%	0%

Those not responding within one of the three categories listed above, reported expected readiness at various times between three and 10 months from now. Again, Providers have made strong progress from the 18% readiness level they reported in the Fall 2003 Survey. However, the progress of Payers is insignificant (up only three points from Fall 2003), and Vendor reports indicate a lower level of readiness today than in Fall 2003 (when 47% reported readiness).

• Participants were asked which transactions they planned to conduct initially.
  
  

Use Ranking	Transaction
1	837 Claims (most frequent)
2	835 Payment & Remittance
3	276/277 Claim Status Request & Response
4	270/271 Eligibility Inquiry & Response

• Respondents were asked to identify what major obstacles (out of a series of 12 listed items) face their organizations in conducting standard Transactions. The top three listed obstacles, by industry segment, are as follows (and are generally consistent with those reported in the Fall 2003 Survey):

Providers Payers are not ready to accept standard Transactions Payers are not ready for testing Cannot get needed information from Vendors, Payers, Clearinghouses

Payers Providers are not ready for testing Providers have not captured the data required for standard Transactions Cannot get needed information from Vendors, Providers, Clearinghouses

Vendors Ambiguities exist in Implementation Guide specifications Payers are not ready to accept/transmit standard Transactions Providers have not captured the data required for the standard Transactions

Clearinghouses Payers are not ready for testing Payers are not ready to accept/transmit standard Transactions Providers have not captured the data required for the standard Transactions

• We asked Providers and Payers for their assessments of their trading partners’ readiness to conduct the HIPAA standard Transactions, as an alternate way of “testing” readiness.
  
  

Providers’ Evaluation of Third Party Readiness
	Ready to Transact	No Readiness Date	Do Not Know
Payers	35%	22%	17%
Vendors	57%	10%	13%
Clearinghouses	52%	15%	16%




Payers’ Evaluation of Third Party Readiness
	Ready to Transact	No Readiness Date	Do Not Know
Vendors	51%	10%	18%
Clearinghouses	38%	14%	28%



• Historically, Survey respondents have complained of poor communications with their trading partners, and the Winter Survey results are no exception. Only one third of Providers and Payers reported that their trading partners are “very forthcoming” in communicating details of their compliance plans, progress and timelines. About 35% of Providers have indicated that their Payers have provided “little or no needed information” or “only some needed information." An average of 22% of Providers have said the same of their Vendors and Clearinghouses.
  
• In the wake of the CMS Contingency Plan, 85% of Payers are continuing to accept non-compliant transactions. About 15% plan to continue accepting non-compliant transactions for the next 30 days, with another 19% planning to do so for up to three months from now. Another 35% said they will continue on this course until CMS discontinues its Contingency Plan.
  
• Provider and Payer respondents were asked how long they believed the CMS Contingency Plan should remain in effect. None felt that the Plan should end immediately.
  
  

Recommended Duration of CMS Contingency Plan
	30 More Days	Up to 3 Months	4 to 6 Months
Providers	27%	25%	21%
Payers	16%	19%	33%

The remaining respondents either had no opinion or advocated continuation of the Plan beyond six months.

• When asked what contingency plans participant organizations would deploy if they are not ready to conduct compliant Transactions when required, participants replied as follows (results for each industry segment listed in order):
  
  

Providers Direct Data Entry and/or Paper Clearinghouse

Payers Accept paper processing Continue to accept non-compliant transactions

Vendors Advise Providers to use a compliant Clearinghouse Continue to accept non-compliant transactions

Clearinghouses Use compliant clearinghouse

Conclusion

Overall, we believe the results reported today speak for themselves. However, in summary, we believe it is fair to say that while some indicators suggest that many organizations, and Providers in particular, have been working hard to make up for lost time, the industry as a whole is far from prepared to begin conducting most of the standard Transactions.

Even taking into account expected normal variations between quarterly Survey results, Vendors and Payers appear to be little more prepared to manage their Transactions roles than they were three months ago. Less than 50% of our industry respondents are ready to conduct most or all of the standard Transactions, a likely reason why significant resistance to an imminent end of the CMS Contingency Plan remains. On the positive side, over 75% of all industry segments have stated that they are able to conduct at least one compliant transaction. Momentum in the right direction is occurring – even if we cannot report that it is conforming to hoped-for timelines.

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