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Summary: Modifications to Standards for Electronic
Transactions and Code Sets
By Amanda Dorsey, Director, Phoenix Health Systems
February 2003
On February 13, 2003, HHS Secretary Tommy Thompson announced the
adoption of Modifications to Standards for Electronic Transactions
and Code Sets, a HIPAA regulatory update that was published in the
Federal Register on February 20, 2003. The modifications represent
the latest in a series of federal electronic data interchange standards
that address a central objective of HIPAA -- healthcare administrative
simplification. The timeline below offers a recap of the progress
of these regulatory developments, beginning with their inception
in 1998.
TCS Timeline to Date:
- May 7, 1998 -- Proposed rule for Standards for Electronic
Transactions and Code Sets (TCS) was published in the Federal
Register.
- August 17, 2000 -- Final rule for Standards for Electronic
Transactions and Code Sets was issued by the Secretary of HHS.
The rule provided for national standardization of the most common
healthcare transactions and several code sets. The compliance
deadline was set for October, 2002.
- January 3, 2001 -- The Administrative Simplification
Compliance Act (ASCA) was passed by Congress, providing for an
extension of the TCS compliance deadline until October 16, 2003
for covered entities that filed a compliance plan with CMS by
October 16, 2002.
- May 31, 2002 -- Two proposed rules, CMS-0003-P and CMS
0005-P, were published in the Federal Register. The two proposed
rules recommended that CMS adopt modifications to certain transaction
standards.
More specifically, CMS-0003-P proposed modifications to the current
electronic data interchange (EDI) standards for retail pharmacy
transactions. It also proposed a repeal of the designation of
National Drug Codes (NDCs) as the standard medical data code set
for reporting drugs and biologics on non-retail pharmacy standard
transactions. CMS-0005-P addressed technical changes to certain
implementation specifications for the transaction standards. Because
of numerous inconsistencies and unanswered questions, implementation
of industry-wide EDI standards would have been frustrating at
best, without incorporation of many of the suggested changes.
- February 13, 2003 -- HHS Secretary Tommy Thompson announces
final rule on CMS-0003 and CMS-0005.
The TCS Modifications
CMS received over 300 public comments in response to the May 31,
2002 publication of the proposed modifications. The comments came
from a variety of sources, including healthcare associations and
societies, health plans, Designated Standards Maintenance Organizations
(DSMOs), healthcare providers, Federal health plans, and private
individuals. In the proposed rule, groups that define content of
the transactions (called Data Content Committees or DCCs) collaborated
with Standards Development Organizations (SDOs) to determine the
global business need and the appropriate model, structure and syntax
for each transaction. Both groups (SDOs and DCCs) allowed comments
from the public at any time via their web sites in order to foster
an environment of open participation and discussion.
So what's new in the February 13th final rule? Readers who are
involved in their organization's implementation of the EDI standards
or inpatient/outpatient billing processes may find the content of
the final rule somewhat familiar since most of the final rule is
what was already proposed in the May 31, 2002 draft rule. For those
covered entities that have already begun testing the standard EDI
transactions with their payers, the following bullets list some
of the adopted changes that may affect your department:
- The National Drug Code (NDC) was repealed as the standard medical
data code set for reporting drugs and biologics in all non-retail
(i.e., institutional and professional) pharmacy transactions.
- The proposed addenda to the WPC Implementation guides were
adopted after extensive discussions with DSMOs. These addenda
proposed very detailed recommendations at the data-element level
and are meant to "fill in the blanks" left in some of
the implementation guides.
- For retail pharmacy transactions:
- The National Council for Prescription Drug Programs (NCPDP)
Batch Version 1.1 was adopted to support the Telecommunications
Version 5.1.
- The Accredited Standards Committee (ASC) X12N 835 was adopted
as the standard for payment and remittance advice, and the
NCPDP Telecommunications Version 5.1 and NCPDP Batch Version
1.1 Implementation Guides as the standard for the referral
certification and authorization transaction.
- The NDC code set will continue to be used for the reporting
of drugs and biologics.
- Two modified standards (premium payments and coordination of
benefits) that were not included in the proposed rules were adopted.
The modifications provide explanatory guidance.
- The effective date of the final rule is 30 days after the Federal
Register publication date of February 20, 2003 -- or March 22,
2003. Covered entities that have submitted timely compliance plans
(in accordance with ASCA) must be in compliance with the TCS Rule,
as amended by the modifications, no later than October 16, 2003.
(Small health plans are provided an additional year for compliance.)
The Bottom Line
In general, the final modifications did not contain any unexpected
or surprising changes, for which most HIPAA-watchers will be grateful.
The new rule did, however, include some significant commentary on
the issue of deadlines for testing and implementing the standard
transactions. CMS acknowledged that the modifications adopted as
a result of CMS-0003-P and CMS-0005-P are necessary for transactions
to be conducted in standard form. CMS also acknowledged that its
delay in finalizing the modifications has created a situation in
which covered entities who did not apply for the ASCA extension
could not possibly have complied with the TCS standards by the original
compliance date of October 16, 2002. Consequently, CMS stated that
it "will not invoke [its] authority to penalize noncompliance
with standards that [its] own delay…has made infeasible."
Further, CMS announced two related decisions. It is affording covered
entities who are already obliged to comply with the TCS standards
(those who did not apply for the ASCA extension) the opportunity
to comply with either the unmodified transaction standards or the
modified standards during this interim one-year extension period.
And, CMS will "take into account the numerous obstacles"
and will work with covered entities through corrective action plans,
rather than penalize their noncompliance.
Finally, CMS noted that it believes that there is sufficient time
between the publication date of the TCS modifications and the ASCA
April 2003 testing deadline for covered entities to meet that deadline.
Similarly, CMS has noted that there is sufficient time for covered
entities to meet the October 16, 2003 compliance deadline provided
under ASCA.
Regardless of your approach to compliance, it is critical that
you contact all of your trading partners immediately for the purpose
of addressing application of the TCS modifications, if you have
not already done so. CMS is on the record in its position that the
effort involved in implementing the adopted TCS modifications should
not prevent any covered entity that makes a reasonable effort from
achieving on-time compliance. The October 16, 2003 deadline still
stands and CMS states very clearly that it has no jurisdiction to
extend the compliance deadline again.
The process for arriving at this final rule speaks volumes to the
value of industry collaboration and open communication; and perhaps
even more so to the role standards can and will play in our industry
in the coming years. By allowing cross-industry input from large
corporations, professional organizations and individuals, the healthcare
industry is now much better positioned to take advantage of the
opportunities presented by EDI.
Read
the final rule.
Amanda Dorsey, Director, Phoenix Health Systems, delivers HIPAA
consulting solutions to hospital clients and physician practices.
Phoenix is expert in HIPAA change management, strategic planning,
and procurement, implementation and integration of state-of-the-art
healthcare information technology. www.phoenixhealth.com
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