1. Standard: Health claims or equivalent encounter information (Subpart K)

a. Background

By the mid-1970s, several health care industry associations had formed committees to attempt to standardize paper health care claim or equivalent encounter forms. By the mid-1980s, those committees were standardizing electronic formats with equivalent data. By the early 1990s, some of these committees were working with the ASC X12N Subcommittee. Nevertheless, many health plans continued to require local formats, revising the formats to suit their own purposes rather than following procedures in order to revise the standards. As a result, it is not unusual for health care providers to support many electronic health care claim formats, either directly or by using clearinghouse services, in order to do business with the many health plans covering their patients.

The committees that pursued organizational goals (such as a more cost-efficient environment for the provision of health care, more time and resources for patient care, and fewer resources for administration) were usually sponsored by health care provider associations such as the National Council of Prescription Drug Programs, the AMA, the American Hospital Association, and the ADA. Each association contributed to the development of the four corresponding accredited claims standards proposed for adoption, with content based on de facto standards derived over time.

i. Candidates for the Standard

The HISB developed an inventory of health care information standards for HHS to consider for adoption. The candidate standards for health claims or equivalent encounter information were:

• Retail drug: NCPDP Telecommunications Standard Format Version 3.2.
• Dental claim: ASC X12N 837 - health care claim: dental, version 3070 implementation.
• Professional claim: ASC X12N 837 - health care claim: professional, version 3070 implementation and HCFA National Standard Format (NSF), version 002.00
• Institutional claim: ASC X12N 837 - health care claim: institutional, version 3070 implementation and HCFA Uniform Bill (UB-92) version 4.1

ii. Recommended Standards

The four standards for claims or equivalent encounter information we are proposing in this proposed rule are:

· Retail drug: NCPDP Telecommunications Standard Format Version 3.2 and equivalent NCPDP Batch Standard Version 1.0.

The NCPDP was formed in 1977 as the result of a Senate Ad Hoc Committee to study standardization within the pharmacy industry. The NCPDP was specifically named in HIPAA as a standards setting organization accredited by ANSI. The first NCPDP Telecommunications Standard was developed in 1988 and allowed pharmacists to process claims in an interactive environment. The NCPDP developed the Telecommunications Standard Format for electronic communication of claims between pharmacy providers, insurance carriers, third-party administrators, and other responsible parties. The standard addresses the data format and content, the transmission protocol, and other appropriate telecommunications requirements. The NCPDP received input from all aspects of the prescription drug industry and designed the standard to be easy to implement and flexible enough to respond to the changing needs of the industry. The NCPDP also provides changes and additions to the standard to support unique requirements included in government mandates.

The NCPDP telecommunications standard for claim and equivalent encounter data is on-line interactive. There is also a batch implementation of this standard, the NCPDP Batch Standard Version 1.0. The telecommunications standard data set includes eligibility/enrollment, claim, and remittance advice information. When the transaction is complete, the sending pharmacy knows whether the customer is covered by the health plan, the health plan knows all of the details of the claim, the pharmacy knows whether the claim will be paid, and how much it will be paid, and any pertinent details regarding the amount of payment or the reason for denial of payment. This standard met all 10 of the criteria used to assess standards.

Since retail drug claims are a specialized class and the NCPDP structure contains claims, enrollment/eligibility and remittance advice data, we did not recommend the ASC X12N 837 for the retail drug standard.

· Dental claim: ASC X12N 837 - Health Care Claim: Dental

The ADA recommended adoption of the ASC X12N 837, version 3070. This standard met all of the criteria used to assess standards.

· Professional claim: ASC X12N 837 - Health Care Claim: Professional

HHS consulted with external groups in accordance with the legislation. These groups included the NCVHS, WEDI, the NUCC, the NUBC, the ADA, and many others.

In a letter, dated March 12, 1997, the NUCC stated,

“The NUCC recommends to the Secretary of HHS that the ANSI ASC X12 837 transaction be adopted as a standard for electronically transmitting professional claims or equivalent encounters, including coordination of benefits information, as per the Administrative Simplification provision of the HIPAA.

“The NUCC recommends that a migration plan be adopted to allow current trading partners who use the National Standard format (NSF) to convert to a standard NSF, which will be implemented by the Secretary per the HIPAA, by February 2000 and to convert to the standard ANSI ASC X12 837 by February 2003.”

The AMA also supported the NUCC recommendation. However, the NCVHS and WEDI recommended adoption of the ASC X12N 837 transaction. The claims implementation team decided that, since the NUCC was clear that it wanted the ASC X12N 837 transaction in the end, it would be better to invest in migrating to that, rather than support two standards and take more time for the transition.

Our recommendation takes into account the advice we received from organizations that we consulted directly and indirectly and from those who testified before the NCVHS subcommittee on Health Data Needs, Standards, and Security. These organizations included entities representing all parts of the health care industry -- health care providers, health plans, and vendors/clearinghouses -- to which the standard will apply.

The ASC X12N 837 standard met all 10 criteria used to assess standards. The NSF met 5 of the criteria. The NSF does not improve the efficiency and effectiveness of the health care system (#1) because a standard implementation does not exist. The NSF meets the needs of many users, particularly Medicare, but not all of the needs of the user community (#2). It is not supported by an ANSI-accredited SDO (#5). There are no testing or implementation procedures in place (#6). Due to its fixed-length structure, it does not incorporate flexibility to adapt easily to change (#10).

· Institutional claim: ASC X12N 837 - Health Care Claim - Institutional

HHS consulted with the groups identified under our discussion of the standard for professional claims above in this section and also consulted with the NUBC on the selection of an institutional standard. In a letter dated March 11, 1997, the NUBC stated,

“The NUBC recommends the use of the EMC V.4 (UB-92) as the single electronic standards transaction for institutional health claims and encounters. We recommend the EMC V.4 for the following reasons:

“-Nearly all institutional providers already use the EMC V.4 with a high level of success

“-The EMC V.4 has been in full production for over four years

“-There is no additional cost for providers to adopt the EMC V.4

“-It reduces the risks associated with the adoption of a new, complex and relatively untested transaction

“-It allows for a more successful transition to the 837.

“We agree with HCFA that coordination of benefits transactions (COB) do not require a fully separate transaction for the health care claim or encounter. The NUBC also believes that the EMC V.4 should be used as the platform for transmitting COB data elements.

“At the present time, the NUBC cannot recommend the use of the 837 as the electronic institutional claim standard.

“We recommend that larger scale testing of the 837 proceed. Once the transaction has proven that it can successfully handle the claim/encounter, the NUBC will consider endorsing the 837 as a successor standard.”

The American Hospital Association also supported NUBC’s recommendation. The NCVHS and WEDI recommended adoption of the ASC X12N 837 transaction.

Due to the batch nature of the ASC X12N transactions, each transaction type and its corresponding data elements are separated by function. The adoption of the transactions for those functions (such as claims and remittance advice), with the exception of the NCPDP transaction, have all been recommended to be ASC X12N transactions. The ASC X12N 837 met all 10 criteria used to assess the standards. The UB-92 met 5 of the criteria. The UB92 does not improve the efficiency and effectiveness of the health care system (#1) because a standard implementation does not exist. The UB92 is not supported by an ANSI-accredited SDO (#5). There are no testing or implementation procedures in place (#6). The UB92 documentation is ambiguous in some instances and not always precise (#8). Due to its fixed-length structure, it does not incorporate flexibility to adopt easily to change (#10). The NUBC stated it would consider the 837, once successfully tested. For these reasons, we have concluded that the ASC X12N 837 should be adopted as the standard format implementation of the institutional claim.

For the most part, a health care provider would use only one of these four health care claim implementations, although a large institution might use the institutional claim for inpatient and outpatient claims, the professional claim for staff physicians who see private patients within the institution, and the retail pharmacy claim, if applicable, which typically would be administered separately from the rest of the institution.

Data elements for the various standards and other information may be found in Addendum 1.

b. Requirements

In § 142.1102, we would specify the exact standards we are adopting: the NCPDP Telecommunications Standard Format Version 3.2 and equivalent NCPDP Batch Standard Version 1.0; the ASC X12N 837 - Health Care Claim: Dental, the ASC X12N 837 - Health Care Claim: Professional, and the ASC X12N 837 - Health Care Claim: Institutional. We would specify where to find the implementation guide and incorporate it by reference.

i. Health plans.

In § 142.1104, Requirements: Health plans, we would require health plans to accept only the standards specified in § 142.1102 for electronic health claims or equivalent encounter information.

ii. Health care clearinghouses.

We would require in § 142.1106 that each health care clearinghouse use the standard specified in § 142.1102 for health claims or equivalent encounter information transactions.

iii. Health care providers.

In § 142.1108, Requirements: Health care providers, we would require each health care provider that transmits health claims and encounter equivalent electronically to use the standard specified in § 142.1102.

c. Implementation Guide and Source

The source of implementation guides for the NCPDP telecommunication claim version 3.2 and equivalent NCPDP Batch Standard Version 1.0 is the National Council for Prescription Drug Programs, 4201 North 24th Street, Suite 365, Phoenix, AZ, 85016; telephone 602-957-9105; FAX 602-955-0749. The web site address is: http://www.ncpdp.org.

NCPDP standards are available to the public on a 3½" diskette for a fee. A set is defined as containing the Telecommunications Standard, Standard Claims Billing Tape Format, Eligibility Verification and Response, and Enrollment. Membership in the NCPDP is not a requirement for obtaining the standards and associated implementation guides. The website contains information and instructions for obtaining these documents.

The implementation guides for the ASC X12N standards are available at no cost from the Washington Publishing Company site at the following Internet address: http://www.wpc-edi.com/hipaa/.

Users without access to the Internet may purchase implementation guides from Washington Publishing Company directly: Washington Publishing Company, 806 W. Diamond Ave., Suite 400, Gaithersburg, MD, 20878; telephone 301-590-9337; FAX: 301-869-9460. The data definitions and description of data conditions may also be obtained from this website.

The names of the implementation guides are:

ASC X12N 837 - Health Care Claim: Professional (004010X098)

ASC X12N 837 - Health Care Claim: Institutional (004010X096)

ASC X12N 837 - Health Care Claim: Dental (004010X097)

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