Electronic claims rule may be postponed

Doctors' offices, hospitals and health plans would have an extra year to comply with the new standards -- if they do the paperwork.

By Amy Snow Landa, amednews staff. Dec. 24/31, 2001.

Washington -- Congress appears likely to approve legislation by the end of the year that would postpone the deadline for physicians' offices and other health care entities to comply with new standards for electronic data transactions.

Regulations issued by the Dept. of Health and Human Services require that most health care entities adopt common standards for the electronic transmission of administrative data, such as claims, health plan eligibility and premium payment, by October 2002.

But both the House and Senate recently approved legislation that would extend the deadline by one year -- to October 2003 -- to give physicians' offices, hospitals, health plans and health care clearinghouses more time to get ready for the new electronic transactions standards.

The new standards implement provisions of the 1996 Health Insurance Portability and Accountability Act that were designed to increase the health system's efficiency, reduce administrative burdens, and prevent fraud and abuse.

Although the House and Senate approved similar measures to delay the compliance deadline by one year, the two bills contain differences that, at press time, still required reconciliation before a final agreement could be sent to President Bush for his signature.

The Senate measure grants health care entities the one-year extension automatically, but the House version provides a one-year delay only to those entities that submit a plan to HHS by October 2002 detailing how they intend to achieve compliance by the following year.

Some believe the paperwork for a compliance extension would be too onerous.

The plan would have to include an analysis reflecting the extent to which and the reasons why the person is not in compliance; a budget, schedule, work plan and implementation strategy for achieving compliance; any plans for using a contractor or other vendor to assist in achieving compliance; and a time frame for compliance testing.

"This is an extremely onerous set of requirements to qualify for a compliance extension," the Medical Group Management Assn. noted in a letter to the bill's sponsors.

But it is the measure's enforcement mechanism that is "our biggest concern," said MGMA Government Affairs Manager Robert Tennant. The bill would allow the HHS secretary to exclude from Medicare physicians or health care entities that fail to either submit a plan or come into compliance by October 2002.

"That is a totally disproportionate remedy," Tennant said. Medicare exclusion is not part of the Senate measure, but the HHS regulations include fines for noncompliance.

At press time, the Senate appeared prepared to adopt the House language in place of its own. But with time quickly running out on this year's legislative session, it remained unclear whether the Senate would have enough time to vote on a final bill.

Lawmakers say the one-year extension of the compliance deadline is a "balanced" compromise between those who advocated for a longer delay and those who opposed any postponement.

Health care groups weigh in

Earlier this year, a coalition of health care groups including the AMA, the Blue Cross Blue Shield Assn., the Health Insurance Assn. of America and several medical specialty groups, had supported legislation that would have delayed the deadline until two years after HHS issued all the new administrative simplification standards required by HIPAA.

The groups argued that issuing all of the administrative simplification rules at the same time would be more efficient for health care entities and allow them to spread the cost of implementation over several years. The coalition did not call for a delay of the HIPAA medical records privacy regulations, set to take effect in April 2003.

On the other side of the debate, MGMA, the American Hospital Assn., the Federation of American Hospitals and the American Assn. of Medical Colleges lobbied against the proposed two-year delay of the compliance deadline.

In a letter sent to congressional leaders in September, the hospital groups wrote that "any legislative delay would unfairly penalize hospitals and health systems that have made the significant commitment of financial and staff resources necessary to meet the current October 2002 deadline for those requirements."

Like hospitals, medical group practices expect to benefit tremendously once the new electronic standards are implemented, in part due to more efficient office administration and faster reimbursement, Tennant said.

HHS has estimated that bringing the health care system into compliance with the electronic transaction standards will reap an estimated net savings of nearly $30 billion over 10 years for the health care industry.

MGMA supported some additional time for implementation, due to concerns that some medical group practices may not be able to meet the current deadline, but felt that a delay with no fixed compliance date would be "counterproductive" to the goal of administrative simplification.

Lawmakers said they had tried to strike a balance with their legislation, recognizing that many health care stakeholders have invested millions of dollars to be ready for the standards but that others simply will not be in compliance by the current deadline.

"That concern that this would disrupt transmission of health and financial information and cause any number of problems for the health care consumer is what motivates this legislation today," said Rep. Thomas Sawyer (D, Ohio), who co-authored the Administrative Simplification Compliance Act with Rep. David Hobson (R, Ohio). "This bipartisan effort will prevent that from happening while still ensuring that the regulations are implemented in a timely manner."

The AMA has not taken a position on the Hobson-Sawyer measure but did lobby successfully for user fees to be dropped from the bill. Initially, the measure would have imposed a $1 user fee on every paper claim submitted to the Medicare program after the compliance deadline.

The provision was replaced with a requirement that health care entities submit their claims to the Medicare program in an electronic format. There would be an exception, however, for physician practices with fewer than 10 full-time employees, health care facilities with fewer than 25 full-time employees, and those entities that lack the ability to submit an electronic claim.