WebMD
July 19, 2004
HIPAA Implementation: The Case for a Rational Roll-Out Plan
HIPAA Administrative Simplification, as it is currently being implemented,is increasing complexity and cost for health care providers and payers.
Introducing WebMD
WebMD Envoy conducts more HIPAA transactions than any other private entity. In total, WebMD processes more than 3.0 billion transactions on an annualized basis for 300,000 physicians, hospitals, dentists, labs and pharmacies, submitting to more than 1,500 payer connections.
The HIPAA Promise: Administrative Simplification
As envisioned by Congress, codified by law and embraced by the industry, HIPAA Administrative Simplification would reduce administrative costs by increasing efficiency through the exchange of electronic communications between providers and payers. As HHS noted in the preamble to the final Transaction Rule, “The lack of standardization makes it difficult and expensive to develop and maintain software. Moreover, the lack of standardization minimizes the ability of health care providers and health plans to achieve efficiency and savings.” At the core of the HIPAA promise is the commitment to reduce administrative costs by defining standards for electronic transactions so that all participants in the electronic health care marketplace would speak the same language and use the same practices.
Instead of negotiating the details of more than 400 claim forms,providers would fill out just one form that would be accepted by all payers. The information payers sent back to providers would be equally uniform. The simplicity brought about by standardization was expected to encourage more providers to switch from paper to electronic transactions.
The HIPAA statute specifies that the standards adopted “shall be consistent with the objective of reducing the administrative costs of providing and paying for health care.” Congress reiterated this objective in the statute three times, and the Department clearly stated that “[t]he purpose of [the Transaction Rule] is to improve the . efficiency and effectiveness of the health care system.” Consistent with Congress’s clear intent that Administrative Simplification reduce administrative costs, standard electronic health care communication must be implemented in a manner that is consistent with and satisfies this objective.
Missing the HIPAA Mark
The simplification envisioned by HIPAA has not materialized and the statutory HIPAA goals of reducing administrative costs and increasing efficiency are in jeopardy.
Transaction Format – Lack of Uniformity
The standards and implementation specifications are extremely complicated and thousands of pages long. Multiple versions of a HIPAA standard claim have emerged as each payer defines for itself what constitutes a “HIPAA-compliant” claim. Payers have published more than 600 different “companion documents” setting forth their individual interpretations and implementation of the government guidelines. That number is expected to grow to one thousand. The standards, as currently being implemented, are increasing the complexity, and therefore the costs of electronic transactions.
Getting HIPAA back on Track: HHS Leadership
HHS must take action to facilitate the successful implementation of Administrative Simplification. Industry efforts to implement Administrative Simplification have resulted in complex standards, expensive and inefficient implementation and uncertainty in the market place. A few strategic actions by the Department can leverage the remarkable forces and resources of the health care industry to achieve the objectives of Administrative Simplification.
Implement full complement of HIPAA transactions
It is widely recognized in the industry that only through implementation of all the covered transactions will administrative efficiencies, and therefore savings, be realized. CMS has an important leadership role to play in making this HIPAA objective a reality. We recommend that, as a payer, CMS focus its implementation efforts on the complete set of HIPAA transactions. To these ends, the Medicare contingency plan should address the full set of transactions, not simply HIPAA formatted claims. Other payers will follow Medicare’s example and diversify efforts to ensure a balanced implementation initiative that recognizes HIPAA is more than just submitting claims.
Conclusion
CMS action is vital to ensuring that the HIPAA objectives of cost savings and increased efficiency are achieved. The success or failure of HIPAA implementation will have significant implications for the success or failure of the National Health Information Infrastructure.
http://www.corporate-ir.net/media_files/IROL/11/116708/HIPAApaper1.pdf
Comment: Imagine if we had a single, publicly administered payer instead. The conclusion that we need a government agency to take action to implement the National Health Information Infrastructure would be the same. But the administrative nightmare of attempting to bring into efficient compliance our fragmented system of funding care would be nothing more than a bad dream.