CMS’ upcoming grab bag regulation on payer-provider business transactions

You haven’t packed, but the plane leaves in an hour. You throw whatever you can into your suitcase and hope that you grabbed everything you needed. You’re not sure when you’ll be back.

That appears to be the Centers for Medicare & Medicaid Services’ approach with an upcoming proposed regulation on HIPAA administrative transactions. HIPAA administrative transactions are electronic billing and payment transactions sent between providers and health plans, like electronic claim submissions and prior authorizations. CMS knows that it will get only one chance for a new regulation on these business transactions because it is unlikely there will be another opportunity for rulemaking in this arena under this administration.

So CMS is doing what any panicked traveler would do when packing for an indefinite stay: Stuffs the bag with everything that might possibly be needed.

The grab bag regulation
If the regulation proposes everything CMS says it will, it would be the most multi-faceted and technically challenging HIPAA administrative transaction rule CMS has ever published. The requirements would apply to all HIPAA-covered health plans, clearinghouses and providers.

In the Office of Management and Budget’s Fall 2018 Unified Agenda, CMS announced that the regulation would propose:

• Attachment standards: Standard electronic formats for clinical documentation attached to claims and prior authorization requests;
• Standard(s) for electronic signatures to be used with all HIPAA transactions;
• A new version of the standard electronic format for prior authorization requests;
• Standard formats for acknowledgements (confirmations that a transaction has been received) for electronic claim submissions, attachments, prior authorization requests, and other lesser-used transactions; and
• Operating rules for acknowledgements related to three other transactions: eligibility and claim status requests from providers, and electronic payments/remittance advice from health plans.

The standards and operating rules that will be proposed in the regulation span a wide range of administrative simplification topics, each with their own obstacles in terms of defining the requirements and drafting the regulatory text:

• Changing technologies: It will be difficult to apply specific standards that won’t quickly become antiquated; for example, standards for electronic signatures.
• One-off versioning: The rule’s proposed standard for prior authorization will be the first time the government has moved a transaction to the next version of a standard without requiring the use of the next version for all HIPAA transactions.
• Standards vs. operating rules: Adoption of standards and/or operating rules on acknowledgements dives into an arcane controversy within healthcare EDI circles about how standards and operating rules, each drafted by separate organizations, are supposed to coordinate with each other.

The real challenge, however, will be the proposed attachments standard.

The attachments standard
Providers especially, but also health plans, think the adoption of a standard format for attachments is an absolute necessity to move the industry toward a more automated process of submitting attachments to claims or prior authorizations. Currently, providers use costly and time consuming mail, fax and PDFs in email to conduct the transaction. A pilot project at the Mayo Clinic demonstrated that providers received payments 30 days sooner when they used an electronic claim attachment. According to the CAQH Index, the industry could save nearly $7.00 per transaction if it moved from paper-based to electronic attachments. Coalescing the industry around universal standards for attachments, as this regulation is expected to do, would be the first step toward finding those time and cost savings.

However, there’s a reason CMS has not adopted an attachment standard even though it was mandated by Congress more than 20 years ago: It’s not an easy task. It is expected that standards for attachments would bring together two healthcare sectors that today have relatively separate vendors and software products. The upcoming regulation is expected to propose at least two discrete standards, but the two standards are like different languages from two different worlds of healthcare IT: the administrative and the clinical.

CMS’ challenge with the regulation will be to describe how these worlds come together through use of the two proposed standards. The first standard CMS is likely to propose is maintained by the standard development organization X12 which develops business-to-business EDI billing and payment standards. The other was developed by Health Level Seven International (HL7), known for standards that are used for EHR. For full electronic automation, these two standards would be expected to facilitate a connection between a claim or prior authorization and its related elements in an electronic health record. The administrative transaction plus clinical documentation would ideally be produced through a coordinated process between the providers’ practice management and EHR systems – two systems that, in general, currently do not talk to each other.

The implementation of universal standards for attachments may result in significant time and cost savings for providers and plans, and an opportunity for time saving innovations by software and service vendors. It would also, however, require a steep learning curve for players on both the administrative and clinical side in order to build organizational processes and IT to bridge the two systems.

Take your time
In October, CMS announced that the proposed regulation would be published by the end of 2018, so it is expected soon. Given the complexity and multiple elements of the anticipated rule, it will require a well-thought out approach. CMS should take its time in order to get it right.

That’s a good approach for packing suitcases as well.

Matthew Albright is Chief Legislative Affairs Officer at Zelis Healthcare where he tracks emerging legislation that impact the business of doing healthcare. Albright previously served as Director of the Administrative Simplification Group for the Centers for Medicare & Medicaid Services where he drafted regulations and developed policy in accordance with the Affordable Care Act mandates.

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